Executive Summary

Engro Chemical Pakistan Limited is the second largest producer of Urea fertilizer
in Pakistan. The company was incorporated in 1965 and was formerly Exxon
Chemical Pakistan Limited until 1991, Exxon decided to divest its fertilizer business
on a global basis. The employees of then Exxon Chemical Pakistan Limited, in
partnership with leading international and local financial institutions bought out
Exxon’s 75% equity. This was at the time and perhaps still is the most successful
employee buy- out in the corporate history of Pakistan. Renamed as Engro Chemical
Pakistan Limited, the company has gone from strength to strength, reflected in its
consistent and enviable financial performance, growth of the core fertilizer business
and successful business diversification into our fields. Its performance & outlook is
following the declared vision, “To be the premier Pakistani enterprise with a
global reach, passionately pursuing value creation for all stake holders”

Engro Chemical Pakistan Limited produced a large quantity of fertilizers such as

Engro Urea, Engro DAP, Engro Zorawar and Engro Zarkhez and the subsidiaries
company like Engro Vopak Terminal Limited, Engro Polymer & Chemical Limited,
Engro Energy Limited and then diverse all the activities to make food products in
Engro Foods Limited by the names of Olper’s, Olwell HCLF, Olper’s Cream,
Tarang.

Engro has never been a company to rest on its laurels. Their employees and culture
drive them to achieve greater success. They look for new and exciting ways to return
value to their customers and their shareholders.

They said about their employees,” Our employee’s performance can only flourish in a
sound work environment. That is why Engro is committed to supporting it leadership
culture through systems and policies that foster open communication, maintain
employees and partner privacy, and assure employee’s health and safety. Engro
people are some of the best in the best in the world with a shared passion to learn and
stretch beyond their limits. It is our people who make Engro a great company and an
exciting place to work.”

The company shows a good financial performance in every field, the sales of the year
2007 were Rs.23.2 billion which is higher than 2006 by 32%. The profit after tax was
3.15 billion which is a new record of the company and higher by 24% over the 2006
profit of Rs 2.55 billion.

Infact Engro Chemical Pakistan Limited is going towards success and making
progress day and night. They really do what they said “Growing with Pride”

35
Company Introduction
Engro Chemical Pakistan Limited is the second largest producer of Urea fertilizer
in Pakistan. The company was incorporated in 1965 and was formerly Exxon
Chemical Pakistan Limited until 1991, when Exxon decided to divest their fertilizer
business on a global basis and sold off its equity of 75% shares in our company. The
Employees of Engro, in partnership with leading international and local financial
institutions bought out Exxon’s equity and the company was renamed as Engro
Chemical Pakistan Limited. Engro is a public limited company listed on the Stock
Exchanges of Karachi, Lahore and Islamabad.

Engro accomplished significant progress not only in its base urea fertilizer business
but also in diversification projects. Urea production was increased from an annual
capacity of 270,000 tons in 1991 to 850,000 tons in 2001. Further expansion plans are
being developed to debottleneck plant capacity to 1.2 million tons in stages. In
addition, Engro has over thirty years of experience of fertilizer marketing in Pakistan
with an elaborate dealer network.

As part of our growth and diversification plans, we have established a $60 million
50:50 Joint Venture company named “Engro Vopak Terminal Limited” in 1995,
between Engro and Royal Vopak (formerly Royal Pakhoed), a Netherland based
company and one of the foremost terminal operators in the world. This joint venture
company has built a modern Jetty & Terminal at Port Qasim, Karachi for handling and
storage of bulk liquid chemicals, which was completed in 1997. This is a key
infrastructure for the development of capital intensive chemical industry in the heavy
industrial zone of Port Qasim, Karachi.

Engro has also formed another Joint Venture company with Mitsubishi and Asahi
Glass of Japan named “Engro Asahi Polymer & Chemicals Ltd.” to develop a
Polyvinyl Chloride (PVC) resin project at Port Qasim, Karachi, with an initial
capacity of 100,000 tons per year based on imported Vinyl Chloride Monomer. The
project has been successfully completed and commenced production in November
1999. The plant production is being marketed both in domestic and export market
under the brand name SABZ. Engro has 50% equity in this $74 million venture.

Construction of Engro’s 100,000 tons p.a. capacity NPK fertilizers plant at Port
Qasim at a cost of US $10 million was completed in 2001. The plant is in production
and considerably benefiting the country’s agriculture by providing balance nutrition to
improve farm yields. During the year 2004 the product’s generic name of NPK was
replaced by Zarkhez.

In April 2003 Engro acquired 51% intrest in the Automation & Control Division of
Innovative (Private) Limited, a Lahore (Pakistan) based company that provides
process control industrial solutions in the knowledge based services sector. The joint

35
venture has been named as "Innovative Automation & Engineering (Private)
Limited (IAEL)".The aquisition was part of Engro’s diversification strategy.

Our Seeds business completed four years of operations and during this period, the
Company has made significant progress in developing its own hybrid seeds of maize
and sunflower crops and launched two new maize hybrids of imported origin. All seed
products are being marketed under the brand name of Bemisal.

Engro has announced plans to set up a milk processing facility to produce and market
branded UHT milk, cream and other milk products. The plant to be located in Sukkur
is expected to cost Rs 1 billion and will be completed by March end 2006. All major
equipment is on order and civil construction is expected to commence soon. Engro
plans to procure raw milk supplies from Sindh and lower Punjab

Growing with Pride

35
 Mission Statement

Our mission is two fold:

۞ To help farmers maximize their farm produce by providing quality plant nutrients
and technical services upon which they can depend.

