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ADVICE FOR GENERAL PUBLIC
THE INVESTORS ARE STRONGLY ADVISED IN THEIR OWN INTEREST TO CAREFULLY READ THE CONTENTS OF THIS
PROSPECTUS, ESPECIALLY THE RISK FACTORS GIVEN AT SECTION 5.14, BEFORE MAKING ANY INVESTMENT DECISION.
SUBMISSION OF FICTITIOUS AND MULTIPLE APPLICATIONS (MORE THAN ONE APPLICATIONS BY SAME PERSON) IS
PROHIBITED AND SUCH APPLICATIONS’ MONEY IS LIABLE TO CONFISCATION UNDER SECTION 18A OF THE
SECURITIES AND EXCHANGE ORDINANCE, 1969.
ADVICE FOR INSTITUTIONAL INVESTORS AND HIGH NETWORTH INDIVIDUAL INVESTORS
A SINGLE INVESTOR CANNOT SUBMIT MORE THAN ONE BIDDING APPLICATION EXCEPT IN THE CASE OF REVISION OF BID.
IF AN INVESTOR SUBMITS MORE THAN ONE BIDDING APPLICATION THEN ALL SUCH APPLICATIONS SHALL BE SUBJECT TO
REJECTION.
TPL DIRECT INSURANCE LIMITED
PRELIMINARY PROSPECTUS
For Issue of 15 million Ordinary Shares (32.6% of the enhanced Paid Up Capital) of
Face Value of PkR 10.00 each
Book Building Portion of the Issue comprises of 10.0 million Ordinary Shares (66.7% of
the Issue) at a floor price of PkR 10 per share
General Public Portion of the Issue comprises of 5.0 million Ordinary Shares (33.3% of
the Issue) at or below the Strike Price determined through the Book Building Process
BIDDING PERIOD DATES: From JUNE 21ST, 2011 TO JUNE 22ND, 2011
(BOTH DAYS INCLUSIVE) FROM 9:00 A.M. TO 5:00 P.M.
DATE OF PUBLIC SUBSCRIPTION: From DD/MM, 2011 to DD/MM, 2011
(BOTH DAYS INCLUSIVE) DURING BANKING HOURS
LEAD MANAGER, ARRANGER & BOOK RUNNER
AKD Securities Limited
Book Building Portion Underwritten by: General Public Portion Underwritten by:
(To be filled in within 10 working days of closing of
Bidding Period i.e. before submission of application to
the Exchange for allocation of dates for publication of the
final Prospectus and subscription of shares by the general
AKD Securities Limited public as required under clause 6 of Appendix-4 of the
listing regulations of Karachi Stock Exchange (G)
Limited)
Date of Publication of this Prospectus: DD/MM, 2011
Prospectus
GLOSSARY OF TECHNICAL TERMS
AKDS AKD Securities Limited
AICL Adamjee Insurance Company Limited
Bancassurance is the selling of insurance and banking
Bancassurance products through the same channel, most commonly
through bank branches
CDA Central Depositories Act, 1997
CDC/CDCPL The Central Depository Company of Pakistan Limited
CDS Central Depository System
CNIC Computerized National Identity Card
Commission/SECP Securities and Exchange Commission of Pakistan
Company/TDI TPL Direct Insurance Limited
CVT Capital Value Tax
EFUG EFU General Insurance Limited
GOP Government of Pakistan
HNWI High Net Worth Individual
IGIIL IGI Insurance Limited
ITO Income Tax Ordinance, 2001
IPO Initial Public Offering
Issue Initial Public Offering of shares by the Company
Issuer TPL Direct Insurance Limited or the Company
KIBOR Karachi Inter Bank Offer Rate
KSE/Stock Exchange/Exchange Karachi Stock Exchange (Guarantee) Limited
LM & BR Lead Manager & Book Runner
NJICL New Jubilee Insurance Company Limited
Ordinance The Companies Ordinance, 1984
PkR Pakistan Rupee(s)
WHT Withholding Tax
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Prospectus
DEFINITIONS
Application Money In case of bidding for shares out of the book building
portion, the total amount of money payable by a
successful bidder which is equivalent to the product of the
strike price and the number of shares to be allotted.
AND
In case of application for subscription of shares out of the
general public portion, the amount of money paid along
with application for subscription of shares which is
equivalent to the product of the issue price and the number
of shares applied for.
An indication to make an offer during the bidding period
Bid by a bidder to subscribe to the Ordinary Shares of TPL
Direct Insurance Limited at or above the floor price,
including all the revisions thereto.
Bidder Any eligible prospective investor who makes a bid
pursuant to the terms of the Preliminary Prospectus and
the Bidding Form.
Bid Amount The total amount of the bid which is equivalent to the
product of the bid price and the number of shares bid for.
Bid Collection Centre Pre-determined locations where applications for bidding
of shares are collected by the Book Runner on behalf of
the Company including the offices of Corporate
Brokerage Houses, Schedule Banks, Development
Financial Institutions and Investment Finance Companies,
subject to appointment of these institution as agents by the
Book Runner through an agreement in writing for the
purpose, with the consent of the Issuer.
Bidding Form The form prepared by the Issuer on the format mentioned
in the Listing Regulations of the Exchange for the purpose
of making bids which will be considered as the application
for subscription of Ordinary Shares out of the book
building portion.
Bidding Period The period during which bids for shares of the Company
shall be made by Institutional Investors and HNWI
Investors. The Bidding Period commences on June 21st,
2011 and ends on June 22nd, 2011 (daily from 9:00 a.m. to
5:00 p.m.).
Bidding Process Ending Date The date after which BR will not accept any bids for the
book building portion of the issue.
Bidding Process Starting Date The date on which BR shall start accepting bids for the
book building portion of the issue.
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Prospectus
Book Building A mechanism of price determination through which
indication of interest for subscription of shares issued by
the Company is collected from Institutional Investors and
HNWIs. Through this process a book is built which gives
an idea of demand for the shares at different price levels.
The strike price is determined based on the price at which
demand for shares at the end of book building period is
sufficient to raise the required amount.
Book Building Account An account opened by the Company with the Collection
Bank(s). The bidder will pay the margin money/bid
amount through demand draft, pay order or cheque in
favor of this account and the balance of the application
money, if any, shall be paid through this account after
successful allocation of shares.
Book Runner AKD Securities Limited.
Final Prospectus A document containing all the information and disclosures
as required under the Companies Ordinance, 1984
together with disclosure of the strike price, results of the
Book Building process, the date of publication of
Prospectus and, the date(s) for subscription of shares out
of the general public portion.
Floor Price The minimum price set by the Company for Initial Public
Offering of shares which is PKR 10 per share. A bid
placed below the floor price will not be entertained by the
Book Runners.
General Public All individual and institutional investors including both
Pakistani (residents & non-residents) and foreign
investors.
General Public Issue Price The price at which ordinary shares are issued to general
public. This price can be at or below the strike price.
High Net worth Individual Individual investor who applies or bids for shares of the
(HNWI) value of PKR 1,000,000/- or above in the book building
process.
Institutional Investors Both local and foreign institutional investors
Issue IPO of 15 million Ordinary Shares by the Company at a
price of PkR [•] per ordinary share aggregating to PkR [•]
million. The Issue constitutes 32.6% of the post-IPO paid-
up capital of the Company.
Portion of Institutional Investors/HNWI: 10.0 million
ordinary shares – 66.7% of the total issue size.
Portion of General Public: 5.0 million ordinary shares –
33.3% of the total issue size. (For details please see para 3.1)
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Prospectus
TPL Direct Insurance Limited
Issuer
AKD Securities Limited.
Lead Manager, Arranger and
Book Runner The maximum price a prospective institutional investor or
HNWI is willing to pay for a share under the Book
Limit Price Building process.
The partial or total amount, as the case may be, paid by a
Margin Money bidder at the time of making a bid.
Ordinary Shares of TDI having face value of PkR 10 each
Ordinary Shares unless otherwise specified in the context thereof.
The preliminary prospectus containing all the information
Preliminary Prospectus and disclosures as required under the Companies
Ordinance, 1984, and Listing Regulation of the Stock
Exchange approved by the Commission under section 57
(1) of the Companies Ordinance, 1984 and issued to the
Institutional Investors and HNWIs Investors for bidding of
shares out of book building portion through the Book
Building Process.
A bid for a specified number of shares at the strike price to
Strike order be determined through the Book Building process.
A series of limit bids at increasing prices.
Step bid
The price of share determined/discovered on the basis of
Strike Price the Book Building process in the manner provided in the
Listing Regulations of KSE at which the shares are issued
to the successful bidders. The Strike Price determined
through the Book Building process is PKR XX.
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Prospectus
TABLE OF CONTENTS
Section Contents Page No.
Section 1 Approvals and Listing on the Stock Exchanges 07
Section 2 Book Building Procedure 09
Section 3 Share Capital and Related Matters 22
Section 4 Underwriting, Commissions, Brokerage and other Expenses 31
Section 5 Overview, History and Prospects 33
Section 6 Financial Information 45
Section 7 Management 61
Section 8 Miscellaneous Information 67
Section 9 Application and Transfer Instructions 71
Section 10 Bidding Form of TPL Direct Insurance Limited 75
Section 11 Signatories to the Prospectus 76
Section 12 Memorandum of Association 77
Section 13 Application Form
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Prospectus
PART 1
1. APPROVALS AND LISTING ON THE STOCK EXCHANGE
1.1 APPROVAL OF THE SECURITIES & EXCHANGE COMMISSION OF PAKISTAN
Approval of the Securities & Exchange Commission of Pakistan (the “SECP” or the
“Commission”) as required under Section 57(1) of the Companies Ordinance, 1984 (the
“Ordinance”) has been obtained by TPL Direct Insurance Ltd (“TDI” or “the Company”) for
the issue, circulation and publication of this Prospectus.
DISCLAIMER:
It must be distinctly understood that in giving this approval, SECP does not take any
responsibility for the financial soundness of the Company and any of its schemes stated
herein or for the correctness of any of the statements made or opinions expressed with regards
to them by the Company in this Prospectus.
SECP has not evaluated quality of the issue and its approval for issue, circulation and
publication of the Prospectus should not be construed as any commitment of the same. The
public/investors should conduct their own independent due diligence and analysis regarding
the quality of the issue before bidding/ subscribing.
1.2 CLEARANCE OF THE PROSPECTUS BY THE STOCK EXCHANGE
This Prospectus of the company has been cleared by the Karachi Stock Exchange (Guarantee)
Limited in accordance with the requirements under its Listing Regulations.
DISCLAIMER:
• The KSE has not evaluated the quality of the issue and its clearance should not be construed as
any commitment of the same. The public / investors should conduct their own independent
investigation and analysis regarding the quality of the issuer before subscribing.
• The publication of this document does not represent solicitation by the Karachi Stock Exchange.
• The contents of this document does not constitute an invitation to invest in shares or subscribe for
any securities or other financial instrument by the Karachi Stock Exchange, 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 the Exchange.
• It is clarified that information in this Prospectus should not be construed as advice on any
particular matter by the Karachi Stock Exchange and must not be treated as a substitute for
specific advice.
• The Karachi Stock Exchange disclaims any liability whatsoever for any loss however arising from
or in reliance upon this document to any one, arising from any reason, including, but not limited
to, inaccuracies, incompleteness and/or mistakes, for decisions and/or actions taken, based on this
document.
• The Karachi Stock Exchange neither takes responsibility for the correctness of contents of this
document nor the ability of the Company to fulfill its obligations thereunder.
• Advice from a suitably qualified professional should always be sought by investors in relation to
any particular investment.
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Prospectus
1.3 FILING OF THE PROSPECTUS AND OTHER DOCUMENTS WITH THE
REGISTRAR OF COMPANIES
The Company has filed with the Registrar, Companies Registration Office Karachi, as
required under Section 57(3) and (4) of the Companies Ordinance 1984, a copy of this
Prospectus signed by all the Directors of the Company, along with the following documents
are attached hereto:
a) Letter No KA-ZS-1351 dated May 9, 2011 from Auditors of the Company, KPMG Taseer
Hadi & Co., consenting to the publication of their names in the Prospectus, which
contains in Part 6 certain statements and reports issued by them as experts (for which
consent has not been withdrawn), as required under Section 57(5) of the Companies
Ordinance, 1984.
b) Copies of Material Contracts and Agreements mentioned in Part 8 of this Prospectus as
required under Section 57(4) of the Ordinance.
c) Written confirmations of the Legal Advisor to this issue and Bankers to this issue,
mentioned in this Prospectus consenting to act in their respective capacities, as required
under Section 57(5) of the Companies Ordinance, 1984.
d) Consent of Directors, Chief Executive and Company Secretary of the Company who have
consented to their respective appointments being made and their having been named or
described as such Directors and Chief Executive in this Prospectus, as required under
Section 57(3) of the Ordinance, read with sub-clause (1) of clause (4) of Section 1 of Part
1 of the Second Schedule to the Ordinance.
1.4 LISTING AT THE KARACHI STOCK EXCHANGE
An Application has been made to the KSE for permission to deal in and for quotation of the
shares of the Company.
If for any reason, the application for formal listing is not accepted by the Stock Exchange the
Company undertakes that a notice to that effect will immediately be published in the press
and thereafter the Issuer undertakes to refund application money to the applicants without
surcharge as required by the provisions of Section 72 of the Ordinance.
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Prospectus
PART 2
2 BOOK BUILDING PROCEDURE
2.1 BRIEF ISSUE STRUCTURE
The Present Issue
The Company is issuing 15 million Ordinary Shares of PkR10 each for cash at a price of PkR
[--] per share aggregating to PkR [-] million (the “Issue”). The Issue constitutes 32.6% of the
post-IPO paid-up capital of the Company.
The Issue is being made through the Book Building process at a floor price of PkR10 per
share, whereby 66.7% of the total issue size i.e. 10 million Ordinary Shares of PkR10 each
will be offered through the book building process to Institutional Investors and High Net
Worth Individuals (HNWI) while the remaining 33.3% of the total issue size i.e. 5 million
Ordinary Shares of PkR10 each will be offered to the general public at or below the Strike
Price.
2.2 BOOK BUILDING PROCEDURE
Book building is a process whereby investors bid for a specific number of shares at various
prices. The LM & BR, with the consent of Issuer, sets a floor price which is the lowest price
an investor can bid at. An order book of bids from investors is maintained by the BR, which
is then used to determine the strike price through the “Dutch Auction Method”.
Under the Dutch Auction Method, the strike price is determined by lowering the price to the
extent that the total number of shares that the issuer intends to issue through the Book
Building process are fully subscribed. However, while determining the strike price the
bids placed through strike order shall not be taken into consideration.
A bid by a potential investor can be a “Limit Bid”, “Strike Bid” or a “Step Bid”, which are
explained below.
Limit Bid: Limit bid is at the limit price, which is the maximum price an investor is
willing to pay for a specified number of shares.
In such a case a bidder explicitly states a price at which he/she/it is willing to subscribe to
a specific number of shares. For instance, a bidder may bid for 2 million shares at PkR15
per share. Since the bidder has placed a limit price of PkR15 per share, this indicates that
he/she/it is willing to subscribe at or below PkR15 per share.
Strike Order: A bid for a specified number of shares at the strike price to be determined
through the Book Building Process.
In strike order the bidder explicitly states the number of shares he/she/it is willing to
subscribe at the Strike Price. For instance, a bidder may bid for 2.0 million shares at the
strike price to be determined through the Book Building Process.
Step Bid: A series of limit bids at increasing prices. The aggregated amount of step bid
shall not be less than 1,000,000/- and the amount of any step shall not be less than
250,000/-
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Prospectus
Under this bidding strategy, bidders place a number of limit bids at different price levels.
The bidders may, for instance, make a bid for 2.0 million shares at PkR13 per share, 1.5
million shares at PkR14 per share and 1.0 million shares at PkR15 per share.
A SINGLE INVESTOR SHALL NOT MAKE MORE THAN ONE BIDS, HOWEVER,
A BID CAN BE REVISED
THE INVESTORS SHALL NOT PLACE CONSOLIDATED BIDS. A BID
APPLICATION WHICH IS FULLY OR PARTIALLY BENEFICIALLY OWNED BY
PERSONS OTHER THAN THE ONE NAMED THERIN IS TO BE CONSIDERED AS
CONSOLIDATED BIDS.
Once the bid period is over and book has been built, the BR shall determine the strike price.
Successful bidders shall be intimated, within two (2) working days of the closing of the
bidding period, the strike price and the number of shares provisionally allotted to each of
them. The successful institutional bidders shall, within seven (7) working days of the closing
of the bidding period, deposit the balance amount as consideration against allotment of
shares. Where a successful bidder defaults in payment of shares allotted to him, the
margin money deposited by such bidder shall be forfeited to the Book Runner under
clause 8.11 of Appendix 4 of the Listing Regulations of KSE.
AS PER REGULATION 8.16 OF THE KSE LISTING REGULATIONS, THE
SUCCESSFUL BIDDERS SHALL BE ISSUED SHARES IN THE FORM OF BOOK-
ENTRY SECURITIES TO BE CREDITED IN THEIR CDS ACCOUNTS. ALL THE
INSTITUTIONAL AND HNWI INVESTORS SHALL, THEREFORE, PROVIDE
THEIR CDC ACCOUNT NUMBERS IN THE BID APPLICATION.
2.3 LEAD MANAGER, ARRANGER AND BOOK RUNNER
AKD Securities Limited has been mandated by the Company to act as a Lead Manager,
Arranger and Book Runner to this Issue, which is being made through the Book Building
Process as laid out in Appendix 4 of the Listing Regulations of the KSE.
AKD Securities Limited (“AKDS”) is ranked among the premium brokerage houses in
Pakistan and its Investment Banking team is among the most active in carrying out financial
advisory services in Pakistan’s capital markets.
