ADVICE FOR INVESTORS

THE INVESTORS ARE STRONGLY ADVISED IN THEIR OWN INTEREST TO CAREFULLY READ THE CONTENTS OF THE PROSPECTUS ESPECIALLY THE RISK FACTORS AT PARA 4.4 BEFORE MAKING ANY INVESTMENT DECISION.

PROSPECTUS
Public Offer of Rated, Listed and Secured Term Finance Certificates (Engro Rupiya Certificates) of PKR 4,000 Million Inclusive of Green Shoe Option of PKR 2,000 million

ENGRO CORPORATION LIMITED
(FORMERLY ENGRO CHEMICAL PAKISTAN LIMITED)
3-YEAR FIXED RATE INSTRUMENT PROFIT @ 14.5% PER ANNUM (FIXED)

Instrument Rating “AA” (Double A) Entity Rating “AA” (Double A) By The Pakistan Credit Rating Agency Limited (“PACRA”)

Public Subscription between
October 15, 2010 – January 14, 2011 (Both Days Inclusive)
During Banking Hours

Date of Publication of this Prospectus is October 06, 2010

ENGRO CORPORATION LIMITED TFC PROSPECTUS
GLOSSARY ECL or Company or Issuer or Engro BoD CDCPL CDS CEO CVT Date of Investment Engro Corporation Limited Board of Directors Central Depository Company of Pakistan Limited Central Depositary System Chief Executive Officer Capital Value Tax The date when investor‟s subscription money is received by any of the Company‟s Bankers to the Issue Earnings per Share Government of Pakistan The period from the Date of Investment till the Issue Date Initial Public Offering Independent Power Producer February 01, 2011 which will be the first day after the interim profit payment Issue of TFCs through this Prospectus Karachi Stock Exchange (Guarantee) Limited Face value of the TFCs which is outstanding and payable to the TFC Holders at any point of time (excluding the TFC scrip for which payment of the redemption amount has been made) Pakistan Credit Rating Agency The option to redeem, in full or in part, the outstanding face value of the TFCs, which may be exercised by the TFC holders anytime after the Date of Investment provided that in case of partial call option the amount to be redeemed should either be PkR 5,000/- or in multiples thereof Term Finance Certificate IGI Investment Bank Ltd

EPS GoP Interim Period IPO IPP Issue Date

Issue KSE OUTSTANDING ISSUE PRICE

PACRA Put Option

TFC TFC Trustee

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ENGRO CORPORATION LIMITED TFC PROSPECTUS
WHT Withholding Tax

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ENGRO CORPORATION LIMITED TFC PROSPECTUS TABLE OF CONTENTS Page Number PART – I 1. HISTORY AND PROSPECTS PART – V 5. APPROVALS. MEMORANDUM OF ASSOCIATION PART – XII 12. SIGNATORIES TO THE PROSPECTUS PART – XI 11. MISCELLANEOUS INFORMATION PART – IX 9. CONSENTS AND LISTING ON THE STOCK EXCHANGE PART – II 2. COMMISSIONS. APPLICATION FORM PART – XIII 13. MANAGEMENT OF THE COMPANY PART – VIII 8. BROKERAGE AND OTHER EXPENSES OF THE ISSUE PART – IV 4. TRUSTEE AND SECURITY PART – VII 7. REDEMPTION NOTICE 7 9 17 18 23 79 83 90 93 97 98 104 106 4 . TERM FINANCE CERTIFICATES AND RELATED MATTERS PART – III 3. FINANCIAL INFORMATION & CREDIT RATING REPORT PART – VI 6. APPLICATION AND ALLOTMENT INSTRUCTIONS PART – X 10.

Semi Annually From the Date of Investment Rs. 5. 2012 July 31. 2013 January 31.11) Upto PkR 4.a. 2010 January 14. 2012 January 31.or in multiples thereof 3 months Date of opening of subscription period Date of closing of subscription period Date of Interim Profit Payment Issue Date First Profit Payment Second Profit Payment Third Profit Payment Fourth Profit Payment Fifth Profit Payment Sixth and Final Profit Payment Principal Repayment in full Maturity Date Allotment basis Holding of TFCs First come first served TFCs may be held either in physical form or in book entry (scripless) form through CDS of CDCPL 0. 2013 July 31. 2011 February 01.5% p.000 million) 3 years from the Issue Date 14. 2014 January 31. 2014 January 31.000 million (inclusive of a Green Shoe Option of PkR 2. 2011 July 31.000/.ENGRO CORPORATION LIMITED TFC PROSPECTUS Summary of the Issue Issuer Purpose of the Issue Engro Corporation Limited (“Engro”) The proceeds of the Issue will be utilized to finance the cash needs of Engro Corporation for investments in its subsidiaries (For details refer to para 2.9% of the principal amount in the thirty-sixth (36th) month (For details refer to 1 Issue Amount Tenor Profit Rate Profit payment frequency Profit Accrual Minimum Investment Denomination of TFC Subscription Period TFC Schedule October 15.3 5 .000/Rs. 25. 2014 Principal Redemption 1 Please refer to para 2. 2011 January 31.1% of the principal amount in five equal semi-annual installments in the first thirty (30) months and the remaining 99. 2011 January 31.14.

with prior written consent of the Trustee. Askari Bank Limited.14. JS Bank Limited.A. The Company may. Bank Al Habib Limited. Standard Chartered Bank (Pakistan) Limited. Habib Bank Limited. United Bank Limited.5) “AA” (Double A) by PACRA (For details refer to para 5. NIB Bank Limited.ENGRO CORPORATION LIMITED TFC PROSPECTUS para 2.5) For details refer to para 4.1) MCB Bank Limited. Allied Bank Limited.2) The TFC has been secured by way of first ranking floating charge over all the present and future movable properties (including investments) of Engro Corporation Limited but excluding present and future trade marks and copyrights of ECL and excluding its shares in Engro Energy Limited and Engro Polymer & Chemicals Limited (“Charged Assets”) at 125% of the outstanding principal amount. create further first ranking pari passu charges over the Charged Assets (For details refer to para 6. Bank Alfalah Limited.4 Karachi Stock Exchange (“KSE”) None None Security Bankers to the Issue Trustee Registrar & Transfer Agent Entity Rating Instrument Rating Risk Factors Listing Pre-IPO Underwriting 6 . Pakistan IGI Investment Bank Limited (“IGI”) Central Depository Company of Pakistan Limited (“CDCPLRATING”) “AA” (Double A) by PACRA (For details refer to para 5. Citibank N. These charges have been created in favor of IGI Investment Bank Limited (“Security Trustee”) for safeguarding interest of the TFC holders.14) Put Option (Early Redemption) The investors/TFC holders may ask the Company for early redemption at anytime from the Date of Investment subject to a service charge of 2% of the Outstanding Issue Price and 15 day prior notice (For details refer to para 2.

circulation and publication of this Prospectus. While clearing the Prospectus. 1984 (“the Ordinance”) has been obtained for the issue. the directors of the Company shall be liable to 7 .3. Karachi as required under section 57 (3) and (4) of the Companies Ordinance 1984. listed and secured Term Finance Certificates (“TFCs”) has been cleared by the Karachi Stock Exchange (Guarantee) Limited (“KSE”) in accordance with the requirements under its Listing Regulations. The Company has filed written confirmations of such consents.5% per annum and if any such money is not refunded within eight days after the Company becomes liable to refund it. 2010 from A. a copy of this Prospectus signed by all the Directors of the Company together with the following documents attached thereto: a) A Letter No. which contains in Part V certain statements and reports issued by them as experts (which consent has not been withdrawn) b) Copies of contracts mentioned in Part VIII of the Prospectus c) Written confirmations of the Auditors and Bankers to the Issue mentioned in the Prospectus consenting to act in their respective capacities. as required under section 184 of the Ordinance 1. 1. D 070 dated August 2.4.1. 1.2. the Securities and Exchange Commission of Pakistan does not take any responsibility for the financial soundness of any scheme or for the correctness of any of the statements made or opinions expressed by Engro Corporation Limited (“ECL” or „the Company‟ or “the Issuer”) in this Prospectus.F. 1. APPROVALS.ENGRO CORPORATION LIMITED TFC PROSPECTUS PART I 1. CLEARANCE OF THE PROSPECTUS BY THE KARACHI STOCK EXCHANGE This Prospectus for the issue of rated. It must be distinctly understood that in giving this approval. consenting to the issue of the Prospectus. the application for listing is not accepted by KSE. as required under section 57(5) of the Ordinance d) Consent of Directors and Chief Executive of the Company to their respective appointments being made and their having been named or described as such Directors and Chief Executive in this Prospectus. FILING OF PROSPECTUS AND OTHER DOCUMENTS WITH THE REGISTRAR OF COMPANIES The Company has delivered to the Registrar of Companies. CONSENTS AND LISTING ON THE STOCK EXCHANGE APPROVAL OF THE SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN Approval of the Securities and Exchange Commission of Pakistan as required under section 57(1) of the Companies Ordinance. for any reason. If.FERGUSON & CO. the KSE neither guarantees the correctness of the Prospectus nor the ability of ECL to redeem the TFCs. LISTING ON KARACHI STOCK EXCHANGE Application has been made to KSE for permission to deal in and for quotation of TFCs of the Company. the Company undertakes to publish immediately in the press a notice to that effect and thereafter to refund the subscription money with markup at 14.

ENGRO CORPORATION LIMITED TFC PROSPECTUS refund the money from the expiration of the said eight day together with surcharge at the rate of 1. 8 .5% per month as required under the provisions of Section 72 of the Ordinance.

with prior written consent of the Trustee. SECURED TERM FINANCE CERTIFICATES The TFC has been secured by way of first ranking floating charge over all the present and future movable properties (including investments) of Engro Corporation Limited but excluding present and future trade marks and copyrights of ECL and excluding its shares in Engro Energy Limited and Engro Polymer & Chemicals Limited (“Charged Assets”) at 125% of the outstanding principal amount. TERM FINANCE CERTIFICATES AND RELATED MATTERS 1st ISSUE OF LISTED TFCS TO THE GENERAL PUBLIC The Issue consists of PKR 4.1% of the principal amount in five equal semi-annual installments in the first thirty (30) months and the balance 99. The TFCs will be offered to the general public under the brand name of “engro rupiya certificate” in sets of six (6) scrips (TFCs) with an accompanying “Certification of Holding Term Finance Certificates”. please refer to para 2.9% of the principal amount in the thirty-sixth (36th) month.000/-. create further first ranking pari passu charges. The redemption value of the TFCs shall be specified on the TFC itself. The minimum amount of application for the subscription of TFCs is PKR 25. All previous TFC issues by Engro Chemical Pakistan Limited are now part of Engro Fertilizers Limited.14.3. However. The Company was formerly known as Engro Chemical Pakistan Limited and had issued TFCs for the expansion of its fertilizer business and for its working capital requirements. 2.1) 2.1. listed and secured Term Finance Certificates (“TFCs”) being the instrument of Redeemable Capital under section 120 of the Ordinance for a tenor of three (3) years. (For details refer to para 6. 2. This will be the first TFC Issue by Engro Corporation Limited. 2011 (BOTH DAYS INCLUSIVE) 9 . all subscription amounts up to the target amount (inclusive of the green shoe option) will be listed on the KSE.000/. OPENING AND CLOSING OF SUBSCRIPTION LIST THE SUBSCRIPTION LIST WILL OPEN FOR 3 MONTHS AT THE COMMENCEMENT OF BANKING HOURS ON OCTOBER 15. each set having an aggregate face value of PKR 5.ENGRO CORPORATION LIMITED TFC PROSPECTUS PART II 2. the entire amount is available for subscription by the public including both individual and institutional investors for three (3) months from the date of commencement of public subscription. The TFC is structured to redeem 0. There is no pre-IPO placement. if the target amount i.000 million (inclusive of the green shoe option) is subscribed before the end of subscription date.2. PKR 4. subscription period will be closed immediately. For more details.e. The Company may. These charges have been created in favor of IGI Investment Bank Limited (“Security Trustee”) for safeguarding interest of the TFC holders.or in multiples thereof.000 million) to be issued in the form of rated.000 million (inclusive of green shoe option of PKR 2. Since there is no minimum subscription requirement. 2010 AND CLOSE AT THE END OF BANKING HOURS ON JANUARY 14.