۞To create wealth by building new businesses based on company and country
strengths in Petrochemicals, Information Technology, Infrastructure and other
Agricultural sectors.

In pursuing the mission we shall at all times be guided in our conduct and decision
making by our Core Values.

Where we are going

Our Vision
To be the premier Pakistani enterprise with a global reach, passionately pursuing
value creation for all stake holders

35
 Values that we live
by

Core Values

Our employee’s performance can only flourish in a sound work environment. That is
why Engro is committed to supporting it leadership culture through systems and
policies that foster open communication, maintain employees and partner privacy, and
assure employee’s health and safety.

SAFETY, HEALTH & ENVIRONMENT

We will manage and utilize resources and operations in such a way that the safety and
health of our people, our neighbors. Our customers and our visitors are ensured. We
believe our safety, health and environmental responsibilities extend beyond protection
and enhancement of our own facilities, and we are concerned about the distribution,
use and after use disposal of our products.

ETHICS AND INTEGRITY

We do care how results are achieved and will demonstrate honest and ethical behavior
in all our activities. Choosing the course of highest integrity is our intent and we will
establish and maintain the highest professional and personal standards. A well-
founded reputation for scrupulous dealing is itself a priceless asset.

LEADERSHIP
We have leaders of high integrity, energy and enthusiasm who have the necessary
managerial, professional and people skills to inspire a group or an organization to set
high goals and achieve them willingly. We believe that leadership skills need to be
strengthened at all levels within our organization and that managerial and professional
impatience is a necessary foundation.

35
QUALITY & CONITNUOUSE IMPROVEMENT
We believe that quality and a relentless commitment to continuous improvement are
essential to our ongoing success. To this end, we define quality as understanding the
customer's expectations, agreeing on performance and value, and providing products
and services that meet expectations 100 percent of the time. Our motto is, "Quality in
all we do."

ENTHUSIASTIC PURSUIT OF PROFIT

Successfully discharging our responsibilities to our shareholders to enhance the long-
term profitability and growth of our company provides the best basis for our career
security and meaningful personal growth. We can best accomplish this by consistently
meeting the expectations of our customers and providing them with value.

EXTERNAL & COMMUNITY INVOLVEMENT

We believe that society must have industrial organizations that it can trust. Trust and
Confidence are earned by our performance, by open and direct communication, and
by active involvement in the communities in which we live and conduct our business."

CANDID & OPEN COMMUNICATIONS

We value communications that are courteous, candid and open and that enable each of
us to do our jobs more effectively by providing information that contributes to the
quality of our judgment and decision making. Effective communication should also
provide the means for gaining understanding of the company's overall objectives and
plans and of the thinking behind them.

ENJOYMENT & FUN

We believe that excitement, satisfaction and recognition are essential elements of a
healthy, creative and high-performing work environment. Having fun in our work
should be a normal experience for everyone.

INNOVATION
Success requires us to continually strive to produce break through ideas that result in
improved solutions and services to customers. We encourage challenges to the status
quo and seek organizational environments in which ideas are generated, nurtured and
developed.

INDIVIDUAL GROWTH & DEVELOPMENT

35
We strongly believe in the dignity and value of people. We must consistently treat
each other with respect and strive to create an organizational environment in which
individuals are encouraged and empowered to contribute, grow and develop
themselves and help to develop each other.

TEAMWORK & PARTNERSHIP

We believe that high-performing teams containing appropriate diversity can achieve
what individuals alone cannot. Consciously using the diversity of style. Approach and
skills afforded by teams is strength we must continue building into our organization.

DIVERSITY & INTERNATIONAL FOCUS

We value differences in gender, race, nationality, culture, personality and style
because diverse solutions, approaches and structures are more likely to meet the needs
of customers and achieve our business goals. Corporate Responsibility Report

35
 Board of Directors

Hussain Dawood
Chairman

Is Chairman of Engro Chemical Pakistan Limited, Dawood Hercules

Chemicals Limited, Central Insurance Company Limited and Dawood
Lawrencepur Limited. He is a Director on the Board of Sui Northern
Gas Pipelines Limited, Shell Pakistan Limited and Pakistan Centre for
Philanthropy.

His Social responsibilities include Chairmanship of the Board of

Directors of the Pakistan Poverty Alleviation Fund, which is one of the
largest World Bank financed social funds globally. He also serves as a
Director of the Pakistan Business Council, Beacon House National
University & Institute of Strategic Studies, is a Global Charter Member
of The Indus Entrepreneurs and a member of the World Economic
Forum in Davos. He is the Honorary Consul of Italy, in Lahore.

He is a MBA from the Kellogg School of Management, Northwestern

University, USA, and a graduate in Metallurgy from Sheffield
University, UK. He joined the ECPL Board in 2003.

Asad Umar
Chief Executive

Is President and Chief Executive of Engro Chemical Pakistan Limited

and Chairman of Engro Polymer & Chemicals Limited, Engro
Vopak Terminal Limited, Engro Foods Limited, Engro Energy
(Pvt) Limited, Engro Innovative Automation (Pvt) Limited and
Advanced Automation LP. He is also a member of the Board of
Directors of Oil & Gas Development Company Limited, Pakistan
Business Council and Member of the Board of Trustees of Lahore
University of Management Sciences (LUMS). He has held key
assignments at Engro and with Exxon Chemical in Canada. A Masters
in Business Administration, he joined the ECPL Board in 2000.

