ADVICE FOR INVESTORS

INVESTORS ARE STRONGLY ADVISED IN THEIR OWN INTEREST TO CAREFULLY READ THE CONTENTS OF THIS PROSPECTUS ESPECIALLY THE RISK FACTORS
AT PART 6 OF THIS PROSPECTUS BEFORE MAKING ANY INVESTMENT DECISION
SUBMISSION OF FALSE AND FICTITIOUS APPLICATIONS IS PROHIBITED AND SUCH APPLICANT’S MONEY MAY BE FORFEITED UNDER SECTION 87(8) OF
THE SECURITIES ACT, 2015

K-Electric Limited
Date of Incorporation: September 13, 1913, Incorporation Number: 0000002, Registered and Corporate Office: KE House, 39-B, Sunset Boulevard, Phase II,
Defence Housing Authority, Karachi, Contact Person: Mr. Abdul Muqeet Husain, Contact Number: 92-21-3870 9132 (Ext: 7585), Website: www.ke.com.pk,
Email: intranet@ke.com.pk
Prospectus
The Issue Size of Rated, Secured and Listed Diminishing Musharakah Sukuk of up to PKR 25,000 million (inclusive of Green Shoe option of PKR 5,000 million),
out of which Sukuk of PKR 23,708 million (94.8% of Issue Size) are issued to the Pre-IPO investors and PKR 1,292 million (5.2% of Issue Size) are being offered
to the general public by way of an Initial Public Offering through this Prospectus.
Rate of Return: 7-year floating rate instrument @ 3-month KIBOR (Ask Side) plus 1.70% per annum
Instrument Rating: AA+ (Double A Plus) by VIS Credit Rating Company Limited
Long-Term Entity Rating: AA (Double A) by VIS Credit Rating Company Limited
Short-Term Entity Rating: A1+ (A One Plus) by VIS Credit Rating Company Limited
As per PSX’s Listing of Companies and Securities Regulations, the Draft Prospectus was placed on PSX’s website for seeking public comments starting from
May 13, 2020 to May 21, 2020.
Date of Public Subscription: From 23/07/2020 to 20/08/2020 (both days inclusive) during banking hours
From 23/07/2020 to 02/08/2020 only individual investors can apply.
From 03/08/2020 to 20/08/2020 all investors i.e. individuals and institutions can apply.
(For further details, please refer to para 14.2)

TRUSTEE/INVESTMENT CONSULTANT TO THE SHARIAH STRUCTURING

STRUCTURING AGENTS
AGENT ISSUE ADVISOR

Bankers for the Retail Portion of the Issue:

Askari Bank Limited Bank AL Habib Limited Bank Islami Pakistan Limited Dubai Islamic Bank Pakistan Limited
Faysal Bank Limited Habib Bank Limited Habib Metropolitan Bank Limited MCB Bank Limited
Meezan Bank Limited Soneri Bank Limited United Bank Limited*

* In order to facilitate investors, United Bank Limited (“UBL”) is offering electronic submission of application (e-IPO) to its account holders. UBL account holders
can use UBL Net Banking to submit their application via link http://www.ubldirect.com/corporate/ebank. Furthermore, please note that online applications
can be submitted 24 hours a day during the subscription period which will close at midnight on 20/8/2020.
In order to facilitate investors, the Central Depository Company of Pakistan (“CDC”) in collaboration with 1LINK (Private) Limited (1LINK) has developed a
Centralized e-IPO System (“CES”) through which applications for subscription of securities offered to the general public can be made electronically/online. CES
has been made available in this Initial Public Offering (IPO) and can be accessed through the web link. Payment of subscription money can be made through
1LINK’s member banks available for CES, list of which is available on above-mentioned website. Details for registration with CES are given in Para 14.10 of this
prospectus.
In addition to the above, CDC has also introduced a new facility in CES through which sub-account holder(s) will request their respective TREC Holders who are
Participants in Central Depository System (CDS) to make electronic subscription on their behalf for subscription of securities of a specific company by authorising
(adding the details of) their respective Participant(s) in CES. Further details regarding applications made by sub-account holder(s) through their respective TREC
Holders is given in Para 14.10 of this prospectus.

Shariah Advisory Board

Dr. Muhammad Zubair Usmani Mufti Irshad Ahmad Aijaz
Dr. Ejaz Ahmed Samadani Dr. Noor Ahmed Shahtaz Mufti Muhammad Yahya Asim
Trustee/Issue Agent: Mr. Hamidullah Khan – Head Trustee & Agency Services, Phone: +92 21 3536 1215-19 Ext: 131, Email: hamid.ullah@pakbrunei.com.pk
For investor education, please visit www.jamapunji.pk and read the IPO Investor Guide placed at web link
https://www.secp.gov.pk/document/initial-public-offering-ipo-a-concise-guide-for-investors/?wpdmdl=29584. Jama Punji
is an investor education initiative of SECP.
Date of Publication of this Prospectus: 16/07/2020 Name of Securities Exchange: The Issue is proposed to be listed at the Pakistan Stock Exchange Limited
Prospectus and Subscription Form can be downloaded from the following websites: www.ke.com.pk & http://www.arifhabibltd.com
For further queries, you may contact:
K-Electric Limited: Mr. Muhammad Farrukh, Phone: + 111-537-211 (Ext: 1337), E-mail: muhammad.farrukh@ke.com.pk, Mr. Abdul Muqeet Husain, Phone: + 111-537-211 (Ext:
7585); E-mail: muqeet.husain@ke.com.pk
Habib Bank Limited: Mr. Khurram Shaukat, Phone: +92 21 33116504, E-mail: khurram.shaukat@hbl.com, Mr. Shmail Amin, Phone: +92 21 33116510, E-mail: shmail.amin@hbl.com,
Ms. Sana Hidayatullah, Phone: +92 21 33116537, E-mail: sana.hidayatullah@hbl.com
National Bank of Pakistan Limited: Mr. Muhammad Aamir Khan, Phone: +92 2199062124, E-mail: aamirkhan@nbp.com.pk, Mr. Frasat Ali, Phone: +92 21 99062119,
E-mail: ali.frasat@nbp.com.pk

Arif Habib Limited: Mr. Dabeer Hasan, Phone: +92 21 3246 5891, E-mail: dabeer.hasan@arifhabibltd.com, Mr. Ammad Tahir, Phone: +92 21 3243 3542,
Email: ammad.tahir@arifhabibltd.com
 Sukuk Prospectus | K-Electric Limited

UNDERTAKING BY THE CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER

Date: April 06, 2020

WE, SYED MOONIS ABDULLAH ALVI, THE CHIEF EXECUTIVE OFFICER (CEO) AND MUHAMMAD AAMIR GHAZIANI, THE
CHIEF FINANCIAL OFFICER (CFO) OF K-ELECTRIC LIMITED, HEREBY CERTIFY THAT:

1. THE PROSPECTUS CONTAINS FULL AND COMPLETE INFORMATION WITH REGARD TO THE ISSUERS AND THE
ISSUE, WHICH IS MATERIAL IN THE CONTEXT OF THE ISSUE AND NOTHING HAS BEEN CONCEALED IN THIS
RESPECT;

2. THE INFORMATION CONTAINED IN THIS PROSPECTUS IS TRUE AND CORRECT TO THE BEST OF OUR KNOWLEDGE
AND BELIEF;

3. THE OPINIONS AND INTENTIONS EXPRESSED THEREIN ARE HONESTLY HELD;

4. THERE ARE NO OTHER FACTS, THE OMISSION OF WHICH MAKES THE PROSPECTUS AS A WHOLE OR ANY PART
THEREOF MISLEADING; AND

5. ALL REQUIREMENTS OF THE SECURITIES ACT, 2015; THE DISCLOSURES IN PUBLIC OFFERING REGULATIONS, 2017
FOR PREPARATION OF PROSPECTUS AND THE PSX’S RULE BOOK RELATING TO DISCLOSURES AND APPROVALS
HAVE BEEN FULFILLED.

6. NO CHARGES, FEE, EXPENSES, PAYMENTS ETC., HAVE BEEN COMMITTED TO BE PAID TO ANY PERSON IN
RELATION TO THIS PUBLIC OFFERING EXCEPT FOR THOSE AS DISCLOSED IN THIS PROSPECTUS.

On behalf of K-Electric Limited

-Sd- -Sd-
Syed Moonis Abdullah Alvi Muhammad Aamir Ghaziani
Chief Executive Officer Chief Financial Officer

Page 2 of 133
Sukuk Prospectus | K-Electric Limited

GLOSSARY OF ABBREVIATIONS

3M KIBOR Three-Month Karachi Inter-Bank Offered Rate (Ask Side)

Bn Billion

BoD Board of Directors

Bps Basis points. One hundred basis points equal 1 per cent.

Byco Byco Petroleum Pakistan Limited

Capex Capital Expenditure

CDC Central Depository Company of Pakistan Limited

CDS Central Depository System

CEO Chief Executive Officer

Company or Issuer or KE K-Electric Limited

Collection Bank Habib Bank Limited

CPPA-G Central Power Purchasing Agency (Guarantee) Limited

EHT Extra High Tension

FY Financial Year ending 30th June

FO Furnace Oil

FSA Fuel Supply Agreement

GoP Government of Pakistan

HSEQ Health, Safety, Environment & Quality

IBC Integrated Business Centres i.e. a network of more than 30 customer facilitation centres

IM Information Memorandum

IPO Initial Public Offering

IPPs Independent Power Producers

Page 3 of 133
Sukuk Prospectus | K-Electric Limited

MMBTU Million British Thermal Units

MMCFD Million Cubic Feet per Day

Mn Million

MVAs Mega Volt Amperes

MW Megawatt

NCCPL National Clearing Company of Pakistan Limited

NTDC National Transmission and Despatch Company Limited

Opex Operating Expenditure

p.a. Per annum

PAEC Pakistan Atomic Energy Commission

PPA Power Purchase Agreement

PKR or Rs. Pakistani Rupees

PMTs Pole-Mounted Transformers

PSO Pakistan State Oil Company Limited

RLNG Re-Gasified Liquefied Natural Gas

SBP State Bank of Pakistan

SECP Securities & Exchange Commission of Pakistan

SSGC Sui Southern Gas Company Limited

T&D Transmission and Distribution

Page 4 of 133
Sukuk Prospectus | K-Electric Limited

GLOSSARY OF TECHNICAL TERMS

Listed security or derivative contract designated by the stock exchange from time to time,
Assigned Security for which a designated market maker has been appointed by the exchange for market
making

Average three (03) months Karachi Inter Bank Offered Rate (KIBOR) prevailing on the Base
Base Rate
Rate Setting Date

Means the date upon which the Trustee shall establish the Base Rate on the Sukuks for
Base Rate Setting Date the immediately succeeding instalment period in terms of the relevant Sukuk Transaction
Documents; detailed mechanism is provided in Part V section 5.1

A sale transaction executed by market maker not backed by inventory i.e. the market
Blank Sale maker will short the security and will subsequently arrange the security by the end of
trading session to ensure transfer to buyer

Bridge Financing Facility of PKR 20 Billion provided by Habib Bank Limited in terms of
Bridge Facility
Bridge Facility Agreement dated March 14th, 2019

Date of Investment The date when investor’s subscription money is received

All amounts standing to the credit of the Hypothecated Accounts and/or any one of them
Deposits and includes all amounts that may be deposited in the Hypothecated Accounts at any time
and from time to time during the term of the relevant Sukuk transaction documents

Early Re-Purchase The option to redeem, in full or in part, before the final redemption, the outstanding face
Option/Call Option value of the Sukuk by the Company

Grace Period Two (2) years from the Issue Date

Gross Dependable The highest gross power level that the unit can sustain in a period without any operating
Capacity or regulatory restrictions

The following bank accounts of the Issuer held with the Collection Bank wherein the
Hypothecated Collections will be deposited:
a) titled ‘K-ELECTRIC LIMITED COLLECTION ACCOUNT’ bearing account number
Hypothecated Accounts 420041238603;
b) titled ‘K-ELECTRIC LIMITED E COLLECTION’ bearing account number
427900207003; and
c) Second Master Collection Account

All collections deposited by customers of the Issuer in relation to the electricity bills issued
Hypothecated
by the Issuer in any of the Hypothecated Accounts and/or deposited through the
Collections
Collection Bank

All present and future fixed assets located at certain Grid Stations (list provided in Part VII
Hypothecated Properties Section 7.9, mainly consisting of but not limited to transmission assets, transformers and
switch gears, owned by the Issuer (excluding the immovable properties) and all amounts,

Page 5 of 133
Sukuk Prospectus | K-Electric Limited

claims, rights, benefits of the Issuer under the Insurance/Takaful contracts covering the
above assets.

Investment Agent Pak Brunei Investment Company Limited

Issuer K-Electric Limited

The issue date means the last subscription date or the date of closure of subscription
Issue Date
period under the IPO, whichever is earlier.

Second Master Collection The master collection account of the Issuer held with the Collection Bank bearing account
Account (“MCA”) number 0042-79918674-03 (Titled: KE MCA ACCOUNT)

Account No. 5000-79015983-52 (Titled: K-ELECTRIC LTD SUKUK-5 PAYMENT A/C)

Payment Account maintained with Habib Bank Limited, Islamic Banking, Finlay House, I.I. Chundrigar Road,
Karachi

Dr. Muhammad Zubair Usmani

Mufti Irshad Ahmad Aijaz
Shariah Board to the
Dr. Ejaz Ahmed Samadani
Issue
Dr. Noor Ahmed Shahtaz
Mufti Muhammad Yahya Asim

Shariah Structuring
Habib Bank Limited – Islamic Banking
Advisor "SSA"

Structuring Agents "SAs" Habib Bank Limited (HBL) and National Bank of Pakistan (NBP)

Sukuk Trustee Pak Brunei Investment Company Limited

This Prospectus, Declaration of Trust, Musharaka documents, security documents and

Sukuk Transaction
other documents and agreements executed/to be executed inter alia between the Issuer
Documents
and the Sukuk Trustee in relation to the Sukuk.

Page 6 of 133
 Sukuk Prospectus | K-Electric Limited

A) Summary of the Issue

Issue Size Up to PKR 25,000 million (inclusive of Green Shoe option of PKR 5,000 million)
Pre-IPO Placement PKR 23,708 million
Initial Public Offering (IPO)
PKR 1,292 million
(IPO Portion)
The primary utilisation purpose of the Sukuk proceeds is to fund routine operational
and capital expenses requirements of the Company. Bridge facility of PKR 20,000 Mn
Purpose was availed earlier from HBL for the same purpose and has already been settled
through pre-IPO proceeds of the Sukuk Issue. For further details please refer to
section 4.1
The Sukuk will be offered in denominations of PKR 5,000/- or multiples thereof to
Minimum Investment
the investors subject to a minimum Investment amount of PKR 5,000/-.
The issue date means the last subscription date or the date of closure of subscription
Issue Date
period under the IPO, whichever is earlier.
Tenor Seven (7) years (inclusive of a Grace Period) from the Issue Date.
Grace Period Two (2) years from the Issue Date.

Sukuk will be redeemed in twenty (20) equal payment on quarterly basis. The first
such redemption will be due at the end of the twenty seventh (27th) month from the
Issue Date:
Year Sukuk Redemption (% of the Issue Size)
1 -
Sukuk Redemption 2 -
3 20%
4 20%
5 20%
6 20%
7 20%

3-months KIBOR plus 170 bps, subject to a floor of 2% and a cap of 25% to comply
Profit Rate
with Shariah principles
Rental Payment Frequency Quarterly basis; detailed mechanism is explained in Part V section 5.5
Issue Price At par (i.e. each Sukuk having a face value of PKR 5,000)
The Sukuk facility has been secured by:
a. A first charge over the Hypothecated Properties, in favour of the Sukuk Trustee
for the benefit of Sukuk holders. The list contains a total of 50 grid stations that
KE has identified having total valuation of PKR 33.4 Bn.

b. A first hypothecation charge over the Hypothecated Collections, Accounts and

Security Deposits in favour of the Sukuk Trustee for the benefit of Sukuk holders.

c. A first charge by way of letter of lien over the Hypothecated Accounts and
Deposits in favour of the Sukuk Trustee for the benefit of Sukuk holders.

d. A first charge by way of letter of lien over the Payment Account and deposits in
favour of the Sukuk Trustee for the benefit of Sukuk holders.

Page 7 of 133
Sukuk Prospectus | K-Electric Limited

Further, during the tenor of Sukuk the Security created over the Hypothecated
Properties may be released/vacated from time to time to the extent of amounts paid
to Sukuk holders towards rental payments and buy out prices, provided value of the
remaining Hypothecated Properties subject to the Security will always be more than
the outstanding amounts under the Sukuk (i.e. outstanding rental payments and buy
out prices) plus 25% margin, compliance with financial covenants and non-
occurrence of dissolution event or potential dissolution event.
Transaction Legal Counsel Haidermota and Co.
Legal Counsel of the Company Mohsin Tayebaly & Co.
Listing Pakistan Stock Exchange Limited
Long Term Rating : AA (Double A)
Entity Rating Short Term Rating : A1+ (A one plus)
Rating by VIS Credit Rating Company Limited dated April 16, 2020.
Instrument Rating AA+ (Double A Plus) by VIS Credit Rating Company Limited dated April 16, 2020.
23/07/2020 to 20/08/2020 (both days inclusive) from 9:00 am to 5:00 pm
From 23/07/2020 to 02/08/2020 only individual investors can apply
Subscription Date
From 03/08/2020 to 20/08/2020 all investors i.e. both individuals and institutional
investors can apply. For further details please refer to section 14.2
Risk Factors For details, please refer to Part VI of the Prospectus

Trustee to the Issue Pak Brunei Investment Company Limited

Rizwan Pesnani
Head of Treasury and Corporate Finance
K-Electric Limited
KE Head Office - Main Building,
Compliance Officer
39-B, Sunset Boulevard,
DHA II, Karachi.
rizwan.pesnani@ke.com.pk
Tel: 111-537-211 (Ext:7370)
Market Maker to the Issue Arif Habib Limited

1. Askari Bank Limited

2. Bank AL Habib Limited
3. Bank Islami Pakistan Limited
4. Dubai Islamic Bank Pakistan Limited
5. Faysal Bank Limited
Bankers to the Issue 6. Habib Bank Limited
7. Habib Metropolitan Bank Limited
8. MCB Bank Limited
9. Meezan Bank Limited
10. Soneri Bank Limited
11. United Bank Limited

The Sukuk will be inducted into the CDC; transfer shall be made in accordance with
Transferability
the Central Depository Act, 1997 and CDC Regulations.

The Sukuk shall be subject to the laws of Islamic Republic of Pakistan and non-
Governing Law
exclusive jurisdiction of the Pakistan Courts.

Page 8 of 133
 Sukuk Prospectus | K-Electric Limited

B) Summary of Risk Related to the Issue

Risk factors related to the issue

Interest rate Risk/Reinvestment risk

Increase in market interest rates and underlying inflation, may adversely affect the comparative return and/or the real
(inflation adjusted) return for the investors. As a counter measure the Sukuk is a floating rate instrument that offers
attractive margins over KIBOR.

Price risk
The Sukuk will be listed on PSX and the Sukuk holders will be able to sell or buy the Sukuk through the TREC Holders of
the Stock Exchange. Price of Sukuk will largely depend on the bond market behavior and interest rate regime. Hence price
may rise or fall and result in increase or decrease in the value of Sukuk.

Liquidity risk
By investing in the Sukuk the investor assumes the risk of not being able to sell the Sukuk without adversely affecting the
price of the instrument. It is pertinent to note that the Sukuk are to be listed on PSX, subsequent to which PSX will provide
a trading platform for investors during the life of the instrument. Also, the Issuer has appointed a market maker for the
Issue to ensure enough liquidity and tradability.

Default risk
This risk is associated with the repayment capacity of the Company to service the Sukuk (Musharaka Investment)
redemptions and profit payments. Also, there is a risk that there may be a timing mismatch between receipt of consumer
collections and payment due dates of principal/profit payments. Further, since the Sukuk will be redeemed through 20
equal quarterly instalments, payment risk is largely weighted on those repayment dates.

Shariah structure risk

The structure is based on rental payments from identified assets. Total loss of assets or partial loss that may impair the
usability of the Sukuk assets will impact the ability of the Issuer to pay rentals and/or redeem Sukuk.

Details on Risk Factors related to the Sukuk Issue and the Company are provided in Part 6 of this Prospectus.

Page 9 of 133
 Sukuk Prospectus | K-Electric Limited

TABLE OF CONTENTS

1 APPROVALS, CONSENTS AND LISTING ON THE STOCK EXCHANGE ............................................................................ 11

2 SUMMARY OF THE PROSPECTUS ............................................................................................................................... 13

3 OVERVIEW, HISTORY AND PROSPECTS ...................................................................................................................... 17

4 PRINCIPAL PURPOSE OF THE ISSUE AND FUNDING ARRANGEMENTS ....................................................................... 34

5 THE ISSUE ................................................................................................................................................................... 35

6 RISK FACTORS ............................................................................................................................................................. 55

7 FINANCIAL INFORMATION ......................................................................................................................................... 59

8 ENTITY & INSTRUMENT RATING REPORT ................................................................................................................... 86

9 MANAGEMENT OF THE COMPANY ............................................................................................................................ 95

10 LEGAL PROCEEDING, OVERDUE LOANS & CONTINGENCIES .................................................................................... 104

11 UNDERWRITING ARRANGEMENT, COMMISSION, BROKERAGE AND OTHER EXPENSES ......................................... 109

12 MISCELLANEOUS INFORMATION ............................................................................................................................. 111

13 MATERIAL CONTRACTS AND DOCUMENTS RELATED TO THE ISSUE ........................................................................ 115

14 APPLICATION AND ALLOTMENT INSTRUCTION ....................................................................................................... 118

15 SIGNATORIES TO THE PROSPECTUS ......................................................................................................................... 127

16 MEMORANDUM OF ASSOCIATION .......................................................................................................................... 128

17 APPLICATION FORM ................................................................................................................................................. 132

Page 10 of 133
 Sukuk Prospectus | K-Electric Limited

PART I

1 APPROVALS, CONSENTS AND LISTING ON THE STOCK EXCHANGE

APPROVAL OF THE SECURITIES & EXCHANGE COMMISSION OF PAKISTAN

Approval of the Securities and Exchange Commission of Pakistan (the “Commission” or the “SECP”) as required under
Section 87(2), read with Section 88(1) of the Securities Act, 2015 (the “Act”) has been obtained for the Issue, circulation
and publication of this Prospectus vide their letter no. SMD/PO/SA-88/04/2020 Dated June 30, 2020.

Disclaimer
IT MUST BE DISTINCTLY UNDERSTOOD THAT IN GIVING THIS APPROVAL, SECP DOES NOT TAKE ANY RESPONSIBILITY
FOR THE FINANCIAL SOUNDNESS OF THE ISSUER AND ANY OF ITS SCHEMES STATED HEREIN OR FOR THE CORRECTNESS
OF ANY OF THE STATEMENTS MADE OR OPINIONS EXPRESSED WITH REGARD TO THEM BY THE COMPANY IN THIS
PROSPECTUS.

SECP HAS NOT EVALUATED QUALITY OF THE ISSUE AND ITS APPROVAL FOR THE ISSUE, CIRCULATION AND
PUBLICATION OF THIS PROSPECTUS SHOULD NOT BE CONSTRUED AS ANY COMMITMENT OF THE SAME. THE
PUBLIC/INVESTORS SHOULD CONDUCT THEIR OWN INDEPENDENT DUE DILIGENCE AND ANALYSIS REGARDING THE
QUALITY OF THE ISSUE BEFORE SUBSCRIBING.

APPROVAL OF THE PROSPECTUS BY PAKISTAN STOCK EXCHANGE LIMITED

The Prospectus for the issue of Rated, Secured and Listed Diminishing Musharakah Sukuk has been approved by the
Pakistan Stock Exchange Limited (“PSX") in accordance with the requirements of its Listing of Debt Securities Regulations
vide their letter no. PSX/GEN-1232 Dated June 15, 2020.

Disclaimer

 PSX HAS NOT EVALUATED THE QUALITY OF THE ISSUE AND ITS APPROVAL SHOULD NOT BE CONSTRUED AS ANY
COMMITMENT OF THE SAME. THE PUBLIC/INVESTORS SHOULD CONDUCT THEIR OWN INDEPENDENT
INVESTIGATION AND ANALYSIS REGARDING THE QUALITY OF THE ISSUE BEFORE SUBSCRIBING.

 THE PUBLICATION OF THIS DOCUMENT DOES NOT REPRESENT SOLICITATION BY PSX.

 THE CONTENTS OF THIS DOCUMENT DO NOT CONSTITUTE AN INVITATION TO INVEST IN SUKUK OR SUBSCRIBE
FOR ANY SECURITIES OR OTHER FINANCIAL INSTRUMENT BY PSX, NOR SHOULD IT OR ANY PART OF IT FORM THE
BASIS OF, OR BE RELIED UPON IN ANY CONNECTION WITH ANY CONTRACT OR COMMITMENT WHATSOEVER OF
PSX.

 IT IS CLARIFIED THAT INFORMATION IN THIS PROSPECTUS SHOULD NOT BE CONSTRUED AS ADVICE ON ANY
PARTICULAR MATTER BY PSX AND MUST NOT BE TREATED AS A SUBSTITUTE FOR SPECIFIC ADVICE.

 PSX DISCLAIMS ANY LIABILITY WHATSOEVER FOR ANY LOSS HOWSOEVER ARISING FROM OR IN RELIANCE UPON
THIS DOCUMENT TO ANYONE, ARISING FROM ANY REASON, INCLUDING, BUT NOT LIMITED TO, INACCURACIES,
INCOMPLETENESS, AND/OR MISTAKES, FOR DECISION AND/OR ACTIONS TAKEN BASED ON THIS DOCUMENT.

 PSX NEITHER TAKES RESPONSIBILITY FOR THE CORRECTNESS OF CONTENTS OF THIS DOCUMENT NOR THE ABILITY
OF THE ISSUER TO FULFIL ITS OBLIGATIONS THEREUNDER.

Page 11 of 133
 Sukuk Prospectus | K-Electric Limited

 ADVICE FROM A SUITABLY QUALIFIED PROFESSIONAL SHOULD ALWAYS BE SOUGHT BY INVESTORS IN RELATION
TO ANY PARTICULAR INVESTMENT.

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

The Company has delivered to the Registrar of Companies, Karachi as required under Sections 57 (1) of the Act, a copy
of this Prospectus signed by all the Directors of the Company together with the expert reports and contracts mentioned
in the Prospectus with the Registrar of Companies.

CONSENT FROM SHARIAH ADVISORY BOARD TO THE ISSUE

The Shariah Advisory Board to the Issue has given consent to include and publish names of its members in the Prospectus.

LISTING ON THE STOCK EXCHANGE

Application has been submitted by the Issuer to PSX for listing of the Sukuk. If for any reason the application for formal
listing is not accepted by PSX or approval for formal listing is not granted by PSX before the expiration of the twenty one-
day period from the date of closing of the subscription period/list or such longer period not exceeding forty two days as
may, within the said twenty one days, be notified to the applicants for permission by the securities exchange, the Issuer
undertakes that a notice to that effect will immediately be published in the press and it will refund Subscription Money
to the applicants without surcharge as required under the provisions of Section 69 of the Companies Act, 2017.

If any such money is not repaid within eight (08) days after the Company becomes liable to repay it, the Directors of the
Company shall be jointly and severally liable to repay that money from the expiration of the eighth day together with
surcharge at the rate of two per cent (2.0%) for every month or part thereof from the expiration of the eight-day period
and, in addition, shall be liable to a penalty of level 3 on the standard scale in accordance with the provisions of sub-
section (2) of Section 69 of the Companies Act.

The surcharge mechanism has been mentioned here in order to ensure regulatory compliance. However, from the
Shariah perspective, since this surcharge is a form of interest, the applicants are advised to dispose any such received
amount as charity.

COMPLIANCE OFFICER

Rizwan Pesnani
Head of Treasury and Corporate Finance
K-Electric Limited
KE Head Office - Main Building,
39-B, Sunset Boulevard,
DHA II, Karachi
rizwan.pesnani@ke.com.pk
Tel: 111-537-211 (Ext:7370)
Fax: 99205165

Page 12 of 133
 Sukuk Prospectus | K-Electric Limited

PART II

2 SUMMARY OF THE PROSPECTUS

PRIMARY BUSINESS OF THE ISSUER AND THE INDUSTRY IN WHICH IT OPERATES

The Company is principally engaged in generation, transmission and distribution of electric energy to industrial,
commercial, public sector and residential consumers under the Electricity Act, 1910 and NEPRA Act, 1997, both as
amended to date, to its licensed areas.

As of FY-19, the Company owns five power plants with an installed capacity of 2,267 MW which includes capacity
enhancement of 1,057 MW of highly efficient generation capacity added since 2009. Thus, a major portion of the
Company’s generation assets are relatively new. Further, the Company’s transmission system comprises 69 grid stations
and 166 power transformers having transmission capacity of over 6,300 MVAs and supplemented by a network of around
1,288 km of transmission lines.

The Company reserves exclusive rights for distributing power within its service territory i.e. city of Karachi and adjoining
areas of Sindh and Balochistan and serves over 2.9 million consumers.