Applications for TFCs by the general public. In case of foreign investors who are not individuals. Applicants may also subscribe using their Special Convertible Rupee Account (SCRA) as set out under the State Bank of Pakistan‟s Foreign Exchange Manual. the Bankers to the Issue shall mark each Subscription Application with the date and time of their receipt. Mutual Funds. INVESTOR ELIGIBILITY Investors include the following:      Pakistani citizens resident in or outside Pakistan or Persons holding two nationalities including Pakistani nationality. applications must be accompanied with a letter on applicant‟s letterhead stating the legal status of the applicant. In order to ensure that allotment of TFCs is made to the applicants on first come first served basis. the same must be lodged with the application.or in multiples of PKR 5. then all applications in excess of the target amount will be returned to the applicants along with profit at the rate of 14. ADDITIONAL INSTRUCTIONS FOR FOREIGN/NON-RESIDENT INVESTORS 1. if available. Allotment of TFCs shall be subject to scrutiny of applications for subscription. 2. In case Bankers to the Issue on any given day accept subscriptions which result in the target amount being exceeded. A copy of memorandum of association or an equivalent document should also be enclosed. The applications not marked with date and time of receipt shall be accommodated after all the applications properly marked with date and time are accommodated. Copies of these documents can be attested by the bank manager/officer in the country of applicant‟s residence. and Branches in Pakistan of companies and bodies corporate incorporated outside Pakistan.000/. Where applications are made by virtue of Power of Attorney.000/.000/. place of incorporation and operations and line of business. Companies.5% per annum for the number of days for which such applicants are deprived of their money plus a further three (3) days profit at the same rate. a) b) MINIMUM AMOUNT OF APPLICATIONS AND BASIS OF ALLOTMENT OF TFCs The minimum amount of application for subscription of TFCs is PKR 25. Provident/pension/gratuity funds/trusts. must be made for a minimum of the aggregate face value of PKR 25.for amounts above PkR 25. Foreign Nationals whether living in or outside Pakistan.000/-. bodies corporate or other legal entities incorporated or established in or outside Pakistan (to the extent permitted by their constitutive documents and existing regulations.will not be entertained. 2.000 million (inclusive of the green-shoe option) is subscribed. c) d) e) 10 . Therefore.4.5.000/Applications for TFCs below the aggregate face value of PKR 25.ENGRO CORPORATION LIMITED TFC PROSPECTUS 2. there will be no oversubscription. (subject to the terms of the Trust Deed and existing regulations). as the case may be). including institutions and individuals. Allotment of TFCs will be made on first come first served basis and applications for subscription of TFCs will not be accepted once the target amount of PKR 4.

ENGRO CORPORATION LIMITED TFC PROSPECTUS
2.6. REFUND OF MONEY TO UNSUCCESSFUL APPLICANTS Since there will be no oversubscription, there will be no case of refund of money to unsuccessful applicants except in the case mentioned in para 2.5 (d) above. 2.7. MINIMUM SUBSCRIPTION There is no requirement of minimum subscription as the issue is not project specific but the proceeds of the issue will be utilized for meeting the cash needs of Engro Corporation Limited for investments in its subsidiaries and affiliates. 2.8. ISSUE, CREDIT AND DISPATCH OF TFCs The Company shall credit or dispatch, as the case may be, TFCs within thirty (30) days of closure of subscription period in compliance with the requirements of KSE Listing Regulations. Consequently, an investor subscribing to the TFC issue on the first day of subscription will be issued TFCs within a maximum of one-twenty (120) days from the first day of subscription. TFCs will be issued either in scripless form in the Central Depository System (“CDS”) or in the shape of physical scrips on the basis of option exercised by the applicants. TFCs in physical form shall be delivered to the applicants through registered mail or courier service whereas scripless TFCs shall be directly credited through book entries into the respective CDS accounts of allottees maintained with the Central Depository Company of Pakistan Limited (“CDCPL”). The TFCs issued directly for induction in the CDS, without the issuance of the physical certificates and the TFC scrips (with the terms and conditions), shall be subject to the terms and conditions for the issuance of the TFCs specified in Schedule 5 of the Trust Deed dated September 17, 2010 executed between the Company and the Trustee for the TFC Issue. The applicants who opt for issuance of TFCs in scripless form in the CDS should fill in the relevant columns in the Application Form. In order to exercise the scripless option, the applicant must also have a CDS account at the time of subscription. In case where the CDS account is not mentioned or is not correct, physical TFC certificates will be issued. If the Company defaults on complying with the requirements of the Listing Regulations, it will pay to the KSE a penalty of PKR 5000/- per day for the period during which the default continues. The KSE may also notify the fact of such default and the name of the Company by notice and also by publication in the Daily Quotation. 2.9. 2.9.1 TRANSFER OF TFCs Physical Scrips

TFCs shall be transferred in the manner as provided under the Companies Ordinance, 1984. Transfer of TFCs will be subject to payment of the applicable stamp duty levied by the Provincial Government. Stamp duty on initial issuance will be borne by the Company, while stamp duty on subsequent transfer will be on account of the TFC holders. 2.9.2 Transfer under Book Entry System

TFCs will be declared as eligible security through CDS of CDCPL. Stamp duty on initial issuance will be borne by the Company. TFCs, which are in the CDS, shall subsequently be transferred in accordance with the Central Depositories Act, 1997 and the Central Depository Company of Pakistan Limited Regulations. The transfer fee for all subsequent transfers shall be borne by the TFC holders.

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ENGRO CORPORATION LIMITED TFC PROSPECTUS
2.10. TFCs ISSUED IN PRECEDING YEARS This will be the first TFC Issue by Engro Corporation Limited. The Company was formerly known as Engro Chemical Pakistan Limited and had issued TFCs for the expansion of its fertilizer business and for its working capital requirements. On January 01, 2010, the fertilizer operations were demerged into a new company Engro Fertilizers Limited and all previous TFC Issues were transferred to Engro Fertilizers Limited by Order of the High Court of Sind dated December 9, 2009, as part of Scheme of Arrangement under sections 284 to 288 of the Companies Ordinance, 1984. 2.11. PRINCIPAL PURPOSE FOR THE USE OF SUBSCRIPTION MONEY The subscription money, as and when received by the Bankers to the Issue, shall be transferred to the designated bank account of the Company and will be utilized by the Company. Following is the tentative investment plan: Subsidiary Engro Fertilizers Limited Engro Foods Limited Amount in PKR million 3,000 by way of loans 1,000 by way of equity

In case the subscription money received is below the target amount, the shortfall will be met through borrowings either by Engro Corporation Limited or directly by the respective subsidiary. 2.12. REGISTERED INSTRUMENT TFCs will be in registered form and the Company shall maintain or cause to be maintained a register of TFC holders. 2.13. INTEREST OF TFC HOLDERS There is no outstanding TFC issue of the Company as such the question of interest of TFC holders does not arise. 2.14. REDEMPTION OF TFCs A register for TFC holders will be maintained or cause to be maintained by the Company. The register will be closed for a period of 7 days prior to the profit payment date. The company will give a minimum of 14 days notice to the Exchange prior to the Book Closure for Profit payments. Investors can redeem TFCs earlier than maturity by exercising Put option (see para 2.14.2) or the TFCs will redeem as per schedule detailed in para 2.14.1. All payments will be made either through crossed cheque, pay order or direct bank deposit on the basis of option exercised by the applicant in the TFCs Subscription Application. In case of cheque or pay order, the instrument will be dispatched to the mailing address of the registered holder of the TFC. 2.14.1 TFCs held till Maturity For TFCs held till maturity, the TFC holders will not need to physically go to the counters of any specific bank in order to have the TFCs redeemed. All payments will be made either through crossed cheque, pay order or direct bank deposit on the basis of option exercised by the applicant in the TFCs Subscription Application. In case of cheque

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ENGRO CORPORATION LIMITED TFC PROSPECTUS
or pay order, the instrument will be dispatched to the mailing address of the registered holder of the TFC. The terms of redemption of TFCs held till maturity are as follows: Tenor Principal Repayment Profit Rate 3 years The TFC is structured to redeem 0.1% of the Principal amount in the first 30 months and 99.9% in the 36th month. 14.5% per annum An interim profit payment for the period from the Date of Investment till the Issue Date will be made before the dispatch or credit, as the case may be, of the TFCs after the close of subscription period. All subsequent profits will be payable semi-annually in arrears on the outstanding Principal amount from the Issue Date.

Profit Payment

The redemption schedule for TFCs held till Maturity of an aggregate face value of PKR 25,000 based on profit rate of 14.5% per annum is set out in the table below:

Principal Months Redemption 6 5 12 5 18 5 24 5 30 5 36 24,975 Total 25,000

Profit @ 14.5% 1,812.50 1,812.14 1,811.78 1,811.41 1,811.05 1,810.69 11,926.85

Zakat @ Withholding 2.5% Tax @ 10% 0.13 181.25 0.13 181.21 0.13 181.18 0.13 181.14 0.13 181.11 624.38 181.07 625.00 1,192.69

Total Principal Principal Payment Payment in % Outstanding 1,636.13 0.02% 24,995 1,635.80 0.02% 24,990 1,635.47 0.02% 24,985 1,635.15 0.02% 24,980 1,634.82 0.02% 24,975 25,980.24 99.90% 35,109.17 100.00%

Notes:  The above redemption schedule includes deduction of Zakat and Withholding Tax. For applicability of these, please refer to para 2.16 and 2.18 below respectively.  The above redemption may be subject to Income Tax. For its applicability, please refer to para 2.17. 2.14.2 Put Option (Early redemption) Investors have the option to pre-maturely redeem the outstanding TFCs anytime from the Date of Investment subject to a service charge of 2% on Outstanding Issue Price, 15 day prior written notice, and in case of partial call option the amount to be redeemed should either be PkR 5,000/- or in multiples thereof. The outstanding amount (Outstanding Issue Price) equal to or less than PkR 5,000/- may be redeemed in full only. Profit will be paid till the date the Company receives the redemption notice. In case of TFCs held in physical form, TFC holders can exercise the Put Option by submitting Redemption Notice directly to the Company or to any of the branches of the following banks:  MCB Bank Limited

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812.17.18 0.811.985 1. 2011 to January 31. respectively. 2011 to July 31. For applicability of these. please refer to para 2.13 181.51 921.480 Total 24. The following table illustrates profit payment for the interim period and for the three years period commencing from the Issue Date: Profit Payment Interim First Second Profit Period Interim Period (Date of Investment till the Issue Date) February 01.41 905.635. as the case may be.5% 1. By way of an example. TFCs applied for redemption will not be tradable in the secondary market.78 1.  The above redemption may be subject to Income Tax.177. please refer to para 2. as the case may be.990 1.811.5% per annum from the Date of Investment.00% Notes:  The above redemption schedule includes deduction of Zakat and Withholding Tax. PLEASE NOTE THAT THE ISSUER HAS NO CALL OPTION.06 Total Principal Principal Payment Payment in % Outstanding 1.92% 32.636.210.5% Tax @ 10% 0.01 90.80 0.36 97.53 9. 2012 Profit Payment Date January 31.47 0.13 181. TFC holders can exercise the Put Option as per the Central Depository Company of Pakistan Limited Regulations. an interim profit payment for the period from the Date of Investment till the Issue Date will be made before the dispatch or credit. In case of physical certificates.500 Profit @ 14. From the Issue Date.47 98. 2.ENGRO CORPORATION LIMITED TFC PROSPECTUS  Standard Chartered Bank (Pakistan) Limited In case of TFCs held in CDS. 2012 14 .13 0.02% 24.02% 24. TFCs held in CDS will be cancelled when the redemption notice is received by the Company.812.02% 24. the investor will have to surrender the certificates along with the redemption notice.25 0.02% 24. the redemption schedule for TFCs of an aggregate face value of PkR 25.15 0.635.980 24.995 1.50 1.14 1. 2011 July 31.16 and 2.14 612.635.  Profit will be paid to the TFC holder till the date the Company receives the redemption notice and will be computed on 365 day year basis.13 181.5% per annum and redeemed at the end of 27th month from the Issue Date is set out in the table below: Principal Months Redemption 6 5 12 5 18 5 24 5 27 24. For its applicability.64 Zakat @ Withholding 2.18 below.683. of the TFCs after the close of subscription period. all subsequent profits will be payable semi-annually in arrears on the outstanding Principal amount.000 based on profit rate of 14.21 0. To bring all TFCs at par before dispatch or credit.14.55 612.  The above redemption schedule includes deduction of a service charge of 2% of the outstanding Issue Price of the TFC.3 Profit Payments Profit will be paid at a fixed rate of 14. 2011 January 31.13 181. 2011 August 01.

under subsection 3 of Section 151 of the Income Tax Ordinance. Para (a). According to this Ordinance. 2013 January 31. currently at the rate of 10%. 2.15. from profit payments to all investors except companies and resident individuals whose investment amount is up to PKR 150. DEDUCTION OF ZAKAT Zakat is deductible in case of TFCs held by Muslim citizens of Pakistan. 2014 REDEMPTION RESERVE In view of the secured nature and good credit rating (“AA”). at the rate of 2.ENGRO CORPORATION LIMITED TFC PROSPECTUS Third Fourth Fifth Sixth & Final 2. 2. Second Schedule of Income Tax Ordinance 2001. Part 3. 2. 2014 July 31. 2013 February 01.20. Zakat shall be deducted at the time of redemption of the principal amount of the TFCs or on the market value based on the closing rate on KSE on the first day of Ramzan. 1980) etc. 2012 to January 31. modaraba certificates.000 under Clause 59. part (IV). 2012 to July 31. 2013 to July 31.18.17. and in case of certain non-corporate entities such as Trusts. 2012 August 01. the tax shall be deducted @ 10% of the gross amount of profit paid as per the First Schedule. and instruments of redeemable capital as defined in the Companies Ordinance. the Company is expected to have adequate funds to meet its financial obligations arising from the issue of TFCs.50% on such dates as the concerned TFC becomes due for redemption in a Zakat year.02% Capital Value Tax (“CVT”) will be charged on purchase of all modarba certificates and instruments of redeemable capital as defined in the Companies Ordinance. DEDUCTION OF WITHHOLDING TAX ECL is required to withhold tax. 2. Funds (subject to being qualified for non-deduction of Zakat in terms of the Zakat and Ushr Ordinance. Therefore. 2012 January 31. CAPITAL VALUE TAX & WITHOLDING TAX ON SALE/PURCHASE OF TFCs Pursuant to the provisions of Section 233A of the Income Tax Ordinance. INCOME TAX Any income derived from the Term Finance Certificates shall be subject to income tax as per the Income Tax Ordinance. February 01. 2013 to January 31. 2001 & Capital Value Tax (Finance Act 1989) the following charges are applicable on sale/purchase of securities:  0. 2.16. no redemption reserve is being created for the redemption of TFCs. 2013 July 31. 2013 August 01. and shall be deemed to be the final discharge of tax liability on the profit arising to a tax payer other than a company. 2001. CAPITAL GAINS TAX Any capital gains derived from the sale of Term Finance Certificates shall be subject to capital gains tax as per the Income Tax Ordinance. Division 1. 15 . whichever is lower. 1984.01% Withholding Tax (“WHT”) will be charged on sale of all shares. 1984 0. except where a statutory declaration of exemption is filed. 2001.19. 2001.

interest rates and credit risk on the issuer. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse.22. Marketable lots are defined as any amount upto PKR 1 million face value with minimum face value of PKR 25. MARKET MAKING The TFCs will be listed on the Karachi Stock Exchange. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized. 2010 is PKR 158 thousand.50% and 1. providing for all temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The role of the market maker will be to offer bid & ask quotes for the TFCs at a spread of 0.50% in yield. Market Maker will trade TFCs which are either available for transfer with CDS or physically in the form of printed certificates. based on the laws that have been enacted or substantively enacted by the reporting date. 2. Break up is as follows: Amounts in „000 PKR (16) PKR 174 PKR 158 Accelerated depreciation Retirement & other Service benefits 16 . for marketable or non-marketable lots respectively. JS Global Capital Limited (formerly Jahangir Siddiqui Capital Markets Limited) will act as Market Maker for the issue. The balance of deferred tax liability for Engro Corporation Limited as at June 30.000 and Non-Marketable lots are defined as any amount less than PKR 25. DISCLOSURE OF DEFERRED TAXATION Deferred tax is recognized using the balance sheet method. A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which temporary difference can be utilized.000 face value or more than PKR 1 million face value.21. Price will be determined by market maker in light of prevailing liquidity. or equivalent price terms.ENGRO CORPORATION LIMITED TFC PROSPECTUS 2.