Arshad Nasar
Director

Is currently the Chairman and Chief Executive Officer of Oil & Gas

35
Development Company Limited. He holds a Masters degree in
Economics as well as Political Science. He joined ECPL Board in 2002.

Prior to his current assignment, he was the Country Chairman and

Managing Director of Caltex Oil Pakistan Limited and has served as a
Director on the Boards of Pakistan Refinery Limited and Pak Arab
Pipeline Company Limited. He is also a former President of the
American Business Council of Pakistan and has undertaken several key
assignments with Caltex Oil both in-country and overseas. Arshad is
also serving as a Director on the Boards of PIDC and Mari Gas
Company Limited.

Asif Qadir
Director

Is a Senior Vice President of Engro Chemical Pakistan Limited and

Chief Executive of Engro Polymer & Chemicals Limited. He is
Chairman and Chief Executive of Engro Polymer Trading (Pvt)
Limited and a director of Engro Energy (Pvt) Limited. He has held
key assignments at Engro and with Exxon Chemical Canada. A
Chemical Engineer by qualification, he joined the ECPL Board in 1997.

Isar Ahmad
Director

Is Group Director, Strategy and Business Development at the Dawood

Group. He has had the experience of working in senior management
positions in multinational and large Pakistani Organizations. He held the
position of Finance Director, Supply Chain Director and Head of
Business Unit at Reckitt Benckiser (previously Reckitt & Colman) and
was the Managing Director Haleeb Foods (previously CDL Foods
Limited). He has also been the Financial Advisor at Indus Motor
Company Limited. He holds a Masters Degree in Economics and is a
Chartered Accountant from the Institute of Chartered Accountants of
England & Wales, he joined the ECPL Board in 2006.

Khalid Mansoor
Director

Is a Senior Vice President of Engro Chemical Pakistan Limited. He

has held various key assignments at Engro and with Esso Chemical
Canada including leading various major expansion projects. He is a
Director on the Boards of Engro Polymer & Chemicals Limited and
Chief Executive of Engro Energy (Pvt) Limited. A Graduate in
Chemical Engineering, he joined the ECPL Board in 2006.

35
Khalid Siraj Subhani
Director

Is a Senior Vice President of Engro Chemical Pakistan Limited. He

has held key positions at Engro Chemical and with Esso Chemical
Canada. He is a Director on the Boards of Engro Vopak Terminal
Limited and Engro Polymer & Chemicals Limited. A Graduate in
Chemical Engineering, he joined ECPL Board in 2006.

Ruhail Mohammed
Director

Is a Vice President and Chief Financial Officer of Engro Chemical

Pakistan Limited. He has worked for many years in various senior
positions in Pakistan, UAE and Europe. He is on the Boards of Engro
Foods Limited, Engro Energy (Pvt) Limited, Engro Innovative
Automation (Pvt) Limited, Sigma Leasing Corporation Limited. A
Masters in Business Administration in Finance, he joined ECPL Board
in 2006.

Shahzada Dawood
Director

Is the Chief Executive of Dawood Hercules Chemicals Limited. He is

also a Director of Sui Northern Gas Pipelines Limited and a number of
other companies. A Masters in
Global Textile Marketing and an LL.B, he has been on the Board of
ECPL since 2003.

Shabbir Hashmi
Director

Joined Actis Assets Limited (formerly CDC Group Plc) in 1994. He

leads private equity investment activities out of Karachi for Pakistan
and Bangladesh. Prior to joining Actis he worked for 8 years with the
World Bank and US Aid specialising in the energy sector. He is an
Engineer from DCET, Pakistan and holds an MBA from JF Kennedy
University, USA. He has previously been on Engro’s Board as CDC
nominee in 2001/02 and rejoined the Board in 2006 as an independent
director.

35
 Hierarchy Structure

President

Company
Secretary

Vice Vice Special Manager Manger Vice Vice

Projects/ President
President president Expansion
Internal Public President Manufacturin
HR Finance Projects Audit Affairs Marketing g

Compensation
and Benefits Accounting Sales Production

Planning
Recruitment and Maintenanc
Treasury es
Developme
nt

Training and Industrial Technical Process

Development Trade Services Engineering

Instrumental
Purchasing / Fleet

Administrati
Legal on

35
 PRODUCT PORTFOLIO

• Fertilizers

A specific product line

that focuses on balanced
crop nutrition and higher
yield for the farmer

Nitrogenous Fertilizers

ENGRO Urea - A trusted name with farmers

35
Compound Fertilizers

ENGRO Zarkhez- Towards Balanced Fertilization

Phosphatic Fertilizers

ENGRO Di-Ammonium Phosphate (DAP) &

Zorawar - Leading Phosphatic fertilizers

Engro Urea

ENGRO UREA is a trusted high grade fertilizer

containing 46% N, with moderate hygroscopic. It has
a pH value of 6.8 (organic molecule) and is suitable
for all crops on all soils. Engro Urea is an excellent
source of Nitrogen for the vast majority of cultivated
soils of Pakistan.

Engro DAP

35
Engro DAP contains 46% P2O5 and 18% N. More
than 90% of P is water soluble. It has a pH value of
7.33 and is a good source of P fertilizer for all crops.
It is an equally good source on problem soils (saline
sodic) with coarse texture. On an overall basis it suits
to about 90% soils of the country.

