February

Initial Public Offering 2015

of
Mughal Iron & Steel Industries Limited
27.35 million Ordinary Shares via Book
Building at a price band of PKR20.0/- to
PKR34.0/- per share

Lead Manager, Arranger & Book Runner

Date of Book Building: 16/02/2015
From 9:00 a.m. to 5:00 p.m.
 GLOSSARY

AKDS AKD Securities Limited HSPL Huffaz Seamless Pipe Industries Limited

AOD Argon Oxygen Decarboriser INIL International Industries Limited

ASL Aisha Steel Mill Limited ISL International Steel Limited

BVPS Book Value Per Share MISIL Mughal Iron & Steel Industries Limited

CAGR Compounded Annual Growth Rate MMBTU Million British Thermal Unit

CIS Common Wealth of Independent States MW Mega Watt

CSAP Crescent Steel & Allied Products Limited NPAT Net Profit After Tax

Earnings Before Interest Taxes Depreciation

EBITDA ROE Return to Equity
and Amortization

EPS Earnings Per Share ROA Return on Assets

FED Federal Excise Duty STPL Siddiqsons Tin Plate Limited

2
 TABLE OF CONTENT

S.N
o. Contents Page Number
1 Executive Summary 5

2 Company Overview 7

3 Sector Overview 15

4 Key Investment Highlights 20

5 Financial Highlights 24

3
Executive Summary

4
 EXECUTIVE SUMMARY
TRANSACTION

Mughal Iron & Steel Industries Limited (Company or MISIL) is issuing

27,350,000 Ordinary Shares representing 25.00% of the total post IPO paid-up
capital of the Company having a face value of PKR10.00/- each:
Book Building Portion - 20,512,500 Ordinary Shares (75% of the Total Issue)
at a price band of PKR20.0/- to PKR34.0/- per share
General Public Portion - 6,837,500 Ordinary Shares (25% of the Total Issue)
at a Strike Price determined via the Book Building
The principal purpose of the Issue for the Company is to expand its manufacturing
facilities by acquiring a new 7.5MW Induction Furnace and to balance, modernize &
replace its existing Re-Rolling mills facilities.
AKD Securities Ltd (AKDS) has been mandated by the management of the
Company to act as Lead Manager, Arranger and Book Runner for the IPO of Mughal
Iron & Steel Industries Limited.
Book Building will be held on
16th February 2015 from 09:00a.m to 5:00p.m
This presentation intends to solicit interest from Institutions and High Net Worth
Individuals (HNWI) to participate in the Book Building process.

5
Company Overview

6
 COMPANY OVERVIEW
HISTORY
The forefathers of the current Sponsor of the Company
established Mughal Trader in 1950s. MISIL has since
evolved from traders to manufacturer of Iron and Steel
products in the last 6 decades.

Over the years the Sponsors of MISIL have vertically

integrated the Company by installation of various Re-
Rolling Mills, Furnaces and other manufacturing units. In
2010, MISIL was incorporated as a public unlisted
company.

The Company is one of the largest manufacturers of

structural steel products in Pakistan with an annual Iron
and Steel melting capacity of 384,000 tons. The
Induction furnaces feed into Re-Rolling Mills capable of
processing up to 675,000 tons of molten Iron and Steel.

The Companys production facility is located in industrial

area of Lahore. It currently operates with 5 Induction
Furnaces, 6 Re-Rolling Mills, 1 Arc Furnace, Coal
Gasification Plant and a 9.3 MW Power Plant.
7
 COMPANY OVERVIEW
PRODUCT LINE
MISIL offers a wide range of Iron and Steel products which include semi-finished
products, long products, flat products, and ferroalloys. The Company has expertise
in both hot rolling and cold rolling procedures.

Billets

Beams

Bars

Ferro
Alloys

8
 COMPANY OVERVIEW
PLANT SPECIFICATION
The following are the details of MISIL production facilities:

9
 COMPANY OVERVIEW
KEY MILESTONES
1950s Establishment of Mughal Traders

1994 Installation of a Medium Section Mill

1998 Establishment of Mughal Trust Eye Hospital

Installation of Argon Oxygen Decaboriser (AOD) & Ladle Refining Furnace

1999
Installation of Cold Rolling Mills, Spectrometer & Other equipment
2003

2005 Installation of 9.3MW Power Plant

2007 Installation of Ferro Plant

Installation of Two Small Section Mill
2008 Winner of Brand of the Year Award
Installation of Dedicated Bar Re-Rolling Mill
2010 Incorporation of Mughal Iron & Steel Industries Limited
Installation of Coal Gasification Plant
2011
License of Microsoft AX-Dynamics
Installation of new Tandem Section Mill
2013
Winner of Best Export Performance Award
2014 Installation of three new Induction Furnaces
10
 COMPANY OVERVIEW
AWARDS & ACCREDITATIONS