ENGRO CORPORATION LIMITED TFC PROSPECTUS PART III 3.50% Promotion by the Bankers to the Issue Brokerage to the members of Stock Exchanges 0. COMMISSIONS.000 200.500.067.05% Rating Fee – Initial Initial Listing Fee of the Karachi Stock Exchange Processing Fee of the Securities & Exchange Commission of Pakistan Annual Listing Fee of the Karachi Stock Exchange CDCPL Fee Trustee Fee Registrar Fee Printing & Publication Expenses of Prospectus Marketing Legal Expenses Out of Pocket Expenses Total *Represents maximum expenses related to the issue Amount in PKR 20.000 50.000. 3.067. BROKERAGE For the public offer.000 1. LSE and ISE at the rate of 0.000. COMMISSION TO THE BANKERS TO THE ISSUE A commission at the rate of 0.000.000 1. EXPENSES OF THE ISSUE The initial expenses of the issue paid or payable by the Company inclusive of all commissions are estimated to be PKR 249.25% of the value of TFCs actually sold through them.000 20. The details of the expenses of the issue are as follows: Expenses Category Rate Commission to the Bankers to the Issue 0.000 100. the Company will pay brokerage to the members of KSE.000 100.500 500.25% Stamp Duty – Sindh 0.3.000 2.500.000 67. BROKERAGE AND OTHER EXPENSES TO THE ISSUE 3.000.000 2.000 249. in respect of accepted applications will be paid to the Bankers to the issue for services to be rendered by them in connection with the public offer.1.500/-.500 17 .5% of the amount collected.000 1.000.2.200. 3.000 50.

277. A significant part of this change is the demerger and transfer of Engro‟s expanding fertilizer business into a separate wholly owned subsidiary. Modaraba Companies Investment Companies Cooperative Societies Others Total No.56 million. As a testament to ECL„s blue chip corporate status.736.32% 7. ECL‟s corporate and social responsibility initiatives have been recognized internationally at various forums.942. In April 2010.563.14% As per Annual Audited Accounts 2009.410.ENGRO CORPORATION LIMITED TFC PROSPECTUS PART IV 4.251 12. the Company was renamed Engro Chemical Pakistan Limited (ECPL) in 1991 when Exxon decided to divest out of the fertilizer business globally.858.879. ECPL was later renamed Engro Corporation Limited (ECL) on January 01. 2010 18 .37 million where as total market2 capitalization stood at PKR 56.57% 0. Lahore and Islamabad stock exchanges and has a total paid-up capital1 of PKR 3.208. 4.712.819 shares.321 17.69% 0.243. Shareholding Structure As of June 30.01% 10. Individuals Financial Institutions Insurance Companies  Central Insurance Co. total number of shares issued by ECL were 297. Ltd. 2010 As of June 30.168.1. Engro Corporation Limited was formed in the interest of better managing and overseeing businesses of subsidiaries and affiliates that are currently part of Engro's capital investments. the Company has been a frequent winner of the Corporate Excellence Award of the Management Association of Pakistan as well as the Top 25 Companies‟ Award of the Karachi Stock Exchange. ECL is listed on the Karachi.888.471 11.408 79. 2010.600 33.07% 7. there has been a 10% bonus issue which has increased the total shareholding to 327. Further.784 1.382 25.982. HISTORY AND PROSPECTS BACKGROUND AND HISTORY Established in 1965 as a fertilizer company and subsequently named Exxon Chemical Pakistan Limited.975 327.44% 24.819 % Shareholding 46. 1 2 Unaudited accounts as of June 30. of Shares held 152.736.289 23. the shareholding structure of Engro Corporation Limited was as follows: Shareholding Breakdown Shareholder Category Joint Stock Companies  Dawood Hercules Chemical Ltd. and its fertilizer business demerged into a new company Engro Fertilizers Limited.095.997 124.75% 3. 2010.

05 7. bulk chemical storage. of shares held by ECL 372. 2010 33. Engro Fertilizer Ltd.54 2008* 40.725 3.197 31.541 14.152 3.00 265.37 2.121 2.000 Percentage Holding 56.66 2006* 20.942 152. PRINCIPAL PRODUCTS ECL is a holding company and is responsible for the long term vision and profitable growth of the Company and its subsidiaries and affiliates.2.300.000 500.00 164.700 120.128 10.A.36 6.23 12.810.06 st 2005* 18.236 30.856 1.958 1.31 14.000.67 98. power generation etc. Engro PowerGen Ltd.935 8.000. Engro Eximp (Pvt) Ltd.00 14.90 2007* 34.973 4.207 23.254 2.240 2.65 16. Engro Foods Ltd. Following are the subsidiaries and affiliates of the Company as at June 30.796 20.000 542.277 9.979 6.757 3.548 80.00 183.58 16.802 57.397 6.000 25. Engro Management Services (Pvt) Ltd.719 29. (Joint Venture) Arabian Sea Country Club (Affiliate) No.139 9.27 13.761 2.46 5.276. The following is a summary financial snapshot of Engro Corporation Limited on a consolidated basis: Year Ended December (Rs.682 10.00 173. Engro Energy Ltd.48 10. 2010: Subsidiaries and Affiliates Engro Polymer & Chemicals Ltd.84 58. Engro Vopak Terminal Ltd.278 49.000 45.46 10.02 9. 1H June 30.ENGRO CORPORATION LIMITED TFC PROSPECTUS ECL has diverse business interests in fertilizer. Million) Revenue Profit After Tax Shareholders‟ Equity Total Assets Total Liabilities Total Paid-up Capital Net Profit Margin (%) Return On Equity (ROE) % Breakup Value per share (PKR) Earnings Per share (PKR) Dividend Per share (PKR) Market value per share (PKR) Price to Earnings ratio (x) 4.74 2009* 58.18 30. through various subsidiaries and joint ventures.834 18.75 17.49 13.00 169.284 7.19% 100% 100% 100% 100% 62.50 94.000.45 11.57 21. Avanceon Ltd.344 132.066.000 298.757 2.258 1.529 12. food processing.000 9.000 250.28 49.54 6.67% 95% 100% 50% N.667 304.47 15.105 102.12 11.000 10.00 96. PVC.31 15.87 110.40 12.65 *As of 31 December 19 .27 17.01 97.054 10.

Further. This exposes the Company to the risks that diversification may pose. power generation.ENGRO CORPORATION LIMITED TFC PROSPECTUS 4. The Instrument has been assigned rating of “AA” (Double A) by PACRA. Instrument Risks i. 4. Diversification In order to diversify future cash flows of the Company. Mitigants Instrument has been secured by first ranking floating charge over the shareholding of ECL in some of its subsidiary companies and affiliates and certain other assets of the Company at 125% of the outstanding principal amount. 20 . the chances of default are very low as confirmed by the TFC Rating. FINANCIAL OVERVIEW ECL‟s income comprises of dividends received from its subsidiaries and royalty income from its fertilizer business.3. Furthermore. Default Risk Given the secured nature of the instrument. the Company has been assigned a long term entity rating of “AA” (Double A) and short term entity rating of “A1+” (A One plus) by PACRA. ii. Individual companies are run by independent teams of professional and competent management personnel. all ventures are backed by extensive due diligence and/or through participation of world-renowned joint venture partners (Vopak in Engro Vopak Terminal Limited. The Company also aims to capitalize on the synergies between its various subsidiaries and joint ventures. PVC manufacturing and bulk chemical handling and storage business. ECL‟s recent diversification into food business has been very successful with the flagship brand “Olpers” capturing 36% of the market share in a short span of time and the IPP of Engro Energy Limited achieving commercial operations date in record time. Mitigants ECL has a successful track record in profitably managing its associated businesses.4. RISK FACTORS Business Risks i. as in Engro Foods Limited. information technology. ECL has been diversifying and expanding in a number of sectors including foods. while there is a default risk. and Mitsubishi Corporation in Engro Asahi) to provide the necessary technical expertise. ECL has hired experienced professionals. Liquidity Risk By investing in the TFC the investor assumes the risk of not being able to sell the TFC without adversely affecting the price of the instrument. Where required.

iii. viii. Hence price may rise or fall and result in increase or decrease in the value of TFC‟s to any extent. Regulatory Risk Changes in the regulatory framework may have an effect on the returns to investors in so far as such changes impact the return on the TFCs ix. In addition. Price of TFC‟s will depend on the bond market behavior and the performance of the Company. may affect the redemption and profit for the TFC investors. the market makers would also make market for the instrument. Capital Market Risk The TFC issue will be listed on KSE and the TFC holders will be able to sell or buy TFC‟s through the members of KSE and through market maker subsequent to the listing of the issue. Financial Projection Risk The Company has prepared financial projections on the basis of various assumptions that current market conditions continue to prevail and are subject to change. 21 . iv.2. vii.ENGRO CORPORATION LIMITED TFC PROSPECTUS Mitigants The TFC‟s are to be listed on KSE. Exchange Rate Risk Depreciation of the Rupee may adversely affect the yield to the overseas investors. Any unforeseen events such as problems arising out of lower than projected production and sales by subsidiaries and affiliates. which will act as provider of liquidity for TFC‟s during the life of the instrument by facilitating secondary market trades. Mitigants The structure of the product is such that the investor can redeem the TFCs anytime after the Date of Investment. vi. and underlying inflation. The investors assume the risk that due to the unforeseen events the Company may not be able to maintain consistent growth. Interest Rate or Price Risk Fluctuations in interest rates. Investors can also exercise the Put Option anytime from the Date of Investment as explained in detail in para 2. Changes in Tax Regime Any adverse change in the existing Tax regime for investment in TFCs.14. and consequent receipt of dividends by the Company have not been taken into account. Reinvestment Risk Investors in fixed income securities face the risk that the interest rate at which the interim cash flows can be re-invested may fall and that the investor may not have suitable avenues for investing interim cash flows. v. may adversely affect the yield to the investors.

22 .ENGRO CORPORATION LIMITED TFC PROSPECTUS Note: It is stated that all material risk factors with respect to this issue have been disclosed to the best of knowledge and belief and that nothing has been concealed in this respect.

documents and books of accounts of the Company relating to prior years were destroyed. the auditors‟ opinion was also unqualified in all respects except that due to a fire at the Company‟s premises on August 19. 2001. for the purpose of reporting under section 53(1) read with clause 28 of Section 2 of Part I of the Second Schedule to the Companies Ordinance. 2007. the auditors report for the years 2007. pending designation from the Securities and Exchange Commission of Pakistan (SECP) as company entitled for Group Relief under the Income Tax Ordinance. 2005 to December 31. The percentage of shareholding in the subsidiary companies. for inclusion in the prospectus for proposed issue of rated. Clifton Karachi Dear Sirs AUDITORS‟ REPORT UNDER SECTION 53(1) READ WITH CLAUSE 28 OF SECTION 2 OF PART I OF THE SECOND SCHEDULE TO THE COMPANIES ORDINANCE.the Company (formerly Engro Chemical Pakistan Limited) and the audited consolidated financial statements of the Company and its subsidiaries (the Group) for the five years ended December 31. alongwith the details of their respective auditors are as follows: August 2. 2005 and 2006. certain records. 2008 and 2009. HC-3. 2008 and 2009 included an emphasis of matter paragraph that the Company has recognized the effect of acquisition of taxable losses of subsidiary company. Records in electronic form remained intact and certain hard copy records relating to financial years 2005 and 2006 have not been recreated. 5.1 AUDITOR‟S CERTIFICATE The Board of Directors Engro Corporation Limited (formerly Engro Chemical Pakistan Limited) 7th & 8th Floor. 2010 D 067 23 . Block-4 Scheme No.. Harbour Front Building Plot No. 1984. Chartered Accountants whereas the financial statements for the year ended December 31.ENGRO CORPORATION LIMITED TFC PROSPECTUS PART V FINANCIAL INFORMATION & CREDIT RATING REPORT 5. 2008 were audited by KPMG Taseer Hadi & Co. 2005 to December 31 2009. The auditors issued an unqualified opinion on the financial statements for the years ended December 31. Whereas for the years ended December 31. The Group comprises of Engro Corporation Limited (formerly Engro Chemical Pakistan Limited) and eight subsidiary companies. listed and secured Term Finance Certificates by the Company. 1984 FOR THE PURPOSE OF INCLUSION IN THE PROSPECTUS FOR TERM FINANCE CERTIFICATES BY ENGRO CORPORATION LIMITED (FORMERLY ENGRO CHEMICAL PAKISTAN LIMITED) We have. reviewed the audited unconsolidated financial statements of Engro Corporation Limited . 2009 were audited by us. 2007. The financial statements of the Company and the Group for the years ended December 31. Further.