Engro Zorawar

Engro Zorawar is one of the highest grade phosphatic

fertilizers. It is acidic in reaction (pH >= 3.5) and
contains 52% P2O5 of which more than 90% is water
soluble, while the rest is citrate soluble. In addition to
P, it contains 12% N, 2% sulphur and 1% calcium. It
is a good fertilizer for all crops on all soils of
Pakistan and produces excellent results on alkaline
soils, due to its acidic nature.
The acidic pH of Engro Zorawar also tends to slow
down the rapid conversion of soluble P to water
insoluble compounds, keeping it plant available for a
greater period of time.

Engro Zarkhez

Engro Zarkhez is homogenously granulated fertilizer which maximizes crop yield by

providing balanced nutrition for a wide variety of crops through the uniform
availability of Nitrogen, Phosphorous and Potassium. Engro Zarkhez grades are
specially produced to suit the requirements of individual crops and soils, and provide
convenience to the farmer through ready availability of of precise quantities of
different nutrients.

35
• Chemical Handling & Storage

35
 Developing Pakistan's First
Cyrogenic Storage Facility

Chemical Handling & Storage by Engro Vopak Terminal

Limited
A state of the art jetty and terminal at Port Qasim, Karachi for handling and storage of
LPG and bulk liquid chemicals.

Storage Capacity 69,000 m3

Number of Tanks 20
Draft Sea Berth 10 meters
Vessels up to 75,000 dwt (currently 45,000 dwt) at
Jetty Capacity
13 meters draft
Access Sea/Road/Pipeline
Products Handled & Stored Paraxylene
Acetic Acid
Phosphoric Acid (Handling only)
Vinyl Chloride Monomer
Acrylonitrile
Liquefied Petroleum Gas
Mono Ethylene Glycol

• PVC Resin

35
 Expansion and
backward integration

PVC Resin by Engro Polymer & Chemicals Limited

Polyvinyl chloride (PVC) Resin: A synthetic resin, composed of repeating units of

vinyl Chloride. It is very versatile and is used in a wide variety of products
1. SABZ PVC AU-58
AU-58 is a medium-low molecular weight suspension resin. It offers high fusion rate
in processing, and has a narrow particle size range. It is very low in fish-eyes, gel
count and foreign matter and has excellent heat stability and clarity. It is
recommended for transparent and opaque rigid / semi-rigid PVC applications.

Applications
Rigid PVC sheet, PVC bottles, injection moulded PVC products like non-pressure
PVC pipe fittings and conduit fittings, rigid PVC extruded film and sheet.

2. SABZ PVC AU-60

AU-60 is a medium-low molecular weight suspension resin. It offers high fusion rate
in processing and has a narrow particle size range. It is very low in fish-eyes, gel
count and foreign matter and has excellent heat stability and clarity. It is
recommended for transparent and opaque rigid PVC applications.

Applications
Rigid PVC sheet, PVC bottles, injection moulded PVC fittings for pressure
application, rigid PVC extruded film and sheet, PVC welding rods.

3. SABZ PVC AU-67S

AU-67S is a medium molecular weight suspension resin. It has a porous particle
structure and large interior surface. It has high plasticizer take up and absorption rate.
On mixing, it results in free-flowing powder with dry feel. It is very low in fish-eyes
and foreign matter. This grade has been specially designed for both transparent and
opaque plasticized applications.

Applications
PVC shoes, sandals and soles (expanded and compact), PVC film, sheet and artificial
leather, PVC cables, PVC garden hose and tubes with reinforcements, tubular film
and tubing, PVC flooring and tiles, PVC water stops / expansion joints and plasticized
PVC compounds.

35
4. SABZ PVC AU-67R
AU-67R is a medium molecular weight suspension resin. It has a narrow range of
particle size distribution, high bulk density, and excellent dry-flow properties. This
results into a high and uniform production rate in the extrusion process. This grade
has been specially designed, and is recommended for rigid PVC applications.

Applications
Rigid PVC pipes, conduits and ducting,, PVC profiles such as doors, windows and
other sections, PVC corrugated pipes, PVC shrinkable film and also twist wrap candy
film, rigid PVC compounds for extrusion.

5. SABZ PVC AU-72

AU-72 is a high molecular weight suspension resin. It has a high plasticizer take up
and absorption rate. On mixing, it results in free-flowing powder with dry feel. It is
free from gels and foreign matter. It has superior dielectric properties and physical
strength, which makes it an ideal choice for electric insulated PVC cables.

Applications
PVC cables, flexible calendared PVC film, sheet and leather, flexible PVC extrusion
and injection moulded products.

• Power Generation

35
 Our 217 MW Power Plant.

Power Generation by Engro Energy Limited

Engro identified a Power Project based on low BTU, high H2S gas from Qadirpur gas
field. The project is unique as it will convert low BTU high sulphur content permeate
gas, which is currently being wasted and flared, into 217 MW electric power

• Industrial Automation

35
 Providing process control
solutions to your industrial units

Industrial Automation By Avanceon (formerly known as Engro

Innovative Automation Pvt. Limited)

Market leader in industrial automation business providing process control solutions to

Industrial units. It offers Power & Energy Management Software solutions as well as
High end Software that integrate production and business application.