SPONSORS

Major shareholders and sponsors of issuer are KES Power Limited (“KESP”) and Government of Pakistan (“GoP”). As of
December 31, 2019, the shareholding structure of the Company is as follows:

Shareholding Structure
Number of Shares
Shareholder Shareholding
Held
KES Power Limited (KESP) 18,335,542,678 66.40%
Government of Pakistan (GOP) 6,726,912,278 24.36%
Other Shareholders 2,552,739,290 9.24%
Total 27,615,194,246 100%

In October 2016, Shanghai Electric Power (“SEP”) entered into a Sale and Purchase Agreement with KES Power Limited
to acquire up to 66.4% stake in K-Electric, subject to receipt of government and regulatory approvals. SEP is a state-
owned enterprise controlled by China’s State Power Investment Corporation (“SPIC”), a Fortune 500 company. SEP is
listed on the Shanghai Stock Exchange (SSE: 600021) and is mainly responsible for Shanghai’s power supply, with an
annual generation of approximately 40 TWh (terawatt hours). SEP had received all requisite Chinese government
approvals to proceed with its acquisition. In addition, the Competition Commission of Pakistan and NEPRA have also
issued approvals for SEP’s acquisition, while the State Bank of Pakistan has issued conditional approval pending issuance
of all regulatory approvals. Currently some of GoP approvals are outstanding which are essential to complete SEP’s
acquisition.

Page 13 of 133
 Sukuk Prospectus | K-Electric Limited

SALIENT FEATURES OF THE ISSUE

* Floor of 2% and Cap of 25%

PRINCIPAL PURPOSE AND UTILISATION OF PROCEEDS

The primary utilisation purpose of the Sukuk proceeds is to fund routine operational and capital expenses requirements
of the Company and to repay the PKR 20 Bn bridge facility obtained from HBL for the same purpose. Detailed breakup is
as under:

1. Approximately PKR 10.7 Bn incremental working capital requirement resulting from the arrangement, whereby 60
MMCFD of indigenous gas was swapped with RLNG as an alternate fuel; and substantial increase in the price of
indigenous gas for the balance quantity, from PKR 400/MMBTU to PKR 824/MMBTU.

2. Approximately PKR 600 Mn additional working capital requirement resulting from the addition of new IPPs in the
generation pool of KE.

3. Approximately PKR 13.7 Bn to fund ongoing capital expenditure (non-project) in Generation, Transmission and
Distribution segments of the Company. These include recurring maintenance, protection, overhauling and
distribution loss reduction & growth-related initiatives such as Earthing & Aerial Bundled Cable (ABC).

In case KE fails to raise PKR 1,292 million through the IPO during the time stipulated for Public Subscription, the Sukuk
Issue shall be considered successful at the amount raised through IPO plus the Pre-IPO portion of PKR 23,708 million
which is already raised by the Company. The Sukuk Issue and IPO shall be considered successful on the premise that,
since the proceeds are to be used to fund routine operational and capital expenses requirements, the Company have
alternative working capital lines available from the banks to fund the gap arising from reduced IPO portion subscription.

Page 14 of 133
 Sukuk Prospectus | K-Electric Limited

Note: Please note that PKR 23.7 Bn raised through Pre-IPO investors has been primarily utilised to repay the bridge facility
of PKR 20 Bn, and the remaining amount is being used for the above-mentioned purpose. Further, the proceeds from IPO
portion will also be utilised for the same purpose.

FINANCIAL INFORMATION

Financial Information
Audited (PKR in Millions) FY 2015 FY 2016 FY 2017 FY 2018 FY 2019
Share Capital 96,262 96,262 96,262 96,262 96,262
Net Worth 139,559 171,288 184,316 207,293 214,490
Revenue 194,755 188,607 183,855 217,127 289,119
Gross Margin 24.5% 30.3% 21.5% 20.9% 17.5%
Operating Margin 14.85% 15.9% 6.7% 7.8% 5.2%
Profit After Tax 32,413 31,807 10,419 12,312 17,274
Profit After Tax Margin 16.6% 16.9% 5.7% 5.7% 6.0%
Earnings Per Share 1.17 1.15 0.38 0.45 0.63
Break-up Value Per Share 5.05 6.20 6.67 7.51 7.77
Total Borrowings 67,844 55,894 49,404 72,805 129,511
Total Debt to Equity 0.49x 0.33x 0.27x 0.35x 0.60x
Cash Flow from Operations 18,585 41,097 27,836 19,335 (16,884)

Note: Financial Information disclosed herein is based on available audited financial statements. Financial information
post FY19 is not incorporated as this is not publicly available.

LEGAL PROCEEDINGS AND OVERDUE LOANS

For legal proceedings and overdue loans, refer to Part X of the prospectus.

RISK FACTORS

For key risk factors that would have an impact on the Company, its business operations and the Issue, please refer to part
VI.

RELATED PARTY TRANSACTIONS

Related parties of the Company comprise of associated companies, state-controlled entities, staff retirement benefit
plans and company’s directors and key management personnel. Details of transactions with related parties are as follows:

Page 15 of 133
 Sukuk Prospectus | K-Electric Limited

Related Party Transactions

S. FY 2017 FY 2018 FY 2019
Related Parties Relationship* Nature
No. (PKR in Millions)
State Controlled
1 CPPA-G/NTDC Power Purchases 40,039 45,658 52,596
Entity
Purchase of
State Controlled
2 PSO Furnace Oil and 30,354 40,838 54,217
Entity
Lubricants
State Controlled
3 SSGC Purchase of Gas 29,452 25,569 58,648
Entity
Common Purchase of
4 BYCO 1,964 6,687 7,242
Directorship Furnace Oil
Post-Employment
5 Provident Fund Contribution 747 812 915
Benefits/Plans
Key Management Managerial
6 Employees 193 352 444
Personnel Remuneration
Housing and Utilities 106 - -
Other Allowances and Benefits 238 236 266
Retirement Benefits - 11 40
Leave Encashment - 1 1.3
* Relationship with Related Parties is also mentioned in note 48.1 of the audited financial statement of FY19

As of FY19, the outstanding payables to related parties is disclosed in note 25.1 of the audited financial statement of FY19
and reproduced below:

Related Party Payables as of June 30, 2019

Related Party PKR in Millions
PSO 4,002
SSGC 19,802
BYCO Petroleum Pakistan Limited 603
CPPA-G/NTDC 98,012
Total 122,419

Page 16 of 133
 Sukuk Prospectus | K-Electric Limited

PART III

3 OVERVIEW, HISTORY AND PROSPECTS

COMPANY HISTORY AND OVERVIEW

K-Electric Limited ("the Company") was incorporated as a limited liability company on September 13, 1913 under the
repealed Indian Companies Act, 1882 (now the Companies Act, 2017) and was listed in 1949, with its shares currently
quoted on the Pakistan Stock Exchange Limited. The registered office of the Company is situated at KE House, 39-B,
Sunset Boulevard, Phase II, Defence Housing Authority, Karachi and its registration number is 0000002.

KES Power Limited (the holding company) holds 66.40 percent (2018: 66.40 percent) shares in the Company. KE is the
only vertically integrated power utility in Pakistan. In addition to its own generation fleet comprising five generation
plants with an installed capacity of 2,267 MW, KE has arrangements for over 1,400 MW from external sources including
the National Grid and KANUPP. Besides this, as at December 2019, Company’s transmission system comprises 1,288 km
of transmission lines, 69 grid stations and 166 power transformers.

Historically, the Company was a state-owned entity. In 2005, a consortium including Al Jomaih Group (a conglomerate
based in Saudi Arabia) and National Industries Group (a business group based in Kuwait) acquired majority shareholding
in KE from the Government of Pakistan through an SPV named KES Power. In 2009, Abraaj Capital (“Abraaj”), a private
equity firm based in Dubai, acquired majority equity stake in KES Power and accordingly assumed management control
of KE.

Since 2009, the Company has made significant investments of more than USD 2.4 Bn (up to June 2019) in the business
which has translated into improvements both across operating and financial parameters. KE’s business model is
summarised as follows:

Presence across the Entire Power Value Chain

Generation Transmission Distribution

Own Generation
Grid Stations End User
Power Purchases

5 plants with installed capacity of 6,310 MVAs transmission capacity 7,800+ MVAs distribution capacity
2,267 MW and 1,400+ MW of through 69 Grid Stations, 166 Power through 1,831 feeders & 28,000+
arrangement with external sources Trafos & around 1,288 km of EHT PMTs and substations
lines
Note: information as at December 2019

KE with exclusive distribution rights for Karachi and its adjoining areas including Dhabeji and Gharo in Sindh and Hub,
Uthal, Vindar and Bela in Balochistan is serving a population base of 22 million people. The Company has a diversified
consumer base of over 2.91 million including industrial, commercial, agriculture and residential consumers. The break-
up of consumers as at December 2019 is as follows:

1 as of December 2019

Page 17 of 133
 Sukuk Prospectus | K-Electric Limited

Break-up of Consumers
Number of Consumers
Consumer Type % age
(in ’000)
Residential 2,392 82.4%
Commercial 471 16.2%
Industrial 34 1.2%
Public Sector 7 0.2%
Total 2,904 100%

As the city of Karachi’s sole electricity provider, KE is of strategic importance to the municipality and the country. Over
the years, Karachi has witnessed growth in power demand, however, Capacity additions, loss reduction initiatives and
process improvements have enabled KE to exempt over 70% of the service territory from load-shedding (LS).

72%
60% 63% 64%
57% 59%

3,527 3,530
3,195 3,270
2,929 3,056

FY 14 FY 15 FY 16 FY 17 FY 18 FY 19

Peak Demand (MW) % LS Exempt Areas

3.1.1 GENERATION

KE currently has a total installed capacity of 2,267 MW (own plants). Since 2009, significant investments have been made
on augmenting KE’s generation assets in order to increase Company’s power generation capacity and operational
efficiency.

In this regard, since 2009, an additional 1,057 MW of highly efficient generation capacity has been added. Thus, almost
50% of the Company’s generation assets are relatively new which has subsequently led to an overall improvement of
fleet efficiency from c. 30% in 2009 to c. 37% in 2019.

Overview of KE’s generation capacity as of FY 19 is as below:

KE’s Generation Capacity

Installed
Power Plants Gross Dependable MW
MW
Bin Qasim Power Station-I (BQPS-I) 1,260 1,061
Bin Qasim Power Station II (BQPS-II) 560 526
Korangi Combined Cycle Power Plant (KCCPP) 247 229
SITE Gas Turbine Power Station (SGTPS-II) 100 96
Korangi Gas Turbine Power Station (KGTPS-II) 100 96
Total Capacity 2,267 2,008

Page 18 of 133
 Sukuk Prospectus | K-Electric Limited

In order to manage the growing power demand within its service territory, KE, in addition to its own generation capacity,
also procures power from IPPs and the National Grid. A summary of units generated and purchased is as follows:

Gross Units Generated/Purchased in GWh (KE/IPPs)

Year KE IPPs
2015~2016 10,323 6,981
2016~2017 10,147 7,206
2017~2018 10,338 7,862
2018~2019 10,727 7,768
Jul-Dec 2019 5,662 4,099

As a result of additions to its own generation fleet, along with IPPs added to the KE system, the Company has been able
to reduce the peak demand/supply gap over the years. Historic peak demand and supply within KE service area is as
follows:

Annual Peak Demand/Maximum Supply in MW

Year Supply Demand Supply Gap
2015~2016 2,741 3,195 -14%
2016~2017 2,854 3,270 -13%
2017~2018 3,008 3,527 -15%
2018~2019 3,196 3,530 -10%
Jul-Dec 2019 3,131 3,415 -8%

Further, KE is also diversifying its energy mix by adding renewable energy sources. In this regard, KE has made
arrangements for 50 MW electricity from Oursun Pakistan Limited, a solar power plant located at Gharo, Sindh which
came online in November 2018 and another 50 MW from Gharo Solar (Pvt) Limited, located at District Gharo, Sindh,
which began commercial operations in December 2019.

900 MW RLNG-Based Power Plant

To manage the growing power demand, KE’s planned generation capacity additions include a 900 MW RLNG-based power
plant, which will be owned and operated by KE and is expected to be commissioned by 2021. The planned project
comprises 2 x 450 MW units, running on the combined cycle gas turbine “CCGT” configuration. The plant will be based
on F-Class machines which incorporate the latest technology for environmental compatibility and improved dry low NOx
(“DLN”) operability and eliminate firing temperatures suppression.

In this regard, a Licensee Proposed Modification (LPM) has been filed with NEPRA for addition of this 900 MW RLNG-
based power plant within KE’s generation license and project contracts have been signed with Siemens AG and Harbin
Electric International. Subsequently, Notice to Proceed has also been issued to the contractor after initial advance
payment and construction works have started.

Power Purchases
Besides internal power generation, KE purchases 800 MW of electricity from the National Grid which includes 650 MW
being procured under a Power Purchase Agreement (PPA) with NTDC, which expired in January 2015. KE is currently in
discussions with relevant stakeholders for renewal of the PPA. However, in the interim period, through continued sale
and purchase of electricity, NTDC/CPPA-G as seller and KE as buyer have affirmed the continuation of the PPA, and
accordingly, to date NTDC/CPPA-G continues to supply power and raise invoices in line with terms of the PPA.

Page 19 of 133
 Sukuk Prospectus | K-Electric Limited

Given the strategic and national importance of Karachi (the economic hub of Pakistan and home to more than 10% of
Pakistan’s population), it is well understood at all levels of the Government of Pakistan (GoP) that KE will continue to get
power from the National Grid until a new PPA is signed. In addition to this, KE signed an agreement with NTDC and CPPA-
G in June 2019 for the purchase of 150 MW additional power from three wind power plants situated in the Gharo area
for two years and is successfully evacuating power from these wind power plants. In addition, KE has arrangements with
external power producers for over 600 MW which include Gul Ahmed Energy Limited, Tapal Energy (Pvt.) Limited, FFBL
Power Company Limited, Sindh Nooriabad Power Company (Pvt.) Limited and others.

Additional Supply from the National Grid

While KE continues to pursue its planned generation projects including 900 MW RLNG-based Power Plant to manage the
growing power demand, the Company is also in discussions with relevant stakeholders for supply of additional power
from the National Grid including 500 MW from KANUPP II/III projects, subject to technical study and necessary approvals.
In this regard, post completion of technical study and the required approvals, related interconnection works which
include setting up of 500 kV grid stations will commence operation and the expected completion time for which is around
three years.

3.1.2 TRANSMISSION

Operational improvements within KE’s Transmission and Distribution (T&D) network have remained a key driver of its
growth and profitability. T&D losses have been reduced from the level of 35.9% in 2009 to 19.1% in 2019. Through
continued investment and further improvements, KE forecasts a further reduction of T&D losses with majority of the
reduction expected to be derived through reduction in distribution losses.

As of December 2019, KE’s transmission system comprises 69 grid stations and 166 power transformers. In addition, the
Company owns and maintains approximately 1,288 km of transmission lines. Transmission losses (excluding the
distribution losses) have plummeted to a mere 1.2% in FY19 from a staggering 4.2% in September 2008. KE has
undertaken major development works to secure better efficiency levels. Significant investment has been made for
upgrading the transmission network over recent years. These investments include:

─ Capacity Addition: seventeen (17) new grid stations since 2009, including the rehabilitation of other grid power
transformers, significantly increasing net transmission capacity.

─ Loss Reduction: twenty five (25) new EHT lines added all across Karachi since 2009. Moreover, over 404 km power
lines of old circuit length rehabilitated and increase of over 103 km in EHT line length.

─ System Reliability: major Capex investments in improving the overall stability of the power system, enabling a 72%
reduction in transformer tripping and 43% reduction in transmission-line trips since 2009 till December 2019.

In tandem, to reduce transmission losses and increase the overall system stability, KE has undertaken a transmission
enhancement package, TP-1000, with the objective of upgrading KE’s transmission infrastructure and addition of over
1,000 MVAs in transmission capacity. With an overall project cost of over USD 450 Mn, the project is in advanced stages
and is on course for successful completion. Under the TP-1000 project, five new Grid Stations (2x220kV and 3x132kV)
and 25 power transformers have been added till December 2019, and another 2 new Grid Stations (1x220kV and 1x132kV)
are to be added in 2020, along with the installation of new/rehabilitated transmission lines.

Going forward, KE plans to continue and further accelerate investments in Transmission infrastructure upgrade through
capacity enhancement as well as to set up new interconnection points with the National Grid for increased reliability and
off-take of additional power from the National Grid. In this regard, KE plans to set up 500 kV grid stations, which would

Page 20 of 133
 Sukuk Prospectus | K-Electric Limited

increase the Transmission network’s reliability and enable KE to off-take of additional power from the National Grid, thus
helping KE bridge the power demand-supply gap within its service area.

3.1.3 DISTRIBUTION

KE has exclusivity through its distribution license to distribute electricity within its service territory, which includes the
city of Karachi and the surrounding areas. This service territory is divided into five (5) regions, and further sub-divided
into thirty (30) distribution centres. Residential consumers constitute the largest proportion of consumers and account
for almost 50% of total revenue from sale of energy.

Break-up of consumers with respect to revenue generated in percentage terms during FY17-FY19, is as follows:

Revenue Generated From Consumer Segments (% Terms)

Consumer Segment FY17 FY18 FY19
Residential 44% 45% 45%
Commercial 18% 18% 18%
Industrial 25% 25% 26%
Public Sector 13% 12% 11%
Total 100% 100% 100%

Residential consumers remain the major customers of the Company (82% of the total consumer mix), contributing almost
50% of total revenue whereas industrial consumers (which account for 1% of the total consumer base) have around 30%
share in revenue.

In 2009, due to technical constraints, outdated equipment, corroding wires and administrative issues such as, power theft
and meter-tampering, T&D losses were as high as 35.9%. Since 2009, KE has invested around USD 690 million focused on
reducing T&D losses and improving operational processes to unlock value. As a result, T&D losses reduced to 19.1% as of
FY19 and capacity enhancements were made by over 3,100 MVAs (67 %). Today over 70% of the service territory is load-
shedding free, with 100% exemption given to industries. Ongoing initiatives to continue this trajectory of operational
improvements include:

Aerial Bundled Cabling (ABC)

To cater to areas plagued with losses due to the illegal abstraction of electricity, ABC project is being carried out to control
theft and to provide safe and reliable power through the usage of insulated conductors in place of bare conductors. In
this regard, ABC has already been rolled out on around 8,000 Pole-Mounted Transformers (PMTs) in various areas across
Karachi, as a result of which, KE has experienced a significant reduction in losses and improved service levels.

Technology & Process Automation

Further, to improve network performance and enable KE to make targeted investments in its distribution network, the
Company has made technological advancements including installation of Automated Meter Readers (AMRs) at PMT level
and implementation of Meter Data Management System (MDMS) Project, which is expected to enhance the network
governance to a real-time basis and would therefore result in significant improvement in reliability of power supply.

Low Cost Meter Project

In an effort to energise communities, increase consumer engagement and discourage power theft, KE has successfully
initiated the roll-out of low-cost electricity meters. The project includes availability of electricity meters on easy
instalments for catering to the bottom-of-the-pyramid consumers. The consumer-centric drive uses community

Page 21 of 133
 Sukuk Prospectus | K-Electric Limited

engagement to gain support, whilst new and improved electricity meters facilitate better services for the consumers.
Approximately, 250,000 meters have been installed under this project to date throughout the city of Karachi.

Project Sarbulandi
To achieve the vision of a load-shedding free Karachi, KE has launched Project Sarbulandi aimed at improving network
health to provide a safe electricity environment, network up-gradation through complete installation of ABC, social uplift
of areas through community engagement activities and elimination of commercial losses. In this regard, it is critical that
high loss IBCs are fully converted to ABC, coupled with an effective governance mechanism to support investment. For
this, KE has launched Project Sarbulandi and the key objective of the same is achieving loss reduction and improving
recoveries in chronic areas. Six of the high loss IBCs are to undergo 100% ABC completion by 2020 and remaining high
loss IBCs that would be added as part of Project Sarbulandi would undergo similar ABC completion by 2021.

Asaan Meter
A customer-centric product line called ‘Aasaan Meter’, a facility for easy processing of new application (for below 80kW
customers) has reduced the time taken to acquire a new connection. Under this initiative, KE successfully managed to
energise more than 216,000 meters through easy processing and application transparency for new connections below
80 kW in FY 2019. Customers can now apply at any of KE’s thirty (30) Integrated Business Centres (IBC) as per their
convenience.

PATTERN OF SHAREHOLDING

Major shareholders of Issuer are KES Power Limited (“KESP”) and Government of Pakistan (“GoP”). As of December 31,
2019, the shareholding structure of the Company is as follows:

Shareholding Pattern
Number of Shares
Shareholder Shareholding
Held
KES Power Limited (KESP) 18,335,542,678 66.4%
Government of Pakistan (GOP) 6,726,912,278 24.4%
Mutual Funds 468,099,463 1.7%
Directors, CEO & their Spouse and Minor Children 500 0.0%
Executives 30,100 0.0%
Public Sector Companies and Corporations 55,727,112 0.2%
Banks, Development Finance Institutions, Non-Banking Finance
Companies, Insurance Companies, Takaful, Modarabas and 687,129,517 2.5%
Pension Funds
General Public – Local 1,243,965,188 4.5%
Foreign Shareholders 73,168,759 0.3%
Other Shareholders 24,618,651 0.1%
Total 27,615,194,246 100.0%

In October 2016, Shanghai Electric Power (“SEP”) entered into a Sale and Purchase Agreement with KES Power Limited
to acquire up-to 66.4% stake in K-Electric, subject to receipt of government and regulatory approvals. SEP is a state-
owned enterprise controlled by China’s State Power Investment Corporation (“SPIC”), a Fortune 500 company. SEP is
listed on the Shanghai Stock Exchange (SSE: 600021) and is mainly responsible for Shanghai’s power supply, with an
annual generation of approximately 40 TWh (terawatt hours).

Page 22 of 133
 Sukuk Prospectus | K-Electric Limited

REVENUE AND COST DRIVERS

The Company, being a regulated entity, is governed through Multi Year Tariff (MYT) regime. Accordingly, National Electric
Power Regulatory Authority (NEPRA) determines the tariff for the Company for the tariff control period from time to
time.

Key Drivers
Revenue Side Cost Side
 Energy Sent-out – dependent upon factors  Generation Efficiency & Auxiliary based on NEPRA
including organic growth, economic growth, loss determined benchmarks
reduction resulting in reduced load-shed and  O&M Cost (with CPI indexation going forward)
increased sent-out  Depreciation
 T&D Losses  Finance Cost

Further, KE’s MYT includes a tariff variation mechanism based on which fuel, power purchase and other components are
to be adjusted in tariff through the monthly and quarterly adjustment mechanism defined in the MYT. NEPRA through its
decisions dated December 27, 2019 and December 31, 2019 determined monthly Fuel Charge Adjustment (FCA) for the
period July 2016 to June 2019 and quarterly tariff variations for the period July 2016 to March 2019. The quarterly
determinations are yet to be notified by MoE and the Company remains in continuous engagement with MoE for the
same. Within the quarterly tariff variations determination, NEPRA has not included write-off claims filed by the Company
for FY 2017 and FY 2018, to further deliberate on the matter. These claims were filed in accordance with the mechanism
prescribed within the MYT and the Company remains in continuous engagement with NEPRA for expedient processing of
these claims.

Further, in March 2020, based on the mid-term review mechanism included within the MYT, the Company filed its petition
for adjustments in the tariff to account for (i) impact of exchange rate variation on allowed Return on Equity (RoE)
component, (ii) impact of rupee depreciation on investments and necessary revisions in investment plan due to changes
in operational dynamics, service requirements and revision in estimated scope, (iii) impact of working capital
requirements of the Company beyond its control, and (iv) other factors including change in KIBOR & LIBOR rates and sent-
out growth from NEPRA assumed levels. The determination of NEPRA on mid-term review is awaited.

Page 23 of 133
 Sukuk Prospectus | K-Electric Limited

ORGANISATIONAL STRUCTURE

MAJOR HISTORICAL EVENTS

Established in 1913 to meet the power needs of a small port town Karachi, KE stayed at the forefront of meeting ever
increasing power demands of the city with a surge in population witnessed after independence to date. K-Electric Limited
was nationalised in 1952 by the GoP to provide the Company with much needed investment in its infrastructure.

During 1983 to 1997, KE’s flagship Bin Qasim Power Station-I was added to the generation fleet. K-Electric was first placed
under WAPDA’s control and later the Pakistan Army took over the Company’s management. In 2005, KE was privatised
with the GoP selling 73% of its stake including 71% to a consortium of foreign investors, including Al Jomaih Group (a
conglomerate based in Saudi Arabia) and National Industries Group (a business group based in Kuwait) acquired majority
shareholding in KE from the GoP through an SPV named KES Power. In 2009, Abraaj, a private equity firm based in Dubai,
acquired majority equity stake in KES Power and accordingly assumed management control of KE and kick started the
turnaround of KE.

During 2009 to 2019, c. US $ 2.4 billion of investment has been made in the power generation, transmission and
distribution value chain of KE. Through these continuous investments in the power value chain KE posted profits after 17
years in FY12. During the last decade c. 1,057 MW has been added in KE’s generation capacity and 18 new grid stations
have been established to manage the growing power demand.

In October 2016, Shanghai Electric Power (“SEP”) entered into a Sale and Purchase Agreement with KES Power Limited
to acquire up to 66.4% stake in K-Electric, subject to receipt of government and regulatory approvals. SEP is a state-

Page 24 of 133
 Sukuk Prospectus | K-Electric Limited

owned enterprise controlled by China’s State Power Investment Corporation (“SPIC”), a Fortune 500 company. SEP is
listed on the Shanghai Stock Exchange (SSE: 600021) and is mainly responsible for Shanghai’s power supply, with an
annual generation of approximately 40 TWh (terawatt hours).

SEP notified its initial Public Announcement of Intention (PAI) for the above equity acquisition on October 3, 2016.
Subsequently, in order to comply with the statutory requirements under Securities Act 2015 and Listed Companies
(Substantial Acquisition of Voting Shares and Takeovers) Regulations 2017, SEP notified fresh PAIs on June 29, 2017,
March 29, 2018, December 25, 2018, September 30, 2019 and June 30, 2020 incorporating amended/additional
requirements pursuant to the Securities Act and the aforementioned regulations.

SEP had received all requisite Chinese government approvals to proceed with its acquisition including approval from the
Chinese Ministry of Finance and Commerce (MoFCOM) and National Development and Reform Commission (NDRC).
Currently some of GoP approvals are outstanding which are essential to complete SEP’s acquisition.

Going forward, KE management plans to invest around USD 2 billion in its generation, transmission and distribution
capacities. In addition, the Chairman of SEP has mentioned that “SEP will leverage its own strengths as a strategic investor
and further realise K-Electric’s potential to provide better services to the people of Pakistan and the Government of
Pakistan”.

FUTURE PROSPECTS AND DEMAND OUTLOOK

KE is a dynamic organisation that has demonstrated its resilience and determination to grow and thrive, overcoming
multiple challenges in its 106-year journey since its inception in 1913. Most importantly, since 2009, a successful
turnaround has been executed through a combination of propitious investments and professional management.

The Company remains firm in its commitment to providing safe, reliable and consistent power to all its customers,
underpinned by initiatives that would result in investments of over USD 2 billion over the span of four (4) years, spanning
across the power value-chain, to enhance the energy self-sufficiency and propelling the socio-economic growth of
Karachi and resultantly Pakistan. A key feature of this investment plan is to move towards cost-effective and efficient
sources of generation, including RLNG and most importantly increasing the share of renewables, both solar and wind.
These are in line with the organisation’s overarching priorities to be environmentally sustainable and economically viable
for the city’s growth.

Further, the Company’s planned investments include capacity addition in Transmission and Distribution business, along
with system improvement and loss reduction projects. In this regard, the Company has made significant progress on its
over USD 450 million TP-1000 Project, resulting in capacity enhancement and improved reliability. Around 90% of the
project has been completed, with expected completion later this year. In addition to TP-1000 project, the Company plans
to set up 500 kV grid stations which would enable the Company to off-take additional supply from the National Grid.
These initiatives are expected to significantly improve the system reliability and performance of KE’s transmission
network, while also enabling KE to serve the incremental power demand.

Further, the Company continues to prioritise safety in all of its operations and remains firm in its commitment to ensure
the safety of its people, infrastructure as well as the safety of the people and the communities it works with.

Customer-centricity is a core organisational value, reiterating the Company’s belief that customers are at the heart of
our business. Making KE increasingly more accessible to customers and enabling self-service solutions are high on the
Company’s agenda. In this regard, we have further extended and enhanced KE’s customer service portfolio through the
addition of a Mobile App as well as a Web-based Consumer Portal, with efforts already underway to scale up its offerings.
The Company is also exploring multiple payment solutions to further facilitate customers.

Page 25 of 133
 Sukuk Prospectus | K-Electric Limited

A key lever that has propelled the Company’s growth is technology, underpinning many of its customer platforms and
driving the organisation to explore more efficient and innovative ways of doing business. The Company is also
accelerating investments for technological advancements, including installation of Automated Meter Readers (AMR)
technology at PMT level and implementation of Meter Data Management System (MDMS) Project, providing greater
visibility into network performance and ensuring better transparency.

Further, the Company strongly believes in its professionally driven workforce and dynamic management, who are and
will be the key to the success of the Company, and continues to strengthen the processes with the objective of attracting,
hiring and retaining a high-calibre and diverse employee base that can take the organisation to the next level.

VENDORS TO THE ISSUER

A significant portion of KE’s total payments are made to Fuel & Power Suppliers. Major contributors are listed below.