2005 to Engro Eximp (Private) Limited 100% December 31. A. Ferguson & Co. A. F. A. A.2007 Avanceon Limited 62. KPMG Taseer Hadi & Co. KPMG Taseer Hadi & Co. KPMG Taseer Hadi & Co.19% to December 31. F.2009 December 31. Ferguson & Co. 2008 and December 31.2009 December 31. 2009 December 31. Auditors Engro Fertilizers Limited 100% A. Ferguson & Co. 2005 Engro Polymer & Chemicals Limited 56. F. 2006 to December 31. 2008 Engro PowerGen Limited 100% December 31. 2005 to Engro Management Services (Private) Limited 100% December 31. Ferguson & Co.2009 December 31.2009 June 29.2008 December 31. 2005 to December 31. F. KPMG Taseer Hadi & Co. F.67% December 31.2009 December 31. 2009 A. F. 2009. F. Ferguson & Co. Fakharuddin Yousaf Ali & Co. the date of incorporation.ENGRO CORPORATION LIMITED TFC PROSPECTUS Name of the Subsidiary Companies Percentage of holding Years ended December 31. A. Ferguson & Co.2008 December 31.2009 December 31. Ferguson & Co. Ferguson & Co. 2006 to Engro Energy Limited 95% December 31. F. to December 31. A.2008 December 31. 2005 Engro Foods Limited 100% December 31. 24 . KPMG Taseer Hadi & Co.

LIABILITIES AND SHAREHOLDERS‟ EQUITY AS AT DECEMBER 31. liabilities and shareholders‟ equity of the Company and the Group as at December 31.955.536. 2009 1.636 512.819.650 The Group 25 .969 150.136.040.512 122.971 3.607 2.469.880.1 The summary of assets.105.167 450.533 97.907 82.873 585.709.532 3.960 112.438 1.425 1. deposits and prepayments Other receivables Derivative financial instruments Taxes recoverable Short term investments Cash and bank balances 961. ENGRO CORPORATION LIMITED (FORMERLY ENGRO CHEMICAL PAKISTAN LIMITED) AND THE GROUP SUMMARY OF ASSETS.514.376 110.408 19.726 132. 2009 were as follows: (Amounts in thousand) The Company Rupees ASSETS Non-Current Assets Property.255 6.567 Current Assets Stores.492 1.517.871 TOTAL ASSETS 93.372.155 275.425 87.117 422.503. 1984.710 438. plant and equipment Biological assets Intangible assets Long term investments Deferred employee compensation expense Long term loans and advances 69. advances.988.857 3.181. spares and loose tools Stock-in-trade Trade debts Deferred expense Loans. we report that: 1.960.265 76.787 328.704 12.209 1.657 2.780 2.342 10.209 536.451.278 1.714 76.923.358 499.ENGRO CORPORATION LIMITED TFC PROSPECTUS In accordance with section 53(1) read with clause 28 of Section 2 of Part I of the Second Schedule to the Companies Ordinance.748.

153 632.888.191 29.500.142.753 740.550.981 132.961 1.565.785 96.426 10.obligations under finance lease .500.520 23.972 23.242 (617.426 10.100 20.deferred liabilities Short-term borrowings Derivative financial instruments Unclaimed dividends Total Liabilities TOTAL EQUITY AND LIABILITIES 26.979.777 20.225.842 891.429.550.375.812 26.675 18.429.731 3.778 26.302.298 211.238 Minority Interest Total Equity Non-Current Liabilities Borrowings Derivative financial instruments Obligations under finance lease Deferred taxation Employee housing subsidy Deferred liabilities Current Liabilities Trade and other payables Accrued interest / mark-up Current Portion of : .886 60.105.395.344.000 2. subscribed and paid-up Share Premium Employee share option compensation reserve Hedging reserve Revaluation reserve on business combination Exchange revaluation reserve General reserve Unappropriated profit 3.204 3.387.246 22.600 195.908.022 810.888.790.785 143.608.099 6.200 93.160.043 102.900 (43.250.borrowings .354 612.163 86.979.395 The Group 58.970.864 211.587 1.366.766 740.061 288.240 8.800.469 66.763 9.238 3.061 318.043 102.258 (609.000 2.ENGRO CORPORATION LIMITED TFC PROSPECTUS (Amounts in thousand) The Company Rupees EQUITY AND LIABILITIES Equity Share Capital Authorised 350.821.425.709.000 ordinary shares of Rs.760.240 9.139.376 26 .000) 114.687.000 1.719) 4.218 102. 10 each Issued.099 15.119.438 84.000.852 1.428 2.185) 4.

2 Claims including pending lawsuits Claims including pending lawsuits.6 Arbitration proceedings for recovery of marketing incidentals The Company had commenced two separate arbitration proceedings against the Government of Pakistan for non-payment of marketing incidentals relating to the years 1983-84 and 1985-86 respectively. 10.936 paid and expensed in 1997.4 Undated cheques Undated cheques issued by the Subsidiary Company (Avanceon Limited) to Adamjee Insurance Company Limited as insurance guarantee in favor of BP Pakistan Exploration and Production Inc.148.271.2. 47. The sole arbitrator in the second case has awarded the Company Rs. 14.2. however. imposed by the State Bank of Pakistan (SBP) for alleged late payment of foreign exchange risk cover fee on long term loans and has filed a suit in the High Court of Sindh. 47. amounting to Rs.3 Post dated cheques Post dated cheques issued by the Subsidiary Company (Avanceon Limited) to Customs and Excise Department for the clearance of Rockwell Automation and Autogen Software Shipments and to Adamjee Insurance Company Limited as cash margin against insurance guarantee issued by them in favor of BP Pakistan Exploration and Production Inc.2.482 1. 2009 have been reproduced below: 1.283 The Group the financial statements as at 27 . 1. 1.676 2.480. The award for the second arbitration has not been recognised due to inherent uncertainties arising from its challenge in the High Court.800 whereas the award for the earlier years is awaited. 1. A partial refund of Rs.2 CONTINGENCIES AND COMMITMENTS Contingencies and commitments reported in December 31.255 for performance of contract.5 Recovery of penalties imposed by the State Bank of Pakistan The Company is contesting the penalty of Rs. recovered in 1999 from SBP and the recovery of the balance amount is dependent on the Court‟s decision.2.618 was.1 Guarantees The Company Rupees Corporate guarantees issued to banks in favour of subsidiary companies Bank guarantees in favour of third parties 1..2. 99. for performance of contracts amounting to Rs..658 47.658 273.ENGRO CORPORATION LIMITED TFC PROSPECTUS (Amounts in thousand) 1.2. 62. not acknowledged as debts 1.

28 .2. Model Customs Collectorate raised a sales tax demand of Rs.2. The management therefore is confident that the issue would be decided in the Company‟s favour. Further.236 in prior years in respect of first catalyst and other items being part and parcel of the expansion plant of the Company on the contention that these items do not fall under the definition of 'plant and machinery' which is exempt under the relevant SRO.2. inter-corporate dividend (in 2007) besides certain other issues. aggregating to Rs. 910. However. Agriculture and Livestock had also recommended through its letter dated June 27. 2001 (the Ordinance) on losses acquired for an equivalent cash consideration from Engro Foods Limited (EFL).644) and Rs.ENGRO CORPORATION LIMITED TFC PROSPECTUS (Amounts in thousand) 1.000 respectively thereagainst.135 on certain imports of Mono Ammonium Phosphate (MAP) 10:50:0 by the Company based on the actual import value rather than the deemed value as prescribed by SRO 609 (1) / 2004. These project supports are contingent upon occurrence or nonoccurrence of specified future events. 406.400 and a further support to the lenders of Engro Polymer and Chemicals Limited for US$ 12. 476.744. 1.845 for financial years 2006 and 2007. During the year. on disallowance of mainly Group Relief (in both years). 170. the Department refunded the payments made by the Company.479 (rectified to Rs.103 and Rs.7 Project completion support to lenders The Company has extended project completion support to the lenders of Engro Energy Limited for US$ 15.8 Recovery of custom duty and sales tax The Collector of Customs had disallowed exemption from custom duty and sales tax amounting to Rs. against the aforementioned disallowances. for financial year 2007.000 respectively. 622. 48. 1. Stay by the High Court of Sindh for payment of balance amount for financial year 2006 has been granted pending decision of the appeal filed by the Company before the Income Tax Appellate Tribunal (ITAT). 22.000 and Rs. The Company has paid the demand under protest and filed an appeal before the Collector. 2010.2.207. The Company challenged the Department's contention through a constitutional petition in the High Court of Sindh which stayed the recovery of the amount claimed and in December 1994 decided that petition in favour of the Company. a wholly owned subsidiary company. Rs. The tax department raised a demand of Rs.200. Sales Tax and Federal Excise.9 Sales tax on import of Mono Ammonium Phosphate (MAP) During 2008. The Company has paid Rs.10 Status of Tax Matters / Assessments Group Relief The Company in its tax return for financial years 2006 to 2008 (tax years 2007 to 2009) claimed the benefit of Group Relief under section 59B of Income Tax Ordinance. 428. 400. amounting to Rs. 450. stay has been granted by the tax department till April 30. 2008 that the aforementioned grade of MAP should be assessed at deemed value of import with retrospective effect. 57. the Ministry of Food. 1. The Supreme Court of Pakistan dismissed the Department‟s appeal thereagainst in 2005 and upheld the Sindh High Court judgement in Company‟s favor.

2.ENGRO CORPORATION LIMITED TFC PROSPECTUS (Amounts in thousand) The main contention for disallowance of Group Relief. among others. decided the issue of Group relief in Company's favor for the financial year 2007. The Company is confident that all the above issues.479 398. a requirement of section 59 B of the Ordinance.584 (iii) Avanceon LP (USA) is obligated under non-cancellable operating leases for computer & office equipment which expire at various dates through 2011. These regulations have been framed by SECP subsequently in December 2008 under which the Company alongwith other subsidiaries have been registered as a Group and a fresh application for the aforesaid designation will now be filed.603 2. The Commissioner Inland Revenue (Appeals) taking cognizance of the above and other factors has. including the issue of Group Relief. while for 2006 it is pending at the ITAT level as stated above. vide order dated November 13. 2009 are as follows: Rupees Not later than one year Later than one year and not later than five years Later than five years 1. The future lease commitments related to non-cancellable operating leases as of December 31. Others The Company has filed tax returns up to financial year 2008 of which tax returns from financial years 2003 – 2008 have been filed under the self assessment scheme.572 29 . the major one being apportionment of gross profit and expenses between normal income and final tax regime (FTR) income.490 799.260 (ii) Letters of credit expenditure other than for capital 2.846 5. 2009.504.11 Commitments The Company Rupees The Group (i) Property. being the nondesignation of the Company as well as the subsidiary company as 'companies' entitled to Group Relief by the Securities & Exchange Commission of Pakistan (SECP).999.723. The Company had applied for such a designation but remained pending with SECP for want of related regulations not framed then. plant and equipment 3. will be ultimately decided in its favor without any additional tax liability. All assessments for income years 1995 to 2002 have been finalized by the Department and are in appeal at either the CIT or ITAT level on various issues.863.921. 1.

Sindh Engo Coal Mining Company Limited. 2009. (v) The Subsidiary Company (Engro PowerGen Limited) through its subsidiary.324.582. 8. 271. has signed various agreements with consultants for detailed feasibility study and other related studies aggregating to Rs. against which the Subsidiary Company has made an advance payment of Rs.395 as at December 31. The lease shall expire on April 30. 2010 and future commitments in respect thereof amount to Rs.295 all of which are due not later than one year. 2. 9. 30 .ENGRO CORPORATION LIMITED TFC PROSPECTUS (Amounts in thousand) (iv) Avanceon Limited leases its facilities from Cornerstone investments (a related party) under an operating lease at a monthly rental of Rs.