Human Machine Interfaces

Variable Frequency Drives
Distributed Control System
Industrial & ERP Software
Non-Contact Online Measurement
Vibration Monitoring
Analytical & Combo Solutions
Weighing Conveyers
Motors
Field & Process Instruments With other Sensors
Security & Monitoring Solutions
Control Valves
Combustion Products
Programmable Logic Controllers

• Food

35
Foods by Engro Foods Limited

Olper’s: Standardized at 3.5% fat, Olper’s is a premium, UHT all-purpose milk.

Olwell HCLF: (High Calcium, Low Fat) Olwell is a premium quality milk for the
health conscience.

Olper’s Cream : UHT Cream standardized at 40% fat

Tarang: Liquid tea whitener

Communication Network

35
An understanding of managerial communication isn’t possible without looking at the
fundamentals of organizational communication. Communication within an
organization is often described as formal or informal.

Formal Communication:
Communication that follows the official chain of command or is required to do one’s
job.

Informal Communication:
Communication that is not defined by the organization’s structural hierarchy.

Communication Network:
The vertical and horizontal flows of organizational communication can be combined
into a variety of patterns called communication networks.

As a manager, which network should you use? The answer depends on your goal. No
single network is best for situations. If you’re concerned with high member
satisfaction, the all channel network is best; if having a strong and identifiable leader
is important, the wheel facilitates this; and if accuracy is most important, the chain
and wheel networks works best.

In Engro Pakistan all channel network is working because they think that employees
are our most important asset of our organization. All the company policies and
information is shared with the employee that’s why they are going to progress. Engro
Pakistan is one of the leading organizations in Pakistan and has a good
communication network within the organization as well as outside the organization.
They are always in touch with employees and shareholders for the betterment of
organization. From better communication network there logo “Growing with Pride”
is fully understandable.

They also communicate with the farmers for better production of crops. More than 10
lines are answering the phone calls. Infact Engro has a very good communication
network so this is also a reason for their success.

35
 All Channel Communication Network

As we see in the diagram that no single person have the authority to make a decision.
In All Channel Network all the members have equal power to give decision in
decision making. In this channel information goes to all employees quickly and have
high member satisfaction but the drawback of this channel is that no urgent decision
are made, it consume a lot of time to make a decision.

35
 Management Functions
Before explaining four functions of management, we would like to define that what
management.

Simply speaking, management is what managers do. But that simple statement doesn’t
tell us much does it? A better explanation is that management involves coordinating
and overseeing the work activities of others so that their activities are completed
efficiently and effectively.

According to the functions approach, mangers perform certain activities as they

efficiently and effectively coordinate work of others. What are these activities or
functions? These are Planning, Organizing, Leading and Controlling. Let’s briefly
look at each function with the management of Engro Pakistan.

1. Planning:
In Planning managers engage in planning, they define goals, establish strategies for
achieving those goals and develop plans to integrate and coordinate activities.
In Engro Pakistan all the mangers are involve in planning function. The chairman
with the help of all the directors set some long term as well as short term goals, and
then the directors and manager make the strategies to accomplish such goals.

2. Organizing:
Managers are also responsible for arranging and structuring work to accomplish the
organization’s goal. This is known as organizing. When mangers organize, they
determine what tasks are to be done, who is to to do them, how the tasks are to be
grouped, who reports to whom, and where decisions are to be made.
In organizing managers at Engro allocate and arrange human and non-human
resources so that their plan can be carried out successfully. Like it allocate the
machinery and advanced technology in production unit that must be a relating to
accomplish our goals.

3. Leading:
Every organization includes people, and manger’s job is to work with and through
people to accomplish organizational goals. This is leading function. When mangers
motivate subordinates, help resolve work group conflicts, influence individuals or
team as they work, select the most effective communication channel, or deal in any
way with employees behavior issues, they are leading.
Managers at Engro influence others work behavior. Labours and subordinates to get
optimum task achievement even by satisfying them accordingly.

4. Controlling:
The final management function is controlling. After the goals and plans are set
(Planning), the tasks and structured arrangements determined (Organizing), and the
people hired, trained and motivated (Leading), there has to be some evaluation of
whether things are going as planned. To ensure that goals are being met and that work

35
is being completed as it should be, Engro’s manager regulates organizational
activities so that actual performance conforms to expected organizational standards
and goals e.g. Engro’s goal is to help farmers maximize their farm produce by
providing quality plant nutrients and technical services upon which they can depend,
the mangers must monitor and evaluate performance. Actual performance must be
compared with the previously set goals. If there are significant deviations, it’s
management’s job to get work performance back on track.

According to Mintzberg Theory

So far managers are performing the roles of symbolic duties, like figurehead, liaison
etc.
Managers perform informational and decisional skills applying inside and outside the
organization.

a)Interpersonal Roles

Figurehead at Engro performs symbolic duties of a legal and social nature. They
are Board of Directors, Chief Executives, and Financial Managers etc.

Leader builds relationship with subordinates and communicates with, motivates

and coaches them that how all employees can improve their professional skills in
Engro.

Liaison maintains network of contacts outside work unit who provides help and
information to other organizations and build good relation for Engro Sales
Promotion.

b)Informational Role

Monitor at Engro seeks internal and external information about issues affecting
organization.

Disseminator at Engro transmits information internally obtained from either

internal or external sources, so that all employees go through by all current
situations.

Spokesperson in Engro transmits information about the organization to outsiders

so people and other organizations can reach its features, benefits etc.

c)Decisional Role

Entrepreneur acts as initiator designer and encourager of change and innovation

in Engro to promote diversity and best selling.