Fuel Suppliers
 Sui Southern Gas Company Ltd
 Pakistan State Oil
 Byco Petroleum Pakistan

Power Suppliers
 NTDC/CPPA-G
 Gul Ahmed Energy Limited
 Tapal Energy (Pvt.) Limited
 Sindh Nooriabad Power Company (Pvt.) Limited
 FFBL Power Company Limited
 Karachi Nuclear Power Plant

Page 26 of 133
 Sukuk Prospectus | K-Electric Limited

APPROVALS

KE has all the required licenses and approvals from the government and concerned regulatory authorities for carrying
out the business of Generation, Transmission and Distribution of electricity. Details of these licenses are provided below:

Regulatory Licenses
Issue Expiration
License Details
Date Date2
The license allows KE to produce electricity by its generation plants.
Remaining useful life of these plants have been tabulated below:
DETAILS BPQS-I KCCPP KGTPS SGTPS BQPS-II
COD 1983-97 2008-15 2009-15 2009-15 2012
Generation Nov 18, Nov 17,
End of
(GL/04/2002) 2002 2027
Useful 2018-32 2039-40 2039-40 2039-40 2042
Life3

This license allows KE to engage in the transmission of electric power

Transmission June 11, June 10, business as transmission network and system operator within the
(TL/02/2010) 2010 2030 territory defined in the license.

The license allows KE to exclusively carry out distribution service and

Distribution July 21, July 20, make sales of electric power within the service territory of KE as defined
(09/DL/2003) 2003 2023 in the license which includes Karachi and its suburbs.

Upon expiry of these licenses, KE being a going concern, shall apply for their renewal in accordance with the prevailing
laws and regulations.

RELATED PARTIES TRANSACTIONS

Related parties of the Company comprise associated companies, state-controlled entities, staff retirement benefit plans,
Company’s directors and key management personnel. Details of transactions with related parties are as follows:

Related Party Transactions

FY 2017 FY 2018 FY 2019
S. No. Related Parties Relationship* Nature
(PKR in Millions)
Power
1 CPPA-G/NTDC State Controlled Entity 40,039 45,658 52,596
Purchases
Purchase of
2 PSO State Controlled Entity Furnace Oil and 30,354 40,838 54,217
Lubricants
3 SSGC State Controlled Entity Purchase of Gas 29,452 25,569 58,648
Purchase of
4 BYCO Common Directorship 1,964 6,687 7,242
Furnace Oil
Post-Employment
5 Provident Fund Contribution 747 812 915
Benefits/Plans

2 As per Licenses issued by NEPRA

3 Useful life as per Generation License Modification-VIII (dated March 13, 2019)

Page 27 of 133
 Sukuk Prospectus | K-Electric Limited

Related Party Transactions

FY 2017 FY 2018 FY 2019
S. No. Related Parties Relationship* Nature
(PKR in Millions)
Key Management Managerial
6 Employees 193 352 444
Personnel Remuneration
Housing and Utilities 106 - -
Other Allowances and Benefits 238 236 266
Retirement Benefits - 11 40
Leave Encashment - 1 1.3
* Relationship with Related Parties is also mentioned in note 48.1 of the audited financial statement of FY19.

As of FY19, the outstanding payables to related parties is disclosed in note 25.1 of the audited financial statement of FY19
and reproduced below:

Related Party Payables as of June 30, 2019

Related Party PKR in Millions
PSO 4,002
SSGC 19,802
BYCO Petroleum Pakistan Limited 603
CPPA-G/NTDC 98,012
Total 122,419

INDUSTRY OVERVIEW AND SECTOR ANALYSIS

Pakistan’s power sector was historically served by two power entities namely the Water and Power Development
Authority (WAPDA) serving most of the country, and KE serving Karachi and its adjoining areas. In 1997, the government
adopted unbundling policies and enacted the NEPRA Act (1997) and WAPDA Act (1998).

As a part of the unbundling process, WAPDA was successfully unbundled into fourteen separate entities – four generation
companies (GENCOs), nine distribution companies (XWDISCOs) and the National Transmission and Despatch Company
(NTDC). While KE and XWDISCOs continue to hold regional monopolies – being the exclusive distributors in their service
territories, the generation segment has managed to diversify its players to include both public and private sector entities.

The main aim of above initiatives was to promote efficiency and improve financial, operational and management
competitiveness in all tiers of WAPDA to eventually offer affordable electricity to customers, however, due to lack of
investments and private sector participation, T&D segment continues to face a number of operational challenges.

Page 28 of 133
 Sukuk Prospectus | K-Electric Limited

A. Key Players of Power Sector in Pakistan

 WAPDA
WAPDA was established in 1958 as a semi-autonomous body for the purpose of coordinating and giving a unified
direction to the development of schemes in water and power sectors, which were previously being dealt with, by
the respective electricity and irrigation department of the provinces.

In October 2007, WAPDA was further bifurcated into two distinct entities i.e. WAPDA and Pakistan Electric Power
Company (PEPCO), with WAPDA being solely responsible for the development of Hydel Power and Water Sector
Projects.

 NEPRA
National Electric Power Regulatory Authority (NEPRA) was established under the NEPRA Act 1997, as the regulatory
body of the electricity sector. NEPRA is responsible for issuing licenses for generation, transmission and distribution
of electric power, establishing and enforcing standards to ensure quality and safety of operation and supply of
electric power to consumers, approving investment and power acquisition programs of the utility companies and
determining tariffs for generation, transmission and distribution of electric power.

 Generation Companies
The generation segment is comprised of WAPDA (hydel power), four public sector generation companies (GENCOs),
PAEC operated Nuclear plants and several Independent Power Producers (IPPs). These IPPs operate under the
jurisdiction of Private Power and Infrastructure Board (PPIB) and Alternative Energy Development Board (AEDB) (in
case of renewable power plants).

 NTDC
National Transmission & Despatch Company (NTDC) was incorporated on November 6, 1998 and commenced
commercial operation on December 24, 1998. It was organised to take over all the properties, rights and assets
obligations and liabilities of 220 kV and 500 kV Grid Stations and Transmission Lines/Network owned by Water and
Power Development Authority (WAPDA). NTDC operates and maintains sixteen (16) 500 kV and forty-two (42)220
kV Grid Stations, 5,618 km of 500 kV transmission line and 10,478 km of 220 kV transmission line in Pakistan.

Page 29 of 133
 Sukuk Prospectus | K-Electric Limited

 CPPA-G
Central Power Purchase Agency (Guarantee) Limited (CPPA-G) was incorporated under the Companies Ordinance
in 1984, under which Federal Government transferred the role of power purchase from NTDC to CPPA-G. Since June
2015, CPPA-G has assumed the business of NTDC pertaining to the market operations and presently, is functioning
as a Market Operator in accordance with Rule-5 of the NEPRA Market Operator (Registration, Standards and
Procedure) Rules, 2015 (the “Market Rules”).

 State-Owned Distribution Companies

Currently, there are 10 state-owned Distribution companies (XWDISCOs) having exclusive distribution rights within
their service territories as per the distribution license granted by NEPRA.

B. Sector-wise Electricity Consumption in Pakistan

0.9%
5.2%

9.6%

25.9% 50.4%

8.0%

Domestic Commercial Industrial Agriculture Public Lighting & Others Bulk Supply

C. Sector Challenges

During the recent times, the power sector has seen major developments as the Government has given high priority to
this sector. However, despite capacity additions of over 10,000 MW in the last five (5) years, overall energy planning
remained fragmented across the energy value chain. Accordingly, even with significant additions in the generation
segment, power supply has remained unreliable, primarily due to:
 Lack of investments resulting in T&D capacity constraints, as a result of which, despite availability of surplus
capacity, the same cannot be served to the end consumers
 High system losses and no improvement in recovery levels, adversely impacting the financial viability and
sustainability of the distribution companies

As detailed above, with capacity additions on the generation side, the sector has moved into a surplus scenario, and the
power surplus trajectory is expected to continue further. An overview of the historical and projected demand-supply gap
is provided below:

Page 30 of 133
 Sukuk Prospectus | K-Electric Limited

Power Sector - Demand-Supply Gap

(MW)

2018 2019 2020 2021 2022 2023 2024 2025

Generation Capability Peak Demand

Source: NEPRA State of Industry Report, 2017 & 2018

Circular Debt: It is also one of the prominent challenges that are deterring our market performance. The power sector of
Pakistan suffers from circular debt due to its inability to meet targets for loss reduction owing to theft, inefficiencies and
recovery losses. This hinders the ability of power sector to discharge its obligations towards fuel suppliers and banks;
thereby, creating a financial gap which in turn affects the energy and financial sectors.

Given these challenges, while the sector continues to remain among the top priorities of the government, there is an
inherent need for targeted reforms aimed at attracting private sector investment in the T&D segment. In this regard, KE’s
turnaround validates the case for privatisation of state-owned entities, which would help lower their dependence upon
the government, thus making them self-sufficient, both operationally as well as financially.

SHARE CAPITAL AND RELATED MATTERS

3.11.1 SHARE CAPITAL

Share Capital
Number of Shares Fully Paid-up Ordinary Shares of PKR 3.5 each Rupees (‘000)
14,493,490,368 Issued for Cash 50,727,215
12,988,827,989 Issued for Consideration other than Cash 45,460,898
132,875,889 Issued as Bonus Shares 465,066
Less: Transaction Cost on Issuance of Shares (391,628)
27,615,194,246 96,261,551

Page 31 of 133
 Sukuk Prospectus | K-Electric Limited

3.11.2 PATTERN OF SHAREHOLDING

Major shareholders and sponsors of Issuer are KES Power Limited (“KESP”) and Government of Pakistan (“GoP”). As of
December 31, 2019, the shareholding pattern of the Company is as follows:

Shareholding Pattern
Number of Shares
Shareholder Shareholding
Held
KES Power Limited (KESP) 18,335,542,678 66.4%
Government of Pakistan (GOP) 6,726,912,278 24.4%
Mutual Funds 468,099,463 1.7%
Directors, CEO & their Spouse and Minor Children 500 0.0%
Executives 30,100 0.0%
Public Sector Companies and Corporations 55,727,112 0.2%
Banks, Development Finance Institutions, Non-Banking Finance
Companies, Insurance Companies, Takaful, Modarabas and 687,129,517 2.5%
Pension Funds
General Public – Local 1,243,965,188 4.5%
Foreign Shareholders 73,168,759 0.3%
Other Shareholders 24,618,651 0.1%
Total 27,615,194,246 100.0%

3.11.3 SHARES ISSUED IN PRECEDING YEARS

Details of shares issued in the history of the Company are as follows:

Shares Issued in Preceding Years

Number of Shares Issued
Par
Sr. No Description of Shares Issued Redeemable Value Date of Allotment
Preference Ordinary Shares (PKR)
Shares
Opening Balance as of January
1 - 482,759,294 10.0
1, 2000
Debt Equity Swap, Issue of
2 - 1,783,456,000 10.0 17 Feb, 2002
Ordinary Shares to GoP
Debt Equity Swap, Issue of
3 - 6,534,077,300 10.0 09 July, 2002
Ordinary Shares to GoP
Paid-up Capital - 8,800,292,594
Reduction of Par Value of
Ordinary Shares from Rs.10 to
4 Rs.3.5 (approved in EGM on 27 - - 6.5
May 2002 - date of court order:
11 Oct 2002)
Paid-up Capital after Reduction
- 8,800,292,594 3.5
of Par Value
Debt Equity Swap, Issue of
5 - 4,366,782,389 3.5 31 Jan, 2005
Ordinary Shares to GoP
Redeemable Preference Shares
6 1,714,285,713 - 3.5
(RPS)

Page 32 of 133
 Sukuk Prospectus | K-Electric Limited

Shares Issued in Preceding Years

Number of Shares Issued
Par
Sr. No Description of Shares Issued Redeemable Value Date of Allotment
Preference Ordinary Shares (PKR)
Shares
First Allotment 849,613,330 - 3.5 6 Oct, 2006
Second Allotment 332,417,064 - 3.5 12 Apr, 2007
Third Allotment 109,914,597 - 3.5 27 Apr, 2007
Fourth Allotment 422,340,722 - 3.5 6 Oct, 2007
7 First Right Issue (31%) - 4,081,714,286 3.5 24 Oct, 2009
8 Second Right Issue (14.5%) - 2,501,074,444 3.5 15 Mar, 2010
9 Third Right Issue (7.8%) - 1,540,489,370 3.5 1 Jan, 2011
10 Forth Right Issue (7.25%) - 1,543,550,599 3.5 3 Jan, 2012
11 Fifth Right Issue (9.20%) - 2,100,719,138 3.5 25 June, 2012
Conversion of RPS into Ordinary
12 (1,714,285,713) 1,285,714,284 3.5 24 Dec, 2012
(@ 3:4 ratio)
13 Allotment to IFC & ADB - 1,394,857,142 3.5 20 Dec, 2012
Present Paid-up Capital - 27,615,194,246 3.5

3.11.4 BONUS SHARES, RIGHT SHARES AND NON-CASH SHARES ISSUED DURING THE PRECEDING YEARS

Details of shares issued in the preceding years is given in part 3.11.3.

3.11.5 UNDERTAKING FOR UTILISATION OF PROCEEDS

Chief Executive Officer of K-Electric Limited has undertaken that IPO proceeds shall be utilised as per the purpose
disclosed in this prospectus.

Page 33 of 133
 Sukuk Prospectus | K-Electric Limited

PART IV

4 PRINCIPAL PURPOSE OF THE ISSUE AND FUNDING ARRANGEMENTS

PRINCIPAL PURPOSE OF THE ISSUE AND UTILISATION OF PROCEEDS

The primary utilisation purpose of the Sukuk proceeds is to fund routine operational and capital expenses requirements
of the Company and to repay the PKR 20 Bn bridge facility obtained from HBL for the same purpose. Detailed break-up is
as under:

1. Approximately PKR 10.7 Bn incremental working capital requirement resulting from the arrangement, whereby 60
MMCFD of indigenous gas was swapped with RLNG as an alternate fuel; and substantial increase in the price of
indigenous gas for the balance quantity, from PKR 400/MMBTU to PKR 824/MMBTU.

2. Approximately PKR 600 Mn additional working capital requirement resulting from the addition of new IPPs in the
generation pool of KE.

3. Approximately PKR 13.7 Bn to fund ongoing capital expenditure (non-project) in Generation, Transmission and
Distribution segments of the Company. These include recurring maintenance, protection, overhauling and
distribution loss reduction & growth-related initiatives such as Earthing & ABC.

In case KE fails to raise PKR 1,292 million through the IPO during the time stipulated for Public Subscription, the Sukuk
Issue shall be considered successful at the amount raised through IPO plus the Pre-IPO portion of PKR 23,708 million
which is already raised by the Company. The Sukuk Issue and IPO shall be considered successful on the premise that,
since the proceeds are to be used to fund routine operational and capital expenses requirements, the Company has
alternative working capital lines available from the banks to fund the gap arising from reduced IPO portion subscription.

Note: Please note that PKR 23.7 Bn raised through Pre-IPO investors has been primarily utilised to repay the bridge facility
of PKR 20 Bn, and the remaining amount is being used for the above-mentioned purpose. Further, the proceeds from IPO
portion will also be utilised for the same purpose.

Page 34 of 133
 Sukuk Prospectus | K-Electric Limited

PART V

5 THE ISSUE

STRUCTURE OF THE ISSUE

The Issue Amount for the proposed Sukuk is up to PKR 25,000 million (inclusive of the Green Shoe option of PKR 5,000
million) in the form of Rated, Secured and Listed Sukuk being the instrument of Redeemable Capital under Section 66 of
the Companies Act, 2017 for the tenor of seven (7) years.

Out of the total Issue Size:

 Allocation of capital to the Pre-IPO investors is PKR 23,708 Mn.
 Allocation of capital available to General Public (excluding the Pre-IPO) is up to PKR 1,292 Mn.

The Sukuk Issue has a floating rental at a rate of 1.7% over 3-month KIBOR, subject to a floor of 2% and a cap of 25% to
comply with Shariah principles. The rental will be revised every three months, based on the 3-month KIBOR prevailing
on the Base Rate setting date in accordance with the terms of the Sukuk transaction documents. Rental will be payable
quarterly in arrears calculated on 365 days a year basis (366 days in case of leap year) against the use of leased assets
under Sukuk. The first such rental payment will fall due three months from the Sukuk Issue date and subsequently every
three months thereafter.

Before the Issue Date, in relation to the Pre-IPO placement, the Base Rate has been set on the first disbursement date
and subsequently on each quarterly rental date till the Issue Date. For the subscription under the IPO, the Base Rate will
be set one day prior to commencement of subscription period. After the Issue Date, the Base rate will be set one day
prior to each installment date as mentioned in the subsequent para. Profit is payable to each Sukuk Certificate holder
from the date when such Sukuk Certificate Holders have applied, subscribed and made payment for subscription of
relevant Sukuk Certificate. To bring the IPO and Pre-IPO investors at par before the credit of Sukuk certificates, profit for
the interim period, i.e. from the disbursement of the funds by the Pre-IPO investors until the day before the Issue Date
shall be paid separately to the pre-IPO investors.

PRE-IPO INVESTORS

PKR 23,708 Mn has been raised from Pre-IPO investors. List of Pre-IPO investors with their participation amount is as
follows:

Pre-IPO Investors
S. % Allocation of the
Investors PKR
No. Total Issue
1 National Bank of Pakistan 5,000,000,000 20.0%
2 Habib Bank Limited 5,000,000,000 20.0%
3 Government of Sindh – Provincial Pension Fund 1,875,000,000 7.5%
4 Sindh General Provident Investment Fund 1,875,000,000 7.5%
5 Pak Kuwait Investment Co. (Pvt.) Ltd. 1,500,000,000 6.0%
6 Jubilee Life Insurance Company Limited 1,250,000,000 5.0%
7 Askari Bank Ltd. 1,000,000,000 4.0%
8 Pak-Qatar Family Takaful Ltd 700,000,000 2.8%
9 Allied Bank Limited 600,000,000 2.4%

Page 35 of 133
Sukuk Prospectus | K-Electric Limited

Pre-IPO Investors
S. % Allocation of the
Investors PKR
No. Total Issue
10 Al Baraka Bank (Pakistan) Limited 500,000,000 2.0%
11 Pak Oman Investment Company Limited 500,000,000 2.0%
12 The Bank of Khyber 500,000,000 2.0%
13 NBP Riba Free Savings Fund 500,000,000 2.0%
14 NBP Financial Sector Income Fund 492,300,000 2.0%
15 CDC Trustee Meezan Islamic Income Fund 400,000,000 1.6%
16 NBP Income Opportunity Fund 400,000,000 1.6%
17 Dawood Family Takaful Limited 300,000,000 1.2%
18 Bestway Foundation 250,000,000 1.0%
19 CDC Trustee Meezan Balanced Fund 200,000,000 0.8%
20 Karachi Electric Provident Fund 172,000,000 0.7%
21 Pakistan Telecommunication Employees Trust 150,000,000 0.6%
22 Engro Corporation Limited Provident Fund 84,000,000 0.3%
23 K-Electric Employees Gratuity Fund 78,000,000 0.3%
24 Pakistan Mobile Communications Limited – Provident Fund 50,000,000 0.2%
25 Al Baraka Bank Pakistan Limited – Staff Provident Fund 50,000,000 0.2%
26 Service Provident Fund Trust 50,000,000 0.2%
27 ICI Pakistan Limited Management Staff Gratuity Fund 48,000,000 0.2%
28 CDC Trustee Meezan Tahaffuz Pension Fund-Debt Sub Fund 40,000,000 0.2%
29 Engro Corporation Limited Provident Fund 31,000,000 0.1%
30 Telenor Pakistan (Pvt) Limited Employees Gratuity Fund 21,000,000 0.1%
31 Pak Arab Refinery Ltd Supervisory Staff Gratuity Fund 14,000,000 0.1%
32 Gul Ahmed Textile Mills Ltd Employees Provident Fund Trust 14,000,000 0.1%
33 NAFA Islamic Pension Fund Debt Sub Fund Account 10,000,000 0.0%
34 THAL Ltd Employees Provident Fund 8,000,000 0.0%
35 Service Provident Fund Trust 8,000,000 0.0%
36 Telenor Pakistan (Pvt) Limited Employees Provident Fund 7,000,000 0.0%
37 Hilal Group Employees Provident Fund 5,000,000 0.0%
38 Byco Petroleum Ltd Employees Provident Fund 5,000,000 0.0%
39 Telenor Pakistan (Pvt) Limited Employees Provident Fund 5,000,000 0.0%
40 Engro Fertilizer Limited NMPT Employees Gratuity Fund 5,000,000 0.0%
41 The Crescent Textile Mills Employees Provident Fund Trust 4,000,000 0.0%
42 Descon Power Solutions (Pvt) Limited Staff Provident Fund Trust 3,000,000 0.0%
43 Agri Auto Industries Limited Employees Provident Fund 2,000,000 0.0%
44 THAL Ltd Employees Retirement Benefit Fund 1,000,000 0.0%
45 Descon Oxychem Limited Employees Provident Fund Trust 500,000 0.0%
46 Inspectest Private Limited Employees Provident Fund Trust 200,000 0.0%
Pre-IPO Total 23,708,000,000 94.8%

Page 36 of 133
 Sukuk Prospectus | K-Electric Limited

KEY TERMS OF THE ISSUE

K-Electric Limited is offering Rated, Secured and Listed Diminishing Musharakah Sukuk Certificates of up to PKR 25,000
million (inclusive of Green Shoe option of PKR 5,000 million) in denominations of PKR 5,000/- or multiples thereof to the
investors subject to the minimum investment amount of PKR 5,000/. The Sukuk Certificates of PKR 23,708 million have
been subscribed by the Pre-IPO investors and Green Shoe option has already been exercised partially. Remaining PKR
1,292 million shall be offered to the general public through the complete prospectus (IPO Portion). Key features of the
Issue are as follows:

Issuer K - Electric Limited

Issue Type Rated, Secured & Listed Sukuk Offering by way of Diminishing Musharakah

Issue Size/Amount Up to PKR 25,000 million (Inclusive of Green Shoe option of up to PKR 5,000 million)
Allocation of capital to the Pre-IPO investors is PKR 23,708 Mn and Green Shoe option
Pre-IPO Placement
has already been exercised partially.
Initial Public Offering (IPO Allocation of capital available to the General Public (excluding the Pre-IPO) up to PKR
Portion) 1,292 Mn
The primary utilisation purpose of the Sukuk proceeds is to fund routine operational
and capital expenses requirements of the Company. Bridge facility of PKR 20,000 Mn
Purpose
was availed earlier from HBL for the same purpose and has already been settled
through pre-IPO proceeds of the Sukuk Issue.
The Sukuk will be offered in denominations of PKR 5,000/- or multiples thereof to the
Minimum Investment
investors subject to a minimum Investment amount of PKR 5,000/-
The Issue date means the last subscription date or the date of closure of subscription
Issue Date
period under the IPO, whichever is earlier.
Tenor Seven (7) years (inclusive of a grace period) from the Issue Date
Grace Period Two (2) years from the Issue Date
3-months KIBOR plus 170 bps, subject to a floor of 2% and a cap of 25% to comply
Profit Rate
with Shariah principles
Denomination of Sukuk PKR 5,000/-
Sukuk will be redeemed in twenty (20) equal payments on quarterly basis. The first
such redemption will be due at the end of the twenty seventh (27th) month from the
Issue Date:
Year Sukuk Redemption (% of the Issue Size)
1 -
Sukuk Redemption 2 -
3 20%
4 20%
5 20%
6 20%
7 20%
Rental Payment Frequency Quarterly basis
Issue Price At par (i.e. each Sukuk having a face value of PKR 5,000)
Prepayment/early Purchase shall be allowed after expiry of the Grace Period. In case
Prepayment
of Prepayment/early Purchase, the unit price may be revised by adding 1% of the face

Page 37 of 133
Sukuk Prospectus | K-Electric Limited

value of the amount prepaid in addition to the early Purchase price of face value of
such units and rental amount due till that date.
The Sukuk facility has been secured by:
a. A first charge over the Hypothecated Properties, in favour of the Sukuk Trustee
for the benefit of Sukuk holders. The list contains a total of 50 grid stations that
KE has identified having total valuation of PKR 33.4 Bn.
b. A first hypothecation charge over the Hypothecated Collections, Accounts and
Deposits in favour of the Sukuk Trustee for the benefit of Sukuk holders.
c. A first charge by way of letter of lien over the Hypothecated Accounts and
Deposits in favour of the Sukuk Trustee for the benefit of Sukuk holders.
d. A first charge by way of letter of lien over the Payment Account and deposits in
Security
favour of the Sukuk Trustee for the benefit of Sukuk holders.

Further, during the tenor of Sukuk the Security created over the Hypothecated
Properties may be released/vacated from time to time to the extent of amounts paid
to Sukuk holders towards rental payments and buyout prices, provided value of the
remaining Hypothecated Properties subject to the Security will always be more than
the outstanding amounts under the Sukuk (i.e. outstanding rental payments and
buyout prices) plus 25% margin, compliance with financial covenants and non-
occurrence of dissolution event or potential dissolution event.
All collections of HBL banking pool is routed and retained as per the retention
requirements through a specific Master Collection Account (“MCA”) from KE’s
existing collection accounts maintained with HBL.
The MCA and existing collection accounts are under hypothecation charge and lien of
the Trustee along with right of setoff.

The mechanism will be as follows:

i. In normal course of business, funds equivalent to 1/3rd of quarterly
instalment requirement will be retained in MCA on monthly basis and any
Collection Mechanism excess funds will be released to KE as per their instructions or credited into
KE checking account, subject to terms of legal documents including
collection agreement;
ii. One (1) day prior to the quarterly instalment date, the retained funds will be
transferred into the Payment Account for onward payments to the Sukuk
holders; and
iii. In case of an event of default as defined in the legal documentation, Trustee
may exercise its right of lien and funds will not be released to KE without
Trustee’s permission. In this case Trustee may use the collection proceeds to
adjust the Sukuk holders’ due amount.

Transaction Legal Counsel Haidermota and Co.

Legal Counsel of the
Mohsin Tayebaly & Co.
Company
Listing Sukuk Issue will be listed on the Pakistan Stock Exchange Limited
Long Term Rating: AA (Double A)
Entity Rating Short Term Rating: A1+ (A one plus)
Rating by VIS Credit Rating Company Limited

Page 38 of 133
 Sukuk Prospectus | K-Electric Limited

Instrument Rating AA+ (Double A Plus) by VIS Credit Rating Company Limited
Registered Office of the KE House, 39-B, Sunset Boulevard, Phase-II, Defence Housing Authority, Karachi
Issuer
Shariah Board to the Issue 1. Dr. Muhammad Zubair Usmani
2. Mufti Irshad Ahmad Aijaz
3. Dr. Ejaz Ahmed Samadani
4. Dr. Noor Ahmed Shahtaz
5. Mufti Muhammad Yahya Asim
Shariah Structuring Advisor Habib Bank Limited – Islamic Banking
Structuring Agents Habib Bank Limited (HBL) and National Bank of Pakistan (NBP)
Sukuk Trustee Pak Brunei Investment Company Limited
Consultant to the Issue Arif Habib Limited
Market Maker to the Issue Arif Habib Limited
The Sukuk will be inducted into the CDC; transfer shall be made in accordance with
Transferability
the Central Depository Act, 1997 and CDC Regulations.
The Sukuk shall be subject to the laws of Islamic Republic of Pakistan and non-
Governing Law
exclusive jurisdiction of Pakistan Courts.

Going forward, KE intends to reorganise its existing security arrangement and create one or more common pools of
security over specific present and future assets and properties of the Issuer (including the properties which will be part
of the Security) in favour of a Common Security Trustee (CST), who will hold such Security interests for the benefit of one
or more pools of long-term financiers (including Sukuk Trustee). It may be noted that there will be no adverse change in
the Sukuk structure (including the Sukuk Trustee) and Security and/or the secured properties under the Sukuk Transaction
Documents, which may be against the interest of the proposed Sukuk holders in any way. To give effect to such
reorganisation of security arrangement, the existing Security created in favor of the Sukuk Trustee will be vacated and
concurrently common security pool(s) will be created in favor of the CST.

The Issuer will notify Sukuk Trustee at the time of initiation of the above reorganisation process and the Sukuk Trustee
will be authorised to take necessary actions and execute (without requiring any consent/approval of Sukuk holders) any:

 documents related to common security pool(s) arrangement and CST relationship;

 amendments/supplementals to relevant Sukuk Transaction Documents and no objection certificates and any
instrument necessary for common security pool(s) arrangement and CST; and

 intercreditor agreement/security sharing agreement or other document for enforcement and sharing of common
security pools.