31 .842) 3.278.332.276.088. refer section 7 of this report.120.144.326 (1.240.987 (286.198 (17.ENGRO CORPORATION LIMITED TFC PROSPECTUS 2.286 1.563 23.240.547.082 Other operating income Other operating expenses Finance cost 1.551) (649.520 (23.948) (2.481.973.793) 4. The above figures are as reported in the respective years‟ published financial statements except certain items that have been rearranged for consistency of classification.583 (1.815) 4. 2005 TO DECEMBER 31.080.943. ENGRO CORPORATION LIMITED (FORMERLY ENGRO CHEMICAL PAKISTAN LIMITED) PROFIT AND LOSS ACCOUNT FOR THE YEARS ENDED DECEMBER 31.929) 3.946 (1.920. For earnings per share.219.344 18.444.957.656 (897.657.754.748 2.755.469) 2.641.277 (14.154.579) (1.149) 2.176) (362. 2009 Year ended December 31.783 (13.551 (900.724) 3.504) 5.430) (535.524) 4.727) 3.730) 2.429 17.302.144) 4.538.652) (280.635) 6.168 (1.176) 6.435 (1.854 (287.320.171.744.722) 3.222 (18.257.831.110) (1.641.262.705 1.364.574 (964. 2008 2007 2006 Rupees 23.696) 3.453) 4. 2.260 (339.556) (1.237.986.319.317.070) (566.176) 4.689) 5.430 (1.931.601.512 (1.945.467 (424.250 PROFIT BEFORE TAXATION Taxation PROFIT AFTER TAXATION Note: 1.235.259 (Amounts in thousand) 2009 2005 Net sales Cost of sales GROSS PROFIT Selling and distribution Expenses 30.183.330 (579.214.196.508.023) (874.330) 2.204.338.529 1.

240.283 (1. For earnings per share.221. 2009 (Amounts in thousand) 2009 Year ended December 31.829 (1.820 (14.386) Other operating income Other operating expenses Finance cost 390.035 (15.737.690 243.200.756.937) 2.138.917.366) 7.142.ENGRO CORPORATION LIMITED TFC PROSPECTUS 3.720 (976.699 34.041) 2.718.138.193 (778.891 31.047 (30.842 371.210 166.249) (585.918 (88.196) 13.106.861.520 (42.732) 2.666 3.494. 32 .803 2. 2.343.658) (1.138.283.829 (482. 2008 2007 2006 Rupees 40.253.125.245 20.181) 5.038.754 80.116) 3.215.982.833.652) 6.320.300) Share of income from Joint Venture PROFIT BEFORE TAXATION Taxation PROFIT AFTER TAXATION 458.690) (438.097.951 2.047 1.216) (2.159 3.206.172 18.536) (3.690 2.625 (297.561) (2.206.953) (2.386) 4.737 (294.Owners of the Company .065.842 2.608.802 245.583) (1.783 Attributable to: . 2005 TO DECEMBER 31. refer section 7 of this report.348) 10.328) 4.157 (843.240) (735.739) (3.558) (717.570 5. ENGRO CORPORATION LIMITED (FORMERLY ENGRO CHEMICAL PAKISTAN LIMITED) AND ITS SUBSIDIARY COMPANIES (THE GROUP) CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEARS ENDED DECEMBER 31.980 4.930 421.788 409.137) (291.278.718.788 2.Minority interest 3.821.802 4.568 2.184.930) (1.973.434 (6.120.715.308.658.283. The above figures are as reported in the respective years‟ published financial statements except certain items that have been rearranged for consistency of classification.582.316) 7.111.854 2005 Net sales Cost of sales GROSS PROFIT Selling and distribution expenses 58.314 (969.924) 2.695) 4.806.399.224) 3.481) 3.351) 2.856 (4.152.550 509.018 (977.611 (26.278.936 4.193 5.119.707.407.368 (44.062.876.952.783 Note: 1.041.833.260.

2009. 33 . 1984 whereby (a) the fertilizer undertaking would be transferred and vested in Engro Fertilizers Limited against the issuance of ordinary shares of Engro Fertilizers Limited to the Company.655 6 1. (b) the retention of the retained undertaking in the Company and the change of the name of the Company to Engro Corporation Limited. The de-merger required the approval of the High Court of Sindh. the High Court approved the Scheme of Arrangement (Scheme) on December 9.896 6 1. 2009 Scheme of Arrangement The Board of Directors of the Company in their meeting of April 28. 4. a wholly owned subsidiary namely Engro Fertilizers Limited was incorporated on June 29.1. However. 2010.1 Financial statements for the year ended December 31.ENGRO CORPORATION LIMITED TFC PROSPECTUS (Amounts in thousand) 4.514. The Scheme came into effect on January 1. 2009 decided to divide the Company into two companies by separating its fertilizer undertaking from the rest of the undertaking that is to be retained in the Company. After obtaining the requisite approvals from the creditors and the shareholders of the Company.340 11 Year ended December 31. 2005 to December 31. 2009. Engro Corporation Limited would then become a holding company and oversee the business of new fertilizer subsidiary as well as business of its other existing subsidiaries/associates.106 9 1. 2009 are as follows: 2009 Cash dividend Rupees in thousand Rate of dividend (Rupees per share) Bonus Issue Rupees in thousand 297. as stated in section 6 of this report. we have reviewed the condensed interim financial information (unaudited) for the half year ended June 30.1 WE FURTHER REPORT THAT: Details of dividend declared by the Company for the years ended December 31. In this regard.276. 2005 to December 31.682. 2009. The division was to be effected through a Scheme of Arrangement under Section 284 to 288 of the Companies Ordinance. 2009: 5. 5.943 1. 2008 2007 2006 2005 4.787.2 No financial statements have been audited subsequent to the audit of financial statements for the year ended December 31.303. SIGNIFICANT DISCLOSURES MADE IN THE NOTES TO THE PUBLISHED FINANCIAL STATEMENTS OF THE COMPANY AND THE GROUP FOR THE RELEVANT FINANCIAL YEARS We reproduce below the significant disclosures made in the notes to the financial statements of the Company and the Group for the relevant years ended December 31.815 7 1.1 5. 2010 (Effective Date).

2010. the Subsidiary Company has also commenced supply of surplus power generated from Power plants to Karachi Electric Supply Corporation (KESC). Joint Venture Agreements. 10 each plus the share premium.000 being the paid up face value of Engro Fertilizers Limited.1. Engro Polymer & Chemicals Limited The new PVC plant commenced commercial production on January 1.2 Subsidiary Companies Engro Fertilizers Limited and Engro Eximp (Private) Limited Consequent to restructuring of its businesses by the Company. in addition to existing 7. 34 . fully paid ordinary shares of Rs. 2009. arrangements and other matters were automatically be transferred to Engro Fertilizers Limited on the Effective Date against the issuance of 9. all reserves including goodwill. Furthermore. liabilities. employee share option compensation reserve. The Vinyl Chloride Monomer (VCM) plant is still in the test production phase. agreements. Engro Foods limited During the year. to Engro PowerGen Limited (EPGL) in exchange for the same number of fully paid-up shares of EPGL.e purchase of fertilizers from the Engro Eximp (Private) Limited (EXIMP) and sale to dealers) has been transferred to EXIMP. Accordingly. 5.ENGRO CORPORATION LIMITED TFC PROSPECTUS (Amounts in thousand) In accordance with the Scheme. The retained undertaking comprises of specific assets and liabilities as of the aforementioned effective dates identified in the Scheme. the fertilizer business. 2009. Effective January 01. Engro Fertilizer Limited. Such share premium is to be based on the net assets so transferred over Rupees 100. 2009 of goods purchased from the EXIMP has been returned. These plants have been set up adjacent to the Subsidiary Company‟s existing PVC facilities in the Port Qasim Industrial Area. 2009 have consented to the Company‟s proposed transfer of 304 million ordinary shares of Rs. Further. 2010. during the year. 10 each in Engro Energy Limited. which is presently being sold only in selected parts of the country.993. share premium. Engro Foods Limited has commenced commercial production of ice cream. Engro Energy limited The Shareholders in the Extraordinary General Meeting (EOGM) held on November 27. will act as the selling agent of EXIMP. capital & revenue reserves but excluding Hedging reserve. to be effected upon completion of legal and other formalities. the Subsidiary Company commenced commercial operations of Ethylene Di Chloride (EDC). under an agreement. the entire trading operations of fertilizer business of the Company (i. effective January 1.999. including all assets. which among other items include Investments/Shareholdings. the stock in hand of the Company as at December 31. is on account of the Company‟s overall restructuring of its businesses to enable all direct subsidiaries to operate as holding companies for their respective lines of business. Chlor-alkali and Power plants (Gas turbines). Such a transfer. on August 1.

2009.subsidiary is to produce. Engro Foods Supply Chain (Private) Limited (the sub-subsidiary). 491 acres of land at Muridke. during the year.ENGRO CORPORATION LIMITED TFC PROSPECTUS (Amounts in thousand) Further. manufacture and trade all kinds of raw. the commissioning of which is expected to be completed in the last quarter of 2010. Baweray Akalian. Engro Foods Limited incorporated a new wholly owned subsidiary on November 3. 35 . In this regard. The principal activity of this sub . dairy and farming products. processed and prepared food products including agriculture. District Sheikhupura has been acquired to construct a rice processing plant.

This has been adjusted in the current year by restating the comparative figure from Rs.100 During the year.1. the Company's employees transferred to Engro Fertilizers Limited will be granted new share options under a new scheme of Engro Fertilizers Limited on surrender of existing share options. percentage of investment in Engro Polymer and Chemicals Limited decreased from 65.174. 15.275 1.1).173.248. 36 . 2008 were overstated by Rs. has no impact on the profit for the year ended December 31. This however. During the year. 4. 40 per share. 2008.297. 3.19% while investment in Engro Energy Limited decreased from 100% to 95%. by investing Rs. due to issue of right shares.362.1. The new scheme is finalized and is awaiting approval by the Board of Directors of Engro Fertilizers Limited and Securities and Exchange Commission of Pakistan.960 to Rs. 205.100.950. 1. 5. the exercise price of employee share option scheme (refer 5.4 Foreign Exchange Forward Contract During the year.7 million shares.2) was adjusted by the Company to Rs.2. the Company identified that the fair values of foreign exchange forward contracts as at December 31.5 Issue of right shares with premium The Company issued 40% right shares of Rs. The total issue including share premium amounted to Rs.123. Consequent to the demerger (refer 5.000 15.92% to 56.3 Employee Share Option Scheme During the year. 4. 5.1 Investment in subsidiaries The following investments were made in the subsidiary companies during the year: Name of Subsidiary Engro Energy Limited Engro Foods Limited Engro PowerGen Limited Rupees 1.1.787.2.52 per share and total entitlements were increased to 7.1. 50 per share to the shareholders including premium of Rs.ENGRO CORPORATION LIMITED TFC PROSPECTUS (Amounts in thousand) 5.604 net of transaction cost on such issue. as the fair values were recognised in the hedging reserve. 2008 5. the Company incorporated a wholly owned subsidiary by the name of Engro PowerGen Limited with the objective to undertake power projects.2 Financial statements for the year ended December 31. 5.

2007 as the grant date. 2008. 2011 and 2012 respectively. 267. According to the Scheme senior employees who are critical to the business operations were to be granted options to purchase nine million three hundred thousand newly issued ordinary shares. and subsequently by SECP on September 25. however.2. The effect of grant of share options has been incorporated in the financial statements using August 23. 17 per share during the financial years ended December 31. The options carry neither right to dividends nor voting rights.5 million shares. The effect of the change in the grant date has been recognized in the consolidated financial statements. 2008.2 Employee Share Option Scheme Engro Chemical Pakistan Limited During the year. The options are exercisable in two years at exercise prices of Rs. when the Scheme was originally approved. 2009. No amounts are paid or payable by the recipient on receipt of the option. 2008. equity and assets for the year ended December 31. Further. cleared these changes subject to the approval of shareholders. the date when the scheme was originally approved by the shareholders. The number of options granted is calculated in accordance with the criticality of employee to the business and their ability and is subject to approval by the Compensation Committee. As per the approved change to the Scheme the 'grant date' is the date of EGM held on October 8. 2008. which was obtained in the Extra Ordinary General Meeting (EGM) held on December 22. through their letter SMD/CIW/ESOS/04/2008 dated July 10. 15 and Rs. Engro Polymer & Chemicals Limited The Employee Share Option Scheme (the Scheme) of Engro Polymer & Chemicals Limited (EPCL) was approved by its shareholders in their Extraordinary General Meeting (EGM) held on October 8. may also be granted options. Engro Energy limited The Employee Share Option Scheme (the Scheme) of Engro Energy Limited was approved by its shareholders in their Extraordinary General Meeting (EGM) held on April 18. the length of vesting period shall be the same as enjoyed by first recipients of options. 73 per share and total entitlements were increased to 5. where after these options can be exercised within a period of two years. 2008 and those who are promoted by the same date. Vesting period has started from the date of grant and shall end on December 31. 2008.ENGRO CORPORATION LIMITED TFC PROSPECTUS (Amounts in thousand) 5. 2007 have been restated. During the year. Accordingly. The Securities and Exchange Commission of Pakistan. These changes were approved by the shareholders in their EGM held on June 27. Future employees who join by October 31. due to issue of right shares. the exercise price of Employee Share Option Scheme was adjusted by the Company to Rs. the Company proposed certain changes relating to „grant date‟ in the originally approved scheme. 2007. According to the Scheme senior employees who are critical to the business operations were to be granted options to purchase five million three hundred thousand newly issued ordinary shares at an exercise price of Rs. 22 per ordinary share. 2007. EPCL proposed certain changes relating to 'grant date' in the originally approved Scheme. 37 .

for a notional amount of USD 50. The options carry neither right to dividends nor voting rights.000 during 38 . subject to approval by the Compensation Committee. 19.2. 2010. Engro Foods limited The shareholders of Engro Foods Limited (EFL). 2013 and 2014 respectively. The options carry neither right to dividends nor voting rights. Those eligible employees who joined the Subsidiary Company after the date of grant but before December 31. Rs. Vesting period shall start from the date of grant and shall end on December 31. Future employees who join by June 30. 2011. 17. 5. where after these options can be exercised within a period of two years. 2008. where after the options can be exercised within a period of two years. however. 23 per share during the financial years ended December 31. 2009 and those who are promoted by the same date.3 Interest Rate Swap Engro Chemical Pakistan Limited The Company entered into an interest rate swap agreement to hedge its interest rate exposure on floating rate committed borrowing under an Off-shore Islamic Finance Facility agreement. The maximum number of options to be issued to an eligible employee is for two million five hundred thousand ordinary shares. have approved an Employee Share Option Scheme (the Scheme). their vesting period will commence when they attained the right to these options and will comprise of the same number of days as the vesting period of all other eligible employees. Under the Scheme. however. 2008 are also entitled to these options. in their meeting held on October 8.5 per ordinary share. Vesting period has started from the date of grant and shall end on December 31. 2008 (the date of grant). 2010. 21 and Rs. Avanceon Group [Formerly Engro Innovative Automation (Private) Limited] The Employee Share Option scheme (the Scheme) was originally approved by the shareholders of the Subsidiary Company in their Annual General Meeting (AGM) held on March 31. senior employees who are critical to the business operations shall be granted options to purchase two million one hundred and five thousand newly issued ordinary shares at an exercise price of Rs 31. No amounts are paid or payable by the recipient on receipt of the option. The options are exercisable within four years at exercise prices of Rs. The Scheme has been approved by the SECP on July 10. The number of options granted is calculated in accordance with the ability and criticality of employee to the business. The effect of grant of share options has been incorporated in the consolidated financial statements except for the options of EFL as its share price is significantly less than the exercise price and the option has a nil value. 2007. for granting of options to its certain eligible critical employees upto twenty one million new ordinary shares.000 which will increase to USD 150. 2009. may also be granted options. vesting period commenced from the date of grant and will end on December 31. According to the Scheme. the length of vesting period shall be the same as enjoyed by first recipients of options. Rs. 2012.ENGRO CORPORATION LIMITED TFC PROSPECTUS (Amounts in thousand) The number of options granted is calculated in accordance with the criticality of employee to the business and their ability and is subject to approval by the Compensation Committee.