Disturbance handler Takes corrective action when organization faces important,

unexpected difficulties at Engro like Technical or Mechanical fault, Labor union
issues, Labour health issues etc.

35
Resource Allocator in Engro distributes resources of all types including time,
funding, equipment and human resources so that services with in the organization
and out side the organization should be manage in proper order to get maximum
output from given resources and material.
Negotiator at Engro represents the organization in major negotiation affecting the
manager’s area of responsibility means negotiator talk to external affecting factors
to maintain and improve the Engro’s alacrity.

Growing with Pride

35
 Challenges and Issue Faced
In the year 2008, Engro’s focus will be on flawless implementation of the significant
growth initiatives in al businesses, viz., fertilizer, food, energy, chlor-vinyls, chemical
storage and industrial automation. Engro has also put in place plans to continue to
source and retain quality people to sustain its growth ambitions.

Urea demand is expected to be rebusting whilst phosphates demand is expected to be

affecting by high international prices.

The Board would like to take the opportunity to express its appreciation to the dealers,
customers and employees for their dedication throughout the year. The Board also
acknowledges the support and corporation received from the Government, Joint
Venture, Partners, Bankers, Suppliers, Contractors and other Stakeholders.

These are the following challenges and issues faced by the organization at starting:

Shortage of irrigation water

Both during the rabi (winter) and kharif (summer) seasons for crop sowing, which led
to reduced farmer income. As a result, overall urea off-take fell by 1% to 4.0m tons
whereas demand for DAP (Di-Ammonium Phosphate) fertiliser dropped by 5% to
1.2m tons. ECPL faced a marginal decline in urea volumes (0.6%) and a 17% decline
in volume sales of imported DAP fertilizer. The sales drop in case of DAP is
attributable to drought conditions and insufficient supply sourcing in a period of
uncertainty relating to GST levy in Pakistan. The Govt. imposed a 15% GST on the
selling price of DAP and other fertilizers w.e.f. Sept 02, 2001.

Increase in Gas Price

Fertilizer Policy was announced in Aug ’02 which maintained subsidy on feedstock
(gas used as raw material - constituting 20% of COGS/ton) with fixed feedstock price
increases stipulated for the next 5 years. However, fuel stock (gas used for running the
plant - constituting 40% of COGS/ton) prices would continue to be deregulated and
adjusted every 6 months. During FYE 01, gas price increase was much lower as
compared to previous years as there was no increase in feedstock prices while
fuelstock went up by 15%.

Start-up losses on NPK operations

ECPL expanded into 100k NPK (blended fertilizer) plant, which came online in Apr
’01. However, initial teething problems limited sakes to 24k tons against production
of 31k tons. NPK business showed a loss of PKR 109m. However, the plant is

35
currently operating at 80% of its design capacity and some reductions in operating
expense have been achieved.

Loss of Production
ECPL’s urea production during the year was down by 2% to 790k tons on account of
certain production issues which were significantly smoothened towards the end of the
year.

Competitive Strategies
Before formulation an effective strategy for getting competitive edge, the manger
must conduct competitive analysis. This involves assessing both environmental and
organizational factors influencing ability to compete effectively.

This competitive situation could be find out with help of SWOT analysis:

Strengths

• Strong, professional management (management practices & principles

inherited from Exxon Chemicals USA, after the management buyout in 1991).
• Subsidized gas pricing during the last 10 years has resulted in strong
accumulated reserves. Low gearing will provide financial strength to the
Company in coming years.
• 50% joint venture, Engro Vopak, has completed fourth year of profitable
operations. Future dividend income will hedge against ECPL’s core-business
risk.

Weakness

• While Engro Vopak is performing satisfactorily, deterioration in operating

results of Engro Asahi could result in Asahi calling on financial support from
ECPL.
• Engro Urea does not command the same market premium as competitor Fauji
Fertilizer’s product ‘Sona’. However, Sona urea is sold mainly in the Punjab
province, whereas Engro has a strong niche in Sindh province.

Opportunities

• New petrochemical projects will help improve Group profitability through 1)

clear synergies, and 2) reduction in business risk through capturing a larger
segment of the value-addition chain.
• Agriculture business projects like blended fertilizers, hybrid seeds etc.

Threats

35
 • Dumping of imported fertilizer in the local market. Government action is often
protracted. During 1999, ex-Soviet states dumped huge quantities of urea in
Pakistan. Even though the government imposed 10% regulatory duty, it was
too little and too late to be effective.
• Takeover by the Burewala Group. The takeover attempts may subside,
however the management of Engro Chemicals may become too drawn into this
battle while it continues, causing reduced focus on operations.
• Droughts directly affect demand. Engro urea sells primarily in southern part of
the country where the droughts are more frequent.

When we talk about our competitor in the market, our main competitor is FFC.

FFC was incorporated in 1978 as a private limited company. This was a joint venture
between Fauji Foundation (a leading charitable trust in Pakistan) and Haldor Topsoe
A/S of Denmark. FFC-Jordan Fertilizer Company Limited is a joint venture between
FFC and Jordan Phosphate Mines Co. Jordan.

The largest urea manufacturing facility of Pakistan consisting of two ammonia/urea

units owned by FFC is built at Goth Machhi in district Rahim Yar Khan. Goth Machhi
is situated at a distance of 2 kms from the main Lahore-Karachi highway and is
adjacent to the main railway line. The two plants are based on natural gas from Mari
Gas Fields and have an annual designed production capacity of 1.3 million tons of
urea.
FFC commenced commercial production of urea in 1982 with annual capacity of
570,000 metric tons.