The Investment Banking team at AKDS has a rich experience in Capital Market transactions
and over the years it has initiated and successfully executed transactions unique in structure &
size. Driven by experienced professionals and dynamic young talent, AKDS Investment
Banking team has been involved in numerous Initial Public Offerings, Acquisitions, TFC
Issuances & Asset Backed Securitization as well as leading Privatization deals in the country.
Origination Capability: AKDS have extensive contacts with existing and potential issuers
across a wide spectrum of industries and business sectors.
Structuring Capability: AKDS analysts have in-depth industry knowledge, financial modeling
and transaction structuring experience.
Placement Capability: A wide network of institutional investor relationships as well as a
large, diversified retail investor base provides AKDS with an unmatched distribution
capability.
10
Prospectus
2.4 ROLE AND FUNCTIONS OF LEAD MANAGER AND BOOK RUNNER
(a) The Lead Manager and Book Runner to the Issue ensure that:
i. all disclosures as required under the Companies Ordinance, 1984 and the Appendix
4 of the Listing Regulations of the Karachi Stock Exchange have been made in the
Prospectus;
ii. necessary infrastructure and electronic system/software is available to collect bids
and to carry out the Book Building process in a fair, efficient and transparent
manner;
iii. it has obtained on behalf of the Company, all approvals/consents/NOCs relating to
the Issue;
iv. the preliminary Prospectus will, after approval of the Commission, be uploaded on
its own as well as on the Company’s website; and
v. it has established bid collection centers at the following addresses:
Karachi
Contact Officer: Mr. Syed Khurram Shahid
Direct No.: +92-21-3537-4301
Mobile No.: +92-333-310-4756
PABX No.: +92-21-111-253-111 Ext. 636
Fax No.: +92-21-3586-7992, +92-21-3537-3211
Email: khurram.shahid@akdsecurities.net
Postal Address: AKD Securities Limited
6th Floor, Continental Trade Centre
Block 8, Clifton, Karachi
Lahore
Contact Officer: Mr. Ehsan Ahmad Qureshi
Direct No.: +92-42-3628-0742, +92-42-3628-0743, +92-42-3628-0744
Mobile No.: +92-334-411-1253
PABX No.: +92-42-111-253-111
Fax No.: +92-42-3628-0745
Email: ehsan.ahmad@akdtrade.com
Postal Address: AKD Trade
Room No. 512/513, 5th Floor
Lahore Stock Exchange Building, Lahore
Islamabad
Contact Officer: Mr. Khalid Hussain
Direct No.: +92-51-2894325
Mobile No.: +92-332-212-5525, +92-333-532-6580
PABX No.: +92-51-289-4321
Fax No.: +92-51-289-4323
Email: malik.khalid@akdtrade.com
Postal Address: AKD Trade
303, 3rd Floor, ISE Tower
Jinnah Avenue, Blue Area, Islamabad
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Prospectus
(b) The Lead Manager and Book Runner to the Issue shall:
(i) conduct awareness campaigns through presentations, meetings, road shows etc;
(ii) collect bid applications and applications’ money, security, margin as the case may
be from the Institutional Investors and HNWI in the manner as mentioned in the
Appendix 4 of the Listing Regulations of the Karachi Stock Exchange.
(iii) put serial number, date and time on each bidding form at the time of collection of
the same from the bidders;
(iv) vet the bidding applications;
(v) ensure that each bid application contains depository account number of the bidder
maintained with CDCPL wherein shares shall be credited in case the bid is
successful.
(vi) not accept multiple bids i.e more than one bid application by same person;
(vii) build an order book showing demand for the shares at various prices;
(viiii) discover the strike price at the close of the bidding period;
(ix) the Book Runner enter into underwriting agreement with the issuer;
(x) maintain record of the bids received for subscription of the shares;
(xi) circulate copies of the preliminary Prospectus and bidding form cleared by the
Exchange and approved by the Commission to the prospective Institutional Investor
and HNWI;
(xii) publish an advertisement, approved by the Commission, in atleast one Urdu and
one English daily Newspaper having wide circulation in the Federal and all the
provincial capitals, to invite the Institutional investor and HNWI to participate in
the bidding process;
(xiii) use the software for Book Building process provided by the Exchange, which is
based on Dutch Auction Methodology for display of the order book and
determination of the strike price, on the terms and conditions as may be agreed in
writing between the Exchange and the Book Runner;
(xiv) for information of the investors, in addition to live display of the order book on the
website of the Exchange, also live display the same order book simultaneously on
its own website till closing of the bidding period; and
(xv) Ensure that all the bids received by the bid collection centers are entered into the
system developed by the Exchange for the purpose of Book Building. Book
Runner shall not accept and Enter any bid after 5:00 p.m. during the days of
the bidding period, except the last day when no fresh bid(s) shall be collected
after 5:00 p.m. and the bid(s) collected thus far, shall be entered into the
system till 7:00 p.m. on the same day and thereafter no bid shall be entered
into the system or be revised in any way and for any reason even if the bid
application have been received from the investor.
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Prospectus
2.5 OPENING AND CLOSING OF THE BIDDING PERIOD
The bidding period shall remain open for 2 working days commencing from the business
hours at 09:00 a.m. on June 21st, 2011 and will close at 05:00 p.m. on June 22nd, 2011 at the
close of business hours
BIDDING PROCESS STARTS ON June 21st, 2011
BIDDING PROCESS ENDS ON June 22nd, 2011
*(Both Days Inclusive)
2.6 ELIGIBILITY TO PARTICIAPTE IN BIDDING
Eligible investors who can place their bids in the Book Building process are “Institutional
Investors” and “HNWI”.
• Institutional Investors include both local and foreign institutional investors
• HNWI investors are individual investors who bid for shares of value of PkR
1,000,000/- (Pak Rupees One Million Only) or above in the Book Building process.
2.7 INFORMATION FOR BIDDERS
• The Preliminary Prospectus for issuance of shares duly cleared by the Karachi Stock
Exchange and approved by SECP shall be circulated to the prospective Institutional Investor
and HNWI. The Preliminary Prospectus and the bidding form can be obtained from the
Registered Office of TPL Direct Insurance Ltd., AKDS and the bid collection centers.
Preliminary prospectus can also be downloaded from the website of Book Runner and the
Company.
• Eligible investors who are interested in subscribing to the Ordinary Shares should approach
LM & BR at the addresses provided in para 2.4 to register their Bids.
• THE BIDS SHOULD BE SUBMITTED ON THE PRESCRIBED BIDDING FORM IN
PERSON OR THROUGH FAX AT NUMBER IN PARAGRAPH 2.4.
2.8 BIDDING FORM AND PROCEDURE FOR BIDDING
a) Standardized bidding form has been prescribed by the BR. Bids shall be submitted at
the bid collection centers in person or through fax number given in paragraph 2.4 on the
standard bidding form duly filled in and signed in duplicate. The bidding form shall be
serially numbered at the bid collection centers and date and time stamped, at the time of
collection of the same from the bidders.
b) Upon completion and submission of the bidding form, the bidders are deemed to have
authorized the Company to make necessary changes in the preliminary Prospectus and
the bidding form as would be required for finalizing and filing the final Prospectus with
the Stock Exchange and SECP, without prior or subsequent notice of such changes to
the bidders.
c) The bidding procedure under the Book Building Process is outlined below:
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Prospectus
i. Copy of approved preliminary Prospectus shall be circulated by the Issuer through
LM & BR to at least ten prospective investors in each of the two categories and a
copy will also be placed on websites of the Company and AKDS.
ii. An advertisement, approved by the Commission, shall be published at least in one
Urdu and one English daily Newspaper having wide circulation in the Federal and
all the provincial capitals, inviting the institutional investors and HNWI for
participating in the bidding.
iii. A Book Building Account shall be opened by the Issuer for collection of bid
amount.
iv. The bidding form shall be issued in duplicate signed by the bidder and
countersigned by the BR, with first copy for BR, and the second copy for the
bidder.
v. Bids shall be submitted through the bid collection centers or through fax numbers
given in paragraph 2.4 on the standard bidding form duly filled in and signed in
duplicate. The addresses for the bid collection centers are given in para 2.4.
vi. Bids can be placed at “limit price”, “strike order” or “step bid”.
vii. Bids/margin money shall be deposited through demand draft/pay order/cheque in
favor of “Initial Public Offering of TPL Direct Insurance Ltd – Book Building
Account.”
viii. BR shall collect an amount of 100% of the application money as bid/margin money
in respect of bids placed by HNWIs.
ix. BR shall collect an amount of not less than 25% of the application money as margin
money in respect of bids placed by institutional investors.
x. BR may reject a bid placed by an institutional investor/HNWI for reasons to be
recorded in writing and the reasons should be disclosed to such bidder forthwith.
Decision of BR shall not be challengeable by the bidder or its associates.
xi. BR shall not accept the bids made at a bid price lower than the Floor Price.
xii. The Issuer and BR shall not accept bids from associated persons of the Issuer
and the Company in excess of five percent (5%) of the size of the Book
Building Portion.
xiii. The bidders will receive back the duplicate form upon submission of their bids
which will be proof of their bid submission. In case of facsimile, a copy of form
with receiving will be faxed back to the bidder.
xiv. Bidders can revise or withdraw their bids during the bidding period (for details
please refer to para 2.12 and 2.14).
xv. BR shall maintain record of the bids received / rejected / revised / withdrawn along
with identities of the bidder and evidence of amount received.
xvi. BR shall ensure that all the bids received by the bid collection centers are
entered into the system developed by the Karachi Stock Exchange for the
purpose of book building according to the procedure given in paragraph 2.4
(b) (xiii) and as per clause 8.6 of Appendix 4 of the Listing Regulation of KSE.
The system shall be capable to display live an order book, in descending order
with respect to the bid price, showing the demand for shares at various prices
and accumulative number of shares bid for along with percentage of the total
shares offered. The order book should also show the revised bids and the bids
withdrawn.
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Prospectus
xvii. At the close of the bidding period, the BR shall determine the strike price with the
consent of the Company.
xviii. Successful bidders shall be intimated, within two (2) working days of the closing of
the bidding period, the strike price and the number of shares provisionally allotted
to each of them.
xix. The successful institutional bidders shall, within seven (7) working days of the
closing of the bidding period, deposit the balance amount as consideration against
allotment of shares.
xx. Under rule 8.11 of the Listing Regulation, where a successful institutional bidder
defaults in payment of shares allotted to him, the margin money deposited by such
institutional bidder shall be forfeited by BR.
xxi. Margin money of unsuccessful bidders will be refunded within three (3) working
days of the close of the bidding period.
xxii. Final allotment of shares out of the Book Building portion shall be made after
receipt of full subscription money from the successful bidders; however, shares to
such bidders shall be transferred at the time of transfer of shares out of the general
public portion of the issue to successful applicants.
xxiii. An associated person or any other related person or party of the Issuer shall not
make bid(s) for shares in excess of 5% of the book building portion of the Issue.
2.9 BANK ACCOUNT FOR BOOK BUILDING AND PUBLIC PORTION
The Company has opened two separate bank accounts for collection of applications’ money,
one each for the Book Building portion and the General Public portion of the Issue.
The bidders shall draw demand draft, pay order or cheque in favor of “Initial Public
Offering of TPL Direct Insurance Limited – Book Building Account” which has been
opened at Faysal Bank Limited. The collection bank shall keep and maintain the bid money
in the said account. Once the strike price is determined and list of allottees is finalized, the
Lead Manager, after obtaining NOC from KSE, may request in writing to the collection bank
for transfer the money of successful and accepted applications to the Company’s account(s)
and advise for refund of the bid money to unsuccessful bidders.
2.10 PAYMENT INTO THE BOOK BUILDING ACCOUNT
The bidders shall draw a demand draft, pay order or cheque favoring “Initial Public
Offering of TPL Direct Insurance Limited – Book Building Account” and submit it at the
designated bid collection center either in person or through facsimile along with a duly filled
in bidding form.
CASH MUST NOT BE SUBMITTED WITH BIDDING FORMS AT THE BID
COLLECTION CENTER. PAY ORDER, BANK DRAFT, CHEQUE AND ANY
OTHER APPROPRIATE INSTRUMENT ACCEPTABLE TO BOOK RUNNER AND
DRAWN IN FAVOR OF “INITIAL PUBLIC OFFERING OF TPL DIRECT
INSURANCE LIMITED – BOOK BUILDING ACCOUNT” ARE ACCEPTABLE.
Since the investors can bid for shares through “limit price”, “strike order” or “step bid”
therefore payment procedure is explained below for all the three (3) methods.
a. Payment for Limit Prices
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If investors are placing their bids through “limit price” then they shall deposit the margin
money based on the number of shares they are bidding for at their stated bid price.
For instance, if an investor is applying for 2 million shares at a price of PkR 11 per share, then
the total application money would amount to PkR 22 million. In such a case, (i) HNWI shall
deposit PkR 22 million in the Book Building account as the bid amount which is 100% of
PkR 22 million; and (ii) Institutional Investors shall deposit at least PkR 5.5 million in the
Book Building account as the margin amount which is 25% of PkR 22 million.
b. Payment for Strike Orders
If investors are placing a “strike order”, then they shall deposit the margin money/bid money
equal to the product of the number of shares they are bidding for and the Floor Price which in
this case is PKR 10 per share assuming that strike price is discovered at the Floor Price.
For instance, if an investor is applying for 2.0 million shares then the total application money
would be PKR 20 million. In such a case, (i) HNWI shall deposit PKR 20 million as bid
amount which is 100% of PKR 20 million and (ii) Institutional Investors shall deposit at least
PKR 5 million as margin money which is 25% of PKR 20 million.
In the event where limit and step orders are insufficient to determine price through the Book
Building mechanism, all strike orders will be considered for allocation of shares at floor price.
For details please refer to para 2.16 below.
c. Payment for Step Bids
If investors are placing a “step bid”, which is a series of limit bids at increasing prices, then
they shall deposit the margin money/bid money based on the total number of shares they are
bidding for at their stated bid prices.
For instance, if the investor bids for 0.5 million shares at PKR 13 per share, 0.4 million shares
at PKR 14 per share and 0.3 million shares at PKR 15 per share, then in essence the investor
has placed one “step bid” comprising three limit bids at increasing prices. The margin money
would amount to PKR. 16.60million, which is the sum of the products of the number of
shares bid for and the bid price of each limit bid. In such a case, (i) HNWI shall deposit PKR
16.60 million in the Book Building Account as bid amount which is 100% of PKR 16.60
million and (ii) Institutional Investors shall deposit at least PKR 4.15 million in the Book
Building Account as margin money which is 25% of PKR 16.60 million.
2.11 PAYMENT BY FOREIGN INVESTORS
Foreign investors may subscribe using their Special Convertible Rupee Accounts (SCRA), as
set out under Chapter 20 of the State Bank of Pakistan’s Foreign Exchange Manual.
Payments made by foreign investors shall be supported by proof of receipt of foreign currency
through normal banking channels. Such a proof shall be submitted along with the Bidding
Application by the foreign investors.
2.12 REVISION OF BIDS BY THE BIDDER
The bidders shall have the right to revise their bids any time during the bidding period and on
the last day till 07:00 pm. Online revision of the bids may be allowed to the bidders through
system software. This will however be subject to the condition that the bidder shall comply
with the requirements of bidding as disclosed under Appendix 4 of the Listing Regulations
and any other condition or procedure disclosed in the Prospectus.
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2.13 REJECTION OF BIDS BY THE BOOK RUNNER
In terms of clause 8.4 of Appendix 4 of Listing Regulations of the Karachi Stock Exchange,
BR may reject a bid placed by an institutional investor/HNWI for reasons to be recorded in
writing and the reasons should be disclosed to such bidder forthwith. Decision of BR shall
not be challengeable by the bidder or its associates.
2.14 WITHDRAWAL OF BIDS BY THE BIDDER
A bidder has the right to withdraw placed bid from the bidding system any time during the
bidding period and on the last day till 05:00 pm. Online withdrawal of the bids may be
allowed to the bidders through system software. This will however be subject to the condition
that the bidder shall comply with the requirements of bidding as disclosed under Appendix 4
of the Listing Regulations and any other condition or procedure disclosed in the Prospectus.
2.15 WITHDRAWAL OF ISSUE BY THE COMPANY
a) According to clause 3.10 of Appendix 4 of the listing regulations of KSE, in case the
Issuer do not receive bids at or above the floor price for the minimum number of shares
offered, it may withdraw the Issue. The decision of withdrawal shall be taken within a
period not more than three (3) working days of the closing of bidding period.
b) The Issuer shall withdraw the offer if the total bids received are less than fifteen.
c) The withdrawal shall be immediately intimated to the Commission and the Exchange.
d) In case the offer is withdrawn the margin money/bid money will be refunded to
bidders within three (03) working days of the decision of withdrawal without any
markup, interest etc.
2.16 MECHANISM FOR DETERMINATION OF STRIKE PRICE
a) At the close of the bidding period, the Issuer, in consultation with the Book Runners shall
determine the strike price on the basis of “Dutch Auction Method”. Under this
Methodology, the strike price is determined by lowering the price to the extent that the total
number of shares offered is subscribed. However, while determining the strike price, the
bids placed through strike order(s) shall not be taken into consideration.
b) The order book shall display the bid prices in a descending order along with the quantity for
each price level as well as the cumulative quantity at each price level. The bids at strike
orders shall, however, be displayed in the order book in the following manner:
i. after the lowest limit bid, in case the limit bids placed are not sufficient for full
allotment of the shares offered, or,
ii. immediately, after the limit bid at which all the shares offered can be allotted, in case
the limit bids placed are sufficient for full allotment of the shares offered.
c) For the purpose of allotment of shares, the limit bid(s) entered at the price
determined/discovered as Strike Price through Book Building Process and the bids placed
as strike order shall be ranked equally and preference will be given to the bidder who has
made the bid earlier.