Accordingly. The total issue including share premium amounted to Rs.319.154. The fair value of the interest rate swap as at December 31. 2008. 152. Under the swap agreement. Under this scheme the Company plans to disburse Rs. 175 per share to the shareholders including premium of Rs. for a notional amount of USD 85.5 Employee Housing Subsidy The Company has announced a medium term Employee Housing Subsidy Scheme for its employees who are not entitled for Employee Share Options. which would be amortised over a period of 2.277. 540.3 5. Pakistan on notional amount and pay fixed 3. the Company would receive USD-Libor from Citibank N. appropriate amendments have been made in the financial statements for the year ended December 31.933.5 years of employee service. 648.47% which will be settled semi-annually.385% which will be settled semi-annually.000 as housing subsidy. 165 per share. 5. Under the Swap agreement. The fair value of the interest rate swap at the year end is negative and amounted to Rs.000. amortizing upto September 2014. 73.2. 60. 2008 housing subsidy has been disclosed as an equity transaction whereas it is a liability transaction.1 Financial statements for the year ended December 31.000 amortizing upto April 2016. 5. Engro Polymer & Chemicals Limited Engro Polymer & Chemicals Limited (EPCL) entered into a interest rate swap agreement with a bank to hedge its interest rate exposure on floating rate borrowing from International Finance Corporation (IFC) for a notional amount of US$ 15.ENGRO CORPORATION LIMITED TFC PROSPECTUS (Amounts in thousand) 2009.73% which will be settled semi-annually.382. The fair value of the interest rate swap at the year end is negative and amounted to Rs.A. EPCL would receive USD-LIBOR from the bank on notional amount and pay fixed 3.223 and recorded an amortization in the profit and loss account amounting to Rs. To date the Company has disbursed an amount of Rs.214 net of transaction cost on such issue. the Company would receive USD-Libor from Standard Chartered Bank on notional amount and pay fixed 3. Under the Swap agreement.3. In the condensed interim financial statements for the period ended September 30. 3.4 Issue of right shares with premium The Company issued 10% right shares of Rs. 2008 is negative and amounted to Rs.2. 5. 2007 Investment in subsidiaries The following investments were made in the subsidiary companies during the year: 39 . The Company entered into another interest rate swap agreement to hedge its interest rate exposure on floating rate committed borrowing from a consortium of Development Finance Institutions. 424.

2007. The management launched an initiative to recreate significant lost records and was successful in gathering the same in respect of the current reported financial year. 5.399 at various maturity dates matching the anticipated payment dates for commitments with respect to Urea Expansion Project. 5.92% while investment in Engro Innovative Automation (Pvt) limited has increased from 51% to 62.429. 360. Engro Eximp (Private) Limited and Engro Management Service (Private) Limited. 2007 although electronic data remained largely intact due to their Disaster Recovery Plan. 2007 to August 19. Immediately following this event the Company and its Subsidiaries whose Head Office were located at PNSC building.661 300.3. launched their Disaster Recovery Plan due to which operational disruption and financial impact resulting from this incident remained minimal. 5. Records related to the already reported financial years 2005 and 2006 have not been recreated to date.485 for tenure of six months to hedge its Euro . percentage of investment in Engro Polymer and Chemicals Limited (formerly Engro Asahi Polymer and Chemicals Limited) has decreased from 80% to 65. Engro Energy Limited. the fire also destroyed a substantial portion of their hard copy records related to the financial years 2005. At year end the Company had forward exchange contracts to purchase Euros 297.Dollar currency exposure of Euros 342. The fair value of these contracts amounted to USD 32. 2001.3 Currency options and Forward Exchange Contracts During the first half of the year.2 Significant Event During the third quarter of the financial year.3. In accordance with the provisions of the Plan.579. senior employees who are critical to the business operations will be granted options to purchase ordinary shares at an 40 .ENGRO CORPORATION LIMITED TFC PROSPECTUS (Amounts in thousand) Name of Subsidiary Engro Energy (Private) Limited Engro Foods Limited Engro Polymer and Chemicals Limited Engro Innovative Automation (Private) Limited Rupees 1.500 1.620 representing the anticipated outflows for Urea Expansion Project. the Company purchased currency option contracts having a cost of Rs.725 797.4 Employee Share Option Scheme The Company has announced ownership-based compensation scheme namely “Employee Share Option Scheme (ESOS)” for executives and senior employees of the Company as per the Guidelines contained in the Public Companies (Employees Stock Option Scheme) Rules. as approved by shareholders at an Extra Ordinary General Meeting held on August 23. a fire broke out at PNSC Building. these contracts were restructured into forward exchange contracts for the remaining balances of commitments in Euros and any realized amounts were netted from the costs of these options included in the balance of hedging reserve.3.642 at the year end.67%. 2006 and the period January 01. Along with the offices of the Company and of Engro Foods Limited. Karachi where the Head Offices of the Company and some of its Subsidiaries were located. On maturity.000 During the year.

1. 70 per share. 80 per share to the shareholders including premium of Rs. 5.300 527. The option carries neither rights to dividend nor voting rights.000 854.190 pertaining to 30% of equity acquired was taken to other income. 392. 2010.ENGRO CORPORATION LIMITED TFC PROSPECTUS (Amounts in thousand) exercise price of Rs. The Company also acquired 30% shareholding from Asahi Glass Company (AGC) of Japan in December 2006 resulting in the holding of the Company increasing from 50% to 80% in EAPCL which became its subsidiary. 5.4. 2006 Investment in Subsidiaries The following investments were made in the subsidiary companies during the year: Name of Subsidiary Engro Energy (Private) Limited Engro Foods Limited Engro Asahi Polymer and Chemical Limited Rupees 98. The total issue including share premium amounted to Rs.221. The number of options granted is calculated in accordance with the criticality of Employee to the business and their ability subject to approval of the Remuneration Committee. 195. 125 per share to the shareholders including premium of Rs. No amounts are payable by the recipient on receipt of the option. 197. 3. The total number of options that may be granted are for five million newly issued shares. This acquisition resulted in a net fair value adjustment (negative goodwill) of Rs.539 During the year.2 Issue of right shares with premium The Company issued 10% right shares at Rs.147.5 Issue of right shares with premium The Company issued 15% right shares of Rs. the Company has incorporated a wholly owned subsidiary by the name of Engro Energy (Private) Limited with the objective to undertake energy related businesses including setting up Independent Power Projects.316 pertaining to 50% of equity already held was taken to equity and Rs. 115 per share. 5.1 Financial statements for the year ended December 31. The total issue including share premium amounted to Rs. Vesting period shall begin from the date when scheme is cleared by SECP and shall end on December 31.4.309 net of transaction cost on such issue. 41 .4 5. where after the options can be exercised.506 out of this amount of Rs. 277 per ordinary share.960 net of transaction cost on such issue.3. No amount has been recognized in the current financial statements as clearance from SECP has not been received.

4 Interest rate swap During the year the Company entered into a matching swap with United Bank Limited. the Company would pay average of last three cut-off yields of six months Government Treasury Bills on notional amount of Rs.2 Incorporation of subsidiary During the year. 748. the Company incorporated a wholly owned subsidiary by the name of Engro Foods (Private) Limited with the objective to undertake food business.5% which would be settled semi-annually. 5. The change in accounting policy was necessitated in view of a clarification from the institute of Chartered Accountants of Pakistan regarding non statutory appropriations to reserves. Under this agreement. 5.5. 2010 on the condensed interim financial information of the Company and the Group. 1 billion and receive fixed at 9. 6.4.1 Financial statements for the year ended December 31. 2005 became part of the new DC Pension Plan. 2010 We have reviewed the condensed interim financial information (unaudited) of the Company and the consolidated condensed interim financial information (unaudited) of the Group for the half year ended June 30.3 Change in accounting policy During 2006 the Company changed its accounting policy relating to appropriations to reserves. 5.5. We have issued unqualified review conclusions vide our reports dated July 29. This change in accounting policy did not have any effect on the Company‟s total equity. whereby such appropriations are recognised in the year in which these are approved.5 5. 5. CONDENSED INTERIM FINANCIAL INFORMATION (UNAUDITED) FOR THE HALF YEAR ENDED JUNE 30.5.ENGRO CORPORATION LIMITED TFC PROSPECTUS (Amounts in thousand) 5. In addition all existing employees were given options to move from the old Defined Benefit (DB) Pension Plan to the new DC Pension Plan. we have without qualifying our 42 . effective from March 2006 to perfectly offset the earlier swap of Citibank. Upto last year appropriations to reserves were recognised in the financial statements of the period to which it related. by investing Rs. All the existing employees have opted to move to the new DC Pension Plan.3 Redemption of Term Finance Certificates The Company redeemed 2nd Tranche of Term Finance Certificates amounting to Rupees 1 billion by exercising the call option for early redemption. approved post balance sheet date. „Review of Interim Financial Information Performed by the Independent Auditor of the Entity‟. However.5. All employees joining the Company on or after July 1. 2005 Employee benefit scheme The Company had set-up a Defined Contribution (DC) Pension Plan. 2010 in accordance with International Standard on Review Engagements 2410. by a company.200.

8). 2010 and their profit and loss account for the half year ended June 30. 2010 are given below: 43 . A summary of the unaudited assets.6).4.2. liabilities and shareholders‟ equity of the Company and the Group as at June 30.ENGRO CORPORATION LIMITED TFC PROSPECTUS (Amounts in thousand) conclusion added emphasis of matter paragraphs in our review report on the consolidated condensed interim financial information of the Group. pertaining to: (i) the Company‟s recognition of the effect of acquisition of taxable losses of a subsidiary company (as more fully explained in section 6. and (ii) non-recognition of embedded derivative pending response from the Institute of Chartered Accountants of Pakistan and deferment of exchange loss pending final response by the Securities and Exchange Commission of Pakistan on resubmission of the required detailed analysis (as more fully explained in section 6.

778.179 581.437 31.916 2.947 299.797 Current Assets Stores.901 241.130.136.406 1.905 607.871 2.525.703 851. 2010 (Amounts in thousand) Unaudited The Company Rupees ASSETS Non-Current Assets Property.864 25.889.352.373 14.145 381.716 578. plant and equipment Biological assets Intangible assets Long term investments Deferred employee compensation expense Long term loans and advances 86.352.572 The Group 44 .699. spares and loose tools Stock-in-trade Trade debts Deferred expense Loans.469 3.870 121.395.471. advances.032 25.403 36.440.563.856 2.680.102 3.085 3.138 1.1 Summary of unaudited assets.672 TOTAL ASSETS 27.671. liabilities and shareholders‟ equity of the Company and the Group as at June 30. deposits and prepayments Other receivables Derivative financial instruments Taxes recoverable Short term investments Cash and bank balances 11.398.679 257 216.744 119.172 152.564 17.ENGRO CORPORATION LIMITED TFC PROSPECTUS 6.864 754.

369 10.921 27.088 26.179 27.942.946 20.760 23.261 152.321.814 8.548 Minority Interest Total Equity Non-Current Liabilities Borrowings Derivative financial instruments Obligations under finance lease Deferred taxation Employee housing subsidy Deferred liabilities Current Liabilities Trade and other payables Accrued interest / mark-up Current portion of : .borrowings .277.469 89.205.621.076.265 275.075.212 3.633 89.550.095.406 4.695 11.699.277.352.551 275.799 (43.744 45 .807.217 5.obligations under finance lease .522.369 10.273 73.429.757.118 4.244.550.742.028 2.776 282.076.003 1.408 91.429.823.551 29.343.943) 68.651 1.663.483 The Group 158 498 656 161.843 28.061 77.240 8.057.548 3.903 19.271 31.ENGRO CORPORATION LIMITED TFC PROSPECTUS Unaudited (Amounts in thousand) The Company Rupees EQUITY AND LIABILITIES Equity Share Capital Share Premium Employee share option compensation reserve Hedging reserve Revaluation reserve on business combination Exchange revaluation reserve Maintenance reserve General reserve Unappropriated profit 3.270) 109.441 40.026 25.093.281 950.566 120.240 10.043.deferred liabilities Short-term borrowings Derivative financial instruments Taxation Unclaimed dividends Total Liabilities TOTAL EQUITY AND LIABILITIES 27.524 (1.962 73.061 164.799.