Through De Bottle Necking (DBN) program the production capacity of the existing
plant increased to 695,000 metric tons per year.

Production capacity was enhanced by establishing a second plant in 1993 with annual
capacity of 635,000 metric tons of urea.

FFC participated as a major shareholder in a new DAPS/Urea manufacturing complex

with participation of major international/national institutions. The new company
(FJFC) commenced commercial production with effect from January 01, 2000. The
facility is designed to produce 551,000 metric tons of urea and 445,500 metric tons of
DAP.

Fauji Fertilizer Company currently has 1,769 employees. With sales of 16.79 billion
Pakistan

35
The following tables provide a comparison of operating performance of ECPL with its
closest competitor and market leader - Fauji Fertilizer Company:

Engro Chemical Fauji Fertilizer

Market 19%
share
Capacity 850,000 tons per annum (2
plants)
Products Aside from sale of Engro
urea, ECPL also sells
imported DAP, NP, MOP and
NPK fertilizers and hybrid manufactures granular urea &
seeds.
Brand Engro Urea – popular brand
in southern part of the
country.
Vision To become a diversified
chemical company operating
internationally. A number of
projects involving backward
& forward integration are
under consideration.
40%
1,300,000 tons per annum (1
plant)
Sells prilled urea.
Affiliate (FFC Jordan)
DAP.
Sona urea – very popular
product, esp. in northern
Pakistan. Sona is granular
urea which is perceived to be
better.
Setting up industrial units in
the fields of petroleum
refining, paper & pulp,
mineral acid, & off-shore
fertilizer manufacturing.

Government policies
In Mar ’02, the Govt. imposed 15% GST on selling price of urea (PKR 6,660/ton)
with the entire impact allowed to be passed on to the customer. In response to the

35
above, prices in fact, have increased by 5.7% since March which is considered
sufficient to protect margins.

Given the decline in domestic fertilizer off-take, the Govt. has allowed export of
0.23m tons of urea in order to reduce inventories. However, exports at current prices
are not a viable option. The local urea ex-factory price in FOB terms currently stands
at US$ 120/ton. Add US$6-8 for local transportation to port and another US$20
freight to Middle East. Thus, US$146-148/ton international price would be required to
make exports viable. However, Middle East bagged prices currently stand at US$ 112-
115/ton.

To date, the fertilizer industry in Pakistan has been subject to preferential treatment in
the form of subsidized gas prices. However, in line with IMF conditionality aimed at
de-regulation, the Fertilizer Policy announced in Aug-01 envisages a gradual
withdrawal of subsidy offered to the industry

Suppliers
Mari Gas Company is the sole gas supplier to ECPL, with the latter having a total gas
allocation of 103 MSCFD. Payments to Mari Gas are made on a fortnightly basis.

The competitive analysis for Engro Chemical Pakistan is as fallows

Porter’s Competitive Forces Model:
Porter’s Competitive Forces model analyzes the nature and
intensity of competition in a given industry in terms of five major
forces.
• Rivalry:

Engro Chemical Pakistan has rivalry with the other

fertilizer manufacturing companies in the fertilizer
Industry of Pakistan. The companies that offer rivalry to
Engro Pakistan are
i. Fuaji Fertilizer Company Limited
ii Dawood Hercules
iii Pak Saudi Fertilizer Limited
iv Pak Arab Fertilizer

Various competitive tactics among rivals lower prices that

can be raise costs of doing business.

• Bargaining Power of Customers:

At Engro Chemical Pakistan Limited there is no

customer power of bargaining, because the company is
already giving good quality at a reasonable rate.

• Bargaining Power of Suppliers:

35
 In the fertilizer industry of Pakistan there is comparison
between the rivals in prices. But as Engro Pakistan is
not an autonomous body in manufacturing their products
so they face encounter bargaining power of suppliers.

• Threat of substitute products:

Engro Pakistan as threat from their rivals in the industry,

but they maintain their quality standards and
manufacturing status at a relatively affordable rate.

Culture

Our employees bring

expertise and
dedication to the
workplace

Organizational Culture:

The shared values, principles, traditions and ways of doing things that influence the
way organizational members act.

Sources of Organizational Culture:

 The organization’s founder (vision and mission).

 Past practices of the organization ( the way things have been done )
 The behavior of top management.

Our people and our culture drive us to achieve greater success. We look for new and
exciting ways to return values to our customers and our shareholders.

The culture of Engro consists of Two Factors:

1. Our People.
2. Quality and Training.

1. Our People:

More than 700 employees bring expertise and dedication to the workplace. We value
each employee, value their inputs and view. Continuously striving to become

35
employer of choice, we provide a workplace where people feel confident, valued and
inspired.

2. Quality and Training:

Employer development is one of the pivotal areas for organizational development. To

organizational competence levels, new training programs encompassing performance
management, leadership and competency development are introduced.

Improvisation
through Six Sigma:
the legend leads
again

Engro is among the first Pakistani companies implementing six sigma across all areas
and utilizing it as a management system to execute its strategic objectives. Among the
focus areas, employee development is the most critical and six sigma is leveraged to
help bring out the best in our people. Employees will drive improvements in other
areas; speed, innovation, perfection and in becoming world class professionals.