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d) Once the strike price is determined all those bidders whose bids have been found successful
shall become entitled for allotment of shares. The bidders, who have made bids at prices
above the strike price, will be issued shares at the strike price and the differential will be
refunded. The bidders, who have made bids below the strike price, shall not qualify for
allotment of shares and their margin money shall be refunded.
The mechanism for determination of strike price can be understood by the following illustration.
a) Number of shares being offered through the Book Building: 10 million ordinary shares
b) Floor price: PKR 10 per share
c) Bidding Period: xx June 2011 – xx June 2011
Price (PkR per Quantity (shares in Cummulative
Bidder Category of Order Date
share) Millions) Number of Shares
Institution - A 15.00 1.00 1.00 Limit Price Day 1
Institution - E 14.50 1.50 2.50 Limit Price Day 3
Institution - B 13.75 2.00 3.00 Limit Price Day 2
Foreign Institution - A 13.00 1.75 4.75 Limit Price Day 2
HNWI - A 12.25 3.00 7.75 Step Order Day 3
Institution - C 11.25 2.00 9.75 Step Order Day 1
HNWI - B 11.05 1.00 10.75 Limit Price Day 2
Institution - D X 1.00 11.75 Strike Order Day 2
HNWI - C X 1.00 12.75 Strike Order Day 3
Institution - C 10.50 3.00 15.75 Step Order Day 1
Institution - B 10.25 4.00 15.75 Limit Price Day 2
HNWI - A 10.10 2.75 18.50 Step Order Day 3
Institution - C 10.05 6.00 24.50 Step Order Day 1
Total Shares Subscribed
Bid Withdrawn Strike Price determined through Bid has been revised and
Dutch Auction Method placed at PkR13.75 per
share
Setting Strike Price – On the basis of the figures provided in the above illustration,
according to the Dutch Auction Method, the strike price would be set at PkR11.05 per share
to sell the required quantity of 10.0 million ordinary shares.
At PkR15 per share, investors are willing to buy only 1.0 million shares. Since 9.0 million
shares are still available, therefore the price will set lower.
At PkR13.75 per shares, investors are willing to buy 2.0 million shares. Since 7 million
shares are still available, therefore, the price will set lower.
At PkR13.00 per shares, investors are willing to buy 1.75 million shares. Since 5.25 million
shares are still available, therefore, the price will set lower.
At PkR12.25 per shares, investors are willing to buy 3 million shares. Since 2.25 million
shares are still available, therefore, the price will set lower.
At PkR11.25 per shares, investors are willing to buy 2 million shares. Since 0.25 million
shares are still available, therefore, the price will set lower.
At PKR11.05 per share, investors are willing to buy 1 million shares. Since after bidding for
1 million shares at PKR 11.05 per shares no share will be available, therefore, the Strike Price
will be set at PKR 11.05 per share for the entire lot of 10.0 million shares.
The bidders, who have placed bids at prices above the strike price (which in this illustration is
PKR 11.05 per shares), will become entitled for allotment of shares at the strike price.
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The bidders, who have placed bids below PKR 11.05 per share, will not qualify for allotment
of shares.
After allotment in the aforementioned manner, 0.25 million shares are still available for
allotment. These shares will be allotted to the bidders who have placed bid(s) at PKR 11.05
and who have placed bid(s) at the strike order, however, for the purpose of allotment of these
0.25 million shares preference will be given to the bidder who has placed the bid earlier.
2.17 BASIS OF ALLOTMENT OF SHARES
After the closure of bidding period, the Book Runners will analyze the demand generated at
various price levels. Only successful bidders shall be eligible for allotment and transfer of
shares. Final allotment of shares out of the Book Building portion shall be made after receipt
of full subscription money from the successful bidders; however, shares to such bidders shall
be dispatched or credited, as the case may be, at the time of transfer of shares out of the
public portion of the issue to successful applicants.
2.18 REFUND OF MARGIN MONEY
Investors who have bid lower than the strike price are not eligible for allotment of shares.
Margin money of the unsuccessful bidders shall be refunded within three (3) working days of
the close of the bidding period as required under clause 8.12 of Appendix 4 of the KSE
Listing Regulations.
2.19 UNDERWRITING
After determination of the strike price Book Runner shall within two (2) working days of the
closing of the bidding period enter into an underwriting agreement with the Issuer indicating
the number of shares that Book Runner would underwrite at the strike price and the
underwriting Commission/Fee to be charged.
2.20 PUBLICATION OF THE FINAL PROSPECTUS
The underwriting agreement for the public portion shall be finalized within ten (10) working
days from closing of the bidding period.
Upon finalization of the underwriting agreements, the Lead Managers shall, within ten (10)
working days from the date of closing of the bidding period, submit an application to KSE for
allocation of dates for publication of the final Prospectus and subscription of shares by the
general public.
The final Prospectus in full or in abridged form must be published within seventeen (17)
working days of the closing of the bidding period in the manner as specified in Section 53 of
the Companies Ordinance, 1984.
Public subscription for the shares shall be held at any date(s) within thirty days (30) of the
publication of the final Prospectus but not earlier than seven (7) days of such publication.
2.21 ADDRESSES OF BID COLLECTION CENTRES
Bid Collection Centers have been established at Karachi, Lahore and Islamabad to collect the
bids for the Book Building portion of TPL Direct Insurance Limited in order to provide
convenient access to bidders to participate in the bidding process. Addresses, detail of contact
persons and fax numbers of the Bid Collection Centers are given in paragraph 2.4.
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2.22 STATEMENT BY ISSUER
Dated: May 13th, 2011
The General Manager,
Karachi Stock Exchange (Guarantee) Limited,
Stock Exchange Building,
Stock Exchange Road,
Karachi.
On behalf of the Company, we confirm that all material information as required under the
Companies Ordinance, 1984 and the Listing Regulations of the Karachi Stock Exchange
(Guarantee) Limited have been disclosed in the Prospectus and that whatever stated in the
Prospectus and the supporting documents is true and correct to the best of our knowledge and
belief and that nothing has been concealed.
For and on behalf of
TPL Direct Insurance Limited
-Sd-
Saad Nissar
Chief Executive Officer
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2.23 STATEMENT BY LEAD MANAGER, ARRANGER & BOOK RUNNER
Dated: May 13th, 2011
The General Manager,
Karachi Stock Exchange (Guarantee) Limited,
Stock Exchange Building,
Stock Exchange Road,
Karachi.
Being mandated as Lead Manager, Arranger and Book Runner to this Initial Public Offering
of TPL Direct Insurance Limited through the Book Building process, we confirm that all
material information as required under the Companies Ordinance, 1984 and Appendix 4 of the
Listing Regulations of the Karachi Stock Exchange (Guarantee) Limited have been disclosed
in this Prospectus and that whatever stated herein and in the supporting documents is true and
correct to the best of our knowledge and belief and that nothing has been concealed.
On behalf of AKD Securities Limited:
-Sd-
Umair Aijaz Shaikh
Head, Investment Banking
AKD Securities Limited
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PART 3
3 SHARE CAPITAL AND RELATED MATTERS
3.1 SHARE CAPITAL
Amount of
Total No. of Total Face Total
Shares Share Capital Value (Pkr) Premium Total (Pkr)
50,000,000 Authorized Share Capital 500,000,000 - 500,000,000
(Ordinary Shares of PKR 10 per share)
Issued, Subscribed & Paid up
31,000,000 capital 310,000,000 - 310,000,000
The Existing Capital of the
company is held as follows:
Directors/Sponsors
TPL Trakker Limited (Holding
30,999,000 Company) 309,990,000 - 309,990,000
500 Mr.Muhammad Ali Jameel (Director) 5,000 - 5,000
500 Mr.Jameel Yusuf (Director) 5,000 - 5,000
31,000,000 SUB TOTAL 310,000,000 310,000,000
Present Issue
The present issue of 15 million ordinary
shares by the Company, represents
32.60% of the total post IPO paid-up
capital of the company
Allocation to Institutional/HNWI
10,000,000 Investors 100,000,000 [•] [•]
(through Book Building Mechanism)
5,000,000 General Public 50,000,000 [•] [•]
15,000,000 SUB TOTAL 150,000,000 [•] [•]
46,000,000 TOTAL 460,000,000 [•] [•]
Notes:
(i). The sponsors of TPL Direct Insurance Limited (the Company) shall at all times retain
at least 25% of the capital of the Company;
(ii). The shares allotted to sponsors in excess of 25% shall not be saleable for a period of
six months from the date of public subscription;
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(iii). The Commission vide its letter No SMD/CO 57(1)/04/2011-2 dated June 15, 2011
has given relaxation to the Company from the requirements of Regulation 6(1) of the
Listing Regulations of the Karachi Stock Exchange under Regulations 6(6) thereof.
3.2 OPENING AND CLOSING OF THE PUBLIC SUBSCRIPTION PERIOD
The subscription list will open at the commencement of banking hours on MM DD, 2011 and
will close on MM DD, 2011 at the close of banking hours.
3.3 INVESTOR ELIGIBILITY FOR PUBLIC ISSUE
Eligible investors include
a) Pakistani citizens residing in or outside Pakistan or persons holding two nationalities
including Pakistani Nationality;
b) Foreign nationals whether living in or outside Pakistan;
c) Companies, bodies corporate or other legal entities incorporated or established in or
outside Pakistan (to the extent permitted by their respective constitutive documents and
existing regulations as the case may be);
d) Mutual funds, provident/pension/gratuity funds/trusts (subject to the terms of their
respective Trust Deeds and existing regulations); and
e) Branches in Pakistan of companies and bodies corporate incorporated outside Pakistan.
3.4 FACILITIES AVAILABLE TO NON-RESIDENT PAKISTAN AND FOREIGN
INVESTORS
Non-resident Pakistani investors and foreign investors may subscribe for the shares being
issued through this Prospectus by using their Special Convertible Rupee Account (“SCRA”)
as set out in Chapter 20 of the Foreign Exchange Manual of the State Banks of Pakistan.
MINIMUM AMOUNT OF APPLICATION AND BASIS FOR ALLOTMENT OF SHARES
OUT OF THE PUBLIC PORTION OF THE ISSUE
The basis and conditions of allotment to the general public shall be as follows:
a) ●
Application for shares below the total value of PKR [ ] ( Issue Price x 500 Shares) shall not
be entertained.
b) The minimum amount of application for subscription of 500 ordinary shares is PKR [ ●] (Issue
Price x 500 Shares)
c) Applications for shares must be made for 500 shares or in multiples of 500 shares only.
Applications which are neither for 500 shares nor for multiples of 500 shares shall be rejected.
d) SUBMISSION OF FICTITIOUS AND MULTIPLE APPLICATIONS (MORE THAN
ONE APPLICATIONS BY SAME PERSON) IS PROHIBITED AND SUCH
APPLICATIONS` MONEY IS LIABLE TO CONFISCATION UNDER SECTION 18A
OF THE SECURITIES AND EXCHANGE ORDINANCE, 1969.
e) If the shares offered to the general public are sufficient for the purpose, all applications shall
be accommodated.
f) If the shares applied for are in excess of the shares issued, the distribution shall be made by
computer balloting, in the presence of the representative(s) of KSE in the following manner:
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(i) If all the applications for 500 shares can be accommodated, then all such applications
shall be accommodated first. If all applications for 500 shares cannot be accommodated
then balloting will be conducted among applications for 500 shares only.
(ii) If all the applications for 500 shares have been accommodated and shares are still
available for allotment, then all applications for 1,000 shares shall be accommodated. If
all applications for 1,000 shares cannot be accommodated then balloting will be
conducted among applications for 1,000 shares only.
(iii) If all applications for 500 shares and 1,000 shares have been accommodated and shares
are still available for allotment, then all applications for 1,500 shares shall be
accommodated. If all applications for 1,500 shares cannot be accommodated then
balloting will be conducted among applications for 1,500 shares only.
(iv) If all applications for 500 shares, 1,000 shares and 1,500 shares have been
accommodated and shares are still available for allotment, then all applications for
2,000 shares shall be accommodated. If all applications for 2,000 shares cannot be
accommodated then balloting will be conducted among applications for 2,000 shares
only.
(v) After the allotment in the above mentioned manner, the balance shares, if any, shall be
allotted in the following manner:
(a) If the remaining shares are sufficient to accommodate each application for
over 2,000 shares, then 2,000 shares shall be allotted to each applicant and
remaining shares shall be allotted on pro-rata basis.
(b) If the remaining shares are not sufficient to accommodate all the remaining
applications for over 2,000 shares, then balloting shall be conducted for
allocation of 2,000 shares each to the successful applicants.
g) If the issue is over subscribed in terms of amount only, then allotment of shares shall be made
in the following manner:
(i) First preference will be given to the applicants who applied for 500 shares;
(ii) Next preference will be given to the applicants who applied for 1,000 shares;
(iii) Next preference will be given to the applicants who applied for 1,500 shares; and then
(iv) Next preference will be given to the applicants who applied for 2,000 shares.
h) After allotment of the above, the balance shares, if any, shall be allotted on pro rata basis to
the applicants who applied for more than 2,000 shares.
i) Allotment of shares will be subject to scrutiny of applications for subscription of shares.
j) Applications, which do not meet the above requirements, or applications which are
incomplete, will be rejected.
3.5 REFUND OF SUBSCRIPTION MONEY TO UNSUCCESSFUL APPLICANTS
The Company shall take a decision within ten (10) days of the closure of subscription list as
to which applications have been accepted or are successful and refund the money in cases of
unaccepted or unsuccessful applications within ten (10) days of the date of such decision, as
required under Section 71 of the Ordinance.
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As per sub-section (2) of Section 71 of the Ordinance, if refund as required under Sub-section
(1) of Section 71 of the Ordinance is not made within the time specified therein, the Issuer
shall be liable to repay the money with surcharge at the rate of 1.5%, for every month or part
thereof from the expiration of the 15th day and, in addition, to a fine not exceeding PKR
5,000/- and in case of continuing offense to a further fine not exceeding PKR 100/- per day
after the said 15th day of which the default continues. Provided that the Issuer shall not be
liable if he/she proves that the default in making the refund was not due to any misconduct or
negligence on his/her part.
3.6 ISSUE AND DISPATCH OF SHARE CERTIFICATES
The Company will dispatch share certificates to successful applicants through their Banker to
the Issue or by crediting the respective Central Depository System (“CDS”) accounts of the
successful applicants within thirty (30) days of the close of public subscription, as per Listing
Regulations of the Stock Exchanges.
Shares will be transferred either in scrip-less form in the CDS of CDCPL or in the shape of
physical scripts on the basis of option exercised by the successful applicants. Shares in the
physical scripts shall be dispatched to the Bankers to the Issue within thirty (30) days from
the date of close of subscription list, whereas scripless shares shall be directly credited
through book entries in the respective accounts maintained with the CDCPL.
The applicants who opt for receipt of shares in scrip-less form in CDS should fill in the
relevant columns of the Application Form. In order to exercise the scrip-less option, the
applicant(s) should have CDS account at the time of subscription.
If the Company makes a default in complying with the above requirements, it shall pay to the
Stock Exchange a penalty of PKR 5,000/- per day for every day during which the default
continues. The Stock Exchange may also notify the fact of such default and the name of the
Company by notice and also by publication in its Ready-Board Quotation of the Stock
Exchange.
The name of the Company be notified to the members of the Stock Exchange and placed on
the website of the Stock Exchange.
3.7 TRANSFER OF SHARES
a) Physical Scripts
Under the provisions of Section 77 of the Ordinance, the Directors of the Company shall
not refuse to transfer any fully paid share unless the transfer deed is, for any reason,
defective or invalid or is not accompanied by the relevant share certificate. Provided that
the Company shall within thirty (30) days from the date on which the instrument of
transfer was lodged with it, notify the defect or invalidity to the transferee who shall, after
the removal of such defect or invalidity, be entitled to re-lodge the transfer deed with the
Company.
b) Transfer under book entry system
The shares maintained with the CDS in the book entry form shall be transferred in
accordance with the provisions of the Central Depositories Act, 1997 and the CDCPL
Regulations.
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3.8 SHARES ISSUED IN PRECEDING YEARS
The details of the shares issued by the Company in preceding years are as follows:
Sr .No. No. of Par Premium Amount Consideration Date of Issue
Shares Value (Rs.)
Issued
1 50,000 10 - 500,000 Cash 8th November 1992
2 450,000 10 - 4,500,000 Cash 29th December 1994
3 500,000 10 - 5,000,000 Cash 31st December 1995
4 500,000 10 - 5,000,000 Cash 30th December 1996
5 500,000 10 - 5,000,000 Cash 31st December 1997
6 2,000,000 10 - 20,000,000 Cash 13th May 1999
th
7 500,000 10 - 5,000,000 Cash 20 December 2001
8 500,000 10 - 5,000,000 Cash 31st December 2002
9 2,042,800 10 - 20,428,000 Cash 28th June 2004
th
10 957,200 10 - 9,572,000 Cash 20 December 2004
11 953,100 10 - 9,531,000 Cash 9th February 2005
12 6,088,108 10 - 60,881,080 Cash 30th December 2005
13 1,000,000 10 - 10,000,000 Cash 25th June 2007
14 11,958,792 10 - 119,587,920 Cash 31st January 2008
15 2,000,000 10 - 20,000,000 Cash 7th March 2008
16 1,000,000 10 - 10,000,000 Cash 29th March 2008
Total 31,000,000 310,000,000
Other than the above mentioned shares, there has been no other issue of shares since its
incorporation.
3.9 PRINCIPAL PURPOSE OF THE PUBLIC ISSUE
The aim of listing is to inject additional equity into the Company for the retirement of short
term running finance and for supporting existing and future working capital requirement.