800 whereas the award for the earlier years is awaited.1 Guarantees The Company Rupees Corporate guarantees issued to banks in favour of subsidiary companies 6. 2010 have been reproduced below: 6. A partial refund of Rs. The sole arbitrator in the second case has awarded the Subsidiary Company Rs. not acknowledged as debts 6.436 The Group Recovery of penalties imposed by the State Bank of Pakistan Engro Fertilizers Limited (the Subsidiary Company) is contesting the penalty of Rs.4 Arbitration proceedings for recovery of marketing incidentals Engro Fertilizers Limited (the Subsidiary Company) had commenced two separate arbitration proceedings against the Government of Pakistan for non-payment of marketing incidentals relating to the years 1983-84 and 1985-86 respectively. 6.067 5.400. Major issues pending before the tax authorities are described below. imposed by the State Bank of Pakistan (SBP) for alleged late payment of foreign exchange risk cover fee on long term loans and has filed a suit in the High Court of Sindh.2. 99. 47.936 paid and expensed in 1997.2.618 was.4. all pending tax issues of the Fertilizer Undertaking of the Company have been transferred to Engro Fertilizers Limited. recovered in 1999 from SBP and the recovery of the balance amount is dependent on the Court‟s decision. 62.377. 6. The award for the second arbitration has not been recognised due to inherent uncertainties arising from its challenge in the High Court of Sindh. 46 .610 1.2 Claims including pending lawsuits Claims including pending lawsuits.6 Status of Tax Matters / Assessments Engro Fertilizers Limited (the Subsidiary Company) (i) Group Relief As a result of demerger referred to in section 6.1.2.5 Project completion support to lenders The Company has extended project completion support to the lenders of Engro Energy Limited for US $ 15.2 CONTINGENCIES AND COMMITMENTS Contingencies and commitments reported in the condensed interim financial information as at June 30.ENGRO CORPORATION LIMITED TFC PROSPECTUS (Amounts in thousand) 6.2. 6.2.3 47.076. however.2.

600.172 in respect of Tax Year 2008. Rs. The Company had applied for such a designation but remained pending with SECP for want of related regulations not framed then.644). 2001 (the Ordinance) on losses acquired for an equivalent cash consideration from its wholly owned subsidiary. During the current period. 400. Engro Polymer and Chemicals Limited (the Subsidiary Company) During the period.000 for 2006 and 2007 respectively. the major one being apportionment of gross profit and expenses between normal income and Final Tax Regime (FTR) income. 47 .000 respectively.814 for financial years 2006. 974. Stay by the High Court of Sindh for payment of balance amount for financial year 2006 was granted to the Company pending decision of the appeal filed by the Company before the Income Tax Appellate Tribunal (ITAT). (ii) Others All the assessments of the Company. inter corporate dividend (in 2007 and 2008) and write down of inventories to net realisable value (in 2008) besides certain other issues. The tax department raised a demand of Rs. Rs 622. 170. among others.479 (rectified to Rs. 476.770 resulting in the aforementioned tax demand. The Subsidiary Company is confident that all pending issues will be ultimately resolved without any additional liability.845 and Rs. These regulations were framed by SECP subsequently in December 2008 and on resubmission of application the Company along with other subsidiaries have been registered as a Group. a requirement of section 59 B of the Ordinance. being the nondesignation of the Company as well as the subsidiary company as 'companies' entitled to Group Relief by the Securities & Exchange Commission of Pakistan (SECP). mainly on account of disallowance of Group Relief (in all three years). 207. amounting to Rs. The additions to income are mainly on account of trading liabilities and financial costs in relation to the expansion Project. 406. the Company had paid Rs. the Subsidiary Company received a Notice of Demand of Rs. 428. 213. 910.000 for financial year 2008. while stay for payment for the balance amount has been granted by the tax department till December 31. Uptil last year.744. However. Designation has also been granted for Group Relief and Group Taxation during the current period.000 and Rs. The Deputy Commissioner Inland Revenue has made various additions to the returned income amounting to Rs.103 and Rs 450. 2007 and 2008 respectively.ENGRO CORPORATION LIMITED TFC PROSPECTUS (Amounts in thousand) The Company in its tax return for financial years 2006 to 2008 (tax years 2007 to 2009) claimed the benefit of Group Relief under section 59 B of the Income Tax Ordinance. 2010. Engro Foods Limited. Appeal has also been filed by the Subsidiary Company with the Commissioner Inland Revenue (Appeals I).370 and has not considered the brought forward losses amounting to Rs. for income years 1995 to 2002 have been finalized by the Department and are in appeal at either the CIT or ITAT level on various issues.670. for financial year 2007 the issue of Group Relief has been decided by the Commissioner Inland Revenue (Appeals I) in the Company's favor against which the tax department has filed an appeal with ITAT. The main contention for disallowance of Group Relief. the Subsidiary Company has paid Rs. 1.

696. which is currently pending. 48 . 1. While the appeal proceedings were pending. The Subsidiary Company had filed an appeal against this disallowance which was pending with the Income Tax Appellate Tribunal (ITAT). decided the matter against the Subsidiary Company by departing from its previous order of ITAT for the assessment year 2001-2002. Engro Foods Limited (the Subsidiary Company) During the period. the OIR only gave a further credit. the effects of which have been recognized in the consolidated condensed interim financial information after taking into account the consequential effects of the ITAT Order in the years subsequent to 2000 . The disallowance of FYA amounts to Rs.072 in the above demand against the Subsidiary Company‟s assessed refunds. 55.696 has also been given by the OIR subject to verification of taxes paid. While finalizing the assessment for the assessment year 2000-2001. Although the Subsidiary Company has sufficient tax refunds and recoupable minimum taxes to have the remaining demand of Rs. which is currently in progress. the ITAT for assessment year 2000-2001.884. the Taxation Officer had disallowed a claim of First Year Allowance (FYA) by the Subsidiary Company on the grounds that it had not met the criteria for claiming this allowance as required under the repealed Income Tax Ordinance. However. the Subsidiary Company has paid the balance amount of Rs. 2010.404 „under protest‟. This disallowance results in a tax deductible timing differences.2001. Consequently. The Subsidiary Company also applied for a stay order to the Commissioner Inland Revenue (Appeals) for the remaining outstanding demand as the credit of Rs. which was granted up to June 26. Application for extension in stay order has also been filed and the management is confident that the stay will be extended. the Tax Department has issued a notice for amendment of assessment under section 122 of the Ordinance for the tax year 2008 and has selected the Subsidiary Company‟s tax return for Tax year 2009 for tax audit u/s 177 of the Ordinance. 125. 1979. 32. subject to further verification. 88.100 adjusted. of Rs. upon appeal this matter was ultimately decided in Subsidiary Company‟s favour in 2005 by the Income Tax Appellate Tribunal (ITAT).359.ENGRO CORPORATION LIMITED TFC PROSPECTUS (Amounts in thousand) The Subsidiary Company has filed an appeal against the aforementioned demand with the Commissioner Inland Revenue (Appeals). The management of the Subsidiary Company is confident that the ultimate outcome of the aforementioned matter would be favourable and consequently has not recognized the effects for the same in the consolidated condensed interim financial information. 55. the Officer Inland Revenue (OIR) adjusted a sum of Rs. During the period. A similar disallowance had also been made for the assessment year 2001-2002 by the Taxation Officer in 2003.

7 Commitments The Company Rupees Plant and machinery Letter of credits other than for capital expenditure 3.174 642. The future lease commitments related to non-cancellable operating leases as of June 30.351 49 .ENGRO CORPORATION LIMITED TFC PROSPECTUS (Amounts in thousand) 6.024 907 4.420 1.2.191.325 The Group The Avanceon Limited Partnership (USA) is obligated under non-cancellable operating leases for computer & office equipment which expire at various dates. 2010 are as follows: Rupees Not later than one year Later than one year and not later than five years Later than five years 2.

216) 466.197.273 Selling and distribution expenses Administrative expenses Other operating income Other operating charges Finance cost (10.000 127.876.834) 741 (81.217) 3.116 6.925 33.984.170.3 Unaudited condensed interim profit and loss account of the Company and the Group for the half year ended June 30.390) 227.739 (80.554.617) (1.Current .158.441) 9.ENGRO CORPORATION LIMITED TFC PROSPECTUS (Amounts in thousand) 6.526 (24. 2010 Unaudited The The Company Group Rupees Net sales Cost of sales GROSS PROFIT Dividend income Royalty income 180.093) 385. 2010: 50 .283.599) (12.865) (1.441.866) (2.085 (3. 2010.349 251.884 3. We give below the significant disclosures made in the notes to the condensed interim financial information (unaudited) for the half year ended June 30.928) 5.571) 371.731) 258.426 Share of income from joint venture PROFIT BEFORE TAXATION Taxation .739 307.739 307.Deferred PROFIT AFTER TAXATION Note: For earnings per share. (81.724.354 (787.576 478.709 (567.157 616.209 6. refer section 7 of this report.616 (1.728.444.4 Significant disclosures made in the notes to the condensed interim financial information (unaudited) of the Company and the Group for the half year ended June 30.

is summarised below: 51 . in addition to existing 7.999.000 being the paid up face value of Engro Fertilizers Limited. In accordance with the Scheme. In this regard.993. a wholly owned subsidiary namely Engro Fertilizers Limited was incorporated on June 29. agreements. as per the Scheme. 6. 2009 decided to divide the Company into two companies by separating its Fertilizer Undertaking from the rest of the undertaking that was to be retained in the Company. liabilities. 2010 In order to determine the net assets of the Retained Undertaking and the Fertilizer Undertaking for the aforementioned transfer / demerger of the Company.1 Scheme of Arrangement The Board of Directors in their meeting of April 28. which among other items include Investments/Shareholdings. between the Fertilizer Undertaking and Retained Undertaking. 2009. share premium. 2010. 1984 whereby (a) the Fertilizer Undertaking has been transferred and vested in Engro Fertilizers Limited against the issuance of ordinary shares of Engro Fertilizers Limited to the Company. all reserves including goodwill. capital & revenue reserves but excluding hedging reserve. the assets and liabilities of the Company as at January 1. The Retained Undertaking comprises of specific assets and liabilities as of the aforementioned Effective date identified in the Scheme.4. The division was effected on January 1. and (b) the retention of the retained undertaking in the Company and the change of the name of the Company to Engro Corporation Limited.ENGRO CORPORATION LIMITED TFC PROSPECTUS (Amounts in thousand) 6.2 Bifurcated Balance Sheet as at January 1. arrangements and other matters have been transferred to Engro Fertilizers Limited on the Effective Date against the issuance of 9. 2010 were bifurcated.4. The bifurcated balance sheet as at January 1. 10 each plus the share premium. Joint Venture Agreements. fully paid ordinary shares of Rs. the fertilizer business. 2010 (the Effective Date) through a Scheme of Arrangement (the Scheme) under Section 284 to 288 of the Companies Ordinance. employee share option compensation reserve. Engro Corporation Limited hence became a Holding Company to oversee the business of new fertilizer subsidiary as well as business of its other existing subsidiaries/associates. duly audited by the external auditors. including all assets. Such share premium is based on the net assets transferred over Rupees 100.