Page 39 of 133
 Sukuk Prospectus | K-Electric Limited

OUTSTANDING DEBT SECURITIES ISSUED IN PRECEDING YEARS

Details of Company’s debt securities outstanding as of March 31, 2019 issued in preceding years is appended below:

Description of Issue Listed Sukuk-4 (Sukuk-ul-Musharika)

Date of Issue June 17, 2015
Issue Size PKR 22,000 million
Amount Redeemed PKR 11,000 million
Amount Outstanding PKR 11,000 million
Amount of Profit Paid PKR 7,185,955,233
Tenor Seven years
AA+ (Double A plus) by VIS Credit rating agency and Islamic International Rating
Credit Rating
Agency, Bahrain (IIRA)

Description of Issue Islamic Commercial Paper (ICP-5)

Date of Issue February 14, 2020
Issue Size PKR 4,295 million
Discounted Face Value PKR 4,003 million
Amount Redeemed Instrument is redeemable at maturity date in bullet payment.
Amount of Profit Paid Profit will be paid at redemption.
Tenor Six (6) months
Credit Rating A1+ (A One plus) by VIS Credit Rating Company Limited

Description of Issue Islamic Commercial Paper (ICP-6)

Date of Issue February 26, 2020
Issue Size PKR 4,295 million
Discounted face value PKR 4,003 million
Amount Redeemed Instrument is redeemable at maturity date in bullet payment.
Amount of Profit Paid Profit will be paid at redemption.
Tenor Six (6) months
Credit Rating A1+ (A One plus) by Pakistan Credit Rating Agency (PACRA)

Description of Issue Islamic Commercial Paper (ICP-7)

Date of Issue March 10, 2020
Issue Size PKR 5,400 million
Discounted face value PKR 5,053 million
Amount Redeemed Instrument is redeemable at maturity date in bullet payment
Amount of Profit Paid Profit will be paid at redemption
Tenor Six Months
Credit Rating A1+ (A One plus) by Pakistan Credit Rating Agency (PACRA)

Page 40 of 133
 Sukuk Prospectus | K-Electric Limited

REDEMPTION SCHEDULE

The tentative Redemption schedule for Sukuk of an aggregate face value of PKR 5,000/- based on 3M KIBOR (assumed
as 8.17% as at April 30, 2020) plus 170 bps per annum for Sukuk, is set out in the table below (only for calculation
purpose):
Redemption Schedule
Musharakah
Musharakah Investment
Months Investment Indicative Profit Total Payment
Outstanding
Redemption
0 5,000
3 123.4 123.4 5,000
6 123.4 123.4 5,000
9 123.4 123.4 5,000
12 123.4 123.4 5,000
15 123.4 123.4 5,000
18 123.4 123.4 5,000
21 123.4 123.4 5,000
24 123.4 123.4 5,000
27 250 123.4 373.4 4,750
30 250 117.2 367.2 4,500
33 250 111.0 361.0 4,250
36 250 104.9 354.9 4,000
39 250 98.7 348.7 3,750
42 250 92.5 342.5 3,500
45 250 86.4 336.4 3,250
48 250 80.2 330.2 3,000
51 250 74.0 324.0 2,750
54 250 67.9 317.9 2,500
57 250 61.7 311.7 2,250
60 250 55.5 305.5 2,000
63 250 49.4 299.4 1,750
66 250 43.2 293.2 1,500
69 250 37.0 287.0 1,250
72 250 30.8 280.8 1,000
75 250 24.7 274.7 750
78 250 18.5 268.5 500
81 250 12.3 262.3 250
84 250 6.2 256.2 0
5,000 2,282.4 7,282.4
Notes:
- KIBOR has been assumed as 8.17% as of April 30, 2020.
- The above schedule does not include Zakat and Withholding Tax and will be applied as per the relevant law, if
the investors are not exempted.

Page 41 of 133
 Sukuk Prospectus | K-Electric Limited

REDEMPTION RESERVE

1. In normal course of business, funds equivalent to 1/3rd of quarterly instalment requirement will be retained in
MCA on a monthly basis and any excess funds will be released to KE as per their instructions.
2. One (1) day prior to the quarterly instalment date, the retained funds will be transferred into the payment
account for onward payments to the Sukuk holders.
3. No other reserve will be created.

INTEREST OF PRE-IPO INVESTORS

Except as provided below, the Pre-IPO Investors only have interest in this Sukuk as Sukuk Holders:
1. Habib Bank Limited and National Bank Limited are Structuring Agents for this Sukuk Issue and have also
participated in the Pre-IPO portion.
2. Askari bank Limited is acting as Banker to the Issue for this Sukuk Issue and has also participated in the Pre-IPO
portion.

CALL OPTION

KE may call the Sukuk, after the expiry of the Grace Period, subject to not less than 30 days’ prior notice being given to
the investors through the Trustee. The call option once announced will be irrevocable. No put option shall be available
to the investors.

MARKET MAKING

Arif Habib Limited will act as Market Maker for the Sukuk. The Market Maker will at all times hold at least 1.00% of the
IPO Portion of Sukuks only. The Market Maker shall mandatorily make available two-way quotes on daily basis with a
maximum spread of 1.5% till complete redemption of the Sukuks.

The Market Maker shall ensure that net buying or net selling does not exceed more than 0.50% of the Sukuk Certificates
of the IPO Portion during a business day and its inventory shall not exceed Sukuk Certificates equivalent to PKR 25,000,000
(Pak Rupees Twenty Five Million) in value.

For abundant clarity, if during a given Business Day, the net amount of buying or selling by market maker of Sukuk does
not exceed 0.50% of the IPO Portion, the Market Maker will continue to give two-way quotes. However, in case during a
Business Day the net buying by Market Maker (in terms of amount in PKR) exceeds 0.50% of IPO Portion, the Market
Maker will only give one-way quote for selling the Sukuk till such time the net buying amount falls below 0.50% of the
IPO Portion (in terms of amount in PKR) and vice versa. Further, once the inventory held by Market Maker reaches PKR
25,000,000 (Pak Rupees Twenty Five Million), the Market Maker will only give one-way quote for selling the Sukuk till
such time the inventory held by the Market Maker does not fall below PKR 25,000,000 (Pak Rupees Twenty Five Million).

The Market Maker will be obligated to replenish its orders/quotes immediately following full execution, withdrawal,
expiration or any change in the price of either bid or offer. The Market Making Orders/Quotes are to be maintained on
both sides during Market Making period as per Market Making agreement which shall be for the tenor of the Sukuk.

The Designated Market Maker shall be allowed to execute Blank Sale in Assigned Security subject to the condition that
sufficient Pre-Existing Interest exists in the account(s) of Designated Market Maker at the end of each Blank Sale day to
validate that the Designated Market Maker can deliver the quantity sold blank during the trading day, failing which the
NCCPL shall have the right to impose additional margin on such Market Maker. Market Marker shall make available copy
of the Prospectus to the investors at all times.

Page 42 of 133
 Sukuk Prospectus | K-Electric Limited

DEDUCTION OF ZAKAT

Zakat is deductible in case of the Sukuk being held by Muslim citizens of Pakistan, except where a statutory declaration
of exemption is filed, and in case of certain non-corporate entities such as Trust Funds, etc., (subject to being qualified
for non-deduction of Zakat under the Zakat and Ushr Ordinance, 1980). Zakat is withheld at 2.5% of the redeemed
principal amount.

INCOME TAX

Any income derived from investment in Sukuk shall be subject to income tax as per the Income Tax Ordinance, 2001.
Withholding tax, as specified in Part III Division IB of the First Schedule of the said ordinance shall be applicable.

DEDUCTION OF WITHHOLDING TAX

Profit paid to Sukuk Holders will be subject to withholding tax under section 150A of the Income Tax Ordinance, 2001
specified in Part III Division IB of the First Schedule of the said Ordinance or any time to time amendments therein. Rates
of tax specified under Division IB are as follows:

Withholding Tax
Tax Rate for Persons Tax Rate for Persons not
Category appearing in Active Tax appearing in Active Tax
payer List payer List
Company 25% 50%
Individual or Association of Persons (if return on
12.50% 25%
Investment is more than one million)
Individual or Association of Persons (if return on
10% 20%
Investment is less than one million)

CAPITAL GAIN

Any capital gain derived from the sale of the Sukuk shall be subject to capital gain tax as per section 37A of the Income
Tax Ordinance, 2001. Applicable capital gain tax rates are as follows:
1. For persons appearing in Active Tax payer List: 15.0%
2. For persons not appearing in Active Tax payer List: 30.0%

Page 43 of 133
 Sukuk Prospectus | K-Electric Limited

DISCLOSURE OF DEFERRED TAXATION

Deferred tax is recognised using the balance sheet method, providing for all taxable temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.
Deferred tax is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities,
using the tax rates enacted or substantively enacted at the reporting date.

The Company recognises deferred tax asset to the extent that it is probable that taxable profits for the foreseeable future
will be available against which the temporary differences can be utilised. Deferred tax assets are reviewed at each
reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

Balance as Impact of Change

Recognized in Recognised Balance as at
Deferred Tax Disclosure at June 30, in Accounting
Profit or Loss in OCI June 30, 2019
2018 Policy
PKR in Millions
Deferred Tax Liability on:
Accelerated Tax
(27,209) - (2,740) - (29,950)
Depreciation
Surplus on Revaluation of
Property, Plant and (18,675) - 1,677 (9,911) (26,909)
Equipment
(45,884) - (1,064) (9,911) (56,859)
Deferred Tax Asset on:
Available Tax Losses 25,080 (7,464) 10,699 - 28,316
Provision for Gratuity and
1,301 - 85 98 1,484
Compensated Absences
Others 19,503 7,464 92 - 27,059
45,884 - 10,876 98 56,859
Total - - 9,813 (9,813) -

As at June 30, 2019, the Company has aggregated deferred tax debits amounting to Rs. 114,670 million (2018: Rs. 98,277
million) out of which deferred tax asset amounting to Rs. 56,859 million (2018: Rs. 45,884 million) has been recognised
and remaining balance of Rs. 57,811 million (2018: Rs. 52,393 million) remains unrecognised. As at year end, the
Company's carried forward tax losses amounted to Rs. 296,993 million (2018: Rs. 267,145 million), out of which business
losses amounting Rs.107,553 million (2018: Rs. 98,006 million) have expiry period ranging between 2020 and 2025.
Disclosure on deferred taxation of the Company is provided in note 24 of the audited financial statement of FY19.

MODE OF PAYMENT

The payment of profit shall be credited in Sukuk Holders’ bank accounts electronically on quarterly basis. The applicants,
therefore, must provide their International Bank Account Number (IBAN) in the Sukuk Subscription Form.

Page 44 of 133
 Sukuk Prospectus | K-Electric Limited

STRUCTURE OF THE INSTRUMENT

1. The proposed Shariah Structure is Sale and Lease back under Diminishing Musharakah ‘DM’. For this Structure, the
certain identified Transmission Assets worth PKR 33.4 billion will be used.

2. KE has sold the beneficial ownership of the Assets worth PKR 25 billion via Asset Purchase Agreement “APA” (Offer
& Acceptance) after obtaining permission of sale from the existing charge holders (where needed) and the ownership
of the Assets has transferred to Sukuk holder (‘the Investors’) through Investment Agent whereas legal title of the
Assets will remain with KE.

3. The funds generated through Pre-IPO & IPO will be utilised by the Investment Agent, on behalf of the investors, to
make payment to KE against purchase of Musharakah Assets.

4. The Investment Agent has entered into Musharakah Agreement with KE by executing Musharakah Agreement under
which the investors (through Investment Agent) and KE will jointly own the Musharakah Assets in 74.81:25.19 ratio
respectively.

5. KE has been appointed as the manager and agent of other co-owners of the assets and will be referred as “Managing
Co-Owner”. The Managing Co-Owner will be responsible for structural maintenance, Takaful/Insurance security and
payment of ownership related expenses and taxes in respect of Musharakah Assets. The cost actually incurred on
account of aforementioned services by Managing Co-Owner in respect of Investment Agent’s share in Musharakah
Assets (to be called as Asset Service Charge) Amount for the transaction tenor will be reimbursable to Managing Co-
Owner by Investment Agent subject to submission of documentary evidences for all such expenses incurred.

Managing Co-Owner will arrange insurance of the Musharakah Assets under Islamic Concept of Takaful or otherwise
will provide written justification for procuring conventional insurance. In case of total loss/destruction of the
Musharakah Assets, the Takaful claims received will be shared among Participants and KE in the ratio of their

Page 45 of 133
 Sukuk Prospectus | K-Electric Limited

Musharakah share. In case of conventional insurance, the claims received will be treated in the manner advised by
the Shariah Board at the time of receipt of such claims.

6. Investment Agent on behalf of investors has leased the Investors’ Share in Musharakah Assets to KE by executing a
Payment Agreement. KE agreed to take on lease the same in consideration for quarterly Rental Payments.
 Under Payment Agreement, the rent will be given to Investment Agent for onward distribution to the Investors.
KE will continue to make rental payments in accordance with terms of Payment Agreement and other Sukuk
documents starting from first subscription date under pre-IPO and IPO till maturity (including Grace Period);
 Rent to be calculated at the start of the first rental period on the basis of Rental Benchmark in terms set forth in
Payment Agreement;
 The subscription rental period under pre-IPO and IPO will commence on first subscription date thereunder and
end on the Issue Date. Thereafter, the first rental period will commence from the first calendar day after the
Issue Date and end on the First Rental Payment Date upon issuance of Rental Payment Notice in accordance of
terms set forth in the Payment Agreement, which will be accepted by KE for commencement of Rental Term;
and
 Following Issue Date, subsequent rental periods will be of three (3) months.

7. Profit Rate for rental calculation is subject to the floor and cap of 2% and 25%, respectively.

 Under pre-IPO, funds have been immediately made available to KE and this has made the participants eligible
for rental returns. This is because the proportional ownership of Sukuk assets against this payment of
contributions is transferred to the Pre-IPO subscribers through sale and purchase agreement already executed
as “Asset Purchase Agreement.”
 On deposit of the funds of IPO period in KE account by any subscriber, a sale of proportion of KE Sukuk assets
will occur between KE and the subscriber. Accordingly, the subscribers will become eligible to receive rentals
from the date of funds availability.

8. KE undertakes through Purchase Undertaking to purchase the investors’ share in Musharakah Assets. Since the
Musharakah Assets consist of multiple assets, therefore, KE will buy one by one on priority basis as per pre-agreed
buyout schedule, in equal buyout price quarterly starting from the end of 27th month from the Issue date. Sukuk will
be redeemed in twenty (20) equal payments post expiry of the Grace Period, on a quarterly basis.

9. The Investment Agent will hold the assets available for IPO subscriber as an agent and trustee of KE. In the IPO period
when the funds will be deposited in KE account by any subscriber, a sale of proportion of KE Sukuk assets will occur
between KE and the subscriber through Investment Agent. Accordingly, the subscribers will become eligible to
receive rentals from the date of funds availability.

10. Through an Undertaking, Investment Agent undertakes to Sell Investors’ share of Musharakah Assets to KE, whereby
KE may purchase Musharakah Units of Investors (through Investment Agent) upon Early Purchase Option/Voluntary
Prepayments (Early Redemption of Sukuk Units other than agreed buyout scheduled of Undertaking to Purchase).

At the end of Tenor, the complete ownership of Musharakah Assets will be transferred to KE upon purchase of agreed
share of ownership of investors.

SHARIAH BOARD

An independent “Shariah Advisory Board to the Issue” has been formed by the Company solely for the purpose of the
Issue which shall remain appointed throughout the tenor of the Issue. The Shariah Advisory Board to the Issue comprises
the following Shariah scholars:

Page 46 of 133
 Sukuk Prospectus | K-Electric Limited

1. Dr. Muhammad Zubair Usmani

2. Mufti Irshad Ahmad Aijaz
3. Dr. Ejaz Ahmed Samadani
4. Dr. Noor Ahmed Shahtaz
5. Mufti Muhammad Yahya Asim

PROFILES OF THE MEMBERS OF THE SHARIAH ADVISORY BOARD

1. DR. MUFTI MUHAMMAD ZUBAIR USMANI

Dr. Muhammad Zubair Usmani is Chairman HBL Shariah Board. He is a qualified and one of the most experienced Shariah
Scholars in the Islamic Banking Industry. He did his Shariah graduation (Fazil Dars-e-Nizami) & Takhassus Fil Fiqh (Mufti
i.e. Specialization in Islamic Fiqh & Fatawa) from Jamia Dar ul Uloom, Karachi. He has a Master’s degree in International
Relations and Doctorate (PhD) in Islamic Finance from University of Karachi. Dr. Zubair Usmani is the author of several
books that also include the topics of Accounting and Auditing for Islamic Financial system, comparative study between
Islam and Christianity and Ijarah (Islamic Leasing). His research papers have been published in various international
journals. He has delivered research-based lectures/presentations at different national and international seminars,
forums and conferences. Dr. Usmani served as Shariah Advisor to MCB Islamic Banking for 14 years and has been
associated with several financial institutions and has also served as a member of Shariah Board of State Bank of Pakistan.
Currently he is also associated with UBL Ameen Islamic banking and Habib Metro Al Sirat Islamic banking as Chairman
Shariah Board, MCB Arif Habib Savings as member Shariah Board, IGI Life Takaful as Shariah Advisor and several other
institutions.

2. MUFTI IRSHAD AHMAD AIJAZ

Mufti Irshad is a Shariah scholar in the field of Islamic Finance in Pakistan. He has hold positions in many financial,
educational and standard-setting institutions and bodies.

Currently he is working as: a Member of AAOIFI Shariah Standard Committee – Karachi; Chairman, Shariah Advisory
Committee, State Bank of Pakistan; Chairman, Shariah Supervisory Board Bankislami Pakistan Limited; Chairman, Shariah
Supervisory Board, Summit Bank Limited; Member, Shariah Committee, Standard Chartered Bank Pakistan Limited; and
Shariah Consultant, Shariah Review Bureau, Bahrain.

He is a visiting faculty member of NIBAF (National Institute of Banking and Finance), IBA Karachi, CIE (Center for Islamic
Economics) and Shaikh Zayed Islamic Center, Karachi. He regularly delivers lectures on Islamic Economics and Finance at
different forums and educational institutions both locally and abroad.

3. DR. MUFTI EJAZ AHMAD SAMADANI

Dr. Ejaz Ahmed Samadani is Member Shariah Board of HBL. He is an eminent Shariah scholar and has sound experience
of Islamic Banking & Finance. Dr. Samadani has a strong academic background in Islamic Studies and Islamic Economics.
He completed his religious qualifications such as Takhassus fi Iftaa & Shahdat ul Aalimiyah from Jamia Dar ul Uloom,
Karachi. Dr. Samadani has done his Master of Arts in Islamic Studies and LLB from Bahauddin Zakariya University and
Sindh Muslim Government College respectively. Further, he did his Doctorate (PhD) from Karachi University (on the topic
of Islamic Banking and Gharar (uncertainty)). He is the faculty member of Centre for Islamic Economics, Vice Chairman
of “Takhassus fi Al Dawa” in Jamia Darul Uloom, Chairman Shariah Board Maldives Islamic Bank and Member Shariah
Board of various banking and non-banking financial institutions in Pakistan. He has delivered several lectures at local and
international forums and has issued about more than three thousand fatwas on different Islamic topics especially in
Islamic finance and family laws. He has written many books on different Shariah matters and his several research papers
have been published in various well renowned newspapers and magazines.

Page 47 of 133
 Sukuk Prospectus | K-Electric Limited

4. PROF. DR. NOOR AHMED SHAHTAZ

Dr. Noor Ahmed is a research scholar, having vast experience in Research Methodology and has been a Director of Shaikh
Zayed Islamic Research Centre University of Karachi for 7 years. He is Member of Sharia Advisory Committee of the State
Bank of Pakistan, Member Sharia Advisory Board Summit Bank Ltd., Advisor of Federal Shariat Court Islamabad. He has
also served as a member of the Special Committee of National Commission on the Status of Women (NCSW) to review
the Hudood Ordinance.

Noor Ahmed is a former member of Council of Islamic Ideology Government of Pakistan, Member Board of Governors,
Pakistan Halal Authority, under the Ministry of Science and Technology Government of Pakistan, Islamabad. Member
Pakistan Madrassah Education Board, Federal Ministry of Religious Affairs, Government of Pakistan. Dr. Shahtaz has 20
years of experience in Darul Ifta and 27 years of teaching experience in the University of Karachi, including Islamic
Banking, and has lectured in different universities, banking institutions, etc.

At present, he is Shaikhul Hadeeth/Mufti at Darul Uloom Hanfia PECHS, Karachi. He has been Shariah Advisor for UBL
Ameen for six years, and for Al –Zamin Leasing Ltd. Dr. Shahtaz also holds degree of Dars-e-Nizami (al- Shahadah Al-
Alamia), equal to M.A (Islamic Studies) and M.A (Arabic). In addition, he had his Regular Bachelor, Masters and LLB from
University of Karachi. He has done Ph.D. on “Hudood, system of Islam” from Karachi University.

5. MUFTI MUHAMMAD YAHYA ASIM

Mufti Muhammad Yahya Asim is a resident Shariah Board Member of HBL Islamic Banking. He has been associated with
the field of Islamic studies for over 20 years; he holds a double master’s degree in International Relations and Arabic and
Islamic Studies respectively. Mr. Asim completed his specialisation in Islamic Fiqh and Fatwa (Islamic Jurisprudence) from
the well renowned Jamia Dar ul Uloom Karachi (1988-91). This was further reinforced by his specialisation as Alimiyyah
(Darse Nizami). He is also currently pursuing a PhD. He has delivered several lectures at local and international forums
and has issued more than thousand fatwas on different Islamic topics especially in Islamic Finance and Family Law. He is
a faculty member for Islamic Economics at Jamia Dar ul Uloom Karachi and National Institute of Banking and Finance
(NIBAF).

Page 48 of 133
Sukuk Prospectus | K-Electric Limited

SHARIAH PRONOUNCEMENT (FATWA)

Page 49 of 133
Sukuk Prospectus | K-Electric Limited

Page 50 of 133
Sukuk Prospectus | K-Electric Limited

Page 51 of 133
Sukuk Prospectus | K-Electric Limited

Page 52 of 133
 Sukuk Prospectus | K-Electric Limited

STATEMENT BY THE ISSUER

The General Manager

Pakistan Stock Exchange Limited
Stock Exchange Building,
Stock Exchange Road,
Karachi

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

For and on behalf of K-Electric Limited

-sd- -sd-
________________ ______________
Syed Moonis Abdullah Alvi Muhammad Aamir Ghaziani
Chief Executive Officer Chief Financial Officer

Page 53 of 133
 Sukuk Prospectus | K-Electric Limited

STATEMENT BY THE CONSULTANT TO THE ISSUE

The General Manager

Pakistan Stock Exchange Limited
Stock Exchange Building,
Stock Exchange Road,
Karachi

Being mandated as Consultant to the Issue to the Initial Public Offering of K-Electric Limited Sukuk, we hereby confirm
that all material information as required under the Companies Act, 2017, the Securities Act, 2015, the Public Offering
Regulations, 2017 and the Listing of Companies and Securities Regulations of the Pakistan Stock Exchange Limited has
been disclosed in the Prospectus and that whatever is stated in the Prospectus and the supporting documents is true and
correct to the best of our knowledge and belief, and that nothing has been concealed.

For and on behalf of Arif Habib Limited

-sd- -sd-
________________ ______________
Dabeer Hasan Ahmed Rajani
Senior Associate Director
Investment Banking Investment Banking

Page 54 of 133
 Sukuk Prospectus | K-Electric Limited

PART VI

6 RISK FACTORS

RISK FACTORS RELATED TO THE COMPANY

EXTERNAL RISK FACTORS

6.1.1 LIQUIDITY RISK – CIRCULAR DEBT SITUATION

KE’s receivables from various federal and provincial public sector entities have been accumulated, primarily due to
significant pending tariff differential claims.

This risk is being managed through adjustment mechanism of payables against power purchases from CPPA-G against
tariff differential claims (TDC), borrowing from commercial banks and arranging funds through capital market by issuance
of debt instruments. Regular meetings and follow-ups with concerned ministries of GoP / GoS are being done for the
expedient release of outstanding dues including TDC.

6.1.2 CURRENCY RISK

In KE’s context, currency risk arises mainly where foreign currency payables exist due to transactions entered into foreign
currencies. This could be in the form of trade payables or long term debt in foreign currencies. The Company executes
cross-currency swaps to hedge foreign currency risk arising out of all long-term foreign currency loans.

6.1.3 FUEL SUPPLY RISK

Company’s ability to generate power is very much dependent on the availability of fuel, including gas and furnace oil. For
gas supply, the Company does not have a signed Gas Supply Agreement with SSGC. However, continued gas supply is
ensured through active collaboration with GoP and SSGC and by posting bank guarantees for timely payment to SSGC for
gas supply.

KE’s long-term furnace oil supply agreement with PSO is valid till June 2022. Moreover, the Company is also investing in
alternate fuel-based projects to diversify its fuel mix.

6.1.4 REGULATORY RISK

Changes in regulatory regime/framework may have an impact on Company’s operations/profitability. KE engages in

regular interactions/discussions with NEPRA/GoP to implement regulatory framework in a manner that supports business
viability, continued investments across the value chain and improved consumer service. Information/data is provided to
NEPRA on timely basis for greater transparency and to avoid possible conflicts. Further, legal opinions are sought to
support KE’s stance on interpretation of regulatory matters, wherever required.

6.1.5 POWER SUPPLY RISK

Although KE is a vertically integrated utility, it purchases 800 MW from the National Grid which is an important
component of the overall energy mix of KE. While Power Purchase & Agency Agreement (PP&AA) for 150 MW is in place,
renewal of 650 MW PPA as also detailed in Section 3.1.1 is under discussion with CPPA-G/NTDC and the supply of 650

Page 55 of 133
 Sukuk Prospectus | K-Electric Limited

MW from the National Grid continues along with discussion with relevant stakeholders for additional supply from the
National Grid.

Further, given the surplus capacity in the National Grid and considering the circular debt issue, one of the factors of which
is the growing capacity payments, GoP and KE are in discussions for an increase in supply from the National Grid, and
accordingly, there is no risk of any reduction in supply to KE from the National Grid.

INTERNAL RISK FACTORS

6.1.6 LITIGATION RISK

Contingencies in relation to the key pending litigations are referred in note 30 of Annual Report for the year ended June
30, 2019 and Part 10 of this Prospectus. Based on the opinion of the Company’s legal counsels, the management believes
that the outcome of those cases will not result in any material adverse financial impact on the Company.

6.1.7 POWER SUPPLY RISK

To manage the growing power demand, KE is committed to its planned generation initiatives including 900 MW RLNG
based power generation project, the first phase of which is expected to commission in summer 2021 whereas entire
project is expected to be commissioned by end of 2021. While the Management is closely monitoring the progress and
is fully committed to the planned timelines, unforeseen circumstances such as COVID-19 might impact the project
timelines.

6.1.8 ENVIRONMENTAL RISK

Environmental contamination are inherent risks to the power generation facilities. The Company has implemented
effective measures to counter any possible environmental contamination issues that may arise due to plant operations,
and resultantly, the Company has not encountered any major environmental concerns. All of KE's five (5) power
generation installations are in compliance with local and international environmental acts and regulations and have
established Environment Management System (EMS) as per ISO 14001. Further, the Company is in compliance with
international Health, Safety and Environment (HSE) management standards. Moreover, with the up-gradation of old
plants and addition of new capacity based on latest technology, there is no significant environmental risk going forward
also.

RISK FACTORS RELATED TO THE ISSUE

EXTERNAL RISK FACTORS

6.2.1 INTEREST RATE RISK/REINVESTMENT RISK

Increase in market interest rates and underlying inflation, may adversely affect the comparative return and/or the real
(inflation adjusted) return for the investors. As a counter measure the Sukuk is a floating rate instrument that offers an
attractive margin over KIBOR. Since the returns for investors are linked to a benchmark, any increase in market interest
rates or inflation may be reflected accordingly in returns for the investors.

Page 56 of 133
 Sukuk Prospectus | K-Electric Limited

6.2.2 PRICE RISK

The Sukuk will be listed on PSX and the Sukuk holders will be able to sell or buy the Sukuk through the TREC Holders of
the Stock Exchange. Price of Sukuk will largely depend on the bond market behaviour and interest rate regime. Hence,
price may rise or fall and result in increase or decrease in the value of Sukuk. Investors of KE Sukuk will be protected
against change in market dynamics, as issue is linked to floating market benchmark.

6.2.3 LIQUIDITY RISK

By investing in the Sukuk, the investor assumes the risk of not being able to sell the Sukuk without adversely affecting
the price of the instrument. It is pertinent to note that the Sukuk is to be listed on PSX, subsequent to which PSX will
provide a trading platform for investors during the life of the instrument. Also, the Issuer has appointed a market maker
for the Issue to ensure enough liquidity and tradability. Furthermore, the Sukuk offers a floating rate of return which may
enable investors to sell the Sukuk in various interest rate scenarios.

6.2.4 CHANGES IN TAX REGIME

Any adverse change in the existing Tax regime for investment in Sukuk may affect the redemption and profit for the Sukuk
investors.

6.2.5 RISK OF NON-COMPLIANCE WITH REGULATIONS OF SECP AND PSX

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

INTERNAL RISK FACTORS

6.2.6 DEFAULT RISK

This risk is associated with the repayment capacity of the Company to service the Sukuk (Musharaka Investment)
redemptions and profit payments. Also, there is a risk that there may be a timing mismatch between receipt of consumer
collections and payment due dates of principal/profit payments. Further, since the Sukuk will be redeemed through 20
equal quarterly instalments, payment risk is largely weighted on those repayment dates.

The Company has no history of credit default. Moreover, the Issue is devised to evenly spread the principal repayments
during the Tenor which will lower the debt service burden/financial obligation on KE. This is ensured through twenty (20)
equal quarterly principal repayments after the Grace Period.

The Issue is also secured through a collection mechanism, whereby all collections of HBL banking pool, which has a long
proven history, will be routed and retained on a monthly basis in a Master Collection Account (“MCA”) as per the
instruction of the Sukuk Trustee for timely payments to Sukuk investors on quarterly basis. This payment security
mechanism is instrumental in securing AA+ (Double A plus) rating for the Sukuk.

Page 57 of 133
 Sukuk Prospectus | K-Electric Limited

6.2.7 SHARIAH STRUCTURE RISK

The structure is based on rental payments from identified assets. Total loss of assets or partial loss that may impair the
usability of the Sukuk assets will impact the ability of the Issuer to pay rentals and/or redeem Sukuk.

Considering the above, insurance cover has been obtained for total and partial loss events and the return of the insurance
proceeds (net-off Issuer’s share) shall be distributed among the Investors.