The Company intends to retire short term running finance amounting to PKR 45.7million as
at 31st May 2011 of the following Banks:
Habib Metropolitan Bank Limited amounting to PKR 24.8 mn (at a markup rate of 3
months KIBOR + 2.1% pa)
KASB Bank Limited amounting to PKR 20.9 mn (at markup rate of 3 months KIBOR
+ 3.5% pa)
The remaining proceeds will be utilized for supporting of existing working capital
requirement and for working capital requirement emanating from the launch of new products.
The Company plans to launch the following new products lines:
Home Insurance
Bancassurance
New products for motor insurance
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3.10 INTEREST OF SHAREHOLDERS
None of the holders of the issued shares of the Company have any special or other interest in
the property or profits of the Company other than as holders of the ordinary shares in the
capital of the Company.
3.11 DIVIDEND POLICY
The rights in respect of capital and dividends attached to each share are and will be the same.
The Company in its general meeting may declare dividends but no dividends shall exceed the
amount recommended by the Directors. Dividend, if declared, in the general meeting, shall be
paid according to the terms of the provisions of the Ordinance.
The Directors may from time to time pay to the members such interim dividends as appear to
the Directors to be justified by the profits of the Company. No dividends shall be paid
otherwise than out of the profits of the Company for the year or any other undistributed
profits.
No unpaid dividends shall bear interest or mark-up against the Company. The dividends shall
be paid within the period laid down in the Ordinance.
3.12 ELIGIBILITY FOR DIVIDEND
The shares being offered for sale shall rank pari-passu with the existing shares in all matters,
including the right to such bonus or right issue and dividend as may be declared by the
Company subsequent to the offer of such shares.
3.13 DEDUCTION OF ZAKAT
Income distribution will be subject to deduction of Zakat at source, pursuant to the provisions
of Zakat and Ushr Ordinance, 1980. (XVIII of 1980) as may be applicable from time to time.
3.14 CAPITAL GAINS (SECTION 37-A)
The capital gain arising on or after the first day of July 2010, from disposal of securities held
for a period of less than a year, shall be chargeable to tax at the rates specified as follows:
S.No Period Tax Year Rate of Tax
1 Where holding period of 2011 10.0%
security is less than six (6) 2012 10.0%
months 2013 12.5%
2014 15.0%
2015 17.5%
2 Where holding period of 2011 7.5%
security is more than six (6) 2012 8.0%
months but less than twelve (12) 2013 8.5%
months 2014 9.0%
2015 9.5%
2016 10.0%
3 Where the holding period of the - 0%
* In terms of the amendments made in the Income Tax Ordinance, 2011 through the Income Tax (Amendment)
security is more than one year
Ordinance, 2011 surcharge at the rate of 15% will be charged on tax liability for the period commencing March 15, 2011
to June 30, 2011.
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Capital Gain Tax is not applicable to a banking company and an insurance company.
The holding period of a security shall be reckoned from the date of acquisition (whether
before, on or after the thirtieth day of June, 2010) to the date of disposal of such security
falling after the thirtieth day of June, 2010.
Where a person sustains a loss on disposal of securities in a tax year, the loss shall be set off
only against the gain of the person from any other securities chargeable to tax and no loss
shall be carried forward to the subsequent tax year.
3.15 WITHHOLDING TAX ON DIVIDENDS
Dividend distribution to the shareholders will be subject to withholding tax under section 150
of the Income Tax Ordinance, 2001 at the rate of 10% as specified in part I, Division III of
First Schedule to the said Ordinance or any time to time amendments therein. In terms of the
provision of Section 8 of the said Ordinance, said deduction at source, shall be deemed to be
full and final liability in respect of such profits.
3.16 DEFERRED TAXATION
Deferred tax is accounted for using the liability method in respect of all temporary
differences at the balance sheet date between the tax base of assets and liabilities and their
carrying amount. Deferred tax liabilities are recognized for all taxable temporary differences.
Deferred tax assets are recognized for all deductible temporary differences to the extent that it
is probable that the temporary difference will reverse in the future and the taxable profits will
be available against which the temporary differences can be utilized.
The carrying amount of deferred tax asset is reviewed at each balance sheet date and reduced
to the extent that it is no longer probable that sufficient taxable profit will be available to
allow deferred tax asset to be utilized.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to
the period when the asset is realized or the liability is settled, based on the tax rates that have
been enacted or subsequently enacted at the balance sheet date.
The company has booked deferred tax asset of Rs.33.39m as at 31st December 2010.
3.17 FEDERAL EXCISE DUTY & WITHHOLDING TAX ON SALE/PURCHASE OF
SHARES
a) Federal Excise Duty (FED) of 16% is charged on brokerage commission on purchase/sale
of shares on a Stock Exchange. FED charges will be borne by the investors.
b) Withholding Tax of 0.01% will be charged on the sale/purchase value on the
purchase/sale of shares/ Modaraba certificates/ instruments of redeemable capital.
3.18 TAX CREDIT FOR INVESTMENT IN IPO
Section 62 of the Income Tax Ordinance, 2001 pertains to tax credit to individuals and
association of persons on investment in shares of a public Company listed in stock exchange
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of Pakistan. The Finance Bill, 2011 seeks to amend the provisions of Section 62 to make the
following changes:
• The upper limit for tax credit for investment in shares has been proposed to be enhanced
from PKR 300,000 to PKR 500,000. Threshold of investment has been proposed to be
enhanced from 10% to 15% of the taxable income.
• Time limit for holding of shares has been proposed to 36 months from the date of their
acquisition as compared to existing 12 months, for the claim of tax credit on investment in
shares. Only resident individuals and association of persons are eligible for the claim of tax
credit.
3.19 TAX CREDIT FOR ENLISTMENT
Under section 65C of the Income Tax Ordinance, 2001, the Finance Act 2010 introduced
tax credit at 5% of the tax payable for the tax year in which a Company is listed on a Stock
Exchange in Pakistan. The Finance Bill, 2011 proposes to enhance the rate of tax credit to
15% for the tax year in which a Company is listed on a Stock Exchange in Pakistan.
3.20 RATIONALE FOR FIXING FLOOR PRICE OF PKR 10 ABOVE BREAK-UP VALUE
• Since taking over the operations of the company from former Jupiter Insurance Company
Ltd in 2005, the financials show significant improvement as per below:
2005 2010
Paid-up Share Capital 150,412,080 310,000,000
Gross Premium 23,528,055 408,732,711
Net Premium Revenue 4,452,746 331,294,224
Total Equity 39,960,152 195,506,598
Total Assets Book Value 87,336,027 562,174,771
• Overall TDI achieved the highest growth in the industry as per below:
GROWTH VS. TDI
INDUSTRY 2007 2008 2009 2010
Industry Premium
Growth 16.4% 3.5% 2.3% 9.5%
TDI's Premium
Growth 46.43% 14.63% 52.66% 42.51%
Industry Premium
(Rs. in millions) 32,812 33,957 34,728 38,036
TDI's Premium
164 188 287 409
(Rs. in millions)
Market Share 0.50% 0.55% 0.83% 1.08%
Source: Insurance Association of Pakistan
• One of the lowest claims ratio in the industry at around 40%.
• One of the lowest credit period of 15 days in the industry.
• 12,000 customers all over Pakistan.
• TDI has recently executed contracts with United Bank and Standard Chartered Bank for
underwriting auto business of their customers.
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• Representation in the Central Committee of the Insurance Association of Pakistan.
• Reinsurance treaties are with A rated reinsurers viz. Malaysian Re and Best Re.
• TDI has extended its operations in 6 major cities i.e. Karachi, Hyderabad, Multan, Lahore,
Faisalabad and Islamabad.
• TDI is conferred with Brands of Year Award consecutively for the past 3 years.
• PACRA ratings maintained at “A-”
• First company to use Risk Profiling specially tailored by leading actuaries for premium
pricing.
• First company to offer services round the clock services through a Call Centre manned with
underwriters and claims specialist.
• Fastest claims recording and processing time in the industry i.e. 60 seconds claims lodging,
processing in 45 minutes and settlements within 7 days.
• Product innovation – 3T Policy and Self Insurance
Financial Highlights:
Amount in ‘000 2010 2009 2008 2007 2006 2005
Paid-up Share Capital 310,000 310,000 310,000 160,412 150,412 150,412
Accumulated Losses (114,493) (96,482) (98,346) (100,194) (134,271) (110,452)
Total Equity 195,507 213,518 211,654 60,218 26,141 39,960
Gross Premium 408,733 287,268 188,364 164,402 112,024 23,528
Net Premium Revenue 331,294 223,570 166,697 138,704 68,775 4,453
Investment & Other
Income 19,476 12,252 8,097 3,752 656 215
Profit (Loss) Before Tax (12,375) 10,142 (4,676) (1,156) (23,819) (37,253)
Profit (Loss) After Tax (18,011) 1,864 1,848 34,077 (23,819) (35,993)
Earnings Per Share/(Loss
Per Share) (0.58) 0.06 0.06 2.12 (1.58) (4.05)
Book Value Per Share 6.31 6.89 6.83 3.75 1.74 2.66
Investment 33,848 38,839 34,315 25,703 15,796 32,496
Cash & Bank Balance 4,659 1,812 1,627 4,998 15,009 6,891
Total Assets Book Value 562,175 462,843 357,893 191,508 134,195 87,336
Total Assets Market
Value 564,389 466,203 357,453 193,043 135,927 88,049
Sector Comparison:
TDI comparison with leading insurance Companies (based on Consolidated audited accounts of
2010)
Sector Benchmarking AICL EFUG IGIIL NJICL TDI
Year End 31-Dec-10 31-Dec-10 31-Dec-10 31-Dec-10 31-Dec-10
Earning Per Share (Rs) A 5.05 (3.31) 8.63 4.55 (0.58)
Book Value Per Share (Rs) B 90.32 76.73 119.35 29.06 6.31
Market Price Per Share (Rs)* C 67.70 37.50 71.00 58.45 10.00
Price Earning Ratio (x) C/A 13.41 (11.34) 8.23 12.84 (17.21)
Price to Book Value (x) C/B 0.75 0.49 0.59 2.01 1.59
*Market Price as at 13th June 2011
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PART 4
4 UNDERWRITING, COMMISSIONS, BROKERAGE AND OTHER EXPENSES
4.1 UNDERWRITING
Book Building Portion
AKD Securities Limited has been mandated to act as the Lead Manager, Arranger &
Book Runners to the Issue. The Book Runners shall underwrite the Book Building
Portion of the Issue of 10,000,000 ordinary shares within two (2) working days of the
closing of the bidding period as required under clause 5 of Appendix 4 of the listing
regulations of the Karachi Stock Exchange at the strike price determined through the
book building process.
In the opinion of the Directors, the resources of the Underwriter are sufficient to
discharge its underwriting obligations/commitments.
Public Portion
As required under clause 6 of Appendix 4 of the listing regulations of the Karachi Stock
Exchange, the Public Portion of the Issue of 5,000,000 ordinary shares will be
underwritten as follows:
Name of Underwriter Number of Shares Underwritten Amount (PkR)
4.2 UNDERWRITING COMMISSION
The underwriter will be paid an underwriting commission at the rate of 0.35% on the amount
of Book Building portion underwritten by the Book Runner.
In addition to the underwriting commission, the BR will be paid a take up commission at the
rate of 1% of the amount taken up.
The commission to be paid to the underwriters for underwriting the public portion is
1% whereas the take up commission is 1%.
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4.3 BUY BACK/REPURCHASE AGREEMENT
THE UNDERWRITERS HAVE NOT ENTERED INTO ANY BUY BACK/RE-PURCHASE
AGREEMENT WITH THE COMPANY OR ANY OTHER PERSON IN RESPECT OF THIS
PUBLIC ISSUE.
ALSO, NEITHER THE COMPANY NOR ANY OF ITS ASSOCIATES HAVE ENTERED INTO
ANY BUY BACK/REPURCHASE AGREEMENT WITH THE UNDERWRITERS OR THEIR
ASSOCIATES. THE COMPANY AND ITS ASSOCIATES SHALL NOT BUY-
BACK/REPURCHASE SHARES FROM THE UNDERWRITERS AND THEIR ASSOCIATES.
4.4 COMMISSION TO THE BANKERS TO THE ISSUE
Commission at the rate of 0.25% - 0.50% of the amount collected on allotment in respect of
successful applicants will be paid by the issuer to the Bankers to the issue for services to be
rendered by them in connection with this Public Issue, plus out-of-pocket expenses, if any.
4.5 BROKERAGE
For this Issue, brokerage shall be paid to the members of KSE, LSE and ISE at the rate of
1.0% of the value of shares (including premium) (if any) actually sold through them. No
brokerage shall be payable in respect of shares taken up by the Underwriters by virtue of their
underwriting commitments.
4.6 ESTIMATED EXPENSES OF THE ISSUE
The expenses of this issue are estimated not to exceed PkR 10,765,000 as mentioned below:
Expense Rate Amount (PkR)
Underwriting Commission – Book Building 0.35% 350,000
Underwriting Commission – General Public 1.00% 500,000
Take up Commission 1.00% 1,500,000
Bankers to the issue Commission including out of pocket 0.50% 550,000
Brokerage to Members of the Stock Exchange 1.00% 1,500,000
Lead Manager Fee (Advisory & Arrangement) 2,000,000
Book Runner Fee 500,000
Printing, Publication and notice Costs(Base on Issue) 1,000,000
KSE Fees and Listing Charges 622,500
KSE Software Charges 500,000
CDC Annual Fees for Eligible Security 67,500
CDC Fresh Issue Fees 150,000
SECP Application and Processing Fee 50,000
Legal & Professional Fees 500,000
Balloting Agent 225,000
Miscellaneous Cost 750,000
TOTAL 10,765,000
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PART 5
5.1 OVERVIEW, HISTORY AND PROSPECTS
TPL Direct Insurance Ltd (TDI) was launched in 2005, when TPL Trakker Ltd (sponsor of TDI)
acquired Jupiter Insurance Company Limited. The company has registration issued by SECP in
2001. Furthermore, according to the Sub Section 9 of Section 7 of the Insurance Ordinance 2000
{Duration and revocation of Registration} “Registration under this Ordinance to carry on insurance
business shall continue until it is revoked.” Therefore, certificate of registration issued by SECP in
2001 stands valid unless revoked. TDI is the first direct insurance company in Pakistan that differs
with conventional companies by offering 24 hour claims and underwriting services through a team
of highly skilled Call Centre officials, pioneering the concept of web based services to allow
customers to interact and retrieve progress of their insurance policies and claims. Underwriting
services includes providing premium quotations and explaining the various products of motor,
travel and healthcare to the inbound call customers. TDI offers fair and equitable premium rates that
are determined on the basis of risk profiling done by the leading firm of actuaries. The Company
has the fastest claim settlement and processing time and possesses a strong in-house risk inspection
and survey capability and therefore maintains the lowest claims processing and settlement time in
the entire industry – 60 seconds claims lodging, 45 minutes claim processing and 7 days claims
settlement. It has strong rapport with the 3S dealers (authorized by the manufactures as dealers for
sales, services and spare parts) and workshops that ensures quality and timely repairs.
TDI started its operations with a focused approach towards increasing its business, initially focusing
on niches where it has an advantage. The car insurance sector provides excellent synergies with its
parent entity, providing a clear advantage to the Company in this sector. This strategy coupled with
the growth prospects of the car insurance sector allowed the Company to accumulate critical mass.
The Company employs an actuarial based risk profiling mechanism for developing customized rates
for every customer. This not only helps the Company in arriving at a judicious quote but also allows
it to have a much better understanding of the quality of risk being acquired. The use of tracking
device as mandatory for most of the current products allows the Company to have one of the lowest
vehicle theft-related claims in the industry.
The insurance industry is predominantly agency based. The agents are the main source of business.
TDI took a bold step by launching a direct company. This is cost effective as well as allows the
company to have a direct rapport with the customer.
TPL Direct Insurance Limited was incorporated by acquiring Jupiter Insurance Company in the year
2005. Jupiter Insurance Company Ltd was incorporated in 1992 with a paid up capital of Rs.0.5m. It
commenced its business operations effective 1994 and recorded premium of Rs. 0.5m. Upto 2003
the capital was raised to Rs.50m but gross premium remained low at Rs.46.5m. In 2004 the capital
was raised to Rs.80m but premium declined to Rs.0.1m. From 1992 through the date of acquisition
by Jupiter Insurance recorded post tax losses except in the year 2000 with Rs.0.2m. In 2005 the
company ceased to underwrite business owing to losses.
TDI after taking over the operations in 2005 achieved a gross premium of Rs.23m which rose to
409m in 2010. Capital injection after the takeover of Jupiter’s operations was made at Rs.220m till
December 2010.
Post acquisition, TDI recorded profits in the year 2007, 2008 and 2009 at Rs.34m, 1.8m and 1.9
respectively. In 2010 the losses were attributable to unprecedented increase in the claims due to
theft off vehicles and the effect of change in the accounting policy of recording the burning cost on
reinsurance treaties.
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5.2 VISION & MISSION
TDI aims to be the top class service and product provider and take an eminent position in the
general insurance market. It will seize opportunities for profitable growth to generate value for the
stakeholders. TDI will also strive to achieve the above by:
• Introducing the concept of direct insurance through call centre, internet and web based service.
• Prudent underwriting practices with effective risk management.
• Creating synergy and market niche through the groups’ customer base.
• High level intake of insurance professionals.
• Settling claims fairly and with promptitude.
• Effective treasury and fund management.
TDI is dedicated to providing insurance products that offer security, quality and protection to the
customers and give them a complete peace of mind through fast settlement of claims. TDI to uphold
the fastest claims benchmark by providing 24 hour services with 60 seconds claims lodging, 45
minutes claims processing and settlements within 7 days. TDI to continuously strive to develop skill
and ability to exceed customers’ expectations.
