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13th April 2012

To, The CFO Kayne Food Limited Lahore

Dear Sir, We thank you for your email dated April 09, 2012 and, as requested, are pleased to submit our proposal for the statutory audit of the financial statements of Kayne Food Limited for the financial year 2012 to 2013. This proposal will provide you with information regarding our firms profile, the scope of our services, our audit approach, our audit team, relevant experience and our professional fees. Please indicate your agreement to the terms of this proposal and your acceptance thereof by signing on the space provided below and returning the duplicate copy of this proposal for our file. We thank you for giving us the opportunity to offer our services to you.

Yours faithfully, Partner Hasan Masud Gul & Co. Conforme: _____________________________________ Name: ________________________________________ Signature over printed name is required. Date:

Gul & Co. 3rd. floor, 25 Commercial Zone, Liberty Market, Gulberg III, Lahore, Pakistan. Phone (92-42) 578 2536 - 9 Fax (92-42) 578 2540 Email info@gulco.com.pk

Table of Content
Mission Statement ... 3 Firm Profile .. 3 Audit Approach ... 5 List of Major Clients ... 8 Audit Team Profile .. 9 Timeline .. 12 Fee Schedule ... 12

Gul & Co. 3rd. floor, 25 Commercial Zone, Liberty Market, Gulberg III, Lahore, Pakistan. Phone (92-42) 578 2536 - 9 Fax (92-42) 578 2540 Email info@gulco.com.pk

Mission Statement
We aim to provide high quality and value-for-money audit and business consulting services to our valued clients while incorporating our values of perfection, integrity and excellence.

Firm Profile
Gul & Co. is a member firm of ABC and Co. in Pakistan. ABC and Co. is one of the leading international audit firms based in the US. Gul & Co. was established in 1995 under the management of Mr. Hasan Masud in Lahore. Over the years Gul & Co. has expanded and now has its offices in Islamabad and Karachi as well. Currently it employs over 400 professionals with 10 partners. Our partners and staff are highly qualified and experienced professionals who have specialized in different areas of expertise. Services We cater to a plethora of business needs ranging from assurance engagements for both public and private companies to taxation, advisory and consulting services by complying with the International Standards of Auditing (ISAs) which is issued by International Federation of Accountants (IFAC). Services relating to the efficiency and effectiveness of Internal Control:

Management Audit Internal Audit and System Control Review (SCR) Cost Audit and Cost Allocation studies

Services relating to Statutory and Non-Statutory Audit:

Audits of public or private limited companies, charities, trusts or non-profit organizations.

Services relating to Taxation:


Providing assurance to tax authorities or other clients on compliance with various aspects of Sales and Income tax or other tax statutes. Analyzing the tax impact of transactions holistically having regard to direct tax, indirect tax, regulatory and transfer pricing implications

We have classified different teams according to different industry groups. This enables us to equip us with more in-depth and thorough knowledge about the diverse nature and working environment of these industries. Through this we provide our clients with specialized and tailored services in the following sectors:

Gul & Co. 3rd. floor, 25 Commercial Zone, Liberty Market, Gulberg III, Lahore, Pakistan. Phone (92-42) 578 2536 - 9 Fax (92-42) 578 2540 Email info@gulco.com.pk

Banking Sector and Financial Institutions Information and Communication Government and Non Profit Organizations Consumer Goods Construction and Real estate

Gul & Co. 3rd. floor, 25 Commercial Zone, Liberty Market, Gulberg III, Lahore, Pakistan. Phone (92-42) 578 2536 - 9 Fax (92-42) 578 2540 Email info@gulco.com.pk

Audit Approach
Scope of Our Services We will audit the basic financial statements of Kayne Food Limited for the year ended March 31, 2013 as per the requirement of Section 233(3) of the Companies Ordinance 1984 in accordance with the following standards: International Standards on Auditing as applicable in Pakistan. Government Regulations as applicable in Pakistan.

Our audit will be for the purpose of expressing an opinion on the basic financial statements, and will include such auditing procedures as considered necessary to accomplish this purpose. We anticipate issuing an Independent Auditors Report on the basic financial statements along with a management letter that will give written appraisals of its accounting and related systems. This letter will identify any significant control deficiencies or material weaknesses that are identified during the audit. The letter will also offer recommendations for the elimination of weaknesses that we identify and we will suggest any methods we discover to help improve efficiency and effectiveness. All working papers and reports will be retained at the Firms expense for a minimum of five (5) years, unless the Firm is notified in writing by the Kayne Food Limited of the need to extend the retention period. In addition, the Firm shall respond to the reasonable inquiries of successor auditors and allow successor auditors to review working papers relating to matters of continuing accounting significance. Preliminary Risk Assessment Gul and Co has an effective audit methodology that helps to enhance our audit quality. We start by carrying out a preliminary risk assessment through the following procedure: Assess threats to independence that may impair the objectivity of the auditor. Identify, analyze and document business risks and key audit risks through gaining an understanding of the external environment, financial performance and nature of the entity.