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

Page 58 of 133
 Sukuk Prospectus | K-Electric Limited

PART VII
7 FINANCIAL INFORMATION

AUDITOR CERTIFICATE ON ISSUED, SUBSCRIBED AND PAID-UP CAPITAL OF THE COMPANY

Page 59 of 133
Sukuk Prospectus | K-Electric Limited

Page 60 of 133
Sukuk Prospectus | K-Electric Limited

Page 61 of 133
Sukuk Prospectus | K-Electric Limited

AUDITOR’S CERTIFICATE ON BREAK-UP VALUE PER SHARE

Page 62 of 133
Sukuk Prospectus | K-Electric Limited

Page 63 of 133
Sukuk Prospectus | K-Electric Limited

Page 64 of 133
Sukuk Prospectus | K-Electric Limited

Page 65 of 133
Sukuk Prospectus | K-Electric Limited

AUDIT REPORT UNDER CLAUSE 1 OF SECTION 2 OF THE FIRST SCHEDULE TO THE PUBLIC OFFERING
REGULATIONS, 2017 FOR THE PURPOSE OF INCLUSION IN THE PROSPECTUS

Page 66 of 133
Sukuk Prospectus | K-Electric Limited

Page 67 of 133
Sukuk Prospectus | K-Electric Limited

Page 68 of 133
Sukuk Prospectus | K-Electric Limited

Page 69 of 133
Sukuk Prospectus | K-Electric Limited

Page 70 of 133
Sukuk Prospectus | K-Electric Limited

Page 71 of 133
Sukuk Prospectus | K-Electric Limited

Page 72 of 133
Sukuk Prospectus | K-Electric Limited

SUMMARY OF FINANCIAL HIGHLIGHTS

FINANCIAL HIGHLIGHTS
Audited (PKR in Millions) FY-17 FY-18 FY-19
Income Statement
Revenue 183,855 217,127 289,119
Cost of Sales (144,334) (171,829) (238,413)
Gross Profit 39,521 45,297 50,706
Operating Expenses (36,599) (36,812) (43,103)
Other Income 9,399 8,470 7,564
Operating Profit 12,321 16,956 15,167
Financial Charges (3,609) (3,236) (6,285)
Profit/(Loss) before Taxation 8,712 13,719 8,883
Taxation 1,708 (1,407) 8,391
Profit/(Loss) after Taxation 10,419 12,312 17,274

EBITDA 25,818 32,422 31,236

Depreciation and Amortisation 13,497 15,467 16,068

Balance Sheet
Non-Current Assets 237,981 277,733 326,857
Current Assets 157,962 195,965 272,008
Total Assets 395,943 473,698 598,865
Equity 136,711 153,206 148,609
Surplus on Revaluation of Fixed Assets 47,605 54,087 65,880
Total Equity 184,316 207,293 214,490
Long-Term Debt 20,147 24,903 49,914
Accrued Markup 5,809 6,370 7,528
Current Portion of Non-Current Liabilities 8,834 6,585 7,675
Short-Term Borrowings 20,424 41,317 71,922
Non-Current Liabilities 53,822 60,451 89,027
Current Liabilities 157,805 205,954 295,348
Stock, Spares and Tools 9,439 11,484 12,078
Trade Debts 103,420 115,371 99,928
Trade and Other Payables 117,067 140,458 190,795
Fixed Assets 237,731 277,403 326,550
Short-Term Investments - - -

Page 73 of 133
Sukuk Prospectus | K-Electric Limited

FINANCIAL HIGHLIGHTS
Audited (PKR in Millions) FY-17 FY-18 FY-19
Cash Flow Statement
Cash Flow from Operating Activities 27,836 19,335 (16,884)
Cash Flow from Investing Activities (19,593) (43,726) (33,842)
Cash Flow from Financing Activities (11,849) 6,040 52,012
Net Increase in Cash and Cash Equivalents (3,606) (18,351) 1,285
Cash and Cash Equivalents at the Beginning of
(4,815) (8,421) (26,772)
the Year
Cash and Cash Equivalents at the End of the Year (8,421) (26,772) (25,487)
Capex 23,767 44,614 35,574

Growth
Sales Growth (%) -2.5% 18.1% 33.2%
EBITDA Growth (%) -40.0% 25.6% -3.7%
Profit after Taxation Growth (%) -67.2% 18.2% 40.3%

Margins
Gross Profit Margin (%) 21.5% 20.9% 17.5%
Net Profit Margin (%) 5.7% 5.7% 6.0%
EBITDA Margin (%) 14.0% 14.9% 10.8%
Profit before Taxation Margin (%) 4.7% 6.3% 3.1%

Earnings Ratios
Earnings per Share 0.38 0.45 0.63
Break-up Value per Share without Revaluation
4.95 5.55 5.38
Surplus
Break-up Value per Share with Revaluation
6.67 7.51 7.77
Surplus
Return on Equity Including Surplus (%) 5.7% 5.9% 8.1%
Return on Equity Excluding Surplus (%) 7.6% 8.0% 11.6%
Return on Total Assets (%) 2.6% 2.6% 2.9%

Balance Sheet Ratios

Fixed Asset Turnover (x) 0.77x 0.78x 0.88x
Asset Turnover (x) 0.46x 0.46x 0.48x
Capex to Total Assets (%) 6.0% 9.4% 5.9%
Current Ratio (x) 1.00x 0.95x 0.92x
Inventory Turnover (days) 24 24 18
Receivables Turnover (days) 205 194 126
Payables Turnover (days) 296 298 292

Page 74 of 133
Sukuk Prospectus | K-Electric Limited

FINANCIAL HIGHLIGHTS
Audited (PKR in Millions) FY-17 FY-18 FY-19
Leverage Ratios
Total Debt to Equity (x) 0.27x 0.35x 0.60x
EBITDA/Interest (x) 7.15x 10.02x 4.97x
(EBITDA - Capex) 2,051 (12,192) (4,338)
(EBITDA - Capex)/Interest (x) 0.57x -3.77x -0.69x

Number of Shares Outstanding 27,615 27,615 27,615

SUMMARY OF MAJOR ITEMS OF REVENUE AND EXPENDITURE

MAJOR REVENUE ITEMS

Audited (PKR in Millions) FY-17 FY-18 FY-19
Sales
Sale of Energy
- Residential 80,358 85,776 85,026
- Commercial 36,841 31,413 33,127
- Industrial 46,502 56,034 58,894
- Karachi Nuclear Power Plant (KANUPP) 142 247 874
- Fuel Surcharge Adjustment 971 7,444 10,694
- Others 3,755 3,242 3,059
Sub Total 168,569 184,156 191,675

Tariff Adjustment 15,286 32,971 97,444

Total Sales 183,855 217,127 289,119

MAJOR EXPENDITURE ITEMS

Audited (PKR in Millions) FY-17 FY-18 FY-19
Costs
Purchase of Electricity
- CPPA-G/NTDC 40,039 45,658 52,596
- Independent Power Producers (IPPs) 18,503 28,997 40,925
- Karachi Nuclear Power Plant (KANUPP) 3,123 2,800 1,632
Sub Total 61,665 77,455 95,153

Consumption of Fuel & Oil

- Natural/RLNG Gas 29,452 25,569 58,648
- Furnace and Other Fuel/Oil 32,015 46,301 61,969
Sub Total 61,467 71,870 120,617

Expenses incurred in Generation, Transmission & Distribution

- Generation 12,403 13,527 15,073
- Transmission & Distribution 8,799 8,977 7,569

Page 75 of 133
 Sukuk Prospectus | K-Electric Limited

MAJOR EXPENDITURE ITEMS

Audited (PKR in Millions) FY-17 FY-18 FY-19
Sub Total 21,202 22,505 22,643
Total Costs 144,334 171,829 238,413

BREAK-UP OF OTHER INCOME

BREAK-UP OF OTHER INCOME

Audited (PKR in Millions) FY-17 FY-18 FY-19
Income from financial assets
- Return on Bank Deposits 229 132 249
- Late Payment Surcharge 2,479 2,318 2,327
Sub Total 2,708 2,450 2,576
Income from Non-Financial Assets
- Liquidated Damages Recovered from Suppliers
265 105 102
and Contractors
- Scrap Sales 277 240 194
- Amortisation of Deferred Revenue 1,532 1,686 1,831
- Service Connection Charges 2,082 1,287 1,079
- Collection charges - TV License Fee 101 113 131
- Gain on Disposal of Property, Plant and
1,324 535 1,137
Equipment
- Gain on Sale of Assets classified as Held for Sale 170 - -
- Others 939 2,055 513
Sub Total 6,690 6,020 4,988
Total 9,399 8,470 7,564

REVALUATION OF FIXED ASSETS OF THE COMPANY

Details of revaluation of fixed assets of the Company is as follows:

REVALUATION OF FIXED ASSETS

Revaluation Written Down Value4 Revalued Amount
Asset Class External Valuer
Year (PKR in Millions) (PKR in Millions)
Colliers International
Leasehold land 2018 11,992 12,567
Pakistan (Private) Limited
Iqbal Nanjee and Company
Plant & Machinery 2019 113,581 135,163
(Private) Limited
Transmission Grid & Iqbal Nanjee and Company
2019 39,809 44,037
Equipment (Private) Limited

4 On revaluation date

Page 76 of 133
 Sukuk Prospectus | K-Electric Limited

DIVIDEND POLICY

The Company in its general meeting may declare dividends but no dividend shall exceed the amount recommended by
the Board. Dividend, if declared in the general meeting, shall be paid according to the provisions of the Companies Act.

The Board of Directors may from time to time declare interim dividends as appear to it to be justified by the profits of
the Company. No dividend shall be paid otherwise than out of the profits of the Company for the year or any other
undistributed profits of prior years.

No unpaid dividend shall bear interest or markup against the Company. The dividends shall be paid within the period laid
down in the Companies Act. The last dividend paid to shareholders was in 1995 in the form of Bonus shares.

SECURITY OF THE ISSUE

1. A first charge over the Hypothecated Properties, in favour of the Sukuk Trustee for the benefit of Sukuk holders. The
list contains a total of 50 grid stations that KE has identified having total valuation of PKR 33.4 Bn.

2. A first hypothecation charge over the Hypothecated Collections, Accounts and Deposits in favour of the Sukuk
Trustee for the benefit of Sukuk holders.

3. A first charge by way of letter of lien over the Hypothecated Accounts and Deposits, in favour of the Sukuk Trustee
for the benefit of Sukuk holders.

4. A first charge by way of letter of lien over the Payment Account and deposits in favour of the Sukuk Trustee for the
benefit of Sukuk holders.

Further, during the tenor of Sukuk, the Security created over the Hypothecated Properties may be released/vacated from
time to time to the extent of amounts paid to Sukuk holders towards rental payments and buyout prices, provided value
of the remaining Hypothecated Properties subject to the Security will always be more than the outstanding amounts
under the Sukuk (i.e. outstanding rental payments and buy out prices) plus 25% margin, compliance with financial
covenants and non-occurrence of dissolution event or potential dissolution event.

All collections of HBL banking pool is routed and retained as per the retention requirements through a specific Master
Collection Account (“MCA”) from KE’s existing collection accounts maintained with HBL.

The MCA and existing collection accounts are under hypothecation charge and lien of the Trustee along with right of set
off.

The mechanism will be as follows:

i. In normal course of business, funds equivalent to 1/3rd of quarterly instalment requirement will be retained in
MCA on monthly basis and any excess funds will be released to KE as per their instructions or credited into KE
checking account, subject to terms of legal documents including Collection Agreement;

ii. One (1) day prior to the quarterly installment date, the retained funds will be transferred into the Payment
Account for onward payments to the Sukuk holders; and

Page 77 of 133
 Sukuk Prospectus | K-Electric Limited

iii. In case of an event of default as defined in the legal documentation, Trustee may exercise its right of lien and
funds will not be released to KE without Trustee’s permission. In this case Trustee may use the collection proceeds
to adjust the Sukuk holders’ due amount.

Furthermore, KE has plans to enhance the capacity of the above-mentioned MCA by adding new banking pools to cater
for its future financing requirements. These future lenders/financiers will rank pari-passu to HBL/trustee for which the
Company will request a NOC (subject to terms of legal documents) at that time and such arrangement will not have any
adverse impact on security created for the Sukuk.

Details of the Grid Stations where the Musharaka assets (which are also the Hypothecated Properties) are/will be located
(and which are secured in favour of Sukuk Trustee) are as follows:

DETAILS OF THE GRID STATIONS

Name of Grid
S. No. Value Address
Station
1 West Wharf 867,662,175 Plot No. 52 A & B at West Wharf Road, Karachi
Plot No. 14, Haris Road, Chalaram Road, Charade, Kharadar,
2 Old Town 1,171,732,200
Karachi
3 Queens Road 716,035,040 Plot # 8, Queens Road, Karachi
4 Lalazar 765,399,550 Plot No. 12, Queens Road (M.T. Khan Road)
5 Surjani Town 995,501,920 Plot No. ST-7 (FL-1), Sector 5-F, Surjani Town, Karachi
6 Lyari 302,592,750 Old Truck Stand, Mauripur Road, Karachi
7 Gizri 341,106,800 Plot # 39/B, Gizri Grid Station, DHA Phase 4, Karachi
8 D.H.A. 624,582,335 Plot No. 135-A, Khayan-e-Shaheen, Phase-vi, DHA, Karachi
9 Korangi West 263,750,160 ST-3 Sector 22 Korangi West
Plot No. St-3, Sector 22, Korangi Grid near Jam Sadiq Bridge,
10 Qayyumabad 598,928,100
Karachi
11 Federal Area "B" [B] 431,520,100 Plot No. St. 3, Block 19, F. B. Area, Near Alnoor Society, Karachi
12 Liaquatabad 372,525,725 F.C. Flats Area, Near Maqsood Elahi Masjid, Liaquatabad
13 Civic Centre 331,097,800 (Plot No. ST-8/1 & ST-15, Block 14, Gulshan-e- Iqbal)
14 Malir Cantonment 288,024,150 Site Opposite Cinema near Khairpur Line, Malir Cantt, Karachi
15 Gulistan-e-Johar 695,885,610 Plot ST-2, Block 6, Scheme 36, Gulistan-e-Johar, Karachi
16 North Nazimabad 263,538,950 Plot # ST-3, Block-P, North Karachi, Karachi
17 North Karachi 311,813,100 ST-22, Sector 5-C-4, North Karachi, Karachi
18 SITE - I 542,480,925 D-108 SITE, Karachi
19 Haroonabad - SITE-II 375,324,250 D-108 SITE, Karachi
20 Valika 1,063,106,600 Plot 25, Mangophir Road, Near Javedan Cement Factory, Karachi
21 Orangi 382,494,550 Plot No. ST-4, St-6 Sector 13-G Orangi Town, Karachi
22 HUB Chowki 604,310,210 Hub Chowki, Moiza Hub Tehsil Hub, District Lasbella, Deh Barot
23 PIPRI East 142,891,500 situated at Pakistan Steel Mills area,
24 Korangi East 220,917,640 Survey No. 196, Deh Sharafi Korangi Industrial Area
25 Landhi 746,133,120 Plot No. HG-10, near Al-Karam Textile Mills Limited, Karachi
Survey No. 2/3, Khasara No. 10/106, Mosa Khathore the
26 Vinder 108,878,800
Somiani Khotore, Vinder

Page 78 of 133
 Sukuk Prospectus | K-Electric Limited

DETAILS OF THE GRID STATIONS

Name of Grid
S. No. Value Address
Station
Survey # 138/1, Khasra # 67, Moza Khangar the District Uthal
27 Uthal 98,205,900
Lasbella
28 Bela 53,387,900 Mauza Wang Tehsil Bela District Lasbella
29 Gharo 142,444,700 Gharo Grid Station Shafiabad.
30 Port Qasim 438,610,500 Grid at Port Qasim area
31 KEPZ 607,426,100 Within the permises of Karachi Export Prossing Zone
32 Garden Road 932,559,500 Plot # 66/1/1 Garden West, Karachi
Memon Goth
33 742,675,705 Plot No. NC-336, Deh Mulh Memon Goth, Karachi
(Malir/K.par)
34 P.R.L. 894,991,095 Naclas No. 24 Deh Dih Korangi Creek Road, Karachi
35 Jail Road 928,155,550 Plot No. 440/1/2 Nishter Road, Garden West
36 DHA Creek City 383,447,340 CC GS-1, 16th Street, DHA, Phase-8, Karachi
37 Hospital 764,477,890 Plot ST-14, 15 & 16 Block-16 Sch-36 Gulistan-e-Jauhar, Karachi
132 KVA AGA KHAN
38 455,377,600 In Chailogy street behind Agha Khan University Hospital Karachi
GS
39 Korangi Town 3,255,871,200 Survey No.19-8, Deh Shara Korangi
40 Gadap 35,416,950 Gadap Town
41 Baldia 1,415,963,700 Sector ‘8’ Baldia Township (Baldia Grid)
42 Clifton 501,948,460 Plot No. ST-1, Block-I, Scheme-5, Clifton
43 Dhabeji 282,365,460 Dhabeji Dist. Thatta;
44 Jacob Lines 527,720,160 Plot No. C-6-2, Block-1, Lines Area.
45 Gulshan-e-Iqbal 535,944,500 Plot No.ST-1, Block 19, Gulshan-e-Iqbal, Karachi
46 KDA (220 KV) 889,190,550 Sec. 48/A, KDA Scheme-33, Super Highway
47 KDA (132 KV) 1,266,837,975 Sec. 48/A, KDA Scheme-33, Super Highway
48 Korangi South - II 1,081,463,700 ST-3, Sector 51-K, Korangi South
49 Mauripur 3,281,651,700 Plot No. S/64, SITE, Mauripur Road, near new truck stand,
50 PIPRI West (132 KV) 371,729,600 situated at Pakistan Steel Mills area,
Total 33,416,097,795

Total value of the assets backing the instrument as per the latest valuation report is PKR 33,416 million (as of June 30,
2019). Book value of these assets as at June 30, 2019 is PKR 33,416 million.

SUKUK TRUSTEE

In order to safeguard the interests of the Sukuk holders, Pak Brunei Investment Company Limited has been appointed to
act as Trustee/Investment Agent for the Issue. The Issuer shall pay to the Trustee/Investment Agent an annual fee of PKR
1,500,000. The fee shall be payable at the beginning of each year commencing from the date of signing of the Declaration
of Trust and on each subsequent anniversary thereof. The Bankers to the Issue have been instructed to inform the
Trustee on a daily basis of the subscriptions received for issuance of Sukuk.

Page 79 of 133
 Sukuk Prospectus | K-Electric Limited

EVENTS OF DEFAULT & CIRCUMSTANCES UNDER WHICH SECURITY BECOMES ENFORCEABLE AND ENFORCEMENT
PROCEDURE

7.11.1 DISSOLUTION EVENTS

In terms of Article 8.1 of the Declaration of Trust, each of the following events shall constitute a Dissolution Event after
the expiry of Grace Period (if any) in terms of the Declaration of Trust (unless defined herein, the capitalised terms under
this paragraph 1 shall have the meaning assigned to them under the Declaration of Trust):

(a) the failure of the Issuer to:

(i) pay any Rental Payments or Buyout Prices on the relevant Payment Dates in accordance with the relevant Sukuk
Transaction Documents;

(ii) pay any amounts payable by the Issuer under Sukuk Transaction Documents (other than as specified in sub-
clause (i), (iv) and (v) of this sub-para (a)) and such failure continues for a period of five (5) consecutive Business
Days after expiry of the payment date as provided under a demand for the payment of the same put to the
Issuer;

(iii) pay any amount due on any of its financial debt (including principal or any premium or fee thereon, but
excluding Circular Debt) aggregating in excess of Pakistani Rupees One Billion only (PKR 1,000,000,000/-) when
due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise), excluding the
Sukuk Issue. Provided, that the above threshold of Pakistani Rupees One Billion only (PKR 1,000,000,000/-) shall
be inapplicable in the event the financial institutions institute court proceedings or litigation in relation to any
such cross-defaults and such event shall constitute a Dissolution Event if such amount is less than Pakistani
Rupees One Billion (PKR 1,000,000,000/-);

(iv) fund the Sukuk Payment Account in terms of the Collection Agreement; and

(v) route and/or deposit any amount in relation to the Collections in accordance with the terms of the Collection
Agreement;

(b) default by the Issuer in the performance or observance of or compliance with any of its other material obligations
or undertakings under the Sukuk Transaction Documents and such default (other than as specified in sub-clause (a)
above) continues for a period of fifteen (15) Business Days from the date of receipt of notice by the Issuer from the
Sukuk Trustee in respect of the same;

(c) an event of default (howsoever described and/or defined) occurs under a Sukuk Transaction Document and such
event of default (other than as specified in sub-clause (a) above) continues for a period of fifteen (15) Business Days
from the date of receipt of notice by the Issuer from the Sukuk Trustee in respect of the same;

(d) any representation or warranty made or deemed to be made or repeated by the Issuer in or pursuant to the
Declaration of Trust is found to be breached, incorrect and/or misleading which may cause or be reasonably
expected to have a Material Adverse Effect 5;

5Material Adverse Effect will be determined by the Sukuk Trustee (acting by way of an Extraordinary Resolution) in terms of the
Declaration Trust.

Page 80 of 133
Sukuk Prospectus | K-Electric Limited

(e) the Issuer assigns or enters into an arrangement for the benefit of its creditors in respect of any Financial
Indebtedness, which has a Material Adverse Effect;

(f) the Issuer:

(i) voluntarily or involuntarily becomes the subject of bankruptcy or insolvency proceedings (except for
proceedings which are frivolous in nature) or is liquidated or declared bankrupt;

(ii) elects to become a party to or is subject to any proceedings or procedure under any law for the relief of
financially distressed debtors, except for proceedings which are frivolous in nature; and/or

(iii) admits in writing its inability to pay its debts as they mature, to the Sukuk Trustee;

(g) the Issuer is unable or admits its inability to meet its payment obligations in respect of its Financial Indebtedness as
the same falls due, suspends making payments on any of its Financial Indebtedness or, by reason of actual or
anticipated financial difficulties, commences negotiations with one or more of its creditors with a view to
rescheduling its Financial Indebtedness or any portion thereof;

(h) a moratorium is declared in respect of any Financial Indebtedness of the Issuer;

(i) any corporate action, legal proceedings or other procedures or steps are taken by the Issuer in relation to the
suspension of payments, winding-up, dissolution, administration or reorganisation (by way of voluntary
arrangement, scheme of arrangement or otherwise) of the Issuer other than a solvent liquidation or reorganisation;

(j) the Issuer enters into or initiates steps for entering into a composition, compromise, assignment or arrangement
with any of its creditors, which has a Material Adverse Effect;

(k) the appointment of a liquidator, receiver, administrative receiver, administrator, compulsory manager or other
similar officer in respect of the Issuer (if applicable) or any of its assets;

(l) enforcement of any Security Interest over substantial assets of the Issuer, which has a Material Adverse Effect;

(m) any Authority condemns, nationalises, acquires or expropriates (with or without compensation) any or all the assets of
the Issuer including but not restricted to the Secured Properties or other assets of the Issuer or its share capital or
assumes custody or control over such property or assets of the business and/or operations of the Issuer, or takes any
action for the dissolution or disestablishment of the Issuer or takes any other action that would prevent the Issuer or its
officers from carrying on all or substantial part of the business or operations;

(n) any other event or circumstance arising out of the Issuer’s negligence or default which results in a Material Adverse
Effect;

(o) any Financial Indebtedness of the Issuer is declared to be or otherwise becomes due and payable prior to its
specified maturity as a result of an event of default (howsoever described), which has a Material Adverse Effect;

(p) any commitment for any Financial Indebtedness of the Issuer is cancelled or suspended by a creditor of the Issuer,
as a result of an event of default (however described), which has a Material Adverse Effect;

(q) it is or becomes unlawful for the Issuer to perform any of its material obligations under the Declaration of Trust;

Page 81 of 133
Sukuk Prospectus | K-Electric Limited

(r) any obligation or obligations of the Issuer under the Declaration of Trust or any Sukuk Transaction Document cease
to be legal, valid, binding or enforceable and the cessation individually or cumulatively has a Material Adverse Effect;

(s) the Declaration of Trust and/or any Sukuk Transaction Document ceases to be legal, valid, binding or enforceable
in the reasonable opinion of the Sukuk Trustee;

(t) the Issuer repudiates the Declaration of Trust or evidences an intention to repudiate the Declaration of Trust;

(u) any Security Document ceases to be in full force and effect, is not fully perfected, or is declared to be void or is
repudiated and the conditions resulting in the repudiation are not remedied and/or replacement Security
Documents are not executed within a period of two (2) Business Days of the date on which the Security Documents
become void and/or are repudiated;

(v) any court or arbitrator passes a final non-appealable judgement or arbitral award for payment, against the Issuer
and the Issuer fails to effect such payment within sixty (60) days from the date on which the obligation to pay arises
and provided the same has a Material Adverse Effect;

(w) the Issuer fails to comply with any law or regulation to which it may be subject and the same has a Material Adverse
Effect;

(x) the Issuer fails to comply with the covenants set out in the Declaration of Trust and such failure continues for a
period of thirty (30) days from the date of receipt of a notice by the Issuer from the Sukuk Trustee in respect of the
same or from the date on which the Issuer has knowledge of the same, whichever is earlier;
(y) the Issuer suspends, ceases, or threatens to suspend or cease, to carry on all or a substantial part of its business or
to change the nature of its business from that undertaken at the date of the Declaration of Trust;

(z) any Sukuk Transaction Document or any of its provisions:

(i) is suspended, repudiated, revoked, terminated or ceases to be in full force and effect or ceases to provide
the security intended, without, in each case, the prior written consent of the Sukuk Trustee and the
Investment Agent;

(ii) becomes illegal, invalid, unlawful, unenforceable or is declared void; or

(iii) is repudiated or its validity or enforceability is challenged in a court of law by any person and any such
repudiation or challenge is not withdrawn within ten (10) Business Days (provided, however, such ten (10)
Business Days limit shall be extended as long as Issuer is actively defending against any such repudiation
or challenge), but in any case, such cure period shall immediately expire if and when such repudiation or
challenge becomes effective consent;

(aa) invalidity or material diminution in value of any of the Secured Properties;

(bb) abandonment or destruction of the whole or a material part of the Secured Properties unless the Secured
Properties are fully insured, and the Insurance/Takaful proceeds are available to be applied in reinstatement of
such Secured Properties;

(cc) change of control of the Issuer or its Sponsors (other than the Permitted Transferee) without the prior written
consent of the Sukuk Trustee and the Investment Agent;

Page 82 of 133
Sukuk Prospectus | K-Electric Limited

(dd) an adverse movement in the base tariff of PKR 12.8172/kWh for the period of July 01, 2016 to June 30, 2023
determined in terms of the existing tariff determination bearing reference number S.R.O. 576 (I)/2019 dated May
22, 2019 issued to the Issuer;

(ee) any event or series of events (whether related or not) occurs which would have a Material Adverse Effect;

(ff) the occurrence of a material major uninsured loss occurs in the opinion of the Sukuk Trustee and the Investment
Agent;

(gg) in respect of Prudential Regulations to be complied with in respect of the affairs of borrowers, any action of the
Issuer that would result in any relevant Sukuk Holder being in breach of the Prudential Regulations, unless
appropriate waivers have been obtained from SBP and/or SECP as applicable;

(hh) any consent or Authorisation is not obtained when required or is rescinded, terminated, lapses or otherwise ceases
to be in full force and effect, where such consent or Authorisation is necessary:
(i) for a Person to comply with its obligations under any of the Sukuk Transaction Documents; or
(ii) for the Issuer to carry on its business and operations, where the failure to obtain such Authorisation, or
the recession, termination, lapse or otherwise cessation of such Authorisation being in full force has or
could reasonably be expected to have a Material Adverse Effect,

and in each case is not restored or reinstated within thirty (30) days of notice by the Sukuk Trustee and the
Investment Agent to the Issuer requiring that restoration or reinstatement;

(ii) the Issuer fails to comply with or pay any sum due from it under any final judgement or any final order made or
given by any court of competent jurisdiction that could be a Material Adverse Effect, and such judgement is not
satisfied, appealed or discharged within sixty (60) days of entry;

(jj) any other event covered as a default under any of the Sukuk Transaction Documents;

(kk) an attachment, sequestration, distress, execution (or analogous process) is levied or enforced upon or issued
against any of the assets or property of the Issuer, if such attachment, sequestration, distress or execution (or
analogous process) is:

(i) in respect of a material portion of the assets or property of the Issuer; or

(ii) over any assets or property of the Issuer which has a Material Adverse Effect on the Issuer, and, in each
case, was not discharged within sixty (60) days;

(ll) any encumbrancer lawfully takes possession of, or a liquidator, judicial custodian, receiver, administrative
receiver or trustee or any analogous officer is appointed in respect of the whole or any part of the undertaking or
assets of the Issuer, or an attachment, sequestration, distress, execution (or analogous process) is levied or
enforced upon or issued against any of the assets or property of the Issuer;

(mm) any claim for immunity occurs;

(nn) the Security created pursuant to the Security Documents and/or furnished by the Issuer ceases to be in full force
and effect, or is declared to be void or repudiated, or deteriorates in quality, or otherwise becomes inadequate in
the sole judgement of the Sukuk Trustee (acting by way of an Extraordinary Resolution), to such extent that it is no

Page 83 of 133
 Sukuk Prospectus | K-Electric Limited

longer sufficient for the purpose for which it was furnished, without adequate alternative security being made
available immediately from the aforesaid communication by the Sukuk Trustee; and/or

(oo) any change in applicable laws (including the Prudential Regulations) which has a Material Adverse Effect.

7.11.2 ACTIONS UPON OCCURRENCE OF DISSOLUTION EVENT

1. Under Article 8.2.1 of the Declaration of Trust, upon occurrence of a Dissolution Event and if such Dissolution Event
is not cured by the Issuer in accordance with the terms of the Declaration Trust, the Sukuk Trustee shall issue a
Dissolution Notification to all Sukuk Holders with relevant details along with a notice for passing an Extraordinary
Resolution of Sukuk Holders.