5.3 DIRECT INSURANCE CONCEPT WITH VALUE ADDITIONS
The direct insurance concept offers the customers to interact directly with the company for buying
the insurance policy or lodging of claims. This eliminates the need for the insurance broker or agent
that is a common trait in the insurance market. Further the direct operation also facilitates the
customer to get insurance quotes then and there, whether by calling at the Call Centre or the
underwriters directly.
Direct insurance goes hand in hand with personal lines insurance and after establishing success
metrics with the auto insurance products, TDI now moving to other personal lines products viz.
Healthcare, Travel, Home and Bancassurance.
Value Added Services for TDI Customers
TDI promotes Innovation and strives for service excellence. TDI has engineered certain value added
services that are not offered by any other insurance company in Pakistan. The unprecedented
services include, where applicable:
Free Usage of C Track Facility
As a part of risk management and also to render safety of the customers, TDI installs C Track Unit
in the insured vehicles that are under 3 years old. The service is free of any charge or annual
monitoring fees. TDI has chosen its parent company i.e. TPL Trakker Ltd to be the service and
product provider as they are the best and largest tracking company in Pakistan.
24 Hour Call Centre
TDI is the first insurance company to have launched a 24 hour Call Centre manned by highly
trained insurance officials. This is outsourced to TRG who were the pioneers in introducing the Call
Centre industry in Pakistan. The Call Centre is fully equipped to handle sales, conduct outbound
calls, fastest and easiest claims recording, and arrangement for emergency services in Karachi for
free tow and ambulance services.
Instant Survey Capability
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TDI has its own team of highly skilled in-house surveyors that renders instant inspections and
surveys, whilst other insurance companies heavily rely on third party surveyors. TDI therefore
registers fastest claims processing and settlement capability.
Authorized Workshops
All authorized workshop commonly known as 3S (dealers for sales, service and spare parts) by the
leading vehicle manufacturers are TDI’s business partners. This gives TDI’s customers a priority
treatment in the vehicle repairs and the company ensures proper repairs with replacement of genuine
parts, if any.
Free EVAC Membership (for Karachi)
TDI has recently introduced value added service by providing Road Side Assistance through its
wholly owned subsidiary EVAC Pakistan (Pvt) Ltd. This service includes roadside assistance in the
event of an Accident, Mechanical Breakdown, Flat Tyre or Vehicle Running out of Petrol. EVAC
offers mobile workshop and tow service.
Free Ambulance Service (for Karachi)
TDI provides free ambulance service to its customers in the event of Medical Emergencies. The
ambulances are owned by TDI and are equipped with state of the art life saving equipments, highly
trained doctors and paramedics. This offers hospital facilities equivalent to an ICU.
5.4 BUSINESS OVERVIEW
Being a direct company TDI is focused on personal lines of business. TDI’s current portfolio is
predominantly motor insurance business and all its current product offerings are tailored to service
this sub segment of non life insurance sector. The Motor portfolio of the industry for 2009 stands at
Rs. 9.5 billion which is 28% of the non-life industry premium. TDI shares 4.3% of the industry’s
motor premium. The break-up of revenue is given below:
Premium 2010 Gross ASC Total Premium Underwritten Percentage
Motor 390,118,726 17,836,673 407,955,399 99.81%
Travel 712,226 35,611 747,837 0.18%
Household 27,510 1,965 29,475 0.01%
Total 390,858,462 17,874,249 408,732,711 100.00%
The motor insurance sector provides an advantage to TDI as its parent entity is the largest car
tracking service provider in Pakistan. The differentiated services provided by TPL Direct are based
in its ability to effectively utilize the database of TPL Trakker Limited to customize the rates it can
offer to various customers. The Company has an actuarial based risk assessment mechanism which
allows TDI to offer customized rates as opposed to flat rates that are quoted by other insurers.
TDI provides each customer with customized insurance rates that are based on the drivers’ historical
information and their vehicle profile. If the customer is a good driver and possess a clean driving
history, TDI will not charge a flat rate of premium as others do, rather it provides the prospective
customer reduced premium rates, as it can evaluate a potential customer on parameters different
from the ones used by the industry.
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With great success of Motor insurance, TDI now aims to diversify its products range. In this
direction, Healthcare and Travel Insurance have already been launched in 2010 and plans are
underway to introduce Home insurance and Bancassurance in 2011.
5.5 PRODUCTS
TDI is a progressive insurer with reputation for creating better ways to understand customers’
needs. Many new products were introduced in the Auto insurance these are detailed below:
TDI Auto Direct offers wide range of auto insurance solution especially tailored for safety of
vehicle and family. TDI Home Direct Insurance is designed to give comfort and peace of mind.
Home Direct plan provides wide range of insurance packages covering fire to the personal property,
with household items, furniture, fixture and other valuables.TDI Travel Direct provides most
affordable comprehensive travel insurance packages that will make the trip hassle-free. With just
one phone call, TDI provides a complete range of products directly at doorstep. TDI also offers
multiple Bancassurance Direct options.
5.5.1 Auto Direct
TDI’s Auto Direct offers wide range of auto insurance products as set-forth below:
i) Comprehensive Insurance:
This product covers vehicle on a comprehensive basis, covering damage, theft and third
party. This product offers free usage of C-Track Secure with no additional charge of
Annual Monitoring fee, and offers free use of Ambulance and EVAC services.
ii) Comprehensive Insurance for used vehicles:
This product is specially tailored for 3 years or above old vehicles (excluding 4X4 &
imported vehicles) with comprehensive cover at low rates. This product carries special
offer of Depreciation waiver on the first claim on parts applicable on the first claim.
iii) Self Insurance:
This is comprehensive policy under which the customer assumes the claim if any upto
PkR.10,000 and avails discount upto 25% of the gross premium. Safe drivers and those
who use their vehicles sparingly can take advantage of Self Insurance.
iv) Executive Cover for vehicles having tracking device already installed:
This is comprehensive policy designed exclusively for existing Trakker customers with
“C-track” already installed in their vehicles. Such customers can get refund/adjustment /
discount of Annual Monitoring.
v) 3T Insurance:
The most affordable way to get auto insured at the lowest premium rates. The triple
covers include Theft cover, Third Party Insurance and Free usage of C-Track Secure
services.
vi) TDI – Senior Citizens:
TDI values senior citizens between (age group of 60 to 75 years) and offer special
discount of 20%. Option of any of the auto product can be taken, where applicable.
vii) TDI – Lady Drivers (Comprehensive Policy for Working Women) Lady Drivers:
This product is designed especially for working women in recognition of their
invaluable contribution to our economy and society. TDI offers 15% discount on the
auto products, where applicable.
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5.5.2 TDI's Home Direct
It caters for protection of home from the peril of fire and burglary. Home Direct Plan provides wide
range of packages for every person. Cover offered from Rs.0.5m to Rs.20m.
5.5.3 Cash and Jewellery Insurance
TDI offers three packages namely Silver, Gold and Platinum that provides burglary, fire,
atmospheric damage and snatch of cash and jewellery in the house as well as outside the premises.
The cover ranges from Rs.350,000 to 1,000,000 with limits set forth for snatch cover outside the
premises.
5.5.4 Bancassurance Direct
i) Secure Wallet Plan:
Secure Wallet Plan is a valuable insurance protection scheme. It is specifically designed for
customers holding Credit Cards to cater for unforeseen eventualities such as:
• Loss or theft of credit card(s)
• Loss or theft of keys and identification papers
• Death or disability (due to theft/robbery)
• ATM Cash Withdrawal Cover (due to theft/robbery)
ii) ATM Cash Withdrawal:
The insurance plan covers financial losses, damages and claims arising due to snatching and
robbery of cash withdrawn from any ATM, within the vicinity.
iii) Credit Personal Accident Plan:
Provides insurance coverage for credit card holders, in case of permanent total disability or
accidental death of the Insured Person.
iv) Family Protection Plan:
This is a value added personal accident product which provides accidental death, temporary
and permanent total disability and limited medical coverage to bank’s account holders.
v) Purchase Protection Plan
When a Card member charges a covered purchase with his or her card account, the
Purchase Protection Plan protects that item for 60 days from the date of purchase if it is
stolen or accidentally damaged including vandalism.
5.6 KEY SUCCESS, STRENGTHS AND ACHIEVEMENTS
TDI success is mainly attributed to the great media policy, product innovation, high level of
promptitude in settlement of claims, round the clock claims and underwriting services and useful
value additions. The partnership with auto dealers and financial institutions has made it possible for
TDI to secure highest growth in the industry since its inception.
TDI has an established network of showrooms with which they have good working relationships.
These showrooms referred to as Trakker Business Partners (TBP), are the leaders in the sales of
Honda and Toyota cars in the country. These aspects provide a very strong marketing and sales base
for TDI.
TDI has set up a call center, which helps customers in getting services round the clock, 7 days a
week. It is the first direct insurance company providing 100% of its services through one phone call.
The claim is processed within 45 minutes and the car’s loss estimate is forwarded within 48 hours
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of time thus providing a quick turnaround time compared to the conventional system of the industry
which goes on for weeks.
Motor insurance companies commonly use a combination of parameters like use, cover, age of
policy holder etc. Given the type of data Trakker captures, it will base its pricing on other
parameters which insurance companies in the industry do not have access to, such as annual
mileage, driving proficiency, moral hazards etc. This detailed level of rating enables the company to
quote lower premiums in low risk cases compared to the average premiums being charged by other
companies and vice versa.
5.7 STRENGTHS & ACHIEVEMENTS
• First direct insurance company of Pakistan with over 14,000 customers.
• First company to launch insurance cover with free usage of C-track.
• First company to have 24 hour service manned by highly qualified Call Centre outsourced
to TRG.
• First company to launch the Web Based policy
• First company to launch policy that covers Theft and Third Party Liability commonly
known as 3T policy.
• Fastest claim processing time in the industry i.e. 60 seconds claims lodging, 45 minutes
processing and settlements within 7 days.
• Only company in Pakistan using Risk Profiling specially developed by Actuaries Sidat
Hyder for premium rating.
• New motor products introduced in the market
• Big financial institutions have reposed trust in TDI and have joint label agreements for
providing cover to the customers of Dubai Islamic Bank, Standard Chartered Bank and
United Bank Ltd.
• TDI is consecutively being conferred with the Brands of the Year Award for best vehicle
insurance company since 2007 by The Exhibitor with support from FPCCI, PSQCA
(Ministry of Science & Technology) and other bodies.
• Highest growth rate in the industry for the past three years.
• One of the lowest claims ratio at around 40%
• Credit period remarkably at lowest < 10 days
• A- rating by PACRA
• Overseas Reinsurance with A rated companies.
• Most comprehensive MIS and Actuarial analysis done for premium pricing.
5.8 SOUND SPONSORS
TPL Trakker Ltd. is the parent corporation of TPL Direct Insurance Ltd. It was incorporated in
September 1998, with principal activity of vehicle tracking and fleet management. The Company
entered into a joint venture agreement with South Africa’s Multinational DigiCore Holdings in
1998, with a 30% shareholding in TPL Trakker Ltd. DigiCore has been successfully offering
satellite-based tracking solutions in Africa, Australia, Europe as well as Asia, and enjoys market
leadership status in these continents since 1978.
TPL Trakker Ltd launched its operations in Pakistan in the year 2000. The Company is servicing
more than 100,000 customers and has an unmatched record of recovering more than 3,582
stolen/snatched vehicles.
TPL Trakker Ltd is Pakistan’s number one Satellite Vehicle Tracking Company in terms of market
share, corporate profile and branding. The brand C Track is so strong that it has become the generic
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name for Vehicle Tracking System (VTS) in Pakistan. The Company enjoys a near monopoly
situation and is way ahead of its competitors in terms of market share, size, countrywide presence
and product portfolio. TPL Trakker Ltd is not only dominant in domestic market, but has made
significant inroads into the Gulf and other neighboring countries.
With its head office in Karachi and branch offices in Lahore, Islamabad / Rawalpindi, Faisalabad &
Multan, Sialkot, Gujranwala & Peshawar, TPL Trakker Ltd is providing car tracking services to
320+ cities all over Pakistan. The Company currently has staff strength of over 520 personnel.
Following diagram shows the major events of Company’s history since its inception in 1998.
TPL Trakker Limited is holding 99.9% shares in TDI. Its corporate profile is as per below:
• TPL Trakker Limited is a joint venture with DigiCore of South Africa and responsible for
markets in the Middle East & South Asian (MESA) region with 100,000 units installed.
Globally C-track installed in 340,000 vehicles in 32 countries and 4 continents.
• It is Pakistan’s first and region’s largest vehicle tracking 1 and fleet management service
provider and has established its notable presence in the market and remains the emphatic
market leader today despite the presence of many competitors.
• Business is to supply superior GPS, GSM & Satellite Mobile Asset Tracking, Management
and Information Solutions.
• Work in partnership with our customers to develop solutions that deliver measurable
business and operational benefits by providing total visibility and control of mobile assets
and work forces.
• C-track is a 3-in-1 tracking system comprising of an onboard computer, a GPS location
device and a vehicle communication unit, GSM or Satellite based, which is linked back to
C-track’s proprietary base station software allowing data on precise location and status of
all vehicles at will.
• The information is presented graphically in real-time down to street and even house number
level using scalable, on-screen maps. Completing the picture, a full suite of management
reports is provided to support quicker, better-informed decision-making.
• Truly a regional turnkey company providing tracking units, software, operation know how,
deployment, data evaluation, consultancy and project management.
• Broadest product range meeting various performance parameters and price ranges.
• GPS satellite tracking for security, safety and peace of mind for car owners, both for single
cars or a fleet of hundreds, with unique product features for customers built on Innovation,
Technology and Performance.
• State-of-the-art fleet management services helps customers to professionally manage
important details thereby, increasing efficiency and decreasing maintenance costs.
• Branches nationwide with modern and well equipped installation centers at Karachi,
Lahore, Islamabad, Faisalabad, Multan, Gujranwala and Hyderabad with a monthly
capacity in access of 3,000 units.
• The only tracking company to be assigned a long term financial status rating of A- (Single
A Minus) by Pakistan Credit Rating Agency Limited (PACRA), which denotes a low
expectation of credit risk and a strong capacity for timely payment of financial
commitments.
• More than 500 employees nationwide with highly qualified and experienced Management
Team.
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• Trakker went International in 2005, by forming Trakker Middle East LLC the GCC region
and now operates in UAE and Qatar with plans to launch Oman, Kuwait and Jordan.
• Trakker Nav, Pakistan’s first in-car navigation and entertainment system launched in 2007
maintaining the reputation of being the first to introduce latest technology and innovative
products. Cell phone version launched in 2009 with Mobilink under the brand Mobi Track
offering turn by turn voice guided navigation developed in collaboration with deCarta and
Appello.
• Only company with a data centre capacity to handle over 150,000 tracking units through
our full fledged communication HUB and 24-hour Control Room.
• Brands of the Year winner in 2007 & 2008 in the "Vehicle Tracking & Security" category.
• Industry accredited products meeting European (e4) and ISO standards.
5.9 REINSURANCE
As a part of risk management TDI has carefully designed its reinsurance arrangements with the
leading international reinsurers. The objective in reinsuring business is to cushion the Company’s
surplus and ameliorate fluctuations in periodic earnings. The per vehicle risk are capped to Rs.1.9m
and any excess is placed locally by way of facultative placement. The reinsurance treaty for the year
2010 has been signed to cover the following:
• Motor excess of loss covering all direct business including co-insurance and reinsurance for
motor business underwritten for own damage, third party, public liability and theft.
• General excess loss covering burglary, theft, pilferage, personal accident, travel, plate glass,
public liability, employers liability, neon sign, cash in transit, cash in safe, householders
comprehensive and mobile phones.
• The reinsurers are:
Malaysian National Reinsurance 45%
Best Reinsurance 20%
Pakistan Reinsurance Company Ltd. 35%
Malaysian National Reinsurance and Best Reinsurance are “A” rated insurers.
5.10 UNDERWRITING RISK PROFILING
TDI’s motor portfolio for risk profiling is analyzed as under. As highlighted in the pie-chart Toyota
has the largest share of the vehicle insured by TDI followed by Suzuki and Honda:
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In addition to the above TDI conducts regular review of portfolios vis a vis claims for determining
the premium pricing. These include analysis like; make and model wise, gender wise, city wise
exposures, driving pattern, parking, colour and age of drivers.
5.11 THE INSURANCE SECTOR
• Global Overview
Risk management is now considered to be of paramount importance. As a part of risk management
whether it’s a company, individual or any corporation there is a need to enforce a contingency plan
to overcome accident losses. And insurance companies play pivotal role in sustaining businesses in
the hour of need. Insurance is all about risk management primarily to hedge against a contingent
loss. The role of the insurance sector is significant in promoting the stability of the overall
macroeconomic environment by providing a mitigant against uncertainty to economic agents by an
equitable transfer of risk, in exchange for a premium.
Global insurance premium contracted by 1.1% to $4,066bn in 2009. Global economy witnessed its
deepest recession since 1930’s as world GDP shrank by 1.9%. The industrialized countries were
severely affected across the board. However, many countries insurance industry grew faster than the
GDP growth that shows robustness of the industry. Credit and stock markets around the world
rebounded from their lows in first quarter of March 2009 that improved profitability of insurance
companies. During the recent financial crises, non-life premium was not impacted. Despite losses
on investments, insurers had enough capacity to meet the demand.
Pakistan stands at 62th position out of 88 countries with a meagre share of 0.03% of the global
premium, whilst India takes 12th position with 1.6% share.
Insurance density and penetration are two key ratios that measure the strength of the insurance
industry of a country. Insurance density is reckoned as ratio of premium to population and
highlights per person premium. The leading countries with high density are: Netherlands at $6,554,
Switzerland $6,257 and Denmark $5,529. USA stands at 10th position with $3,710 density. Pakistan
is placed at 86th position only ahead of Bangladesh and Nigeria.