Planning the Audit Procedures and Fieldwork The next phase is the planning of the audit. In this phase a general audit strategy will be made in which resources are deployed, timetable of audit activities and the audit budget will be made. Then using the audit strategy a more detailed audit plan will be developed. This plan will include descriptions of risk assessment and the nature, timing and extent of other audit procedures to detect material misstatements. The audit plan will then serve as a guideline for conducting the fieldwork which will mainly focus on conducting different tests. In case the evidence obtained from these tests shows material contradictions to the managements assertions then justification from the management will be
Gul & Co. 3rd. floor, 25 Commercial Zone, Liberty Market, Gulberg III, Lahore, Pakistan. Phone (92-42) 578 2536 - 9 Fax (92-42) 578 2540 Email info@gulco.com.pk

sought and alternate audit procedures may be applied. Hence the audit plan may be modified and developed further during the course of the audit as new findings are discovered. The following may be the contents of the audit plan: a) Risk Assessment Procedures Our Firm will use a risk-based approach for the audit. For this purpose we will carry out various risk assessment procedures to understand and analyze the environment in which the entity operates, the entitys accounting policies, financial performance, objectives and Internal control. This will enable us to identify areas that pose significant risks of material misstatements. The procedures to be used for the risk assessment may include inquiries of management, preliminary analytical procedures, observation of operations, confirmation from third parties and inspection of documents. Also past records and performance of the entity will be analyzed. b) Understanding Internal Controls: To gain an understanding of the Internal Controls we will start by assessing the control environment of the firm. Next we will review the entitys risk assessment procedures and also employ the ORCA (Objective Risk Control Alignment) methodology and re-perform the risk assessment procedure. Next we will analyze the information systems, control activities and monitoring of the controls. The information collected will then be recorded using flowcharts, checklists and questionnaires which will be updated from time to time. c) Materiality The materiality level will be set in the planning stage. It will be set as a percentage of a benchmark which will be chosen depending on its volatility, nature and scale of the clients business and elements in the financial statements. Along with this the nature of a misstatement will also be assessed in determining if it is material. The materiality level may be revised over the course of the audit depending on different circumstances that may arise. d) Test of Controls Based on our earlier assessment of internal controls during risk assessment procedures, we will decide to what extent we want to rely on internal controls in reducing audit risks. Accordingly, we will design test of controls to test their operative and design efficiency. Inspection of documents, observation of procedures, inquiries from the management and walk through tests among others may be employed as test of controls. These tests will assess the ability of the controls to detect, prevent and correct material misstatements in the financial statements. The evidence obtained by performing test of control will then determine if we need to change our earlier assessment of the control risk.

Gul & Co. 3rd. floor, 25 Commercial Zone, Liberty Market, Gulberg III, Lahore, Pakistan. Phone (92-42) 578 2536 - 9 Fax (92-42) 578 2540 Email info@gulco.com.pk

e) Substantive Audit Procedures We will design substantive audit procedures to detect any material misstatements and check management assertions regarding account balances, class of transactions and presentation and disclosure. The extent of these procedures will depend on the degree of reliance placed on Internal Controls. The two types of substantive procedures that may be used are substantive analytical procedures and test of details. Approach to be taken in Drawing Audit Samples for Purposes of Test of Control and Substantive Audit Procedures Since each program agreement is different, we use many different approaches to sampling in our tests of compliance. The size of the sample considers many factors; size of the program, complexity, level of oversight, prior audit documents, relevance and reliability of evidence. Ultimately, our professional judgment determines that a representative number of transactions have been selected. You can be confident in our judgment because only senior level staff makes decisions on planned compliance testing. Audit Evidence In order to validate any assertion the audit evidence obtained should be appropriate and sufficient as is required by the ISAs. Whether the evidence meets the required criteria is a matter of professional judgment. However, similar to the sampling decisions only the senior staff will make these decisions. Audit completion After the previous segments mentioned are complete, we will be ready to finalize our audit. During this stage we will complete the following procedures: 1. Complete subsequent events review procedures. 2. Complete final overall analytical review procedures. 3. Communicate significant deficiencies and material weaknesses. 4. Conduct exit meeting. 5. Issue audit report and Management letter. 6. Assemble audit documentation. Note: At this time we do not anticipate any potential audit problems. If problems do arise, we would discuss fully with the Kayne Food Limited management to resolve the issue.

Gul & Co. 3rd. floor, 25 Commercial Zone, Liberty Market, Gulberg III, Lahore, Pakistan. Phone (92-42) 578 2536 - 9 Fax (92-42) 578 2540 Email info@gulco.com.pk

List of Major Recent Clients


The following are the major companies that we have provided different assurance and consultancy services in the recent years. Banking Sector and Financial Institutions National Bank Of Pakistan Standard Chartered Bank Bank Alfalah Ltd. Atlas Bank

Information and Communication Wateen Telecom Balcom (Pvt.) Ltd. Global Mobility (Pvt.) Ltd. Star Communications (Pvt.) Ltd.

Government and Non Profit Organizations Alamgir Welfare Trust International Alkhidmat foundation

Consumer Goods National Foods Nestle Pakistan Ltd. Shezan International Ltd. Mitchells Fruit Farms Ltd. Coca Cola Beverages (Pvt.) Ltd. Kohinoor Textile Mills Ltd. M. S. Reshmatex (Pvt.) Ltd. Sach International (Pvt.) Ltd. Procter and Gamble (Pvt.) Ltd.