2. Under Article 8.3.1 of the Declaration of Trust, upon occurrence of a Dissolution Event and if so directed by an
Extraordinary Resolution passed by Sukuk Holders as defined in Schedule 2 of Declaration of Trust, the Sukuk
Trustee shall issue notice to the Issuer for payment of redemption amount of Sukuk Buyout Price (Applicable Upon
Termination).

3. Under Article 8.3.2 of the Declaration of Trust, if the Issuer fails to pay such amount, the Sukuk Trustee shall be
entitled to enforce the security in accordance with the terms of the Declaration of Trust.

4. In the event the Sukuk Trustee fails to act as instructed by an Extraordinary Resolution, and upon such failure
continuing for a period of fifteen (15) days from the date of the Sukuk Trustee being so instructed, the Enforcing
Sukuk Holders6, may issue the Notice for Payment of Buyout Price (Applicable Upon Termination) to the Issuer and
take all necessary actions in accordance with the terms and conditions of the Declaration of Trust.

Note: It is confirmed that all events of default mentioned in the security documents have been disclosed in this
prospectus in the same manner as per the Declaration of Trust dated December 17, 2019 (as amended on April 17,
2020).

QUORUM AND EXTRAORDINARY RESOLUTION

7.12.1 QUORUM

1. In terms of paragraph 5 of Schedule 1 of Declaration of Trust, at any meeting of Sukuk Holders one or more Sukuk
Holders, proxies or representatives holding or representing in the aggregate not less than:

(a) 75% (seventy five per cent) of the face amount of the Sukuk for the time being Outstanding shall form
a quorum for the transaction of business in relation to any of the Reserve Matters 7; and
(b) 51% (fifty one per cent) of the face amount of the Sukuk for the time being Outstanding shall form a
quorum for the transaction of business in relation to any matter under the Declaration of Trust other
than the Reserve Matters,

6The term “Enforcing Sukuk Holders” means the Sukuk Holders together constituting the majority required to pass the Extraordinary
Resolution in accordance with the provisions of the Declaration of Trust.
7 “Reserve Matters” means, inter alia, matters under the Declaration of Trust relating to Security, Secured Properties, Security
Documents, Buy Out Prices, Buy Out Price Payment Dates, partial release/vacation of the Security, collection mechanism under the
Collection Agreement, any relaxations or concessions given in matters relating to compliance of financial covenants, change of Sponsor,
Sponsor Change Redemption, Dissolution Events, Potential Dissolution Events, provisions for meetings of Sukuk Holders and/or any
amendment in any of the Sukuk Documents in relation to the Reserve Matters, including the definition of “Reserve Matters”

Page 84 of 133
 Sukuk Prospectus | K-Electric Limited

No business (other than the choosing of a Chairman) shall be transacted at any meeting unless the requisite quorum
be present at the commencement of the relevant business.

2. In terms of paragraph 6 of Schedule 1 of Declaration of Trust, if within 15 minutes (or such longer period not
exceeding 30 minutes as the Chairman may decide) of the time appointed for any such meeting a quorum is not
present for the transaction of any particular business, then, subject and without prejudice to the transaction of the
business (if any) for which a quorum is present, the meeting shall if convened upon the requisition of Sukuk Holders
be dissolved, in any other case it shall stand adjourned to the same day in the next week (or if such day is a public
holiday the next succeeding business day) at the same time and place (except in the case of a meeting at which an
Extraordinary Resolution is to be proposed in which case it shall stand adjourned for such period, being not less than
fourteen (14) clear days nor more than forty two (42) clear days, and to such place as may be appointed by the
Chairman either at or subsequent to such meeting and approved by the Sukuk Trustee). If within fifteen (15) minutes
(or such longer period not exceeding thirty (30) minutes as the Chairman may decide) after the time appointed for
any adjourned meeting, a quorum is not present for the transaction of any particular business, then, subject and
without prejudice to the transaction of the business (if any) for which a quorum is present, the Chairman may either
(with the approval of the Sukuk Trustee) dissolve such meeting or adjourn the same for such period, being not less
than fourteen (14) clear days, and to such place as may be appointed by the Chairman either at or subsequent to
such adjourned meeting and approved by the Sukuk Trustee, and the provisions of this sentence shall apply to all
further adjourned such meetings.

7.12.2 EXTRAORDINARY RESOLUTION

The expression “Extraordinary Resolution” used in the Declaration of Trust means:

(a) a resolution passed at a meeting of Sukuk Holders duly convened and held to decide any matter under
the Declaration of Trust (including the Reserve Matters or non-Reserve Matters) in accordance with the
Declaration of Trust by a majority of persons representing or holding in aggregate not less than eighty
one per cent (81%) of the face amount of the Sukuk for the time being Outstanding voting thereat upon
a show of hands or if a poll is duly demanded by a majority of persons representing or holding in
aggregate not less than eighty one per cent (81%) of the face amount of the Sukuk for the time being
Outstanding voting thereat on such poll; or

(b) a resolution in writing (either through written circulation or through email) by or on behalf of Sukuk
Holders holding in the aggregate not less than: (i) sixty six per cent (66%) of the face amount of the
Sukuk for the time being Outstanding in relation to any Reserve Matter; and (ii) fifty one per cent (51%)
of the face amount of the Sukuk for the time being Outstanding in relation to any matter under the
Declaration of Trust other than the Reserve Matters, which resolution in writing may be contained in
one document or several documents in like form.

Page 85 of 133
 Sukuk Prospectus | K-Electric Limited

PART VIII
8 ENTITY & INSTRUMENT RATING REPORT
ENTITY & INSTRUMENT RATING

Page 86 of 133
Sukuk Prospectus | K-Electric Limited

Page 87 of 133
Sukuk Prospectus | K-Electric Limited

Page 88 of 133
Sukuk Prospectus | K-Electric Limited

Page 89 of 133
Sukuk Prospectus | K-Electric Limited

Page 90 of 133
Sukuk Prospectus | K-Electric Limited

Page 91 of 133
Sukuk Prospectus | K-Electric Limited

Page 92 of 133
Sukuk Prospectus | K-Electric Limited

Page 93 of 133
Sukuk Prospectus | K-Electric Limited

K ELECTRIC LIMITED – ENTITY RATING HISTORY

K ELECTRIC LIMITED – SUKUK RATING HISTORY

Page 94 of 133
 Sukuk Prospectus | K-Electric Limited

PART IX

9 MANAGEMENT OF THE COMPANY

BOARD OF DIRECTORS OF THE COMPANY

Mr. Riyadh S.A.A. Edrees

Position Chairman
Address KE House, 3rd Floor, 39-B, Sunset Boulevard, Phase-II, DHA, Karachi
Passport No. P05588888
1. Privatization Holding Company (Kuwait)
2. Meezan Bank Limited (Pakistan)
3. Ikarus Petroleum Industries (Kuwait)
4. Saudi International Petrochemical Company (Saudi Arabia)
5. Noor Financial Investment Company (Kuwait)
Directorship in other companies
6. Noor Telecommunication (Kuwait)
7. Middle East Complex for Eng., Electronics & Heavy Industries Co. (Jordan)
8. Bunyah Fund of Kuwait Investment Co. (Bahrain)
9. Zouk Venture Limited (U.K.)
10. Markaz Energy Fund (Kuwait)
Syed Moonis Abdullah Alvi
Position Chief Executive Officer
Address KE House, 3rd Floor, 39-B, Sunset Boulevard, Phase-II, DHA, Karachi
CNIC No. 4220168861913
Directorship in other companies None
Mr. Khalid Rafi
Position Independent Director
Address KE House, 3rd Floor, 39-B, Sunset Boulevard, Phase-II, DHA, Karachi
CNIC No. 4230107345429
Directorship in other companies* 1. China Three Gorges South Asia Investment Ltd
Mr. Adeeb Ahmad
Position Non-Executive Director
Address KE House, 3rd Floor, 39-B, Sunset Boulevard, Phase-II, DHA, Karachi
CNIC No. 9030393984497
1. Al-Shaheer Corporation Limited
2. KES Power Limited
3. ICD Equity Partners Limited (Labuan)
Directorship in other companies
4. Saudi SME Fund (Saudi Arabia)
5. Green Peak International, (Cayman Island)
6. Omar Peak International, (Cayman Island)
Chaudhary Khaqan Saadullah Khan
Position Non-Executive Director
Address KE House, 3rd Floor, 39-B, Sunset Boulevard, Phase-II, DHA, Karachi
CNIC No. 4230146983577
1. The Abraaj Group
Directorship in other companies
2. Byco Petroleum Pakistan Limited

Page 95 of 133
Sukuk Prospectus | K-Electric Limited

Dr. Ahmed Mujtaba Memon

Position Non-Executive Director
Address KE House, 3rd Floor, 39-B, Sunset Boulevard, Phase-II, DHA, Karachi
CNIC No. 4230134573887
1. SSGC
Directorship in other companies* 2. IESCO
3. NESPAK
Mr. Jamil Akbar
Position Non-Executive Director
Address KE House, 3rd Floor, 39-B, Sunset Boulevard, Phase-II, DHA, Karachi
CNIC No. 4230172696369
Directorship in other companies Al-Shaheer Corporation Limited
Mr. Mubasher H. Sheikh
Position Non-Executive Director
Address KE House, 3rd Floor, 39-B, Sunset Boulevard, Phase-II, DHA, Karachi
CNIC No. 9030901069661
1. Proclad Group Limited, Dubai
Directorship in other companies 2. Sunrise Enterprises Private Limited
3. Ikarus Petroleum Industries (Kuwait)
Mr. Muhammad Abid Lakhani
Position Non-Executive Director
Address KE House, 3rd Floor, 39-B, Sunset Boulevard, Phase-II, DHA, Karachi
CNIC No. 4230190099151
Directorship in other companies* 1. The Abid Lakhani Group
Mr. Ruhail Muhammad
Position Non-Executive Director
Address KE House, 3rd Floor, 39-B, Sunset Boulevard, Phase-II, DHA, Karachi
CNIC No. 4230108954529
1. Hub Power Holding Limited
Directorship in other companies 2. Laraib Energy Limited
3. ThalNova Power Thar (Pvt.) Limited
Mr. Shan A. Ashary
Position Non-Executive Director
Address KE House, 3rd Floor, 39-B, Sunset Boulevard, Phase-II, DHA, Karachi
CNIC No. 4230119948459
Directorship in other companies None
Syed Asad Ali Shah Jilani
Position Non-Executive Director
Address KE House, 3rd Floor, 39-B, Sunset Boulevard, Phase-II, DHA, Karachi
CNIC No. 4230137736587
Directorship in other companies 1. Chairman Pakistan Refinery Limited
Mr. Waseem Mukhtar
Position Non-Executive Director
Address KE House, 3rd Floor, 39-B, Sunset Boulevard, Phase-II, DHA, Karachi

Page 96 of 133
 Sukuk Prospectus | K-Electric Limited

CNIC No. 6110189851225

Directorship in other companies* None

Note: * represents independent or GoP nominee directors. Pursuant to Companies Act 2017, directorship of GOP nominees
and independent director does not fall under the definition of ‘associated companies’.

PROFILES OF DIRECTORS

MR. RIYADH S.A.A EDRESS, CHAIRMAN

With nearly 25 years of experience across the fields of Construction, Finance, Oil & Gas and Telecommunications and
Academics, Mr. Riyadh currently serves as Chairman of Privatization Holding Company, Vice Chairman of Meezan Bank -
Pakistan, Vice Chairman of Noortel and a board member in the following companies, Noor Financial Investment, Ikarus
Petroleum Industries, Markaz Energy Fund, Kuwait Ceramic Company, Investment Committee of Bouniyan Fund of the
Kuwait Investment Co., Middle East Complex for Eng., Electronics & Heavy Industries Company and Saudi International
Petrochemical Company. He also currently serves as the Deputy Chief Executive Officer - Investments and Mega Projects,
National Industries Group, Holding Kuwait, a group with which he has been involved for twenty years. Mr. Riyadh holds
a BSc degree in Chemical Engineering from the University of Newcastle upon Tyon and an MSc in Chemical Engineering
from Kuwait University.

SYED MOONIS ABDULLAH ALVI, CHIEF EXECUTIVE OFFICER

Mr. Moonis Alvi was appointed CEO and the Board member of the Company in June 2018. Mr. Alvi has more than 28
years of diversified experience in the finance industry, with a focus towards driving operational efficiencies, financial
planning and capital restructuring. Mr. Alvi joined KE in 2008 and has served as KE’s Chief Financial Officer, Company
Secretary and Head of Treasury, and has played an integral role in the transformation of KE. He is a Fellow member of
the Institute of Chartered Accountants of Pakistan.

MR. KHALID RAFI, INDEPENDENT DIRECTOR

Mr. Rafi is an Independent Director, elected at the AGM of the company held on October 8, 2012, and also Chairman of
the Board Audit Committee. Mr. Rafi was a Senior Partner at A.F. Ferguson & Co., Chartered Accountants, a member firm
of PricewaterhouseCoopers LLP, for 20 years. He was also the president of the Institute of Chartered Accountants of
Pakistan and of Management Association of Pakistan. Mr. Rafi is a Chartered Accountant, being a Fellow at the Institute
of Chartered Accountants in England and Wales.

MR. ADEEB AHMAD, NON-EXECUTIVE DIRECTOR

Mr. Ahmad’s career spans over 30 years with premier multilateral, leading private equity firms and several international
investment banks primarily in the Gulf region. He has held C-suite positions engaged in multi-sectoral asset management,
private equity investments and M&A across multiple emerging markets, including Pakistan. He has raised and led several
large funds, managed landmark investments, and led several M&A advisory assignments. His last role was as Senior
Advisor to the CEO (& Deputy CEO-Designate) at Islamic Corporation for the Development of the Private Sector (“ICD”)
in Saudi Arabia. Mr. Ahmad holds an M.Sc. degree from the London School of Economics, United Kingdom, and an MBA
from the Institute of Business Administration, Karachi, Pakistan. Other Engagements: Chairman, Al-Shaheer Corporation
Ltd.

Page 97 of 133
 Sukuk Prospectus | K-Electric Limited

CHAUDHARY KHAQAN SAADULLAH KHAN, NON-EXECUTIVE DIRECTOR

Mr. Khan has been a Non-Executive Director of the Company since October 2015. Mr. Khan joined The Abraaj Group as a
Director in 2015. Prior to this, he was an Investment Officer in the International Finance Corporation. Mr. Khan has also
worked as an Investment Consultant in the Board of Investment, Government of Pakistan, and as a manager in Ernst &
Young’s Transaction Advisory Services group based in Chicago. He has previously served on the Boards of Agritech Limited
and Shakarganj Food Products Limited. Mr. Khaqan holds a BA in Economics from Northwestern University, US, and is a
CFA Charter Holder. Other Engagement: Director, The Abraaj Group; Byco Petroleum Pakistan Limited.

DR. AHMED MUJTABA MEMON, NON-EXECUTIVE DIRECTOR

Dr. Ahmed Mujtaba Memon represents the Government of Pakistan and was appointed on the Board of KE in June 2018.
He is the Additional Finance Secretary in the Finance Division and has previously served as Director-General (IOCO) in the
Federal Bureau of Revenue (FBR) as well as serving in various capacities at the Pakistan Customs Service. He has also
worked with the Asian Development Bank on a project as the Secretary Trade Export Promotion and Industrialisation in
the FBR. His academic qualifications include an MBBS, an MA (Economics) and an MBA (Finance). Other Engagements:
Member – Board of Directors, NESPAK.

MR. JAMIL AKBAR, NON-EXECUTIVE DIRECTOR

Mr. Akbar has over 20 years multinational experience in General Management, Strategy, Real Estate Development,
Private Equity and Turnarounds. His most recent role was Country Head and COO, Emaar Pakistan. Previously, he has
worked with the Abraaj Group on Pakistan investments, including an operational role in KE’s turnaround. He has also
been Chief Internal Auditor at GlaxoSmithKline Pakistan and began his career with KPMG UK. Mr. Akbar holds an MBA
from INSEAD, is a Chartered Accountant from the Institute of Chartered Accountants in England & Wales (ICAEW) and
holds a B.Eng. (Mechanical) from Imperial College (UK). Other Engagement: Director, Al-Shaheer Corporation Ltd.

MR. MUBASHER H. SHEIKH, NON-EXECUTIVE DIRECTOR

Mr. Sheikh has been a Non-Executive Director of the Company since its privatisation in November 2005. He joined the
National Industries Group (Holding), Kuwait, in 2001 and is currently Chief Financial Officer. He is also a Non-Executive
Board Member in Proclad Group Limited, Dubai and a Board Member in Ikarus Petroleum Industries, Kuwait. He
graduated with a degree in mathematics and statistics from the University of Punjab and is a Chartered Certified
Accountant UK (FCCA). Other Engagements: Chief Financial Officer, National Industries Group, Kuwait. Board Member:
Proclad Group Limited, Dubai; Ikarus Petroleum Industries, Kuwait.

MR. MUHAMMAD ABID LAKHANI, NON-EXECUTIVE DIRECTOR

A businessman by profession with forty years of experience, Mr. Abid Lakhani is the Chairman of The Abid Lakhani Group,
a group which for over four decades has been involved in the fields of Construction, Education and Financial Services. He
has served as the Chairman of Platinum Commercial Bank (now known as Bank Islami), amongst various other senior
positions over the course of his business career. A passionate philanthropist, Mr. Abid Lakhani, through the university he
established (ILMA University), has disbursed over PKR 202 million in scholarships to various deserving students in search
of higher education. With his involvement in the Real Estate and Construction sector, Mr. Abid Lakhani has enabled the
creation of 12,000 residential and commercial units that range from luxury living to shopping complexes to middle income
housing.

MR. RUHAIL MUHAMMAD, NON-EXECUTIVE DIRECTOR

Mr. Muhammad's career spans over 30 years in General Management, Business Development, Strategy, Financial
Planning and People Development. He has held various C-suite positions in companies focused on a diverse range of
activities from Chemicals to Energy to Polymer production. He is currently the CEO of Hub Power Holdings Ltd, a
subsidiary of HUBCO, Pakistan’s largest IPP. He is responsible for managing the growth portfolio of HUBCO, including
existing coal-based power plants. His responsibilities include evaluating onshore & offshore acquisitions, project
financing, economic evaluation of all growth projects and financial re-engineering to support the growth vision of the

Page 98 of 133
 Sukuk Prospectus | K-Electric Limited

Company. Previously, he was the CEO of Engro Fertilizers from 2012-2018. He has served on the Boards of Engro Corp
and various Engro subsidiaries including as Chairman of Engro Vopak and Engro LNG Terminal. In addition, he has also
served on the Boards of Pakistan Institute of Corporate Governance, British Overseas School, KP Energy Board (PEDO)
and as Chairman of Pakistan Mercantile Exchange Limited. He is a CFA Charter Holder and holds an MBA degree from
Institute of Business Administration, Pakistan. He has attended the Advance Management Program at INSEAD and also
has Agri-Business certification from the Harvard Business School.

MR. SHAN A. ASHARY, NON-EXECUTIVE DIRECTOR

Mr. Ashary has been a Non-Executive Director of the Company since its privatisation in November 2005. He is a senior
executive with over 40 years of proven success in managing international investments, operations of a large diversified
group, finance, treasury, public accounting, and strategic and corporate planning. He is a Fellow of the Institute of
Chartered Accounts of England and Wales. Other Engagements: Investment Adviser, Al-Jomaih holding Co. (Saudi Arabia).

SYED ASAD ALI SHAH JILANI, NON-EXECUTIVE DIRECTOR

Mr. Shah, a Chartered Accountant, has over 35 years of experience in governance, audit & assurance, consulting, financial
advisory and tax services. Currently engaged in his own professional practice by the name of Asad Ali Shah Associates,
Chartered Accountants, he was previously the Managing Partner of Deloitte Pakistan, a member of Deloitte Touche
Tohmatsu LLC, one of the top four global professional services firms in the world. In addition, he serves as member of
Prime Minister’s Task Force on Austerity and Government Restructuring and as a member on the Policy Board of the
Securities and Exchange Commission of Pakistan. He also chairs the board of Pakistan Refinery Limited. He also remained
Advisor to Chief Minister Sindh on Finance, with status of Minister, President of the Institute of Chartered Accountants
of Pakistan and member of International Federation of Accountants, the global body representing accounting profession
on worldwide basis.

MR. WASEEM MUKHTAR, NON-EXECUTIVE DIRECTOR

Mr. Waseem Mukhtar represents the Government of Pakistan and was appointed as Non-Executive Director on the Board
of KE in April 2019. With more than 25 years of experience at the Provincial and Federal Government levels, covering
policy implementation and formulation in the arena of corporate management, public financial management, project
management and public service delivery, Mr. Mukhtar currently serves as Additional Secretary, Power Division,
Government of Pakistan. Mr. Mukhtar has previously served as Managing Director of Utility Stores Corporation and
National Fertilizer Marketing Limited.

PROFILES OF KEY MANAGEMENT

MR. DALE SINKLER, CHIEF GENERATION AND TRANSMISSION OFFICER

Mr. Dale Sinkler brings over 25 years of experience in the power sector ranging from energy sector reforms to
development, execution, operations and management across multiple power plants. He has worked with some of the
world’s largest power companies and has served as the Co-founder of O&M Solutions. He has previously served as Senior
Vice President of Southeast Asia for Globeleq and has spent 15 years with the AES Corporation as Chief Executive Office
for multiple AES businesses including AES Lalpir, AES Pakgen, AES Haripur, and AES Meghnaghat. Prior to that, he also
served as a consultant in the Generation and Transmission portfolio for KE.

Mr. Sinkler envisions an energy infrastructure which links power generation to consumption in real time. He is a frequent
contributor to power sector reforms in emerging markets. His presence of 15 years in this part of the world is a testament
to his dedication to Asia’s emerging markets and particularly Pakistan.

MR. AMER ZIA, CHIEF DISTRIBUTION OFFICER

Mr. Amer Zia is the Chief Distribution Officer, leading a team of over 7,000 employees. Prior to this, Mr. Zia has worked
in the private sector with USAID-Power Distribution Program, as well as in key leadership positions within public sector

Page 99 of 133
 Sukuk Prospectus | K-Electric Limited

organisations including NEPRA and IESCO. He has also served as an independent consultant with the World Bank through
the Competition Commission of Pakistan.

Mr. Zia has remained part of the management team responsible for the successful turnaround of KESC (now KE), as
Deputy Chief Operating Officer Distribution, and most recently as Chief of Distribution Operations.

He has a bachelor’s degree in Electrical Engineering from UET Peshawar, a master’s degree in Electrical Engineering from
Bradley University USA, and an MBA in Project Management. He also speaks at national and international forums about
power sector management and governance and lectures at WAPDA Power Distribution Academy.

MR. MUHAMMAD AAMIR GHAZIANI, CHIEF FINANCIAL OFFICER

Mr. Aamir Ghaziani has more than 20 years of experience in areas of accounting, financial management, risk
management, policy reforms, regulatory compliance and business turnarounds. He joined KE in 2008 and has played a
key role in driving KE’s turnaround over this decade. Prior to becoming KE’s Chief Financial Officer, he has also led KE’s
corporate planning and regulatory compliance function.

Mr. Ghaziani started his career in 1999 at A.F. Ferguson & Co. which is a member firm of PriceWaterhouseCoopers (PwC)
and has also served at CTTL, a leading LDI Telecom operator in various roles including as Financial Controller and Chief
Commercial Officer.

He is a fellow member of the Institute of Chartered Accountants of Pakistan (ICAP) and has also attended executive
management programmes at INSEAD and other prestigious institutions.

MR. RIZWAN DALIA, CHIEF PEOPLE OFFICER AND COMPANY SECRETARY

Mr. Muhammad Rizwan Dalia was appointed as Chief People Officer in March 2018. In addition, he serves as the Company
Secretary reporting to the Board of Directors. He joined KE in 2008 and has served in senior roles in the Finance and
Corporate Affairs functions, playing a key role in driving KE’s turnaround over this decade.

Mr. Dalia did his Articleship from A.F. Ferguson & Co. (a member firm of PricewaterhouseCoopers), and worked at
Pakistan State Oil from 2001 to 2007 in diverse roles in the Finance function. Mr. Dalia is a Fellow of the Institute of
Chartered Accountants of Pakistan and is also a Certified Director from the Pakistan Institute of Corporate Governance.

MAHREEN AZIZ KHAN, CHIEF MARKETING AND COMMUNICATION OFFICER

Mahreen Aziz Khan has over 19 years of experience in strategic communications, media, public policy and stakeholder
management. She has previously worked with the World Bank and Australian Aid with a focus on advocacy and
communications for public policy delivery. She has worked with local and international media, most notably BBC World
Television, and has also held key positions in a variety of public and private entities including the United Nations in
Kosovo.

Ms. Mahreen has a Barrister-At-Law from Cambridge University and a Master’s in Public Policy (MPP) from Harvard
University’s Kennedy School of Government. She has specialised in Strategic Management of Organisations, Political
Advocacy & Leadership, Media and Politics.

MR. RIZWAN PESNANI, HEAD OF TREASURY AND CORPORATE FINANCE

Mr. Rizwan Pesnani is the Head of Treasury and Corporate Finance of KE since November 2013. Prior to joining KE, he
worked for Industrial Promotion Services (Kenya) Ltd. [IPS Kenya] for two years. IPS Kenya is an Infrastructure
Development arm of Aga Khan Fund for Economic Development (AKFED) in East Africa.

Page 100 of 133

 Sukuk Prospectus | K-Electric Limited

He has also worked with State Bank of Pakistan for three years as Director Infrastructure and Housing Finance. He has
been associated with the power sector for the major part of his professional career that spans 23 years. He is a fellow
member of the Institute of Chartered Accountants of Pakistan.

MR. ASIF RAZA, CHIEF INTERNAL AUDITOR

Asif Raza has over 22 years of diversified experience in the field of audit, finance and risk management. He joined KE in
2007 and served as General Manager, Deputy Director and Director in the internal audit department of KE prior to his
existing role. Before KE, he also worked for PSO and Saudi Basic Industries Corporation (SABIC). He is a fellow member of
the Institute of Chartered Accountants of Pakistan and a Certified Internal Auditor from IIA-USA.

NAZ KHAN, CHIEF STRATEGY OFFICER

Ms Khan is a seasoned professional with over 25 years of experience across both financial services and industry. Prior to
joining KE, she was the Managing Director of X-Petroleum and has also served as Chief Financial Officer of Engro
Corporation at a time when the company saw a series of restructurings, divestitures and IPOs of subsidiaries as well as
growth through two landmark projects of LNG Terminal and Thar Coal and Power. Prior to Engro, Ms. Khan was the Chief
Executive Officer of KASB Funds Limited. Her association with Pakistan's capital markets spans over 20 years where she
was actively involved in the primary and secondary markets for debt and equity. She currently serves on the Boards of
Shell Pakistan, Pakistan Stock Exchange, Fauji Fertilizer Bin Qasim and UBL Fund Managers amongst others. Ms. Khan has
a bachelor’s degree in Economics from Mount Holyoke College, USA.

POWER OF DIRECTORS

As required under section 183 of the Companies Act 2017, and the Articles of Association of the Company, the authority
to conduct business of the Company is vested with its Board of Directors and they may exercise all such powers of the
Company as are not required, by the Companies Act 2017 or the Articles of Association of the Company or by a special
resolution to be exercised by the Company in the general meeting of the shareholders.

NUMBER OF DIRECTORS

Pursuant to Section 154 of the Companies Act, 2017, a listed Company shall not have less than seven (7) directors. At
present, the Board consists of 13 directors, including the Chief Executive Officer.

QUALIFICATION OF DIRECTORS

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

ELECTION OF DIRECTORS

The Directors shall comply with the provisions of Sections 154 to 159, 161 and 167 of the Companies Act 2017 relating to
the election of Directors and matters ancillary thereto. The thirteen (13) Directors of the Company were
elected/nominated effective July 30, 2019. The Board of Directors of the Company in exercise of powers vested in it
through Section 161(2) of the Companies Act 2017, has made appointment of Directors in order to fill in the casual
vacancies occurred from time to time for the remainder of the three-year term.

REMUNERATION OF DIRECTORS

Pursuant to Section 170 of Companies Act 2017 and in exercise of powers vested through Article 61 of Articles of
Association of the Company, the remuneration of a Director for attending meetings of the Board or a Committee formed

Page 101 of 133

 Sukuk Prospectus | K-Electric Limited

by the Board shall be PKR 100,000/- for each meeting attended by him, or such other amount as may be prescribed by
the Board. Chairman of Board of Directors and Chairman of all Board Committees formed by the Board shall be paid an
additional fee amounting to PKR 50,000 for each meeting attended by him.

INTEREST OF DIRECTORS ALONG WITH NUMBER AND VALUE OF SHARES HELD

The Directors may be deemed to be interested to the extent of fees payable to them for attending Board meetings. The
Directors performing whole time service to the Company may also be deemed to be interested in the remuneration
payable to them by the Company. The Directors may also be deemed to be interested to the extent of any shares held
by each of them in the Company and/or the Sukuk applied for and allotted to them through the public Issue.

INTEREST OF DIRECTORS IN PROPERTY/ASSET AND PROFIT OF THE COMPANY

None of the Directors of the Company has or had any interest in any property acquired by the Company within the last
two years.

BENEFITS TO PROMOTERS AND OFFICERS

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

VOTING RIGHTS

The Sukuk shall not carry any voting rights in relation to the Company.