• Pakistan Market
Insurance business in Pakistan is categorized under three sub-sectors: non-life insurance, life and
takaful. Currently there are 44 insurance companies out of which 31 companies provide non-life
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insurance and 5 offers life insurance services and 5 provides takaful life and non life. There are
three insurers in the public sector namely, State Life, National Insurance Company and Pakistan
Reinsurance Company. The industry growth is pretty decent at 28% and 12% for 2008 and 2009
respectively. The major growth is registered in the life sector with State Life getting lion’s share of
Rs.28.4b at 67.8% of total life business.
Non-life private sector has been rendering robust results for the past many years both in terms of
underwriting balance and pre-tax profit as summarized below:
Non-Life Industry Profitability
Rs. in millions Underwriting Profit Pre-tax Profit
2003 1,596 3,499
2004 2,209 3,919
2005 1,954 4,862
2006 2,270 14,477
2007 607 33,794
2008 2,282 (4,669)
2009 2,668 4,168
(Excluding National Insurance Corp.) 1
Insurance companies are consistent in rendering positive underwriting balance. This is rare and
most the companies internationally make profits through investment income. The sudden increase in
pre-tax profit in the year 2007 and loss in 2008 came from capital gains/losses from stock market
securities held by the non-life insurance companies. This particular level of profitability cannot be
sustained due to the volatile nature of stock markets.
The non-life premium excluding the state organization NIC stands at 34.7bn and Fire account for
major share followed by Motor. Motor premium share was the highest previously, but the drop in
leasing business and selective financing by the financial institutions resulted in decrease in share by
about 10%. However, Motor account becomes the largest class when reviewed in terms of net
business that is retained in Pakistan. Motor constitutes about 50% of the industry premiums retained
in Pakistan.
Non-Life Key Industry Figures
Rs.in bn 2009 (September 2011)
Paid up Capital 11.6
Equity 52.7
Investments 59.6
Assets 106.0
(excluding National Insurance Corp.) 2
The non life insurance industry mainly comprise of top three players sharing 65% of the business,
whilst top five companies share 71%.
5.12 FUTURE PROSPECTS
TDI has immense growth potential. The brand name is well established and known in the market.
Sales are channeled through a combination of business partners, banks and financial institutions, in-
house sales team and the call centre agents. The branch network is adequate to reach customers
where demographics are well spread. TDI’s is known for innovation and many new motor insurance
products were introduced in the market. After great success in the auto insurance TDI is now
targeting other personal lines business viz. healthcare, travel, home and bancassurance. Auto sector
1
Insurance Association of Pakistan
2
Insurance Association of Pakistan
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is promising and the market potential is about Rs.11b and TDI continues to increase its share every
year. Other personal lines business also offer great opportunity in the travel, health, home and
bancassurance products and TDI aims to tap this segment aggressively.
Given the lowest insurance penetration and density in the country, efforts are underway to tap the
micro insurance sector that includes crop insurance, health and third party motor insurance. For
motor insurance, the government is gradually introducing a standard compensation scheme to
replace bogus third-party motor insurance policies in the country. Under the proposed scheme,
motor vehicle registration offices will issue a certificate of insurance and also collect the premium.
A motor vehicle third-party insurance scheme certificate would be issued under a policy,
underwritten by one or more registered insurers, which would be tendered annually by provincial
governments. The claims of motor vehicle third-party liability insurance would be paid directly by
the insurance companies to the claimants. Khyber Pakhtunkhwa is first to announce third party
insurance cover for all vehicles plying in this region.
5.13 STRATEGY
TDI plans to stay one step ahead of its competition by offering the products and services the
customer wants, when and how they want them. It's the philosophy that has earned the Trakker
Group a successful and respectable name in Pakistan. The same value is being instilled into the
Group’s insurance company.
TDI aims to make a country wide appearance in the near future. The services are already available
in Karachi, Islamabad, Lahore, Multan, Faisalabad and Hyderabad. TDI plans to open up few more
branches in cities like Sialkot and Gujranwala.
TDI has launched Travel and Health Insurance in 2010. TDI aims to launch Home and
Bancassurance in 2011.
5. 14 RISKS FACTORS
5.14.1 Company-Specific Risks
Risk associated with failure to provide competitive products, provide efficient business processes
and systems and support services which will ensure that the insurance business is run prudently and
efficiently.
Mitigant
TDI will go about assessing, evaluating and checking the needs of the stakeholders consistently to
keep the structure of the Company and the processes relevant and up to date.
5.14.2 Pricing Parameters
Need to be measured and refinements to the pricing standards need to be made as data relating to
the portfolio develops over time. Key parameters which need to be re-evaluated include “Theft
recovery rate”, “Overall loss ratio” and “Own damage rate”.
Mitigant
As the pricing parameters need to be re-measured and re-evaluated, TDI will follow these steps to
reduce the respective risk.
5.14.3 Reinsurance Risk
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Reinsurance ceded do not relieve the company from its obligation to policy holders and a result the
Company remain liable for the portion of outstanding claims reinsured to the extent that reinsurer
fails to meet the obligation under the reinsurance agreement.
Mitigant
To minimize its exposure to significant losses from reinsurer insolvencies, the Company evaluates
the financial condition of its reinsurers and monitors concentration of credit risk arising from similar
geographic regions, activities or economic characteristics of reinsurers.
5.14.4 Credit Risk
Credit risk is the risk, which arises with the possibility that one party to financial instrument will fail
to discharge its obligation and cause the other party to incur a financial loss. Concentration of credit
risk arises when a number of counterparties have a similar type of business activities. As a result,
any change in economic, political or other conditions would affect their ability to meet contractual
obligations in a similar manner.
Mitigant
The Company is exposed to credit risk on premiums receivable from customers and for commission
and claim recoveries from reinsurers. The management monitors exposures to credit risk through
regular review of credit exposure and prudent estimates of provisions for doubtful receivables.
5.14.5 Regulatory Risks
Changes in the regulatory framework can greatly influence the performance of the Company.
Mitigant
Pakistan has witnessed a continued phase of economic growth, supported inter alia, by continuity in
investment & economic growth friendly policies. This regime is expected to continue and adverse
shift in the regulatory and policy framework is considered unlikely.
5.14.6 Economic Slowdown / Demand Risk
The growth of the insurance industry is heavily influenced by the macro-economic conditions
prevailing in the country and in the region. The performance of the industry is improved during an
economic up-turn and periods of slowing economic growth have a negative impact on the growth
prospects of the industry.
Mitigant
The growth prospects of the economy still remain strong despite the recent political and internal
security concerns in the country. The penetration level of the industry is still low compared to major
economies in the region and latent demand for insurance products is high which are expected to
keep the demand for insurance services at the higher end.
5.14.7 Market Risk
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Market risk is the risk that the value of financial instrument will fluctuate as a result of changes in
market prices, whether those changes are caused by factors specific to the individual security, or its
issuer, or factors affecting all securities traded in the market.
Mitigant
The company is exposed to market risk with respect to its investments. The company has limited
market risk by actively monitoring the key factors that affect stock market movements.
5.14.8 Under-Subscription Risk
The risk of the present issue getting under-subscribed on account of lack of investors interest.
Mitigation
Shares of TPL Direct Insurance Limited are fully underwritten by the underwriters, thereby the
under-subscription risk is covered.
5.14.9 Liquidity Risk
This is the risk that investors might face difficulty in selling the shares in the secondary markets
Mitigation
After the IPO, a sizeable portion of 32.6% of the post IPO-capital would be owned by outside
investors. Since the free float of the Company would be high therefore the liquidity risk in the
market will minimized.
Note: It is stated that all material risks factors, with respect to this issue, have been disclosed
and that nothing has been concealed.
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PART 6
6 FINANCIAL INFORMATION
6.1 AUDITOR’S REPORT UNDER SECTION 53 (1) READ WITH CLAUSE 28 OF
SECTION 2 PART I OF THE SECOND SCHEDULE TO THE COMPANIES
ORDINANCE, 1984, FOR THE PURPOSE OF INCLUSION IN THE PROSPECTUS
OF TPL DIRECT INSURANCE LIMITED
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6.2 SHARE BREAK-UP VALUE CERTIFICATE:
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Management Note
The breakup value of shares of TDI based on the audited accounts for year ended 30th December
2010 is PKR 6.31.
However, the breakup value of TDI on the basis of the total paid up capital of PKR 460 million is
given as follows:
Total Issued subscribed and paid up capital (Post IPO) 460,000,000
Accumulated Losses (114,493,402)
Total Shareholder’s Equity Rupees (‘000s) 345,506,598
Number of Ordinary Shares 46,000,000
Break-up value per share Rupees 7.51
6.3 SUMMARY FINANCIAL HIGHLIGHTS
Balance Sheet 2006 2007 2008 2009 2010
Total Equity 26,141,493 60,218,476 211,654,012 213,518,014 195,506,598
Current Asset 64,252,018 90,699,595 194,826,006 191,882,949 289,109,779
Fixed Asset 69,942,903 100,808,546 163,067,229 270,960,519 273,064,992
Total Asset 134,194,921 191,508,141 357,893,235 462,843,468 562,174,771
Total Liabilities 108,053,428 131,289,665 146,239,223 249,325,454 366,668,173
Profit Before Tax (23,818,659) (1,155,723) (4,675,787) 10,142,482 (12,374,756)
Profit After Tax (23,818,659) 34,076,983 1,847,616 1,864,002 (18,011,416)
Accumulated
Losses (134,270,587,) (100,193,604) (98,345,938) (96,481,986) (114,493,402)
6.4 FINANCIAL RATIOS
FY06 FY07 FY08 FY09 FY10
ROE -91.11% 56.59% 0.87% 0.87% -9.21%
ROA -17.75% 17.79% 0.52% 0.40% -3.20%
EPS (PkR) (1.58) 2.12 0.06 0.06 (0.58)
PER (x) - 4.71 167.78 166.31 (17.21)
BVPS (PkR) 1.74 3.75 6.83 6.89 6.31
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6.5 Management Accounts
The following is the Profit and Loss Account for the period ended 31st Mar 2011
TPL DIRECT INSURANCE LIMITED
PROFIT AND LOSS ACCOUNT (Unaudited)
FOR THE YEAR ENDED MARCH 31, 2011
March 31, March 31,
Motor Miscellaneous 2011 2010
------------------------------- (Rupees) -------------------------------
Revenue account
Net premium revenue 103,856,507 56,947 103,913,454 70,735,824
Net claims (43,502,609) 18,133 (43,484,476) (33,617,241)
Expenses (36,642,675) - (36,642,675) (31,736,475)
Net commission (10,462,379) (109,381) (10,571,760) (7,001,114)
Underwriting result 13,248,844 (34,301) 13,214,543 (1,619,006)
Investment (loss) / income 601,096 394,521
Other income 5,157,201 1,729,370
General and administrative expenses (9,160,669) (7,934,119)
Financial charges (1,636,910) (2,054,094)
(5,039,282) (7,864,322)
Loss before tax 8,175,261 (9,483,328)
Taxation - -
Loss after tax 8,175,261 (9,483,328)
Profit and loss appropriation account
Balance at the commencement of the year (114,493,403) (96,481,986)
Profit after tax for the year 8,175,261 (9,483,328)
Balance of accumulated losses at the end of the year (106,318,142) (105,965,314)
Earnings per share-basic and diluted 0.26 (0.31)
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The following is the Balance Sheet as at 31st Mar 2011
TPL DIRECT INSURANCE LIMITED
BALANCE SHEET (Unaudited)
AS AT MARCH 31, 2011
March 31, December 31, March 31, December 31,
2011 2010 2011 2010
--------------- (Rupees) --------------- --------------- (Rupees) ---------------
Share capital and reserves Cash and bank deposits
Cash and other equivalent 77,144 38,849
Authorised share capital 350,000,000 350,000,000 Current and other accounts 6,789,186 4,219,934
Deposit with State Bank of Pakistan 400,000 400,000
Paid-up share capital 310,000,000 310,000,000 7,266,330 4,658,783
Accumulated losses (106,318,142) (114,493,402)
TOTAL EQUITY 203,681,858 195,506,598 Loans to employees 571,983 440,967
Investments 33,847,935 33,847,935
Deferred tax asset 33,398,571 33,398,571
Underwriting provisions
Provision for outstanding claims Current assets - others
(including IBNR) 62,016,923 51,909,786 Premiums due but unpaid 18,857,429 13,597,470
Provision for unearned premium 218,148,917 199,415,122 Amounts due from other
Commission income unearned 114,623 26,386 insurers / reinsurers 5,966,456 847,382
Total underwriting provisions 280,280,463 251,351,294 Reinsurance recoveries
against outstanding claims 1,014,764 4,380,875
Accrued investment income 200,000 789,041
Creditors and accruals Taxation - payments less provision - -
Premium received in advance 1,877,582 2,867,950 Deferred commission expense 23,216,406 21,401,063
Amounts due to other insurers / reinsurers 8,864,953 8,247,357 Prepayments 134,096,709 128,244,158
Accrued expenses 3,004,615 2,086,084 Sundry receivables 37,139,038 47,503,534
Taxation - provision less payments 3,244,820 4,177,269 220,490,802 216,763,523
Other creditors and accruals 72,302,711 53,452,060
89,294,681 70,830,720 Fixed Assets
Borrowings Tangible and Intangible assets
Short term running finance 40,614,756 37,273,225 Furniture and fixtures 514,603 542,662
Office equipment 2,597,786 2,732,125
Other liabilities Motor vehicles 11,413,920 9,969,010
Obligation under finance leases 5,890,285 7,212,934 Tracking devices 91,507,719 96,365,924
Computer equipment 1,405,567 1,705,853
Capital work-in-progress 216,098,386 160,998,386
Intangible 648,441 751,032
TOTAL LIABILITIES 416,080,185 366,668,173 324,186,422 273,064,992
TOTAL EQUITY AND LIABILITIES 619,762,043 562,174,771 TOTAL ASSETS 619,762,043 562,174,771
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PART 7
7 MANAGEMENT
7.1 BOARD OF DIRECTORS OF THE COMPANY
Nomination as Director in
Name & Address Designation
Other Companies
Mr. Saad Nissar
Address: House No. 72, 33rd
Chief Executive Officer EVAC Pakistan (Pvt) Ltd
Street, Phase-V, DHA,
Karachi
TPL Holdings (Private) Ltd
TPL Trakker Ltd
Mr. Ali Jameel TRG Pakistan Ltd
Trakker Energy (Pvt.) Ltd
Address: House No. 79, 3rd
Director Habib Asset Management Ltd
Street, Off Khyaban-e-Sehar, TPL Properties (Pvt) Ltd
Phase-6, DHA, Karachi TPL Security Services (Pvt) Ltd
TPL Financial Consultancy
(Pvt) Ltd
TPL Trakker Ltd
Razzaque Razno Trading (Pvt.)
Mr. Jameel Yusuf
Ltd
Address: House No. 37/1, Chairman/Director
TPL Holdings (Pvt) Ltd
Block-6, P.E.C.H.S, Karachi TPL Properties (Pvt) Ltd
Mr. Adil Matcheswalla JS Global Capital Limited
Address: House No. F/71, Fauji Akber Portia Marine
Director
Block-7, Kehkashan, Clifton, Terminals (Pvt.) Ltd.
Karachi Speed (Pvt) Ltd
Mrs. Rizwan Abbas
Address: House No. F/4, Irfan PICIC Insurance Limited
Director
Arcade, 141/D, Block-2, Sind Gas (Private) Ltd
P.E.C.H.S, Karachi
Mr. Mustafa Ali
Address: House No. B-4, TPL Properties Private Limited
Director
Batool Apartment, Block-2, TPL Trakker Limited
P.E.C.H.S, Karachi
Syed Kazim Hasan
Address: House No. 72-B/1,
Director EVAC Pakistan (Pvt) Ltd
Khayaban-e-Sehar, Phase 7,
DHA, Karachi
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7.2 DIVIDEND PAYOUT BY LISTED COMPANIES
None of the group companies are listed on the stock exchanges.
7.3 SALIENT FEATURES OF LEASE & SHORT TERM FINANCE
Short Term Running Finance
The Company has running finance facilities aggregating to Rs. 50 million (2009: Rs. 25 million)
from certain banks at mark up rates ranging from 3 months KIBOR plus 2.1% per annum to 3
months KIBOR plus 3.5% per annum (2009: 3 months KIBOR plus 2.1% per annum). The
arrangements are secured against charge on C-Track units of the Company to the extent of Rs. 34
million with a margin of 25%, first charge over book debts, receivables of the Company and
personal guarantee of the Directors of the Company and is secured against first pari passu charge
amounting to Rs. 36 million over present and future current and fixed assets of the Company. As at
the year end the Company has utilized Rs. 37.27 million (2009: Rs. 24.46 million). At the year end,
the mark-up rates charged by the banks ranged between 15.19% to 16.57% per annum.
Lease
The Company has entered into lease agreements with a bank for lease of vehicle and ambulances
(2009: lease of a vehicle and ambulances). Lease rentals are payable in monthly installments. The
financing have been obtained at mark-up rate of 18.31% per annum (2009: 18.31% per annum). At
the end of lease term, the Company has the option to acquire the assets subject to adjustment of
security deposit which it intends to exercise.
7.4 OVER DUE LOANS
There are no overdue loans (local or foreign currency) on the Company or its Directors.
7.5 PROFILE OF DIRECTORS
Mr. Jameel Yusuf – Chairman
Mr. Jameel Yusuf Ahmed is a businessman by profession and is the chairman of TPL Holdings. He
was the founder Chairman of Citizen-Police Liaison Committee (CPLC), and remained its
Chairman from 1st September 1989 to 22nd March 2003. The CPLC was established by the Sindh
Government after amending the Police Rules. It is a non-political statuary institution, operationally
independent and managed by dedicated and concerned citizens offering their honorary services,
invested with powers of Magistrate (Honorary) of the first class. Since its inception in 1989 it has
made credible strides with envious achievements in assisting the victims of crime in the provision of
justice and combating / detecting criminal cases successfully with the help of the community and
access to modern scientific techniques.