2011 2013 2014

11
COMPANY OVERVIEW
KEY MANAGEMENT PROFILE
Mr. Mirza Javaid Iqbal (Chairman/Director)
Having joined his family business in 1976, Mr. Javaid Iqbal rose to
become a pioneer of the steel industry of Pakistan. He has not only
developed new pathways to achieve energy efficiency and economies
of scale, but has made remarkable contributions towards the
technological advancement and effective documentation of the
national steel industry.
Mr. Khurram Javaid (Chief Executive Officer/Director)
He holds an MBA from the Coventry University, UK and a BSc. from the
Lahore School of Economics in Pakistan. He has made substantial
contributions to the Companys sales and production network within the
country ensuring that each is at par with the international standards
of the steel industry. He is the man behind incorporating effective
HR planning, policymaking and training
Mr. Muhammad Zafar Iqbal (Chief Financial Officer)
He is working as CFO since incorporation of the Company. He is a Fellow
Member of the Institute of Chartered Accountants of Pakistan. He has
vast experience of dealing in accounts, finance, and taxation and
company law related matters. With over 16 years of experience in
leadership positions, he plays an active role in the financial/strategic
planning of the Company.

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COMPANY OVERVIEW
DIRECTORS PROFILE
Dr. Syed Salman Ali Shah (Director)
Syed Salman Ali Shah holds a Ph.D. in Finance from the Kelley School of
Business Administration, Indiana University, USA. He has served as the
Advisor to the Prime Minister of Pakistan on various fields: Finance,
Revenue, Economic Affairs and Statistics. Mr. Shah has worked as the
Former Chairman of the Privatization Commission and is currently the
Chairman of the Lahore Stock Exchange.
Mr. Jamshed Iqbal (Director)
Mr. Jamshed Iqbal has played a pivotal role in developing MISILs
distributional network across Pakistan. He has a vast experience and in-
depth knowledge of the steel sector, with a sound expertise in
managing local and export sales. Mr. Iqbal has strived hard to ensure
that all kinds of geographical requirements are met by the Companys
distributional network a feat that has resulted in expanded growth of
MISIL.

Mr. Muhammad Mubeen bin Tariq Mughal (Director)

Mr. Muhammad Mubeen Bin Tariq Mughal has a BSc. in Economics and
Finance from the Lahore School of Economics, Pakistan. Having an
experience of over five years in the steel sector, he is presently looking
after the Accounts, Finance and Audit functions of the Company.

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COMPANY OVERVIEW
DIRECTORS PROFILE
Mr. Fazeel bin Tariq (Director)
Mr. Fazeel Bin Tariq holds a Bachelors Degree in Business
Administration from the Lahore School of Economics, Pakistan and a
Postgraduate degree in Professional Accounting from the Swinburne
University of Technology, Australia. He has recently joined as the Board
as Director for MISIL.

Mr. Muhammad Mateen Jamshed (Director)

Mr. Mateen holds a Bachelors Degree from Lahore School of Economics
and has recently joined the Board as NonExecutive Director. He is also
a member of the Audit Committee and Human Resource &
Remuneration Committee.

14
Sector Overview

15
 SECTOR OVERVIEW
GLOBAL MARKET
World crude steel production has increased from 851mt
(million metric ton) in 2001 to 1,649mt for the year 2013
Potential growth was higher during the period but it was
halted due to economic recession during the period
Asia produce 65% of the global crude steel making it the
most significant region in the world
Outlook for 2014 and onward is strong as economy
conditions are expected to be more favorable in coming
years
Developing economies in particular are expected to be
lucrative for steel manufactures
Biggest threat to the steel market remains overproduction
as current global capacity exceeds the demand

Source: Steel Year

Book 2014
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 SECTOR OVERVIEW
REGIONAL MARKET
Regional Trade Trade
China produces almost half of worlds
total crude steel production and
consumes most of its production.
Japan, South Korea and India are three
other major players in global steel
export market that are present in this
region, making it a highly competitive
region.
Dynamics
Driven by strong economic growth
number and high level of
consumption, the region is a net
Importer of scrap metal.
The high demand of scrap metal is
fulfilled through imports from the
European Union and North America.
(Source: Steel Year Book 2013)
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 SECTOR OVERVIEW
DOMESTIC MARKET
The steel industry in Pakistan is dominated Steel Production by Process
2011 2012 2013
('000 tonnes)
by small and medium-scale re-rolling mills,
Oxygen-blown Converters
engaged in re-rolling, forging and melting 750 750 850
activities. Electric Furnace
100 100 120
Total
Current consumption for steel is 3.5mn 850 850 970