Six Sigma’s robust problem solving methodology and statistical toolkit allows the
company to benchmark processes against global standards in a language that is
comparable across any industry or function. It helps ensure that Engro sustains its
promise of delivering high quality products and services to its customers – on time,
every time.

The learning does not stop here. The Company has a range of additional training
programs, both core management and technical, which are used on a regular basis to
develop skills and knowledge. In addition, specific one-off programs may be
developed on a need basis. Alternatively, individuals may attend externally run
programs and there may be cases where learning by planned job experience is the best
answer. Employees contributions to assessing their own training needs are welcomed
as are the suggestions for suitable programs.

How employees learn culture:

• Stories Engro is best known for its quality and diversification. The customers
are satisfied from products. It is our people who make Engro a great company.
• Rituals In Engro all the employees are fully dedicate to their workplace and
our tradition is diversification and our core values.

35
 • Symbols Engro symbols motivate the employees which is “ Growing with
Pride”
• Language In Engro mostly that language is used which is easily
understandable by the employees, so the employees easily understand the
culture of the organization.

Financial Position of the Company

Stakeholders:

Any constituencies in the organization external environment that are affected by the
organization decision and actions.

These are the stakeholders of Engro Pakistan

• Employees 1664
• Contract Employees 3005
• Customers 68,000
• Consumers 3,100,000
• Vendors 3500
• Shareholders 11,365
• Dairy Formers 51,000
• Students 4300
• Patients 32,500
• Total Lives Touched 3,275,334

Financial Positions in Last Five Years:

See our Progress

35
 Highlights of Year 2007

1. Sales for the year were Rs. 23.3 billion, higher by 32% due mainly to higher
turn over of Phosphates and Zarkhez.
2. Profit before tax at Rs. 4.2 billion was 23% higher than 2006 principally
because of higher other income from joint ventures and subsidiaries.
3. Profit after tax was 3.15 billion which is a new record of the company and is
higher by 24% over the 2006 profit of Rs. 2.55 billion.

Five Year at Glance

Million Rupees 2007 2006 2005 2004 2003

Net sales 23183 17602 18276 12796 11884
Operating expense 3279 2756 2641 2233 2534
Profit before tax 4235 3445 3220 2315 2323
Profit after tax 3155 2547 2319 1611 1557
Employee costs 1050 950 804 795 749
Taxes, duties & development
5890 4633 4162 3911 3457
surcharge
Worker’s fund 316 251 215 156 168
Property, plant & equipment 6109 6319 6351 6492 6648
Capital expenditure 8024 391 377 520 370
Long term investment 4108 1480 748 - 85
Long term liabilities 15423 1800 2890 2580 3236
Net current assets 11132 2042 2211 1618 1796
Dividends and Shares
Shareholders funds 15482 9370 7376 6586 6199
Shares outstanding at year end 193 168 153 153 153
Dividend per share. Rs. 7.0 9.0 11.0 8.5 8.0
Dividend payout rate 41% 58% 77% 81% 79%
Bonus shares _ _ _ _ _
(thousand matric tons)
Engro urea production 954 969 912 870 955
Engro urea sale 874 945 840 891 930
Zarkhez/ Engro NP production 125 108 157 121 72
135 116 143 114 86 35
 Growing with Pride
Why Engro is Successful?

Engro has never been a company to rest on its laurels. Our people and our culture
derive us to achieve greater success. We look for new and exciting ways to return
value to our customers and our shareholders. It’s tough and demanding but also fun
and always interesting. You will have opportunity to succeed – as an individual and as
part of a team.

Our business gives you flexibility for change the opportunity to learn about new
markets and provides unparalleled career options. Engro people are some of the best
in the world with shared passion to learn and stretch beyond their limits.

It is our people who make Engro a great company and an exciting place to work.

Key Success Factors

• Brand leadership: Farmers’ perception plays a major role in determining a

brand’s success;
• Manufacturing technology: Newer technology helps achieve low-cost
leadership within the industry
• Economies of scale.
• Our core values.
• Diversification of our business.
• Our corporate culture

35
Engro Chemical Pakistan has gone strength to strength, reflected in its consistent
and enviable financial performance, growth of the core fertilizer business
diversification into our fields. Its performance & outlook is following the declared
vision, “To be the premier Pakistani enterprise with a global reach, passionately
pursuing value creation for all stake holders”

Conclusion:
In the conclusion section we first say that Engro is doing good business. If investors
feel that Pakistan is not a good place to invest they look at the success of the Engro
Pakistan, how they are doing business in that situation when there is economic crisis,
bad position of the stock exchange.

Engro Chemical Pakistan Limited is the first company in history of chemical industry
who makes fertilizers as well as food products together. First they only manufactured
fertilizers only but they diverse their business into many fields like, Engro Vopak
Terminal Limited, Engro Polymer & Chemical Limited, Engro Energy Limited, Engro
Innovative Automation Pvt. Limited, and Engro Foods Limited.

The culture of the company is very outstanding. The culture is maintained in such a
way that more values returns to their customers and shareholders. More than 700
employees bring expertise and dedication to the workplace.

The management of the organization is very professional and they are ready to
compete all the challenges. The company financial performance is very good and
continusely increased. Infact Engro Chemical Pakistan Limited is growing by leaps
and bound and they prove that what they say,” Growing with Pride”

References:

For this project we visit the website of the company and collect data and also we visit
Engro North Zone to collect information about the management. These are the
following references from where we gather information.

35
• www.engro.com,pk

• www.engrozarari.com

35