He is also the Director of Asia Crime Prevention Foundation (ACPF), Japan since 1997 and is the
founding trustee of “PANAH” a shelter home established for women in distress within the Ida-Rieu
premises, Karachi. Mr. Yusuf is a member, Advisory council Fellowship Fund for Pakistan (FFFP),
Woodrow Wilson International Centre for Scholars (WWC) since 2004.
Mr. Jameel was awarded Presidential Award “Sitar-e-Shujaat” for gallantry services on 14th August
1992. He was nominated for the First United Nations Vienna Civil Society Award in 1999.
Muhammad Ali Jameel – Director
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Mr. Ali Jameel is the CEO of TPL Trakker Ltd., Pakistan's first vehicle tracking Company. He is
also the Director of TRG Pakistan Limited. Formerly, Mr. Jameel was the Chief Executive of
Jahangir Siddiqui Investment Bank. He has also held several advisory posts in the Pakistan’s
information technology and telecommunication sectors, including appointments on the Task Force
on Telecom Deregulation, the Fiscal Incentives group on the IT Commission and the Task Force on
Venture Capital.
Mr. Jameel received his B.Sc. degree in Economics from the London School of Economics. He is
also an Associate Member of the Institute of Chartered Accountants in England & Wales and
qualified in 1994 at KPMG Peat Marwick in London.
Saad Nissar - CEO
Mr. Nissar is an experienced marketing professional. He joined TPL Trakker Limited in the year
2000 at its inception as National Sales Manager. Mr. Nissar has been instrumental in the setting up
and executing retail network nationwide, successful packaging and promoting of fleet management
and portfolio management services in the corporate sector and Financial Institution Group (FIG) of
Pakistan respectively. Mr. Nissar was appointed as Director of TDI effective July 2005 and he has
recently assumed the office of the CEO of the company. Mr. Nissar holds MBA degree from
Institute of Business Administration.
Syed Kazim Hasan – Chief Operating Officer/CFO
Mr. Kazim hasan is an experienced professional who has worked for more than 22 years with
multinational insurance companies operating in Pakistan. He managed the finance, human resource,
and information technology departments making them lean and more responsive to the customers’
needs. Mr. Hasan worked on many cross-functional assignments working with marketing,
underwriting and claims departments. He established effective system of internal controls and
assured that business processes remain effective. Mr. Kazim is an Associate Public Accountant with
an MBA degree in finance and also worked in PricewaterhouseCoopers (PWC) for 6 years. As a
part of continuing education he attended numerous courses and seminars conducted overseas on
Business Continuity, Economic Value Analysis and Management Development, etc. He also
contributed articles in Financial Times of UK.
Mr. Adil Matcheswala – Director
Mr. Adil Matcheswala serves as Chairman of JS Global Capital Limited. Mr. Matcheswalla joined
the JS Group in April 1993 and remained an employee till October 2001. During his 8 years with
the group he served in various capacities ranging from Head of Equity Operations, Head of Equity
Sales and as a member of various Committees ranging from technology, investments, special
projects and acquisitions. He is also on the board of Jahangir Siddiqui and Company Limited, Food
Basics (Private) Limited and Speed (Private) Limited.
At present he is the Chief Executive Officer of Speed (Private) Limited, a company he co-founded.
The Company’s scope of operations revolve around the retail and service industry and it is the
exclusive distributor and representative in Pakistan for brands like Nike, Tag Heuer, Dior, Fendi,
Oris SA, Timex Watches and HCA International Hospitals UK. He is an Alumni of Brown
University in Rhode Island, USA from where he obtained a degree in Economics.
Mr. Rizwan Abbas -Director
Mr. Rizwan Abbas is a Chartered Accountant and Cost & Management Accountant and posses
more 10 years of rich experience working for banks and financial institutions. After completion of
his four year training period with A.F. Ferguson & Co. (member firm of PriceWaterhouse Coopers)
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he worked for Standard Chartered as CFO and also worked for Al Faisal Investment Bank and
National Bank of Pakistan as Head Investment banking. He is currently managing the operations of
Sind Gas Pvt. Ltd.
Mr. Rizwan has rich experience in negotiating and arranging syndicated and structured finance
facilities for MNC and Local blue chips, in dept commercial, corporate and investment banking
experience with focused on accounting, financial modeling, financial analysis, corporate valuation
to evaluation of M&A proposals, credit risk analysis, capital structuring and long term debt / bond
market.
Mr. Mustafa Ali – Director
Mr. Mustafa Ali is a qualified Cost and Management Accountant with over 10 years of experience
in construction and automobile sector. He started his career in 1991 as Manager Finance &
Administration in Baltistan Trading & Contracting Co. (Pvt.) Ltd. In 2000, he joined, Ghandhara
Nissan Diesel Ltd. as Manager Finance before joining Trakker Group in 2001 as Finance Manager.
Under his supervision, Trakker has maintained a sound financial position despite the multifaceted
nature of its services. Currently he is serving as Vice President Finance in TPL Holdings.
7.6 NUMBER OF DIRECTORS
Pursuant to Section 174 of the Ordinance, the number of directors of the Company shall not be less
than seven (7). At present, the Company’s Board of Directors consists of seven directors including
the Chief Executive.
7.7 QUALIFICATION OF DIRECTORS
A director must be a member unless he is a person representing the Government or an institution or
authority that is a member, or is a whole time working director who is an employee of the
Company, or a Chief Executive or a person representing a creditor. In case of directors representing
special interests holding shares of the requisite value, no such share qualification shall be required
provided intimation in writing as to such representation is lodged with the Company within two
months of the appointment of such directors.
7.8 APPOINTMENT/ ELECTION OF DIRECTORS
The directors shall subject to the provision of Section 178 of the Ordinance fix the number of
directors and the directors shall be elected by the members of the Company in General Meeting.
The present directors of the Company were elected in the annual general meeting of the Company
held on 30-4-2009. The next election of directors is due on or before 30-4-2012.
7.9 BENEFITS OF PROMOTERS AND OFFICERS DURING THE LAST TWO YEARS
No amount or benefit has been paid or given within the last two years or is intended to be given to
any promoter/ or officer of the Company otherwise than as remuneration for services rendered as
wholetime executives of the Company.
7.10 REMUNERATION OF THE DIRECTORS
The remuneration to be paid to the Directors for attending the meetings of the Directors or a
committee of Directors shall be determined by the Board from time to time.
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7.11 INTEREST OF DIRECTORS
The directors may be deemed to be interested to the extent of fees payable to them for attending
Board meetings. The directors performing whole time service to the Company may also be deemed
interested in the remuneration payable to them from the Company. The directors may also be
deemed to be interested, to the extent of any shares held by each of them in the Company and the
dividends to be declared on their shareholding in the Company.
7. 12 INTEREST OF DIRECTORS IN PROPERTY ACQUIRED BY THE COMPANY
None of the Directors of the Company have or had any interest in any property acquired by the
Company.
7.13 VOTING RIGHTS
The rights and privileges, including voting rights, attached to the ordinary shares of the company
are equal.
7.14 AUDIT COMMITTEE/CONSTITUTION OF AUDIT COMMITTEE
Audit Committee of the Board has been formed to comply with the Code of Corporate Governance,
which comprises of the following members:
Mr. Muhammad Ali Jameel
Mr. Rizwan Abbas
Mr. Saad Nissar
The audit committee meeting shall be held on quarterly basis after the Company is listed on the
Stock Exchange, as per provisions of the Code of Corporate Governance. The Committee has its
terms of reference which were determined by the Board of Directors in accordance with the
guidelines provided in the Listing Regulations.
7.15 INTERNAL AUDIT
The board has setup an effective internal audit function managed by suitable qualified and
experienced personnel who are conversant with the policies and procedures of the Company and are
involved in the internal audit function on a full time basis.
7.16 BORROWING POWERS
Subject to the provisions of the Ordinance, the Board of Directors may from time to time borrow
any money for the purposes of the Company from its members or from any other person, firms,
companies, corporations, Government Agencies, institutions or the directors may themselves lend
moneys to the Company.
7.17 POWERS OF DIRECTORS
The business of the Company shall be managed by the directors, who may pay all expenses incurred
in promoting and registering the Company, and may exercise all such powers of the Company as are
not by the Ordinance or any statutory modification thereof for time being in force, or by the Articles
of Association, required to be exercised by the Company in General Meeting.
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7.18 INDEMNITY
Subject to the provisions of the Ordinance every Director, Chief Executive, Managing Agents,
Manager or other Officer or Servant of the Company shall be indemnified by the Company and it
shall be the duty of the Directors to pay out of the funds of the Company all costs, losses and
expenses which any such Director, Chief Executive, Managing Agents, Manager, Officer or Servant
may incur or become liable to by reason of any contract entered into or act or thing done by him as
such Director, Chief Executive, Managing Agents, Manager, Officer, or Servant or in any way in
discharge of his duties including travelling expenses, and the amount for which such indemnity is
provided shall immediately attach as lien to the property of the Company and have priority as
between the members over all other claims.
7.19 INVESTMENTS IN ASSOCIATED COMPANIES
1. The Company has made an advance payment of Rs.159mn to A & A Associates towards
booking of the office premises. The total cost of the premises is Rs.175.0mn for 14,417.16 sqft
@ PkR 12,138.31.
Furthermore an Annual General Meeting was held on April 29, 2011 and in the meeting it was
resolved as under:
2. The Company may make investments, advance or loan to TPL Trakker Limited for the
purchase of C-Track Units and payments of its monitoring fees subject to maximum amount
of Rs. 250m. TPL Trakker Limited will ensure uninterrupted supply of C-Track Units and its
monitoring services to the Company. The advance will be subjected to the following terms &
conditions:
a) The period of the investment will expire on May 31, 2016
b) The mark-up will be charged equivalent to the borrowing cost of the Company on the
outstanding balance. This markup will be revised / reviewed in case any change occurs in
the borrowing cost of TDI.
c) The company will recover additional 2.5% of the outstanding balance from the Parent
Company in case the amount is not paid or Tracking units are not supplied to the Company.
d) At least two Directors of TPL Trakker Limited will provide guarantee for the amount of
investment.
3. A total equity investment in TPL Properties (Pvt) Limited (an associated company) of
10,000,000 shares of Rs.10/- each aggregating to Rs.100,000,000/- be and is hereby approved
and necessary formalities may be completed.
7.20 INVESTMENT IN SUBSIDIARIES
TDI has made investment in EVAC Pakistan (Private) Limited of Rs.4m as at 31st December 2010.
EVAC is fully owned subsidiary of TDI. No resolution is pending or passed for further investment.
7.21 REVALUATION OF ASSETS
No revaluation of Fixed Assets is done by TDI in their financial statements.
7.22 CAPITALIZATION OF RESERVES
The Company has not capitalized reserves by issuing any bonus shares.
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PART 8
8 MISCELLANEOUS INFORMATION
8.1 REGISTERED OFFICE/CORPORATE OFFICE
TPL Direct Insurance Limited
39 – K Block 6 PECHS, Karachi
Phone # 021- 4322555
Fax # 021- 4322515
8.2 BANKERS TO THE ISSUE FOR BOOK BUILDING PORTION
Faysal Bank Limited
8.3 BID COLLECTION CENTRE
Karachi Office:
AKD Securities Limited
6th Floor, Continental Trade Centre,
Block 8, Clifton, Karachi.
Phone: 00-92-21-111-253-111
Lahore Office:
AKD Trade
Room No. 512/513, 5th Floor,
Lahore Stock Exchange Building, Lahore.
Phone: 00-92-42-111-253-111
Islamabad Office:
AKD Trade
303, 3rd Floor, ISE Tower
Jinnah Avenue, Blue Area, Islamabad
Phone: 00-92-51-111-253-111
8.4 BANKERS OF THE COMPANY
Metropolitan Bank Limited
Bank Al-Habib Limited
Standard Chartered Bank Limited
National Bank Limited
United Bank Limited
Dubai Islamic Bank Limited
KASB Bank Limited
8.5 AUDITORS OF THE COMPANY
KPMG Taseer Hadi & Co.
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Chartered Accountants
Sheikh Sultan Trust Building No 2,
Beaumont Road, Karachi
8.6 BANKERS TO THE ISSUE
Habib Bank Limited
United Bank Limited
Bank Alfalah Limited
MCB Bank Limited
Habib Metropolitan Bank
Soneri Bank Limited
Faysal Bank Limited
JS Bank Limited
NIB Bank Limited
Askari Bank Limited
8.7 LEGAL ADVISOR OF THE COMPANY
Lari & Co. Advocates
1206-07 Chapal Plaza
Hasrat Mohani Road, Karachi
Phone # 021-2411573
Fax # 021 – 2421486
8.8 LEGAL ADVISOR TO THE ISSUE
Mohsin Tayebaly & Co.
2nd Floor Dine Centre, BC-4
Block 9, Kehkashan, Clifton, Karachi.
Phone: (021) – 3537 5658-59
Fax: (021) – 3587 70240
8.9 LEAD MANAGER, ARRANGER AND BOOK RUNNER
AKD Securities Limited
6th Floor, Continental Trade Centre,
Block 8, Clifton, Karachi.
Phone: (021) – 111-253-253
Fax: (021) – 3586 7992
www.akdsecurities.net
8.10 COMPUTER BALLOTER AND SHARES REGISTRAR
THK Associates (Pvt.) Limited
Ground Floor, State Life Building No.3
Dr. Ziauddin Road Karachi
Phone # 021- 111-000-322
Fax # 021- 35655595.
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8.11 MATERIAL CONTRACTS/DOCUMENTS
8.11.1 DETAILS OF SHORT TERM FINANCING FACILITIES
TPL Direct Insurance Ltd
Short Term Loans
Quarter Ended On December 31, 2010
Sanction Availed
Facility Limit Amount Mark Up Rate Date
Habib Metropolitan 3 months KIBOR
Bank RF 25.00 16.3 + 2.10 15/08/2008
3 months KIBOR
KASB Bank Limited RF 25.00 20.9 + 3.50 09/01/2010
8.11.2 RE-INSURANCE TREATY
Company has two types of re-insurance arrangements:
(1) Local Re-insurance, this arrangement is with EFU General Insurance and Security
General Insurance Company and is based on case to case basis i.e., vehicle having
value greater than PKR 1.9 million are placed under cessions. Further, for health care
Company cede 50% of the premium to Asia Care Health and Life Insurance Co.
(2) Excess of Loss Treaty with local and foreign Re-insurer.
“Excess of Loss” treaty caters for TDI’s entire portfolio consisting of Motor and
Miscellaneous. It consists of three layers.
Motor
1st Layer Limit: PKR 1 million with excess of PKR 1 million
2nd Layer Limit: PKR 3.5 million with excess of PKR 2 million
3rd Layer Limit: PKR 10 million with excess of PKR 5.5 million
Miscellaneous
1st Layer Limit: PKR 1.25 million with excess of PKR 0.75 million
2nd Layer Limit: PKR 3.5 million with excess of PKR 2 million
3rd Layer Limit: PKR 10 million with excess of PKR 5.5 million
Excess of Loss Treaty is placed as under
Malaysian – Re @45%
A.M. Best Co. has assigned a financial strength rating of "A-" (Excellent)
B.E.S.T. –Re @ 20%
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A.M. Best Co. has affirmed the financial strength rating of "A-“ (Excellent)
Pakistan Reinsurance Company @35%
8.11.3 UNDERWRITING AGREEMENTS
8.11.4 DUE DILIGENCE REPORTS BY THE UNDERWRITERS
8.12 INSPECTION OF DOCUMENTS AND CONTRACTS
Copies of the Memorandum and Articles of Association, the audited financial statements, the
Auditor’s Certificates, Information Memorandum and copies of agreements referred to in this
Prospectus may be inspected during usual business hours on any working day at the
registered office of the Company from the date of publication of this Prospectus until the
closing of the subscription list.
8.13 LEGAL PROCEEDINGS
There are no legal proceeding pending against the Company and the Company has not
initiated any legal proceedings against any party or person.
8.14 MEMORANDUM OF ASSOCIATION
The Memorandum of Association, inter alia, contains the objects for which the Company was
incorporated and the business which the Company is authorized to undertake. A copy of the
Memorandum of Association is annexed to this Prospectus and with every issue of the
Prospectus except the one that is released in newspapers as advertisement.
8.15 FINANCIAL YEAR OF THE COMPANY
The financial year of the Company commences from 1st day of January and ends on the 31st
day of December each year.
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PART 9
9 APPLICATION AND TRANSFER INSTRUCTIONS
9.1 GENERAL INSTRUCTIONS
9.1.1 Eligible investors include:
a. Pakistani citizens resident in or outside Pakistan or Persons holding two nationalities
including Pakistani nationality;
b. Foreign Nationals whether living in or outside Pakistan
c. Companies, bodies corporate or other legal entities incorporated or established in or
outside Pakistan (to the extent permitted by their constitutive documents and existing
regulations, as the case may be);
d. Mutual Funds, Provident/pension/gratuity funds/trusts, (subject to the terms of the Trust
Deed and existing regulations); and
e. Branches in Pakistan of companies and bodies corporate incorporated outside Pakistan.
8.1.2 APPLICATION MUST BE MADE ON THE COMPANY’S PRINTED FORM
8.1.3 Copies of this Prospectus and applications forms can be obtained from members of Karachi
Stock Exchange (Guarantee) Limited, Lahore Stock Exchange (Guarantee) Limited and
Islamabad Stock Exchange (Guarantee) Limited, the Bankers to the issue and their
Branches, the Lead Manager, Arranger & Book Runner, and the registered office of the
Company. The Prospectus and the application form can also be downloaded from the
following website: www.akdsecurities.net and www.tplinsurance.com
8.1.4 The applicants opting for scripless form of shares are required to complete the relevant
sections of the application. In accordance with the provisions of the Central Depositories
Act, 1997 and the CDCPL Regulations, credit of such shares is allowed ONLY in the
applicant’s own CDC account. In case of discrepancy between the information provided in
the application form and the information already held by CDS, the Company reserves the
right to issue shares in physical form.