Construction and Real estate Empire Developers (Pvt.) Ltd. Global Infrastructure (Pvt.) Ltd. Sukh Chayn Gardens (Pvt.) Ltd.

Gul & Co. 3rd. floor, 25 Commercial Zone, Liberty Market, Gulberg III, Lahore, Pakistan. Phone (92-42) 578 2536 - 9 Fax (92-42) 578 2540 Email info@gulco.com.pk

Audit Team Profile


Hasan Masud, Partner: Professional/Educational Qualifications: Certified Chartered Accountant, Member of ICAP for the past 35 years Chartered Financial Analyst Certified Information Systems Auditor (CISA) Bachelor in Accounting and Finance

Experience: Co-Founder of Gul & Co. Has worked for A. F. Ferguson for 11 years Has worked for Ernst-Young for 7 years

Ameer Anis Gul, Senior Qualified Assistant: Professional/Educational Qualifications: Certified Chartered Accountant, Member of ICAP for the past 16 years Masters in Accounting with a Specialization in Taxation Bachelors in Accounting and Finance

Experience: Has been working with Gul & Co for the past 7 years. Has Worked for Ernst & Young for 9 years

Muneeba Shoaib, Junior Qualified Assistant: Professional/Educational Qualifications: Certified Chartered Accountant, Member of ICAP for the past 8 years Certified Management Accountant (CIMA) Bachelors in Accounting and Finance

Experience: Has been working with Gul & Co for the past 7 years. Has worked for KPMG for 1 years

Oneeb Ahmed, Supervisor: Professional/Educational Qualifications:

Gul & Co. 3rd. floor, 25 Commercial Zone, Liberty Market, Gulberg III, Lahore, Pakistan. Phone (92-42) 578 2536 - 9 Fax (92-42) 578 2540 Email info@gulco.com.pk

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Certified Chartered Accountant, Member of ICAP for the past 5 years Bachelor of Commerce

Experience: Has been working with Gul & Co. for the past 5 years

Muhammad Zulnoorain, Senior: Professional/Educational Qualifications: ACCA Bachelor of commerce

Experience: Has been working with Gul & Co. for the past 2 years Has worked for Sidat Hyder for 2 years

Ammad Ejaz Chaudhary, Semi-Senior: Professional/Educational Qualifications: ACCA Bachelor of Economics Trained in IT Audit

Experience: Has been working with Gul & Co. for the past 1 years Has worked for Ernst & Young for 3 years

Hasan Mehmood, Junior: Professional/Educational Qualifications: ACCA (in progress) Masters in Business Administration from UK Bachelor of Accounting and Finance

Experience: Has been working with Gul & Co. for the past 2 years.

Momina Manzoor, Junior: Professional/Educational Qualifications: ACCA (in progress)

Gul & Co. 3rd. floor, 25 Commercial Zone, Liberty Market, Gulberg III, Lahore, Pakistan. Phone (92-42) 578 2536 - 9 Fax (92-42) 578 2540 Email info@gulco.com.pk

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CIMA Bachelor of Economics

Experience: Has been working with Gul & Co. for the past 1 year.

Parnian Khalil Rao, Intern: Professional/Educational Qualifications: CISA (in progress) Bachelor of Accounting and Finance

Experience: Has been working with Gul & Co. for the past 3 months.

Gul & Co. 3rd. floor, 25 Commercial Zone, Liberty Market, Gulberg III, Lahore, Pakistan. Phone (92-42) 578 2536 - 9 Fax (92-42) 578 2540 Email info@gulco.com.pk

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Timeline
If accepted, we will work according to the program outlined below. Appointment date (July 2012): Commencement of audit. July 2012 March 31, 2013: Perform audit planning and preliminary audit procedures. March 31, 2013 to April 30, 2013: Conduct audit procedures, obtain audit evidence and conduct meetings with the management. April 30, 2013 to May 15, 2013: Issuance audit opinion and management letter. July 2013: Presentation of the audit report at the Annual General Meeting.

Audit Fee Structure


Fees for our services are based on the actual time spent by the staff, scale of the entity and the hourly rates of the individuals to be assigned to complete the audit as given by the Institute of Chartered Accountants of Pakistan (ICAP). Based on the anticipated magnitude of the activities of the proposed engagement, we estimate the fee for the examination of your Company's financial statements for the financial year 2012 to 2013 to be Rs 1,118,000 (exclusive of taxes). Forty percent (40%) of our audit fee Rs 447,200 will be paid in advance upon the signing of this engagement proposal. We will add to the above fee cost for out-of-pocket expenses like costs of travel expenses (including taxi, fuel, etc.), office supplies, printing costs and other incidental expenses.

Gul & Co. 3rd. floor, 25 Commercial Zone, Liberty Market, Gulberg III, Lahore, Pakistan. Phone (92-42) 578 2536 - 9 Fax (92-42) 578 2540 Email info@gulco.com.pk

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