tonnes (Steel Year Book 2014). Production

lags behind total consumption hence Imports of Semi-finished and
Finished Steel Products ('000 2011 2012 2013
excess demand is met through import of tonnes)
semi-finished and finished good . Imports of Ingots and Semis
106 41 59
Pakistan is still amongst the lowest per Import of Long Products
145 160 169
capita consumer of crude steel at 19.1 kg Import of Flat Products
1,282 1,663 1,690
in comparison to regional average of
262.5kg and world average of 238.2kg. Imports of Tubular Products
56 88 141
Total
1,589 1,952 2,059
Demand is expected to remain high,
primarily due the current Governments
focus on the infrastructural projects. Import of Raw Material ('000
2011 2012 2013
tonnes)
Import of Pig Iron
Local steel manufacturer compete against 9 8 9
steel products imported primarily from Import of Iron Ore
116 - -
China, however recent change in Chinese
Import of Scrap
export regulation have increased the cost 955 922 875 18
 SECTOR OVERVIEW
COMPETITORS
The following companies are listed on the Karachi Stock Exchange Limited classified
under Industrial Metal and Mining sector:
PKR in Million

Source: Karachi Stock Exchange Limited (15th of Jan

2015)

19
Key Investment Highlights

20
 KEY INVESTMENT HIGHLIGHTS

Historical Performance
Net Sales
The Company has enjoyed a strong 6.00
growth in the revenue stream over 5.00
the years. In last four years, the
4.00
Companys has achieved strong
revenue CAGR of 25%. PKR in Billion
3.00

2.00

1.00
Strong Profile and Management
Prowess -
FY11 FY12 FY13 FY14
The main Sponsors of MISIL have
been in the industry for over 50 Sales Mix
years. During this period the Domestic Exports
Company has brought together a FY14
team of technically skilled and well
versed individuals all of whom have FY13
significant experience in the
industry. FY12

FY11
Export Oriented Company
The Company first entered the - 1.00 2.00 3.00 4.00
export arena back in the year 2006. PKR in Billion
21
 KEY INVESTMENT HIGHLIGHTS

Strong Outsourcing Capabilities

MISIL through its Sponsors has established relationships
in the industry for over five decades and as a result
possesses strong outsourcing capabilities. This allows for
significant scaling of its operations through a network of
dependable partners.

International Standard Infrastructure

In order to ensure and maintain quality standard Mughal
Labs (ML) was established in 2003. ML is equipped with
state of the art Chemical and Mechanical Analytics
machines as well as an Optical Emission Spectrometer of
the M8 Series.

Corporate Social Responsibility

As a socially responsible Company, MISIL is involved in
several philanthropic activities which reflect positively on
its image amongst clients and the society. The Company
has built state of the art Eye Hospital in 1998 which
provides majority of the services free of charge to the
General Public. The hospital annually caters
22
 KEY INVESTMENT HIGHLIGHTS

Strong Controls and Corporate Governance

The Company is in the final stage of implementation of
Microsoft AX, which will provide robust information system
to monitor the supply chain. The Company ensures
implementation of the best corporate governance
practices in order to promote transparency and follows all
applicable International Financial Reporting Standards
(IFRS).

Captive Power and Gas Supply

In the wake of extensive power and gas outages the
Company has managed to mitigate this risk by developing
indigenous power and gas supply.MISIL has installed
9.3MW gas-fired power plant. MISIL also invested PKR 40
million in the installation of a coal gasification industrial
plantthat prepares clean syngas which can be used as a
substitute to natural gas in heating process.

Attractive Lower Limit

The Price Band with Lower Limit of PKR 20 per share
represents a value proposition based on existing trading
multiples of the market. Currently the KSE 100 Index 23
Financial Highlights

24
FINANCIAL HIGHLIGHTS
BALANCE SHEET

25
FINANCIAL HIGHLIGHTS
PROFIT AND LOSS

26
FINANCIAL HIGHLIGHTS
KEY RATIOS

27
 CONTACT DETAILS

Arsalan Nazir Syed Khurram Shahid

Analyst SVP/Head
Investment Banking Investment Banking

Email: Email:
arsalan.nazir@akdsecurities.net khurram.shahid@akdsecurities.net
Direct: +92-21-3536-0533 Direct: +92-21-3537-4301
PABX: +92-21-111-253-111 Ext. 665 PABX: +92-21-111-253-111 Ext. 636
Fax: +92-21-3537-4291 Fax: +92-21-3537-4291
+92-21-3586-7992 +92-21-3586-7992

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