BORROWING POWERS OF DIRECTORS

The Directors may from time to time raise or borrow any sum or sums of money or make any arrangement for finance
for the purpose of the Company. The Director may raise or secure the payment of such sum or sums or financial
arrangement in such manner and upon such terms and conditions in all respects as they think fit and in particular by
making, drawing, accepting or endorsing on behalf of the Company any promissory notes or bills of exchange or by issuing
bonds, perpetual or redeemable debentures or debenture stock or any mortgage, charge or other security on the
undertaking or the whole or any part of the property of the Company (both present and future) but no such charge shall
be created on unpaid capital of the Company.

INDEMNITY AVAILABLE TO DIRECTORS AND OTHER EMPLOYEES OF THE COMPANY

Pursuant to Article 25 of KE Articles of Association, if Directors or any of them or any other person shall become personally
liable for the payment of any sum primarily due from the Company, the Board may execute or cause to be executed any
mortgage, charge or security over or affecting the whole or any part of the assets of the Company by way of indemnity
to secure the Directors or person so becoming liable aforesaid from any loss in respect of such liability.

BOARD AUDIT COMMITTEE

The Board Audit Committee comprises the following members:

1. Khalid Rafi, Chairman
2. Ch. Khaqan Saadullah Khan, Member
3. Mubasher H. Sheikh, Member
4. Syed Asad Ali Shah Jilani, Member

Page 102 of 133

 Sukuk Prospectus | K-Electric Limited

BOARD HUMAN RESOURCE & REMUNERATION COMMITTEE

The Board Human Resource and Remuneration Committee comprises the following members:
1. Khalid Rafi, Chairman
2. Ch. Khaqan Saadullah Khan, Member
3. Shan A. Ashary, Member
4. Syed Moonis Abdullah Alvi, Member

CORPORATE GOVERNANCE

The Company makes all out efforts to comply with the applicable rules and regulations inter alia including Listed
Companies (Code of Corporate Governance) Regulation, 2019. Further, statement of compliance with Listed Companies
(Code of Corporate Governance) Regulations, 2017 for the year ended June 30, 2019 is mentioned in the annual report
of the Company.

Page 103 of 133

 Sukuk Prospectus | K-Electric Limited

PART X

10 LEGAL PROCEEDING, OVERDUE LOANS & CONTINGENCIES

LEGAL PROCEEDINGS

1. The Multi Year Tariff (MYT) applicable to the Company, for the previous tariff control period from 2009 to 2016,
outlines a claw-back mechanism whereby the Company is required to share a portion of its profits with
consumers when such profits exceed the stipulated thresholds. NEPRA vide its determination orders dated
October 17, 2014, June 10, 2015, July 24, 2018 and November 1, 2018 has determined claw-back amount of Rs.
43,601 million for the financial years 2012 to 2016.

The Company is not in agreement with the interpretation and calculation of claw back mechanism performed
by NEPRA, and accordingly has filed suits in the High Court of Sindh, praying that while finalising the claw-back
determination in respect of the financial years 2012 to 2016, NEPRA has mis-applied the claw-back formula as
prescribed in the MYT determination dated December 23, 2009. Amongst others, NEPRA has unlawfully included
‘accumulated losses’ as part of reserve, has not taken into account ‘surplus on revaluation of property, plant
and equipment’ and has calculated the claw-back on notional Earnings Before Interest and Tax (EBIT) instead of
EBIT based on audited financial statements. On June 19, 2015, in respect of suit for financial years 2012 and
2013, the High Court of Sindh (Single Bench) passed an order suspending the earlier relief granted to the
Company against implementation of NEPRA’s order dated October 17, 2014, which was duly contested by the
Company through an appeal before the High Court of Sindh (Divisional Bench), the adjudication of which is
pending to date. The decision dated June 19, 2015 has been suspended and interim relief against
implementation of NEPRA’s order dated October 17, 2014 continues. Further, in other suits filed in respect of
financial years 2014 to 2016, the interim relief provided to the Company against NEPRA’s order for each year
continues in the field.

Considering the above proceedings and the expert opinion obtained by the Company, the Company's
management considers that the Company has a good case and expects favourable outcome of the suits pending
before the High Court of Sindh. Without prejudice to the Company’s aforementioned legal position and on the
basis of abundant caution, a provision amounting to Rs. 25,232 million is being maintained by the Company in
the FY-2019 financial statements, in this respect.

2. On January 22, 2015, NEPRA issued an order directing the Company to discontinue charging of meter rent to the
consumers and refund the total amount collected to the consumers and also imposed a fine of Rs. 10 million, on
the Company. The Company filed a review application to NEPRA against the aforementioned order and
challenged the order on various grounds including that the direction issued by NEPRA is ultra vires and also that
NEPRA has ignored certain provisions of its own rules and regulations which allows the Company to charge meter
rent from its consumers. The review application filed by the Company with NEPRA was dismissed in April 2015.
Thereafter, the Company filed a constitutional petition before the High Court of Sindh, which is pending to date.
Meanwhile, a stay has been granted to the Company against any coercive action by NEPRA. The Company’s
management in accordance with the advice of its legal advisor expects a favourable outcome of the above-
mentioned constitutional petition. However, on the basis of prudence and as an abundant caution, the Company
carries a provision of Rs. 326 million in the FY-2019 financial statements on account of meter rent charged from
January 22, 2015 up to June 30, 2016. Further, NEPRA has excluded meter rent from “Other Income” component
of tariff in the MYT decision effective from July 1, 2016; accordingly, there is no dispute between the Company
and NEPRA on the matter of meter rent with effect from July 1, 2016.

Page 104 of 133

Sukuk Prospectus | K-Electric Limited

3. NEPRA through its order dated March 13, 2015 directed the Company not to collect bank charges as a separate
revenue from its consumers through monthly billings, as these bank charges were already included in the MYT
2009–16 as part of operations and maintenance cost. NEPRA further directed the Company to refund the
amount collected as bank charges to its consumers. The Company refuted NEPRA’s aforementioned order and
filed a review petition which was rejected by NEPRA through its review decision dated October 27, 2015.
Thereafter, the Company filed a suit on November 10, 2015, before the High Court of Sindh which is pending to
date. Meanwhile, through an interim order dated November 17, 2015 by the High Court of Sindh, NEPRA has
been restrained from taking any coercive action against the Company in this regard. The Company, is of the view
that such charges were being collected from the customers as per the directives of the State Bank of Pakistan
and as per NEPRA’s approval dated July 21, 2010 issued in this regard and these were never made part of MYT
2009–16. Therefore, in accordance with the advices obtained from its legal advisors, the Company is confident
of a favourable outcome on this matter, and accordingly, no provision has been recognised in this respect.
Further, NEPRA has separately included bank charges in the operations and maintenance' component of tariff
in the MYT Decision effective from July 1, 2016; accordingly there is no dispute between the Company and
NEPRA on the matter of bank charges with effect from July 1, 2016.

4. The Supreme Court of Pakistan, in its judgment dated August 22, 2014, in a civil appeal, declared that the levy
of Gas Infrastructure Development Cess (GIDC) under Gas Infrastructure Development Cess Act, 2011 was
unconstitutional and all amounts collected by the gas companies were due to be refunded back to the
consumers. The Federal Government on September 24, 2014, promulgated Gas Infrastructure Development
Cess (GIDC) Ordinance, 2014. Under that Ordinance, the Federal Government again levied GIDC chargeable on
gas consumers (both power sector and industrial sector) other than domestic consumers and also fixed the
responsibility of charging and collection of GIDC on gas companies. This GIDC Ordinance, retrospectively,
validated the cess collected/levied or paid under the previous Gas Infrastructure Development Cess Act, 2011
which had been held illegal by the Supreme Court of Pakistan.

In October 2014, SSGC in its monthly bills issued to the Company, claimed GIDC amounting to Rs. 1,925 million,
excluding sales tax, for the period from July to September 2014. The Company filed a fresh legal suit before the
High Court of Sindh. The High Court of Sindh through its order dated October 21, 2014, granted stay and
restrained the Federal Government and SSGC from raising any demand which continues till date. The GIDC
Ordinance lapsed on January 24, 2015, and therefore all amounts previously paid by the Company to SSGC
amounting to Rs. 4,672 million in respect of GIDC became immediately due and recoverable from SSGC.

On May 23, 2015, the GOP after approval from the parliament, promulgated GIDC Act 2015 again levying cess
on gas consumers and made the gas companies responsible to collect the cess. The Company again filed a suit
in the High Court of Sindh challenging the GIDC Act 2015 and through its counsel maintains that certain grounds
were not taken into consideration while promulgating GIDC Act 2015. The High Court of Sindh while granting
stay issued notices to the respondents and restrained SSGC from raising any demand under the GIDC Act 2015.

Single bench of the High Court of Sindh through its judgement (by consolidating all similar cases) dated October
26, 2016 held the GIDC Act 2011, GIDC Ordinance 2014 and GIDC Act 2015 to be ultra vires and unconstitutional
and held that the amounts collected in pursuance of the above laws is liable to be refunded/adjusted in the
future bills. Subsequently, GOP filed an appeal before the divisional bench of the High Court of Sindh challenging
the above judgement (in respect of few other parties), whereby the decision of the single bench was suspended
by the divisional bench of the High Court of Sindh on November 10, 2016.

Subsequent to the year ended June 30, 2019, High Court of Peshawar ruled that the 2015 GIDC Act was
constitutional. Aggrieved parties filed an appeal thereagainst before the Supreme Court of Pakistan to challenge

Page 105 of 133

Sukuk Prospectus | K-Electric Limited

the said decision. The Company was impleaded as a party in the said appeal on the basis of its Intervener
Application.

The Company’s counsel argued that the levy of GIDC through the GIDC Act of 2015 was unconstitutional as there
was no element of quid pro quo in reciprocity of the fee being charged. The Company’s counsel further argued
that since the judgment and decree passed by the High Court of Sindh in the Company's suit has not challenged
consequently the same becomes a past and closed transaction. Further, any rights accrued in favour of the
Company on the basis of such judgement and decree could not be affected by any decision the Supreme Court
comes to in the instant proceedings. The Supreme Court has heard the appeal and the case is now reserved for
judgement.

In the eventual outcome, the amount payable by the Company, if any, on account of GIDC will be ultimately
recovered through MYT as a pass-through item.

5. As part of MYT decision, NEPRA through its order dated July 5, 2018, directed the Company to pay interest on
security deposit collected from consumers. However, the Company, disagrees with the direction of NEPRA, being
without any lawful justification and discriminatory as no other power utility in Pakistan is required to pay interest
on security deposit. Accordingly, the Company filed a constitutional petition in the High Court of Sindh on May
30, 2019. The High Court of Sindh through its order dated May 30, 2019 has restrained NEPRA from taking any
coercive action against the Company. Based on the advice of the legal advisor, the Company’s management
expects a favourable outcome of the above mentioned constitutional petition. However, on the basis of
prudence and as an abundant caution, a provision amounting to Rs. 1,036 million (2018: Rs. 631 million) has
been recognised in FY-2019 Financial statements in this respect.

OVERDUE LOANS & CONTINGENCIES

1. Mark-up on overdue balances with National Transmission and Dispatch Company (NTDC)/Central Power
Purchasing Agency (Guarantee) Limited (CPPA), major government owned power supplier, has not been accrued
in these financial statements. With effect from June 2015, CPPA has assumed the central power purchase
division of NTDC along with the related assets, rights and liabilities of NTDC, including alleged receivables from
the Company. The Company is of the view that in accordance with the mechanism defined in the Power Purchase
Agreement (PPA) dated January 26, 2010 with NTDC, NTDC’s dues are to be settled by the Ministry of Finance
(MOF) through payment of the Company’s tariff differential claims directly to NTDC. Up to June 30, 2019, the
MOF has released the Company’s tariff differential claims aggregating Rs. 392,942 million directly to NTDC/CPPA.
Additionally, the Company has directly paid Rs. 43,475 million up to June 30, 2019 to NTDC/CPPA on account of
its outstanding dues on an agreed mechanism. The PPA with NTDC has expired on January 25, 2015. However,
the supply of electricity of 650 Megawatts (MW) continues in line with the High Court of Sindh’s order dated
February 6, 2014. Accordingly, to date NTDC/CPPA continues to raise invoices in line with the terms of PPA.
Discussions with NTDC/CPPA are underway for the renewal of PPA.

2. On June 22, 2018, NTDC/CPPA filed a suit in the Civil Court of Islamabad for recovery of Rs. 83,990 million up to
May 2018, comprising principal amounting to Rs. 66,347 million and markup thereon amounting to Rs. 17,643
million, the decision of which is pending to date. Within the alleged claims filed by NTDC/CPPA in the
aforementioned suit, release of tariff differential claims amounting to Rs. 15,021 million was unilaterally
adjusted by NTDC/CPPA against the disputed markup claim. This was subsequently corrected by NTDC/CPPA and
adjusted against the principal balance (resulting in decrease in principal amount with corresponding increase in
mark-up), as confirmed from invoices and correspondence received afterwards. NTDC/CPPA’s markup claim up
to June 30, 2019 amounts to Rs. 42,875 million which is on the premise that while the outstanding amounts
were to be adjusted against tariff differential claims, the Company is eventually responsible for payments of all

Page 106 of 133

 Sukuk Prospectus | K-Electric Limited

outstanding amounts, including markup. However, the Company has not acknowledged the disputed mark-up
claimed by NTDC/CPPA as debt, as the Company is of the view that the disputed mark-up claims would not have
arisen in case tariff differential claims payments, including payments related to claims of unrecovered cost due
to 4% capping and gas load management plan were released to NTDC/CPPA by the MOF on behalf of the
Company on timely basis.
3. In addition to above, the markup claimed by Sui Southern Gas Company Limited (SSGC) through its monthly
invoices from July 2010 to June 2019 aggregates to Rs. 76,281 million, which has not been accrued by the
Company. In view of the Company, the unilateral reduction of gas by SSGC in year 2009-10, in violation of the
Economic Coordination Committee (ECC) allocation and Head of Term Agreement dated July 31, 2009, led to
increased consumption of furnace oil, which coupled with non-payment by government entities, as more fully
explained below, significantly affected the Company’s liquidity and hence the markup claim is not tenable.

4. In the year 2013, SSGC filed a Suit against the Company, in the High Court of Sindh for recovery of unpaid gas
consumption charges and interest thereon and the damages amounting to Rs. 45,705 million and Rs. 10,000
million, respectively. The Company also filed a suit, against SSGC in the High Court of Sindh for recovery of
damages/losses of Rs. 59,600 million resulting from SSGC’s failure to comply with its legal obligation to supply
the allocated and committed quantity of 276 MMCFD of natural gas to the Company. The cases were fixed for
hearing on October 7, 2019 and adjourned to date in office. The earlier stay granted to SSGC against the
Company is vacated on October 07, 2019, against which SSGC has filed an appeal in the High Court of Sindh.

5. Further, the Company entered into a payment plan with SSGC in the year 2014 and subsequently renewed the
plan in years 2015 and 2016, which provided for a mechanism for payment of principal arrears by the Company
on supply of adequate gas by SSGC. The dispute of mark-up claim has also been mentioned in the payment plan.
The Company’s management is of the view that the principal payments made by the Company to SSGC have
been unilaterally adjusted by SSGC against SSGC’s disputed markup claim, which is in violation of the payment
plan which clearly mentions that the payments are to be adjusted against outstanding principal balances and
hence any adjustment against the markup by SSGC in the Company’s view is not tenable.

The Company’s management believes that overdue amounts have only arisen due to circular debt situation caused by
delayed settlement of tariff differential claims by the MOF as well as delayed settlement of the Company’s energy dues
by certain public sector consumers (e.g. KW&SB), the dues of which have been guaranteed by the GoP under the
Implementation Agreement dated November 14, 2005 and amended through the Amended Agreement dated April 13,
2009 (“IA”) and Government of Sindh departments and entities (GoS Entities). Given that NTDC/CPPA and SSGC are
majorly owned and controlled by the GoP and considering that tariff differential claims and energy dues of KW&SB
(guaranteed by the GoP under the Implementation Agreement) are the Company’s receivables from the GoP and energy
dues of GoS Entities are also receivable from GoS, the Company’s management is of the view that the settlement of these
outstanding balances will be made on a net basis. Further, this contention of the Company’s management is also
supported by the legal advices that it has obtained. Hence, markup/financial charges will be payable by the Company
only when it will reciprocally receive markup on outstanding balances receivable from the Company’s outstanding tariff
differential claims and energy dues of public sector consumers. Without prejudice to the aforementioned position of the
Company and solely on the basis of abundant caution, a provision amounting to Rs. 5,269 million is being maintained by
the Company in the FY-2019 financial statements on account of markup on delayed payment.

CLAIMS NOT ACKNOWLEDGED AS DEBT

A claim amounting to Rs. 73 million, was lodged by Pakistan Steel Mills Corporation (PASMIC) in respect of right of way
charges for transmission line passing through the premises of PASMIC. The said claim has been calculated on the basis of
the minutes of the meeting held on July 19, 1994, wherein, the key terms were subject to approval of the Company and
PASMIC, which was not duly approved.

Page 107 of 133

 Sukuk Prospectus | K-Electric Limited

The Company vide its letter dated June 27, 2007 refuted the aforementioned claim of PASMIC on the grounds that as per
section 12 and section 51 of the Electricity Act, 1910, any licensee is permitted to lay down or place electric supply lines
with the permission of local authority or the occupier of that land, subject to conferment of powers under Part III, of the
Telegraph Act, 1885. Moreover, public utility is also barred from payment of annual rentals to any authority under the
Electricity Act, 1910 and that the claim is time barred. Further, the Company was issued license from provincial
government and all concessions and permissions for such exemptions are provided in the license. Based on the above
mentioned facts, the Company is not liable to pay any amount, whatsoever, in this regard and therefore has not
acknowledged the aforementioned claim as debt.

The Company is party to number of cases in respect of fatal injuries, billing disputes, property tax, water charges, custom
duty, occupancy charges, ground rent, rent of electric poles and cable and employee related cases. Based on the opinion
of Company's lawyers, the management is confident that the outcome of the cases will be in favour of the Company.
Accordingly, no provision has been made in respect of these cases/claims in these financial statements:

Claims Description (in PKR ‘000) FY18 FY19

Fatal accident cases 77,773 77,773
Architect's fee in respect of the Head Office project 50,868 50,868
Outstanding dues of property tax, water charges, custom duty, ground
8,587,443 9,389,983
rent and occupancy value

The Company does not have any legal proceedings other than related to Company’s normal course of business and that
could have material impact on the company. Based on the opinion of the Company’s legal counsel, the management
believes that the outcome of these cases will most likely be in favour of the Company.

DETAILS OF OVERDUE AMOUNT

There are no overdue balances to any financial institutions established in Pakistan appearing in the Credit Information
Bureau (CIB) report of the Issuer, its sponsors, substantial shareholders, directors and associated group companies over
which the Issuer has control.

Page 108 of 133

 Sukuk Prospectus | K-Electric Limited

PART XI

11 UNDERWRITING ARRANGEMENT, COMMISSION, BROKERAGE AND OTHER EXPENSES

UNDERWITING ARRANGEMENT

Regulation 13(4) of the Public Offering Regulations, 2017 (as amended from time to time) allows for waiver from
underwriting arrangements for the public offer of Sukuk Issue. The utilisation of proceeds as mentioned in part 2.4 and
4.1 of this prospectus meets the conditions as set out in aforementioned regulation. Therefore, KE has not underwritten
the IPO portion of this Sukuk Issue.

FEES AND EXPENSES FOR CENTRALISED E-IPO (CES) SYSTEM

The commission on application received through CES will be paid to CDC, which shall not be more than 0.8% of the
amount of successful applications. CDC will share the fee with other participants of CES at a ratio agreed amongst them.

COMMISSION TO THE BANKERS TO THE ISSUE

A commission at the rate of 0.25% of the amount collected, in respect of successful applications will be paid to the Bankers
to the Issue for services to be rendered by them in connection with the IPO.

BROKERAGE COMMISSION

Brokerage shall be paid to the TREC holders of PSX, at the rate of 0.25% of paid-up value of Sukuk actually sold through
them.

EXPENSES TO THE ISSUE

The initial expenses of the issue paid or payable by the Company inclusive of commission to the Bankers to the Issue and
members of the PSX, etc. are estimated to be as follows:

Expenses to the Issue Rate Amount (PKR)

Commission to the Bankers to the Issue Including Out-of-Pocket Expenses 0.25% 2,265,000
E-IPO Services* 0.80% 5,168,000
E-IPO Charges of Banks 1,750,000
Commission to the TREC Holders of PSX 0.25% 3,230,000
Consultant to the Issue Fee 6,000,000
Trustee Fee p.a. 1,500,000
Rating Fee 2,500,000
Transaction Legal Counsel 3,250,000
Issuer Legal Counsel 1,250,000
Structuring Agent Fee 237,080,000
Collection Agent Fee p.a. 2,500,000
Shariah Structuring Fee and Shariah Board Member Fee 10,000,000

Page 109 of 133

 Sukuk Prospectus | K-Electric Limited

CDC Annual Fee for Eligible Security p.a. 850,000

CDC Fresh Issue Fee 1,000,000
PSX Initial Listing Fee 500,000
PSX Annual Listing Fee 50,000
SECP Processing Fee 100,000
SECP Supervisory Fee 55,000
SECP Fees for Shariah Compliant Certificate 10,000
Auditors for Preparation of Various Certificates 750,000
Printing, Publication of Prospectus/Application Forms 6,000,000
Marketing 7,500,000
Balloter & Share Registrar Fee etc. 5,330,000
Market Making (first year) 2,000,000
Miscellaneous Costs 2,000,000
Total 302,638,000
Notes:
- Stamp duty fee (if any) will be paid as per applicable law.
- All fees are excluding Sales Tax/FED
- * CDC E-IPO fee is 0.8% of the general portion. The Actual cost is dependent on the subscriptions received through E-
IPO.

Page 110 of 133

 Sukuk Prospectus | K-Electric Limited

PART XII

12 MISCELLANEOUS INFORMATION

REGISTERED OFFICE/CORPORATE OFFICE

Address: KE House, 39 B, Sunset Boulevard, Phase II, DHA, Karachi

Tel: 021-32637133, 111-537-211
Fax: 021-99205165
Website: wwe.ke.com.pk

BANKERS TO THE COMPANY

S.
Name Address Contact # Email
No.
Allied Bank 2nd Floor, Bath Island Building, +92 21 111 225 225 info@abl.com.pk
1
Limited Main Clifton Road, Karachi, 75600
Askari Bank 3rd Floor, Plot No. BC-1, Block 9, +92 51 8092000 support@askaribank.com.
2
Limited Scheme-5 Clifton Karachi pk
Bank Alfalah Limited – B.A. +92 21 111 225 111 farahn@bankalfalah.com
Bank Alfalah
3 Building Mezzanine Floor, I.I.
Limited
Chundrigar Road, Karachi
4th Floor, Mackinnons Building, I.I. +92 21 111 014 014 info@bankalhabib.com
Bank AL Habib
4 Chundrigar Road, Karachi,
Limited
Pakistan
13th Floor Executive Tower, +92 21 111 475 264 contact.center@bankisla
Bank Islami
5 Dolmen City, Clifton Block-4, mi.com.pk
Pakistan Limited
Karachi, Pakistan
5-C Lane 4, Khayaban-e-Shahbaz, +92 42 35783700-10 feedback@bop.com.pk
6 Bank of Punjab
Phase VI, DHA, Karachi
Bank of China 23 Zhongshan, East 1st Rd, Wai +86 10 6659 2638 ir@bankofchina.com
7 Limited, Tan, Huangpu, Shanghai, China
Shanghai Branch
Dubai Islamic 2nd Floor, Hassan Chambers, DC- +92 21 111 786 342 info@dibpak.com
8 Bank Pakistan 7, Block 7, Kehkashan, Clifton,
Limited Karachi, Pakistan
Faysal Bank Faysal House, ST-02, Shahrah-e- +92 21 111 747 747 AhmedAbid@faysalbank.c
9
Limited Faisal, Karachi om
S.T.S.M. Foundation Building, +92 21 111 676 767 zahida.begum@fwbl.com.
First Women
10 Beaumont Road, Civil Lines, Off pk
Bank Limited
Dr. Ziauddin Ahmed Road, Karachi
Habib Bank HBL, 2/F, HBL Plaza, I.I. +92 21 32464801 ozair.bilgrami@hbl.com
11
Limited Chundrigar Road, Karachi

Page 111 of 133

Sukuk Prospectus | K-Electric Limited

S.
Name Address Contact # Email
No.
Industrial & 15th Floor, Ocean Tower, G-3, +92 21 35208920 muhammad.shoaib@pk.ic
Commercial Block-9, Main Clifton Road, bc.com.cn
12 Bank of China Karachi
Limited (Pakistan
Branch)
Industrial & No. 55 FuXingMenNei Street, +86 10 6610 8608 ir@icbc.com.cn
Commercial Xicheng District, Beijing, P.R.C.
13
Bank of China
(China Office)
JS Bank Boat Basin Branch, +92 21 111 572 265 Marketing@jsbl.com
14 JS Bank Limited
Karachi
MCB Bank 19th Floor MCB Tower, I.I. +92 21 111 000 622 salman.khawaja@mcb.co
15
Limited Chundrigar Road, Karachi m.pk
Mezzanine Floor, Al Haram +92 42 34501000 info@mcbislamicbank.co
MCB Islamic Corner, Plot No. 167-A, Block-3, m
16
Bank Limited PECHS, Khalid Bin Waleed Road,
Karachi
Meezan Bank Limited, 2nd Floor, +92 21 38103500 info@meezanbank.com
Meezan Bank
17 Meezan House, C-25, Estate
Limited
Avenue, S.I.T.E., Karachi
1st Floor, Head Office Building, I.I. +92 21 99220100 abbas.raza01@nbp.com.p
National Bank of
18 Chundrigar Road, Karachi 74000, k
Pakistan
Pakistan
Sidco Avenue Center, 7th Floor, +92 21 111 172 622 Samba.Care@samba.com.
Samba Bank
19 MDM Wafa Road, Saddar, Karachi pk
Limited
- 74200, Pakistan
Soneri Bank PNSC Building - 10th Floor, M.T. +92 21 111 766 374 complaint.suggestion@so
20
Limited Khan Road, Karachi neribank.com
Standard 4th Floor, Head Office, I.I +92 21 111 722 724 ask.us@sc.com
Chartered Bank Chundrigarh Road, Karachi,
21
(Pakistan) Pakistan
Limited
Standard Standard Chartered Bank, 1 +44 (0)20 7885 8888 Straight2bank.uk@sc.com
22 Chartered Bank Basinghall Avenue, London
(UK)
Summit Bank Bakht Tower, 12th Floor, Plot No. +92 21 111 124 365 complaints@summitbank.
23
Limited G-2, Block 2, Clifton, Karachi com.pk
United Bank 14th Floor, UBL Head Office, I.I. +92 21 111 825 888 customer.services@ubl.co
24
Limited Chundrigar Road, Karachi m.pk

Page 112 of 133

 Sukuk Prospectus | K-Electric Limited

BANKERS TO THE ISSUE

1. Askari Bank Limited

2. Bank AL Habib Limited
3. Bank Islami Pakistan Limited
4. Dubai Islamic Bank Pakistan Limited
5. Faysal Bank Limited
6. Habib Bank Limited
7. Habib Metropolitan Bank Limited
8. MCB Bank Limited
9. Meezan Bank Limited
10. Soneri Bank Limited
11. United Bank Limited

AUDITORS OF THE COMPANY

A.F. Ferguson & Co.

State Life Building No. 1-C,
I.I. Chundrigar Road, Karachi
Tel: 32426682-6/32426711-5
Fax: +92 (21) 32415007/32427938
Website: www.pwc.com

BDO Ebrahim & Co.

2nd Floor, Block-C,
Lakson Square, Building No. 1,
Sarwar Shaheed Road, Karachi
Tel: +92 21 3568 3030
Fax: +92 21 3568 4239
Website: www.bdo.com.pk

LEGAL COUNSEL OF THE COMPANY

Mohsin Tayebaly & Company

Dime Centre, Khayaban-e-Iqbal,
Block 9, Clifton, Karachi, Sindh
Tel: (92-21) 111-682-529
Fax: (92-21) 35870240
Website: http://mtclaw.com.pk

LEGAL COUNSEL TO THE ISSUE

HaidermotaBNR & Co.