8.1.5 Name(s) and address(es) must be written in full block letters, in English and should not be
abbreviated.
8.1.6 All applications must bear the name and signature corresponding with that recorded with
the applicant's banker. In case of difference of signature with the bank and Computerized
National Identity Card (CNIC) or National Identity Card for Overseas Pakistanis (NICOP)
or Passport both the signatures should be affixed on the application form.
8.1.7 APPLICATIONS MADE BY INDIVIDUAL INVESTORS
(i) In case of individual investors, an attested photocopy of CNIC (in case of Resident
Pakistanis)/Passport (in case of Non-Resident Pakistanis) as the case may be, should be
enclosed and the number of CNIC/Passport should be written against the name of the
applicant. Copy of these documents can be attested by any Federal/Provincial
Government Gazetted Officer, Councilor, Oath Commissioner or Head Master of High
School or bank manager in the country of applicant's residence.
(ii) Original CNIC/Passport, along with one attested photocopy, must be produced for
verification to the banker to the issue and the applicant’s banker (if different from the
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Prospectus
banker to the issue) at the time of presenting the application. The attested photocopy will,
after verification, be retained by the bank branch along with the application.
8.1.8 APPLICATIONS MADE BY INSTITUTIONAL INVESTORS
(i) Applications made by companies, corporate bodies, mutual funds,
provident/pension/gratuity funds/trusts and other legal entities must be accompanied by
an attested photocopy of their Memorandum and Articles of Association or equivalent
instrument/document. Where applications are made by virtue of Power of Attorney, the
same should also be submitted along with the application. Any Federal/Provincial
Government Gazetted Officer, Councilor, Bank Manager, Oath Commissioner and Head
Master of High School or bank manager in the country of applicant's residence can attest
copies of such documents.
(ii) Attested photocopies of the documents mentioned in 8(i) must be produced for
verification to the banker to the issue and the applicant's banker (if different from the
banker to the issue) at the time of presenting the application. The attested copies, will
after verification, be retained by the bank branch along with the application.
9.1.9 Only one application will be accepted against each account, however, in case of joint account,
one application may be submitted in the name of each joint account holder.
9.1.10 Joint application in the name of more than two persons will not be accepted. In case of joint
application each applicant must sign the application form and submit attested copies of their
CNICs/Passport. The Shares will be dispatched to the person whose name appears first on
the application form while in case of CDS, it will be credited to the CDS account mentioned
on the face of the form and where any amount is refundable, in whole or in part, the same
will be refunded by cheque or other means by post, or through the bank where the
application was submitted, to the person named first on the application form, without
interest, profit or return. Please note that joint application will be considered as a single
application for the purpose of allotment of Shares.
9.1.11 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 “Initial Public Offering of TPL
Direct Insurance Limited” and crossed “A/C PAYEE ONLY”.
9.1.12 For the applications made through pay order/bank draft, it would be permissible for a banker
to the issue to deduct the bank charges while making refund of subscription money to
unsuccessful applicants through pay order/bank draft individually for each application.
9.1.13 The applicant should have at least one bank account with any of the commercial banks.
The applicants not having a bank account at all (non-account holders) are not allowed
to submit application for subscription of Shares.
9.1.14 Applications are not to be made by minors and/or persons of unsound mind.
9.1.15 Applicants should ensure that the bank branch, to which the application is submitted,
completes the relevant portion of the application form.
9.1.16 Applicants should retain the bottom portion of their application forms as provisional
acknowledgement of submission of their applications. This should not be construed as an
acceptance of the application or a guarantee that the applicant will be allotted the number of
Shares for which the application has been made.
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Prospectus
9.1.17 Making of any false statements in the application or willfully embodying incorrect
information therein shall make the application fictitious and the applicant or the bank
shall be liable for legal action.
9.1.18 Bankers to the issue are prohibited to recover any charges from the subscribers for
collecting subscription applications. Hence, the applicants are advised not to pay any extra
charges to the bankers to the issue.
9.1.19 It would be permissible for a Banker to the issue to refund subscription money to
unsuccessful applicants having an account in its bank by crediting such account
instead of remitting the same by cheque, pay order or bank draft. Applicants should,
therefore, not fail to give their bank account numbers.
9.1.20 Submission of Fictitious and multiple applications (more than one application by same
person) is prohibited and such application money shall be liable to confiscation under
section 18A of the Securities and Exchange Ordinance, 1969.
ADDITIONAL INSTRUCTIONS FOR FOREIGN/NON-RESIDENT INVESTORS
9.1.21 In case of foreign investors who are not individuals, applications must be accompanied with
a letter on applicant's letterhead stating the legal status of the applicant, place of incorporation
and operations and line of business. A copy of memorandum of association or an equivalent
document should also be enclosed, if available. Where applications are made by virtue of
Power of Attorney, the same must be lodged with the application. Copies of these documents
can be attested by the bank manager in the country of applicant's residence.
9.1.22 Applicants may also subscribe using their Special Convertible Rupee Account (SCRA) as set
out under the State Bank of Pakistan's Foreign Exchange Manual.
BASIS OF ALLOTMENT
8.1.23 The basis and conditions of transfer of shares to the general public shall be as follows:
a) The minimum amount of application for subscription of 500 Shares is PKR [●]/-.
Application for Shares below the total value of PKR [●]/- shall not be entertained.
b) Application for Shares must be made for 500 Shares or in multiple thereof only.
Applications, which are neither for 500 Shares nor for multiple thereof, shall be rejected.
c) Allotment/Transfer of Shares to successful applicants shall be made in accordance with the
allotment criteria/ instructions disclosed in the Prospectus.
d) Allotment of Shares shall be subject to scrutiny of applications in accordance with the
criteria disclosed in the Prospectus and/or the instructions by the Securities & Exchange
Commission of Pakistan.
e) 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.
f) The Company will dispatch Shares to successful applicants through their Bankers to the
issue or credit the respective CDS accounts of the successful applicants (as the case maybe).
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8.2 Bankers to the issue
Code No. Bank
01 Faysal Bank Limited
02 Askari Bank Limited
03 Bank Alfalah Limited
04 Habib Metropolitan Bank Limited
05 Habib Bank Limited
06 Soneri Bank Limited
07 MCB Bank Limited
08 NIB Bank Limited
09 JS Bank Limited
10 United Bank Limited
8.3 Code of Occupation
Code No. Occupation Code No. Occupation
01 Business 06 Professional
02 Business Executive 07 Student
03 Service 08 Agriculturist
04 Housewife 09 Industrialist
05 Household 10 Others
8.4 NATIONALITY CODE
Code No. Name of country Code No. Name of country
001 U.S.A 006 Bangladesh
002 U.K 007 China
003 U.A.E 008 Bahrain
004 K.S.A 009 Other
005 Oman
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Prospectus
PART 10
10 BIDDING FORM OF TPL DIRECT INSURANCE LTD
(This space has been left blank intentionally)
22
Prospectus
PART 11
11 SIGNATORIES TO THE PROSPECTUS
Mr. Saad Nissar
-Sd-
Mr. Jameel Yusuf -Sd-
Mr. Ali Jameel -Sd-
Mr. Adil Matcheswalla -Sd-
Mr. Rizwan Panjwani -Sd-
-Sd-
Mr. Mustafa Ali
Mr. Syed Kazim Hasan -Sd-
Witness
Signature:
Name: Syed Altaf Hussain
Place: Karachi
Date:
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Prospectus
PART 12
12 MEMORANDUM OF ASSOCIATION
The Companies Ordinance, 1984
(Public Company Limited by Shares)
Memorandum of Association
Of
TPL DIRECT INSURANCE LIMITED
I. The name of the Company is “ TPL DIRECT INSURANCE LIMITED “
II. The Registered Office of the Company will be situated in the Province of the Sind.
III. The objects for which the Company is established are as follow:
1. To carry on in Pakistan and elsewhere, all kinds of General Insurance business, reinsurance,
counter insurance or counter reinsurance and assurance business, and all kinds of Guarantee
and indemnity business and in particular and without prejudice to the generality of the
foregoing words, to carry on Fire, Marine, Aviation, Accident, Lighting, Explosion,
Earthquake, Hail, Employer’s Liability, Workmen’s Compensation, Sickness, Personal
Accident, Disease, Survivorship, Burglary, Robbery, Theft, Fidelity, Motor Vehicle,
Livestock, Glass, Third Party Risk, Transit Insurance, Bonds and Engineering Insurance.
2. To re-insure or counter-insure any of the risks undertaken by the Company.
3. To effect as Agents for other Company assurances of every kind and against every and any
contingency, subject to the provisions of the law of insurance for the time being inforce.
4. To advance moneys at interest on the security of any freehold, leasehold, or other property,
or of any estate or interest or in such property without doing investment of or banking
business.
5. To purchase and deal in property of all kinds, whether absolute or contingent or expectant
and whether determinable or not and to acquire, redeem, cancel, or extinguish by purchase,
surrender, or otherwise, any policy, security, grant or contract issued, made, taken over or
entered into by the Company.
6. To pay, satisfy or compromise any claims made against the Company in respect of any
policies or contracts granted by the Company, or otherwise which it may seem expedient to
pay, satisfy or compromise, notwithstanding that the same may not be valid in law.
7. To invest and deal with moneys of the Company not immediately required upon such
securities and in such manner as may from time to time be determined, subject to the
provisions of the law of insurance for the time being enforce.
8. To pay, satisfy or compromise any claims made against the Company which it may seem
expedient to pay, satisfy or compromise, notwithstanding that the same may not be valid in
law.
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Prospectus
9. To re-insure or counter-insure all or any risks, and to undertake, all kinds of re-insurance
and counter-insurance connected with any of the businesses aforesaid.
10. To acquire, construct, carryout, equip, maintain, alter, improve, develop, manage, work,
control and superintend any dwellings, offices, shops, stores, buildings and other works and
conveniences; which may seem directly or indirectly conducive to any of the objects of the
Company and to contribute, to subsidies or otherwise aid by taking part in any such
operations.
11. To purchase, take on lease or tenancy or in exchange, hire, take options over or otherwise
acquire for any estate or interest whatsoever and to hold, develop, work, cultivate, deal with
and turn to account concessions, grants, decrees, licenses, privileges, claims, options,
leases, property, real or personal or rights or powers of any kind which may appear to be
necessary or convenient for any business of the Company and to purchase, charter, hire,
build or otherwise acquire vehicles of any or every sort or description for use on or under
land or water or in the air and to employ the same in the carriage of merchandise or all
kinds or passengers.
12. To purchase and deal in or accept by way of exchange reversionary or other interests in
property of all kinds whether absolute, contingent or expectant, and whether determinable
or not, and to acquire, accept by way of mortgage or exchange, redeem, cancel or
extinguish by purchase, surrender or otherwise any policy, security, grant or contract issued,
made or taken over, or entered into by the Company.
13. To sell, exchange, mortgage, royalty or tribute, grant licenses, easements, options and other
rights over and in any other manner deal with or dispose of the undertaking, property,
assets, rights and effects of the Company or any part thereof for such consideration as may
be thought fit.
14. To advance, deposit money, securities and property to or receive loans or grants from the
Governments.
15. To advance money with security and generally to such persons and upon such terms and
conditions as the Company may think fit without doing investment business.
16. To undertake commercial obligations, transactions and operations of all kinds.
17. To take or otherwise acquire, and hold shares in any other Company having objects
altogether or in part similar to those of this Company, or carrying on any business capable
of being conducted so as directly or indirectly to benefit this Company, subject to the
provisions of the laws of insurance for the time being enforce.
18. To guarantee the payment of money secured by or payable under or in respect of
promissory notes, bonds, debentures, debenture stock, contracts, mortgages, charges,
obligations, instruments and securities of any Company or of any authority, supreme,
municipal, local or otherwise or of any persons whomsoever, whether incorporated, and
generally to guarantee or become sureties for the performance of any contracts or
obligations.
19. To subscribe for, absolutely or conditionally, purchase or otherwise acquire and to hold,
dispose of shares, stocks and securities or obligations of any other Company whether
Pakistani or foreign.
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Prospectus
20. To invest any moneys of the Company not for the time being required for any of the
purposes of the Company in such investments as may be thought proper and to hold, sell
such investments.
21. To borrow or secure the payment of money in such manner as the Company shall think fit
and in particular by the issue of debentures or debenture stock perpetual or otherwise,
charged upon all or any of the Company’s property (both present and future), and to
purchase, redeem and pay off any such securities.
22. To remunerate any person or Company for services rendered or to be rendered, in placing or
assisting to place or guaranteeing the placing of, any of the shares in the Company’s capital,
or any debentures, debenture stock or other securities of the Company of in or about the
formation or promotion of the Company or the acquisition of property by the Company or
the conduct of its business, subject to the provisions of the law of insurance for the time
being enforce.
23. To draw, make, accept, discount, execute and issue bills of exchange, Government of
Pakistan and other promissory notes, bills of lading, warrants, debentures and other
negotiable or transferable instruments or securities concerning this Company.
24. To acquire and undertake all or any part of the business, property and liabilities of any
person or Company carrying on any business which this Company is authorized to carry on
or possessed of property suitable for the purposes of the Company.
25. To take part in the management, supervision or control of the business or operations of any
Company or undertaking and for the purpose to appoint and remunerate any Directors,
Accountants or other experts or agents.
26. To form, incorporate or promote any Company or companies, whether in Pakistan or in any
part of the British Commonwealth of Nations or in any foreign country, having amongst its
or their objects the acquisition of all or any of the assets of control, management or
development of the Company or any other objects or object which in the opinion of the
Company could or might directly or indirectly assist the Company in the management of its
business or the development of its properties or otherwise prove advantageous to the
Company and to pay all or any of the costs and expenses incurred in connection with any
such promotion or incorporation and to remunerate any person or Company in any manner
it shall think fit for services rendered or to be rendered in obtaining subscription for or
placing or assisting to place or to obtain subscriptions for or for guaranteeing the
subscription of or the placing of any shares in the capital of the Company or any stock,
shares, bonds, debentures, obligations or securities of any other Company held or owned by
the Company or in which the Company may have an interest or in or about the formation or
promotion of the Company or the conduct of its business or in or about the promotion or
formation of any other Company in which the Company may have an interest, without
doing any investment business.
27. To enter into any arrangement for sharing profits or into any union of interests, joint-
adventures, reciprocal concessions or co-operation with any person or persons or Company
or companies carrying on or engaged in, or about to carry on or engage in or being
authorized to carry on or engage in, any business or transaction which this Company is
authorized to carry on or engage in or any business or transaction capable of being
conducted so as directly or indirectly to benefit this Company.
28. To enter into any arrangements and to take all necessary or proper steps with Governments
or with other authorities imperial, supreme, national, local municipal or otherwise of any
place in which the Company may have interests and to carry on any negotiations or
operations for the purpose of directly or indirectly carrying out the objects of the Company
26
Prospectus
or effecting any modification in the constitution of the Company or furthering the interests
of its members and to oppose any such steps taken by any other Company, firm or person
which may be considered likely directly or indirectly to prejudice the interests of the
Company or its members and to promote or assist the promotion, whether directly or
indirectly, of any legislation which may seem disadvantageous to the Company and to
obtain from any such Government authority or any Company any charters, contracts,
decrees, rights, grants, loans, privileges or concessions which the Company may think it
desirable to obtain and carry out, exercise and comply with any such arrangements,
charters, contracts, decrees, rights, privileges or concessions.
29. To adapt such means of making known the business of the Company as may seem
expedient and in particular by advertising in the press by circulars, by purchase and
exhibition of works of art or interest, by publication of books and periodicals and by
granting prizes, rewards and donations.
30. To apply the assets of the Company in any way in or towards the establishment,
maintenance or extension of any association, institution or fund in anywise connected with
any particular trade or business or with trade or commerce generally including any
association, institution or fund for the protection of the interests of Insurers against loss by
bad debts, strikes, combinations, fire, accidents, or otherwise or for the benefit of the clerks,
workmen or others at any time employed by the Company or their families or dependents
and whether or not in common with other persons or classes of persons and in particular of
friendly, cooperative and other societies, reading rooms, libraries, educational and
charitable institutions, refectories, dining and recreation rooms, schools and hospitals and to
grant gratuities, pensions and allowances and to contribute to any funds raised by public or
local subscriptions for any purpose whatsoever.
31. To aid, pecuniarily or otherwise, any association, body or movement having for an object
the solution, settlement, or surmounting of industrial or labour problems or troubles or the
promotion of industry or trade.
32. To subscribe or guarantee money for any national, charitable, benevolent, public, general or
useful object or for any exhibition.
33. To establish and support, or aide in the establishment and support of associations,
institutions, funds, trusts and conveniences calculated to benefit persons who are or have
been Directors of or who are or have been employed by or who are serving or have served
the Company or its predecessors in business or the dependents or connections of such
persons and to grant pensions and allowances and to make payments towards insurance.
34. To distribute all or any of the property of the Company-amongst the members in specie or
kind in the event of winding up of the Company
IV. The liability of the members is limited.
V. The authorized capital of the company is Rs.500,000,000/- (Rupees Five Hundred only)
divided into 50,000,000 (Two Hundred Fifty Million only) ordinary shares of Rs.10/- each
with powers to increase, reduce, consolidate or otherwise re-organise the share capital and
to divide the shares of the company into different classes in accordance with the provisions
of the Companies Ordinance, 1984.
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Prospectus
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Prospectus
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