Barristers at Law & Corporate Counsellors
Karachi Office: D-79, Block 5, Clifton, Karachi 75600
Tel: 021-111 520 000
Fax: 021-35871054
Website: www.hmcobnr.com.pk

Page 113 of 133

 Sukuk Prospectus | K-Electric Limited

TRUSTEE TO THE ISSUE

Pak Brunei Investment Company Limited

Horizon Vista, Commercial 10,
Block No. 4, Scheme No. 5, Clifton, Karachi.
Tel: (92-21) 35361215-19
Fax: (92-21) 35361213, 35370873
Website: www.pakbrunei.com.pk

CONSULTANT TO THE ISSUE

Arif Habib Limited

Arif Habib Center
23, MT Khan Road, Karachi
Tel: 021-3246 5891
Fax: 021-3242 9653
Email: dabeer.hasan@arifhabibltd.com
Website: www.arifhabibltd.com

COMPUTER BALLOTER AND SHARES REGISTRAR

Central Depository Company of Pakistan Limited

CDC House, 99-B, Block B, S.M.C.H.S.,
Main Shahrah-e-Faisal, Karachi
Tel: +92 (021) 111 111 500
Website: http://cdcpakistan.com/

DESIGNATED MARKET MAKER

Arif Habib Limited

Arif Habib Center
23, MT Khan Road, Karachi
Tel: 021-3246 8297
Fax: 021-3242 9653
Email: zahid.khan@arifhabibltd.com
Website: www.arifhabibltd.com

CREDIT RATING AGENCY

VIS Credit Rating Company Limited

VIS House, 128/C, 25th Lane, off Khayaban-e-Ittehad,
Phase VII, DHA, Karachi
Tel: +92-21-35311861-66
Fax: +92-21-35311873
Website: http://jcrvis.com.pk/

Page 114 of 133

 Sukuk Prospectus | K-Electric Limited

PART XIII

13 MATERIAL CONTRACTS AND DOCUMENTS RELATED TO THE ISSUE

INVESTORS AGREEMENT

Amount
S. No. Pre-IPO Investors Agreement Date
(PKR ‘000)
1 Agri Auto Industries Limited Employees Provident Fund 2,000 26-Dec-19
2 Al Baraka Bank (Pakistan) Limited 500,000 26-Dec-19
3 Al Baraka Bank Pakistan Limited – Staff Provident Fund 50,000 26-Dec-19
4 Allied Bank Limited 600,000 26-Dec-19
5 Askari Bank Ltd. 1,000,000 27-Dec-19
6 Bestway Foundation 250,000 26-Dec-19
7 Byco Petroleum Ltd Employees Provident Fund 5,000 26-Dec-19
8 CDC Trustee Meezan Balanced Fund 200,000 26-Dec-19
9 CDC Trustee Meezan Islamic Income Fund 400,000 26-Dec-19
10 CDC Trustee Meezan Tahaffuz Pension Fund-Debt Sub Fund 40,000 26-Dec-19
11 Dawood Family Takaful Limited 300,000 26-Dec-19
12 Descon Oxychem Limited Employees Provident Fund Trust 500 26-Dec-19
13 Descon Power Solutions (Pvt) Limited Staff Provident Fund Trust 3,000 26-Dec-19
14 Engro Corporation Limited Provident Fund 31,000 26-Dec-19
15 Engro Corporation Limited Provident Fund 84,000 27-Dec-19
16 Engro Fertilizer Limited NMPT Employees Gratuity Fund 5,000 26-Dec-19
17 Government of Sindh – Provincial Pension Fund 1,875,000 30-Dec-19
18 Gul Ahmed Textile Mills Ltd. Employees Provident Fund Trust 14,000 26-Dec-19
19 Habib Bank Limited 5,000,000 27-Dec-19
20 Hilal Group Employees Provident Fund 5,000 26-Dec-19
21 ICI Pakistan Limited Management Staff Gratuity Fund 48,000 26-Dec-19
22 Inspectest Private Limited Employees Provident Fund Trust 200 26-Dec-19
23 Jubilee Life Insurance Company Limited 1,250,000 26-Dec-19
24 K- Electric Employees Gratuity Fund 78,000 26-Dec-19
25 Karachi Electric Provident Fund 172,000 26-Dec-19
26 NAFA Islamic Pension Fund Debt Sub Fund Account 10,000 26-Dec-19
27 National Bank of Pakistan 5,000,000 26-Dec-19
28 NBP Financial Sector Income Fund 492,300 26-Dec-19
29 NBP Income Opportunity Fund 400,000 26-Dec-19
30 NBP Riba Free Savings Fund 500,000 26-Dec-19
31 Pak Arab Refinery Ltd Supervisory Staff Gratuity Fund 14,000 26-Dec-19
32 Pak Kuwait Investment Co. (Pvt.) Ltd. 1,500,000 26-Dec-19
33 Pak Oman Investment Company Limited 500,000 27-Dec-19

Page 115 of 133

Sukuk Prospectus | K-Electric Limited

Amount
S. No. Pre-IPO Investors Agreement Date
(PKR ‘000)
34 Pakistan Mobile Communications Limited – Provident Fund 50,000 26-Dec-19
35 Pakistan Telecommunication Employees Trust 150,000 26-Dec-19
36 Pak-Qatar Family Takaful Ltd 700,000 17-Dec-19
37 Service Provident Fund Trust 50,000 30-Dec-19
38 Service Provident Fund Trust 8,000 26-Dec-19
39 Sindh General Provident Investment Fund 1,875,000 31-Dec-19
40 Telenor Pakistan (Pvt) Limited Employees Gratuity Fund 21,000 26-Dec-19
41 Telenor Pakistan (Pvt) Limited Employees Provident Fund 7,000 26-Dec-19
42 Telenor Pakistan (Pvt) Limited Employees Provident Fund 5,000 26-Dec-19
43 THAL Ltd Employees Provident Fund 8,000 26-Dec-19
44 THAL Ltd Employees Retirement Benefit Fund 1,000 26-Dec-19
45 The Bank of Khyber 500,000 26-Dec-19
46 The Crescent Textile Mills Employees Provident Fund Trust 4,000 26-Dec-19
Total 23,708,000

OTHER MATERIAL DOCUMENTS

S. No. Description Date

1 Investment Agency Agreement 17-Dec-19
2 Asset Purchase Agreement 17-Dec-19
3 Agreement to enter into Musharakah 17-Dec-19
4 Payment Agreement 17-Dec-19
5 Service Agency Agreement 17-Dec-19
6 Declaration of Trust 17-Dec-19
7 Collection Agreement 17-Dec-19
8 Purchase Undertaking 17-Dec-19
9 Sale Undertaking 17-Dec-19
10 Shariah Board Fatwa 06-Dec-19
11 Letter of Hypothecation of Hypothecated Properties 26-Dec-19
12 Letter of Hypothecation of Hypothecated Collections, Accounts and Deposits 26-Dec-19
13 Letter of Lien and Set Off on Hypothecated Accounts and Deposits 26-Dec-19
14 Letter of Lien and Set Off on Payment Account(s) 26-Dec-19
15 First Amendment to the Declaration of Trust 17-Apr-20
16 First Amendment Agreement to the Collection Agreement 17-Apr-20
17 First Amendment Agreement to the Payment Agreement 17-Apr-20
18 First Supplemental to the Letter of Lien and Set Off (Sukuk Payment Account) 17-Apr-20

Page 116 of 133

 Sukuk Prospectus | K-Electric Limited

In addition to the above-mentioned financing documents pertaining to the Sukuk Issue, KE has entered into several
agreements pertaining to normal course of business including financing arrangements with various financial institutions.
The details of which are available in the audited FY19 financials of KE in Notes 19, 20 and 27.

INSPECTION OF DOCUMENTS AND AGREEMENTS

All the Balance Sheets and Profit & Loss Accounts, Copies of the Memorandum and the Articles of Association, the
Auditor’s Certificates, Trust Deeds, the Letter of Hypothecation, the Credit Rating Report by VIS Credit Rating Agency,
Clearance letter from PSX and the approval letter from Securities & Exchange Commission of Pakistan, and the copies of
agreements referred to in this Prospectus may be inspected during usual business hours on any working day at the
registered office of the Company from the date of publication of this Prospectus until the closing of the Subscription
Period.

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 authorised to undertake. A copy of the Memorandum of Association is annexed to this
Prospectus and with every issue of the Prospectus except the one that is released in newspapers as advertisement.

FINANCIAL YEAR OF THE COMPANY

The financial year of the Company commences on July 1 and ends on June 30.

Page 117 of 133

 Sukuk Prospectus | K-Electric Limited

PART XIV

14 APPLICATION AND ALLOTMENT INSTRUCTION

ELIGIBLE INVESTORS INCLUDE:

1. Pakistani citizens resident in or outside Pakistan or Persons holding two nationalities including Pakistani nationality;
2. Foreign nationals whether living in or outside Pakistan;
3. Companies, bodies corporate or other legal entities incorporated or established in or outside Pakistan (to the extent
permitted by their constitutive documents and existing regulations, as the case may be);
4. Mutual Funds, Provident/pension/gratuity funds/trusts, (subject to the terms of the Trust Deed and existing
regulations); and
5. Branches in Pakistan of companies and bodies corporate incorporated outside Pakistan

OPENING AND CLOSING OF THE SUBSCRIPTION PERIOD

The Public Subscription Period for KE Sukuk will start from July 23, 2020 and will end on August 20, 2020. The public
subscription period for the Sukuk will be split into two parts i.e.:

a) Subscription Period for only Individual investors from July 23, 2020 to August 2, 2020 (both days inclusive)
during banking hours for investors submitting physical applications with Bankers to the Issue and 24 hours for
investors using E-IPO services; and
b) Subscription Period for Individuals, Institutional and other investors / participants from August 3, 2020 to
August 20, 2020 (both days inclusive) during banking hours for investors submitting physical applications with
Bankers to the Issue and 24 hours for investors opting E-IPO services

COPIES OF PROSPECTUS

Copies of the Prospectus and Application Forms can be obtained from the Trading Rights Entitlement Certificate (TREC)
holders of Pakistan Stock Exchange Limited, the Bankers to the Issue and their branches, the Consultant to the Issue
and the registered office of the Company. The Prospectus and the Application Forms can also be downloaded from the
website: http://www.ke.com.pk/, www.arifhabibltd.com & https://eipo.cdcaccess.com.pk/public/index.xhtml

The Applicants are required to complete the relevant sections of the application to get the Sukuk in scrip-less form. In
accordance with provisions of the Central Depositories Act, 1997 and the CDCPL Regulations, credit of such Sukuk is
allowed ONLY in the applicant’s own CDC Account OR in CDC’s IPO Facilitation Account. (IPO Facilitation Account is an
Investor Account opened by CDC under its Regulations for the purpose of crediting and holding of Securities on behalf of
individual Pakistani investors who have subscribed to such Securities offered by an Issuer/Offeror).

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

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

Page 118 of 133

 Sukuk Prospectus | K-Electric Limited

APPLICATIONS MADE BY INDIVIDUAL INVESTORS

1. In case of individual investors, a photocopy of the CNIC (in case of resident Pakistanis)/NICOP or Passport (in case of
non-resident Pakistanis) as the case may be, should be enclosed and the number of CNIC/NICOP/Passport should be
written against the name of the applicant.

2. Original CNIC/NICOP/Passport, along with a photocopy, must be produced for verification to the Banker to the Issue
and the applicant’s banker (if different from the Banker to the Issue) at the time of presenting an application. The
photocopy will, after verification, be retained by the branch along with the application.

APPLICATIONS MADE BY INSTITUTIONAL INVESTORS

1. Applications made by companies, corporate bodies, mutual funds, provident/pension/gratuity funds/trusts and
other legal entities must be accompanied by a photocopy of their memorandum and articles of association or
equivalent instrument/document. Where applications are made by virtue of power of attorney, the same should also
be submitted along with the application.

2. Photocopies of the documents mentioned in paragraph 14.7(1) above must be produced for verification to the
Banker to the Issue and the applicant’s banker (if different from the Banker to the Issue) at the time of presenting
the application. The copies, will after verification, be retained by the bank branch along with the application.

ADDITIONAL INSTRUCTIONS FOR INVESTORS

1. Only one application will be accepted against each account, however, in case of joint accounts, one application may
be submitted in the name of each joint account holder.

2. Joint application in name of more than two persons will not be accepted. In case of joint application each applicant
must sign the application form and submit copies of their CNICs/NICOP/Passports. The securities will be credited to
the CDS account mentioned on the face of the form OR in CDC’s IPO Facilitation Account and where any amount is
refundable, in whole or in part, the same will be refunded by cheque or other means by post, or through the bank
where the application was submitted, to the person named first on the application form, without interest, profit, or
return. Please note that application will be considered as a single application for the purpose of allotment of
securities.

3. Subscription money must be paid by cheque drawn on applicant’s own bank account or pay order/bank draft payable
to one of the Bankers to the Issue in favour of “KE Sukuk Subscription Account” and crossed “A/C PAYEE ONLY”.

4. For the application made through pay order/bank draft, it would be permissible for a Banker to the Issue to deduct
the bank charges while making refund of subscription money to unsuccessful applicants through pay order/bank
draft individually for each application.
5. The applicant should have at least one bank account with any of the commercial banks. The applicants not having a
bank account at all (non-account holders) are not allowed to submit application for subscription of securities.

6. Applications are not to be made by minors and/or persons of unsound mind.

7. Applicants should ensure that the bank branch, to which the application is submitted, completes the relevant portion
of the application form.

Page 119 of 133

 Sukuk Prospectus | K-Electric Limited

8. Applicants should retain the bottom portion of their application forms as provisional acknowledgement of
submission of their applications. This should not be construed as an acceptance of the application or a guarantee
that the applicant will be allotted the number of securities for which the application has been made.

9. Making of any false statements in the application or wilfully embodying incorrect information therein shall make the
application fictitious and the applicant or the bank shall be liable for legal action.

10. Banker to the Issue are prohibited to recover any charges from the subscribers for collecting subscription
applications. Hence, the applicants are advised not to pay any extra charges to the Bankers to the Issue.

11. It would be permissible for a Banker to the Issue to refund subscription money to unsuccessful applicants having an
account in its bank by crediting such account instead of remitting the same by cheque, pay order or bank draft.
Applicants should, therefore, not fail to give their bank account numbers.

12. Submission of false and fictitious applications is prohibited and such Application Money may be forfeited under
section 87(8) of Securities Act, 2015.

13.

ADDITIONAL INSTRUCTIONS FOR FOREIGN / NON-RESIDENT INVESTORS

a) In case of foreign investors who are not individuals, applications must be accompanied with a letter on applicant’s
letterhead stating the legal status of the applicant, place of incorporation and operations and line of business. A copy
of Memorandum of Association or equivalent document should also be enclosed, if available. Where applications
are made by virtue of Power of Attorney, the same must be lodged with the applications. Copies of these documents
can be attested by the Bank Manager in the country of applicant’s residence.

b) Foreign/non-resident investors should follow the payment instructions given in para 14.12 of this prospectus.

E-IPO SYSTEM

E-IPO is submission of application for subscription of securities electronically through internet, Automated Teller
Machines (ATM) and mobile phones. In order to facilitate the public during IPOs, SECP has introduced the concept of E-
IPO. The following two systems are available for E-IPOs:

I. Centralized e-IPO Systems

In order to facilitate investors, the Central Depository Company of Pakistan (“CDC”) in collaboration with 1LINK (Private)
Limited (1LINK) has developed a Centralized e-IPO System (“CES”) through which applications for subscription of
securities offered to the general public can be made electronically/online. CES has been made available in this Initial
Public Offering (IPO) and can be accessed through the web link https://eservices.cdcaccess.com.pk. Payment of
subscription money can be made through 1LINK’s member banks available for CES, list of which is available on above-
mentioned website.

For making application through CES, investors must be registered with CES. Registration with CES is a one-time activity,
free of cost and can be done under a self-registration process by filling the CES registration form, which is available 24/7
all-round the year. Investors who have valid Computerized National Identity Card (CNIC), International Bank Account

Page 120 of 133

 Sukuk Prospectus | K-Electric Limited

Number (IBAN) with any of the commercial bank, email address, mobile phone number and CDS Account (Investor
account or sub account) can register themselves with CES.

In addition to the above, CDC has also introduced a new facility in CES through which sub-account holder(s) will request
their respective TREC Holders who are Participants in Central Depository System (CDS) to make electronic subscription
on their behalf for subscription of securities of a specific company by authorising (adding the details of) their respective
Participant(s) in CES.

Consequently, authorised Participants will electronically subscribe on behalf of their sub-account holder(s) in securities
offered through Initial Public Offerings (IPOs) and will also be able to make payment against such electronic subscriptions
through all the available channels mentioned on CES only after receiving the subscription amount from the sub-account
holder(s). To enable this feature, the CDS Participant may request CDC to activate his ID on the CES portal.

The securities will be credited directly in Investors’ sub-account. In case the sub-account of the investor has been blocked
or closed, after the subscription, then securities shall be parked into the CDC’s IPO Facilitation Account and investor can
contact CDC for credit of securities in its respective account.

Investors who do not have CDS account can visit www.cdcpakistan.com for information regarding opening CDS
account. For further guidance and queries regarding CES and opening of CDS account, investors may contact CDC at
phone number: 0800 – 23275 (CDCPL) and e-mail: info@cdcpak.com or Mr. Farooq Ahmed Butt at Phone 111-111-500
and email: farooq_butt@cdcpak.com. Investors who are registered with CES can submit their applications through the
web link www.cdceipo.com 24 hours a day during the subscription period which will close at midnight on August 20,
2020.

II. e-IPO Facilities by Bankers to the Issue

United Bank Limited (UBL) is providing e-IPO facilities to its respective account holders. UBL account holders can use UBL
Net Banking to submit their applications via link http://www.ubldirect.com/corporate/ebank

BENEFITS OF E-IPO

E-IPO has the following benefits:

1. It enables the investors to make application for subscription of Sukuk through the internet without going to the
bank and waiting in long queues.
2. It is efficient and simultaneously facilitative for both the Issuer and the investors.
3. It is available for use 24 hours during the subscription period.
4. If you are registered with CES or account holder of a bank providing e-IPO facility, you may get SMS for new IPOs.
5. By applying through CES, you can also track your application status.

INSTRUCTIONS FOR FOREIGN/NON-RESIDENT INVESTORS

1. Companies are permitted under paragraph 6 (with specific reference to sub para (B) (I)) of Chapter 20 of the State
Bank of Pakistan’s (“SBP”) Foreign Exchange Manual (the “Manual”) to issue Sukuks on repatriation basis to non-
residents who are covered under paragraph 6 (A) of Chapter 20 of the Manual, i.e. (I) A Pakistan national resident
outside Pakistan, (II) A person who holds dual nationality including Pakistan nationality, whether living in or outside
Pakistan; (III) A foreign national, whether living in or outside Pakistan; and (IV) A firm (including a partnership) or
trust or mutual fund registered and functioning outside Pakistan, excluding entities owned or controlled by a foreign
government, provided the Issue price, is paid in foreign exchange through normal banking channel by remittance
from abroad or out of foreign currency account maintained by the subscriber/purchaser in Pakistan.

Page 121 of 133

 Sukuk Prospectus | K-Electric Limited

2. Non-residents who wish to subscribe Sukuks out of the general public portion may contact any of the Bankers to the
Issue (retail portion) for taking instructions regarding payment of subscription money against Sukuks offered to
general public/retail investors. List of Bankers to the Issue for retail portion is available on page 1, summary of the
Issue, para 12.3 and para 14.17 of this Prospectus.

3. The Sukuks issued to non-resident investors shall be intimated by the Company to the designated Authorised Dealer,
along with the documents prescribed in the Manual within 30 days of issue.

4. Non-residents who are covered under paragraph 6 (A) of Chapter 20 of the Manual do not require SBP’s approval to
invest in the Sukuks being issued in terms of this Prospectus. Furthermore, under paragraph 7 (vii) of Chapter 20 of
the Manual the Authorized Dealer shall allow repatriation of profit, net of applicable taxes and proceeds on sale of
listed Sukuks (i.e. divestment proceeds) not exceeding the market value less brokerage/commission on provision of
prescribed documents.

5. Payments made by non-residents shall be supported by proof of receipt of foreign currency through normal banking
channels. Such proof shall be submitted along with the Application by the non-residents.

6. In case of foreign investors who are not individuals, applications must be accompanied with a letter on applicant’s
letterhead stating the legal status of the applicant, place of incorporation and operations and line of business. A copy
of Memorandum of Association or equivalent document should also be enclosed, if available. Where applications
are made by virtue of Power of Attorney, the same must be lodged with the applications. Copies of these documents
can be attested by the Bank Manager in the country of applicant’s residence.

MINIMUM SUBSCRIPTION AMOUNT AND BASIS OF ALLOTMENT

The basis and conditions of transfer of Sukuk to the General Public shall be as follows:

1. The public subscription period for the Sukuk will be split into two parts i.e.:
a) Subscription Period for only Individual investors from July 23, 2020 to August 2, 2020 (both days inclusive); and

b) Subscription Period for Individuals, Institutional and other investors / participants from August 3, 2020 to
August 20, 2020 (both days inclusive).

2. Minimum subscription of atleast 1 Sukuk Certificate of PKR 5,000 will be applicable; whereas the upper limit on the
maximum subscription by one investor shall be the total IPO Portion i.e. PKR 1,292 million.

3. Application for subscription must be made for PKR 5,000/- or in multiple thereof only. Applications, which are neither
for PKR 5,000/- Sukuk nor for multiple thereof, shall be rejected.

4. KE is offering IPO portion of PKR 1,292 million of its Sukuk Issue of up to PKR 25,000 million (inclusive of Green Shoe
option of PKR 5,000 million) through appointing 11 banks as Bankers to the Issue (BTIs) including 1 bank offering E-
IPO service and along with CDC E-IPO.

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

Subscription and allotment of Sukuk shall be made on a first come, first served basis, with investors subscribing prior
to the day the issue is fully subscribed will get full allotment against their subscription. The day entire IPO Portion of

Page 122 of 133

 Sukuk Prospectus | K-Electric Limited

the Sukuk issue is subscribed and the subscription amount exceeds the IPO Portion, Investors subscribing on that
day will be allocated Sukuk certificates on a pro-rata basis as explained below.
Explanation for Clause 5:
For a subscription period of around 4 weeks as mentioned above, assuming that after the completion of first two
weeks of subscription, total value of Sukuk Certificates subscribed is PKR 1,100 million, all investors who have
subscribed the issue up to that time will get full allocation against their subscription.

If on the first day of third week of subscription, new subscription received is of PKR 300 million, i.e. exceeding
the total IPO Portion of PKR 1,292 million by PKR 108 million; then all BTIs, E-IPO of banks and CDC E-IPO will be
requested by AHL to stop accepting further subscription applications and all the investors who have participated
on the first day of third week of subscription shall be allocated Sukuk Certificates such that:

i. In case total value of single unit applications (PKR 5,000) exceeds the remaining subscription amount, then
balloting will be done among the single unit applicants applying on that day and all other applications of
more than single unit for that day will be rejected.

ii. In case total value of single unit applications (PKR 5,000) is less than or equal to the remaining subscription
amount, all single unit applicants will be allocated Sukuk certificates and the remaining amount, if any, will
be allocated to applicants of more than single unit (‘Remaining Applicants’) in the following manner:

a. If the balance unallocated units are less than the number of Remaining Applicants, then balloting will
be held between such applicants for allocation of maximum of one unit to each successful applicant.

b. If the balance unallocated units are more than or equal to the number of Remaining Applicants, then
balance amount will be allocated on pro-rata basis to the nearest multiple of PKR 5,000.

6. Refunds to excess funds from investors who have subscribed to the Sukuk Issue on the last day of Public Subscription
as explained in clause 5 above shall be made within 10 days of finalisation of successful application as per Rule
5B.4.17 of the PSX Rule Book.

7. All participating banks will be requested to date and time each application received by them on a daily basis during
the subscription period and communicate the same to AHL and KE either at the close of business on the same day or
before the opening of banking hours the next working day.

8. Banks offering E-IPO services and CDC E-IPO will be required to share data of subscriptions received with AHL and KE
at a cut-off time of 7 pm each day during the subscription period.

9. The allotment of Sukuks shall be subject to scrutiny of applications in accordance with the criteria disclosed in the
Prospectus and/or the instructions by the Securities & Exchange Commission of Pakistan.
10. Applications, which do not meet the above requirements, or applications which are incomplete will be rejected. The
applicants are therefore required to fill in all data fields in the Application Form.

11. The Company will credit the respective CDS accounts of the successful applicants.

REFUND OF MONEY TO UNSUCCESSFUL APPLICANTS

KE shall take a decision within ten (10) days of the closure of subscription list as to which applications have been accepted
or are successful and refund the money in cases of unaccepted or unsuccessful applications within ten (10) days of the
date of such decision as required under regulation 5B 4.16 read with regulation 5B 4.17 of the PSX Rule Book.

Page 123 of 133

 Sukuk Prospectus | K-Electric Limited

As per sub-section (2) of Section 68 of the Companies Act, 2017, if a refund is not made within the time specified therein,
the Directors of the Company shall be jointly and severally liable to repay the money with surcharge at the rate of 2.00%,
for every month or part thereof from the expiration of the 15th day and, in addition, shall be liable to a penalty of level 3
on the standard scale.

The surcharge mechanism has been mentioned here in order to ensure regulatory compliance. However, from the
Shariah perspective, since this surcharge is a form of interest, the applicants are advised to dispose any such received
amount as charity.

ISSUE AND CREDIT OF SUKUK CERTIFICATES

KE shall credit Sukuk to the successful allottees within twenty one (21) days of closure of public subscription in
compliance with the requirements of PSX. Sukuk will be issued only in the Book-Entry Form through credit in their CDS
Accounts. The applicants, therefore, must provide their CDS Account Number (Investor Account Number or Sub-Account
Number) in the Sukuk Subscription Form.

The Sukuk issued shall be subject to the terms & conditions for the issuance of the Sukuk specified in the Declaration of
Trust dated December 17th, 2019 and First Amendment to the Declaration of Trust dated April 17th, 2020.

If the Company defaults on complying with the requirements of the Listing Regulations, it will pay to PSX a penalty of
PKR 5,000/- per day during which the default continues. PSX may also notify the fact of such default and the name of the
Company by notice and also by publication, in the Daily Quotations.

The surcharge mechanism has been mentioned here in order to ensure regulatory compliance. However, from the
Shariah perspective, since this surcharge is a form of interest, PSX is advised to dispose any such received amount as
charity.

TRANSFER OF SUKUK

The Sukuk will be inducted into the CDC, transfer shall be made in accordance with the Central Depository Act, 1997 and
CDC Regulations.

LIST OF BANKERS TO THE ISSUE

Code Name of Bank

01 Askari Bank Limited
02 Bank AL Habib Limited
03 Bank Islami Pakistan Limited
04 Dubai Islamic Bank Pakistan Limited
05 Faysal Bank Limited
06 Habib Bank Limited
07 Habib Metropolitan Bank Limited
08 MCB Bank Limited
09 Meezan Bank Limited
10 Soneri Bank Limited
11 United Bank Limited*

Page 124 of 133

 Sukuk Prospectus | K-Electric Limited

*Bank providing their own e-IPO facilities. Account holders of this Bank may apply for subscription of Sukuk electronically.

CODE OF OCCUPATION OF INVESTORS/APPLICANTS

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

NATIONALITY CODE

Code Name of Country

001 U.S.A.
002 U.K.
003 U.A.E.
004 K.S.A.
005 Oman
006 Bangladesh
007 China
008 Bahrain
009 Other

DEDUCTION OF ZAKAT

Zakat is deductible in case of the Sukuk being held by Muslim citizens of Pakistan, except where a statutory declaration
of exemption is filed, and in case of certain non-corporate entities such as Trust Funds, etc., (subject to being qualified
for non-deduction of Zakat under the Zakat and Ushr Ordinance, 1980). Zakat is withheld at 2.5% of the redeemed
principal amount.

INCOME TAX

Any income derived from investment in Sukuk shall be subject to income tax as per the Income Tax Ordinance, 2001.
Withholding tax, as specified in Part III Division IB of the First Schedule of the said ordinance shall be applicable.

DEDUCTION OF WITHHOLDING TAX

Profit paid to Sukuk Holders will be subject to Withholding Tax under section 150A of the Income Tax Ordinance, 2001
specified in Part III Division IB of the First Schedule of the said Ordinance or any time to time amendments therein. Rates
of tax specified under Division IB are as follows:

Page 125 of 133

 Sukuk Prospectus | K-Electric Limited

Withholding Tax
Tax Rate for Persons Tax Rate for Persons not
Category appearing in Active Tax appearing in Active Tax payer
payer List List
Company 25% 50%
Individual or Association of Persons (if return on
12.50% 25%
Investment is more than one million)
Individual or Association of Persons (if return on
10% 20%
Investment is less than one million)

CAPITAL GAIN

Any capital gain derived from the sale of the Sukuk shall be subject to capital gain tax as per section 37A of the Income
Tax Ordinance, 2001. Applicable capital gain tax rates are as follows:

1. For persons appearing in Active Tax payer List: 15.0%

2. For persons not appearing in Active Tax payer List: 30.0%

Page 126 of 133

 Sukuk Prospectus | K-Electric Limited

PART XV

15 SIGNATORIES TO THE PROSPECTUS

S. No. Name of Directors Designation Signature

1 Mr. Riyadh S.A.A. Edrees Chairman -Sd-

2 Syed Moonis Abdullah Alvi Chief Executive Officer -Sd-

3 Mr. Khalid Rafi Independent Director -Sd-

4 Mr. Adeeb Ahmad Non-Executive Director -Sd-

5 Chaudhary Khaqan Saadullah Khan Non-Executive Director -Sd-

6 Dr. Ahmed Mujtaba Memon Non-Executive Director -Sd-

7 Mr. Jamil Akbar Non-Executive Director -Sd-

8 Mr. Mubasher H. Sheikh Non-Executive Director -Sd-

9 Mr. Muhammad Abid Lakhani Non-Executive Director -Sd-

10 Mr. Ruhail Muhammad Non-Executive Director -Sd-

11 Mr. Shan A. Ashary Non-Executive Director -Sd-

12 Syed Asad Ali Shah Jilani Non-Executive Director -Sd-

13 Mr. Waseem Mukhtar Non-Executive Director -Sd-

Witness 1: Witness 2:

-sd- -sd-
___________________ ___________________
Name: Name:
Designation: Designation:
CNIC: CNIC:

Date:

Page 127 of 133

 Sukuk Prospectus | K-Electric Limited

PART XVI

16 MEMORANDUM OF ASSOCIATION

Page 128 of 133

Sukuk Prospectus | K-Electric Limited

Page 129 of 133

Sukuk Prospectus | K-Electric Limited

Page 130 of 133

Sukuk Prospectus | K-Electric Limited

Page 131 of 133

 Sukuk Prospectus | K-Electric Limited

PART XVII

17 APPLICATION FORM

Page 132 of 133

Sukuk Prospectus | K-Electric Limited

Page 133 of 133