979.258 4.550.988.821.366.988. at net book value .957 (609.238 2.352.704 12.250.326 69.325 1. spares and loose tools Stock-in-trade Trade debts Other receivables Derivative financial instruments Taxes recoverable Short term investments Cash and bank balances TOTAL ASSETS Equity Share capital Share premium Employee share option compensation reserve Hedging reserve General reserve Unappropriated profit Total Equity Liabilities Borrowings including current portion Derivative financial instruments including current portion Deferred liabilities Employee housing subsidy Retirement and other service benefits obligations including current portion Trade and other payables Accrued interest / mark-up Short term borrowings Unclaimed dividends Adjustment pertaining to transfer of Fertilizer Undertaking (section 6.873 122.425 275.200 93.233.719) (609.429.657 90.785 68.Capital work-in-progress .217 127.250.462.009.438 Retained Undertaking Fertilizer Undertaking Rupees Total 52 17.425 141.429.607 2.4.739.639 54.518.117 422.061 2.Capital spares Intangible assets Long term investments Deferred employee compensation expense including current portion Long term loans.326 69.552.164 6.812 26. plant and equipment .167 450.258 (609.753 102.352.103 3.245 3.209 536.501.607 2.979.181 3.375.704 1.888.857 3.065 245.014.885 987. deposits and prepayments including current portion Stores.857 454.657 90.785 67.144 76.955.468 961. advances.514.209 536.753 66.014.216 17.ENGRO CORPORATION LIMITED TFC PROSPECTUS (Amounts in thousand) Assets Property.167 450.695.426 10.512 122.709.099 66.972 23.274 .527 102.594 134.438 288.274 6.719) 4.3) TOTAL EQUITY AND LIABILITIES 899 936 151.240 9.714 76.156.099 255.565.972 24.117 422.611 76.719) (609.514.164 59.144) 59.061 54.517.739.102.160.375.739 10.426 10.798.709.695.022 195.169 211.497.062 961.461 (10.639 12.550.454 1.852 1.969 63.217 127.454 1.Operating assets.126 76.065 1.233.531 27.240 9.885 988.342 93.022 195.270 211.908.719) 288.330 63.366.

cost .719 10.129.739. 2010 is to be transferred to Engro Fertilizers Limited. Such omission of hedging reserve created a difference of an equivalent amount in the balance sheet. 2010 amounted to Rs. in addition to existing 7.993.739.4.4. fully paid ordinary shares of Rs. whereas only the revaluation surplus/reserves (hedging reserve omitted) is to be deducted by Engro Fertilizers Limited from the net assets so transferred to determine the share premium amount over and above the Rs. as summarized below: Rupees Total assets (section 6. Therefore.2) Less: Total liabilities (section 6.695.144.739 10.ENGRO CORPORATION LIMITED TFC PROSPECTUS (Amounts in thousand) 6.144 Hedging Reserve As per the Scheme of Arrangement. 53 . 10 each plus share premium to the Company as follows: Rupees 9.2) Net assets transferred to Engro Fertilizers Limited Add: Hedging reserve (negative) .000 share capital. supported by the legal advisor.4 Commencement of operations of Engro Energy Limited During the period. 10.3 Transfer of Fertilizer Undertaking The net assets of the Fertilizer Undertaking transferred to Engro Fertilizers Limited as at January 1.999.144 10.425 609. in the opinion of the Company‟s management. 6.639.4. 2007. The electricity generated through the Power Plant is transmitted to the National Transmission and Despatch Company (NTDC) under the Power Purchase Agreement (PPA) dated October 26. 2010.share premium 100.3 MW combine cycle power plant (the Power Plant) and has commenced commercial operations on March 27. Engro Energy Limited completed construction and testing of its 217.999. the need for amendment to the Scheme of Arrangement in respect of such inclusion of hedging reserve does not arise as it does not in any way adversely affect the interest of the shareholders or creditors. the management has also included the hedging reserve (negative) in the determination of share premium to eliminate the aforementioned difference.739.164 66.refer note below Adjustment pertaining to transfer of Fertilizer Undertaking 76.144 Engro Fertilizers Limited in return issued 9.565.000 10. Further.993 ordinary shares issued to the Company by Engro Fertilizers Limited . this being an inadvertent omission in the Scheme of Arrangement. valid for a period of 25 years. 100.4. the hedging reserve and revaluation surplus/reserves as at January 1.

in addition to issuance of shares on transfer of Fertilizer Undertaking. as referred to in section 6. The number of options granted to an employee is the same as the number of options of the Company surrendered by them.3. and Engro PowerGen Limited has issued 3. it has now decided that EPGL will issue fewer number of shares to the Company. The options carry neither right to dividends nor voting rights. These changes have been duly approved by the Securities and Exchange Commission of Pakistan (SECP). the employees transferred to Engro Fertilizers Limited and holding share options of the Company have been. 205.200 shares respectively and the exercise price was adjusted to Rs.100 ordinary shares of Engro Fertilizers Limited at an exercise price of Rs. consequent to the bonus issue in the current period. amounting to Rs.983.e. the employees transferred from the Company to Engro Fertilizers Limited have surrendered their existing share options against which new share options have been granted to them under a new scheme of Engro Fertilizers Limited. granted share options under a new Employee Share Option Scheme (the Scheme) of Engro Fertilizers Limited. Engro Fertilizers Limited As stated above.84 from Rs.4. Engro Fertilizers Limited. the entitlements were increased to 1.000 ordinary shares of Rs.52 respectively. Further.000 shares. as referred to in section 6. a wholly owned subsidiary of the Company.1. 98 per ordinary share.100. have started from January 1. 10 each at a premium of Rs. the Company was planning to obtain in exchange of the aforementioned transfer an equivalent number of shares of EPGL. Initially. 804. on account of the Company's overall restructuring of its business to enable all direct subsidiaries to operate as holding companies for their respective lines of business. 90 per share. employees have been granted options to purchase 4. No amounts are paid or payable by the recipient on receipt of the option.000. 288. 186. 6.937. 2008 in the Company. Under the Scheme. As per the Scheme. due to significant cost of issuance of shares. However. the entitlements and exercise price are subject to adjustments because of issue of right shares and bonus shares.4.520 shares from 1.5 Employee share option scheme Engro Corporation Limited Consequent to the demerger. 2010 and shall end on 54 . has issued bonus shares to the Company in the ratio of 2.  Further. on surrender thereof. the Company is in the process of transferring part of its holding of 304 million ordinary shares of Rs.880 shares for every 100 shares held i.4. Vesting period for employees who were initially granted options on or before June 30.803.ENGRO CORPORATION LIMITED TFC PROSPECTUS (Amounts in thousand) Investment in subsidiaries During the period:   the Company has subscribed to the right shares issued by Engro Polymer and Chemicals Limited.266. 10 each in Engro Energy Limited (EEL) to Engro PowerGen Limited (EPGL).

The fair value of the share options as per the model and underlying assumptions are as follows: Fair value of the share options at grant date Share price at grant date Exercise price Annual volatility Risk free rate used Dividend yield 6. has been recognised in consolidated condensed interim financial information. Engro Fertilizers Limited used Black Scholes pricing model to calculate the fair value of share options at the grant date. 2008.6 Rs.71% Maintenance Reserve – Engro Energy Limited (the Subsidiary Company) In accordance with the Power Purchase Agreement (PPA).00 41. the vesting period will end such number of days after December 31. The above Scheme was conceptually approved by the Securities and Exchange Commission of Pakistan (SECP) before the transfer of Fertilizer Undertaking to Engro Fertilizers Limited. the later options can also only be exercised up to December 31. Rs.94 per share. After the second Agreement year and thereafter the Fund may be re-established at such other level that the Subsidiary Company and NTDC mutually agree. where after these options can be exercised within a period of two years ending December 31. Any interest income resulting from the depository arrangements of the Fund shall remain in the Fund. However. 2012. For options which were initially granted by the Company after June 30.ENGRO CORPORATION LIMITED TFC PROSPECTUS (Amounts in thousand) December 31.4.e. 98.94 Rs.4. whereas the formal approval was granted during the current period. Under the PPA. 11.61 Rs. Engro Energy Limited (the Subsidiary Company) is required to establish and maintain a separate reserve fund (the Fund) with a depository institution for payment of major maintenance expenses.185 in respect of sales made by Engro Energy Limited (the Subsidiary Company) to National Transmission and Despatch Company 55 . 1/24th of the annual operating and maintenance budget of the Power Plant less fuel expenses is to be deposited into the Fund on each capacity payment date until such reserve equals to nine such deposits.7 Non-recognition of embedded derivative / exchange loss by Engro Energy Limited (the Subsidiary Company) Sales for the current period included Rs. 87. 11.64% 12. As the vesting period has started from January 1.007.21% 5. 2. 6. 2010 and the Scheme being considered a continuation of the old Scheme announced by the Company. 2010. 2010 as is equal to the number of days between the date the initial option letters were issued and the date of grant of the later options by the Company. 2010. a charge based on fair value of share options i. 2012. calculated as on January 1.

ENGRO CORPORATION LIMITED TFC PROSPECTUS (Amounts in thousand) (NTDC). Further. other indexations of (i) USD/PKR exchange rate (applicable to Company‟s price components of debt. The SECP in response has regretted. 2009: Rs. on commencing commercial operations. that the economic characteristics and risks of foreign currency indexations are closely related to the economic characteristics and risks of the Host Contract. Further. The Subsidiary Company. has not been charged to the profit and loss account by the Group and has preferred to disclose it as deferred expense. had the exchange loss been recognized in the consolidated condensed interim profit and loss account. The Institute of Chartered Accountants of Pakistan (ICAP) had concluded in 2006.000. Sales invoices are raised by the Subsidiary Company based on the tariffs provided/approved under the PPA. The economic characteristics and risks of most of the Subsidiary Company's Tariff indexations are closely related to the economic characteristics and risks of the Power Purchase Agreement (the Host Contract). 2010 (December 31. the Subsidiary Company taking cognizance of the 'matching principle' requested the Securities Exchange Commission of Pakistan (SECP) on June 30. 2010. such exchange loss amounting to Rs 252. as per practice generally accepted in the power industry. Hence pending final response from the SECP. to allow such deferment in the present form and advised the Subsidiary Company to resubmit the matter with detailed reasons and impact analysis for its fresh consideration. as indexation of USD/PKR exchange rate related to debt component has not been recognized separately as embedded derivative. the Group on prudence has not recognized such indexations in the consolidated condensed interim financial information as derivatives. would result in a credit to the profit and loss account which would more than offset the exchange loss. the profit for the period would have been lower by the aforementioned amount. 2010. which is being sought to avoid distortion of results. 6. Such embedded derivative as per International Accounting Standard 39. has resubmitted such detailed analysis on July 13.e. has sought clarification from ICAP whether its conclusion covers both the aforementioned indexations (i.8 Non-adjusting event after balance sheet date The Board of Directors in its meeting held on July 28. The Subsidiary Company's management. 2 per share for the year ending December 31. However. Pending response from ICAP. Hence have not been separated and accounted for under IAS 39 as a derivative. in the case of a listed power company. 2010 to allow deferment of recognizing exchange loss on translation of borrowings in the profit and loss account till the clarification sought on the recognition of the foreign currency indexations from ICAP has been received. if required. however. return on equity. Such recognition. 2 per share final cash dividend and bonus issue in the ratio of 1 56 .4. USD/PKR exchange rate and US CPI and USD/PKR exchange rate). therefore. 2010 has approved an interim cash dividend of Rs. and (ii) US CPI & USD/PKR exchange rate (applicable to the Subsidiary Company‟s price components of fixed and variable operations and maintenance – foreign) are not separated and accounted for as derivatives. vide letter July 9. like other power companies. 2010 and is very confident that the SECP based thereon would concur with their viewpoint in allowing the requested temporary deferment. return on equity during construction). comprises of various price components with indexations falling within the ambit of embedded derivatives. being the excess of exchange gain realized through tariff indexations upto June 30. The Subsidiary Company‟s tariff. 'Financial Instrument: Recognition and Measurement' needs to be separated from the host contract and accounted for as derivative if economic characteristics and risks are not closely related to the host contract.

The Company .18 and Rs. basic and diluted.08 13.64 10. Yours truly Sd/_____________________ A.F.45 9. as referred to in section 7. of the Company and the Group for the half year ended June 30. 10% bonus). 10. 7. 2005 to 2008 have been restated to incorporate the effect of issuance of right shares upto December 31.54 16. Accordingly. 2009.2. 7.47 10.FERGUSON & CO.81 16.1 EARNINGS PER SHARE The details of audited earnings per share.36 13. these do not include the effect of bonus shares issued subsequent to December 31.53 12.44 The earnings per share for the years ended December 31.33 11.2 The unaudited earnings per share.The Group 14.37 respectively. basic and diluted. 2009.ENGRO CORPORATION LIMITED TFC PROSPECTUS (Amounts in thousand) share for every 10 shares held i. Chartered Accountants Karachi 57 . 1.e. of the Company and the Group are as follows: 2009 2008 Year ended December 31. 2010. calculated after taking the effect of the bonus shares issued by the Company during the half year ended June 30. The condensed interim financial information (unaudited) does not reflect the dividend payable. 2007 2006 Rupees per share 2005 Earnings per share . 2010 was Rs. 7.

3. 2.ENGRO CORPORATION LIMITED TFC PROSPECTUS 5. Marine Drive.354.426 Yours truly Sd/_____________________ A. HC No. The Harbour Front Building. the issued.545 1. of Shares 185. 2010.588.484 112.426 thousand comprising of the following: No. Karachi – 75600. Clifton. SUBSCRIBED AND PAID-UP SHARE CAPITAL We have verified from the books of account and records of Engro Corporation Limited (formerly Engro Chemical Pakistan Limited) that the issued.2 AUDITOR‟S CERTIFICATE ON THE ISSUED. subscribed and paid-up share capital of the Company as at December 31. 10 each issued as fully paid bonus shares Rupees in thousand 1.079 Ordinary shares of Rs.853.F.125.369 thousand.979. 2009 was Rs. Chartered Accountants Karachi MANAGEMENT NOTE As per the unaudited accounts of the Company as at June 30. subscribed and paid-up share capital was Rs.881 297.942. 2010 D 069 AUDITORS‟ CERTFICATE ON ISSUED.FERGUSON & CO. SUBSCRIBED AND PAID-UP CAPITAL The Board of Directors Engro Corporation Limited (formerly Engro Chemical Pakistan Limited) 7th & 8th Floor. Block 4.277.563 2. Pakistan Dear Sirs August 2. 58 .10 each fully paid in cash Ordinary shares of Rs. 3.979.

Harbour Front Building Plot No.67 59 .942.979.520 23. 2009.119.3 AUDITOR‟S CERTIFICATE FOR BREAK-UP VALUE OF SHARES The Board of Directors Engro Corporation Limited (formerly Engro Chemical Pakistan Limited) 7th & 8th Floor.242 (617. and (ii) the Company and its subsidiaries (the Group).908.972 23.563 Rupees per share Break-up value per share (before final dividend) 90.204 Number of shares Number of ordinary shares in issue 297. we confirm that the break-up values of the ordinary shares of Rs.258 (609.812 26.888. are as follows: The Company The Group August 2.942. 10 each of (i) Engro Corporation Limited – the Company (formerly Engro Chemical Pakistan Limited).426 10. 5.000) 114.563 297.426 10.139. subscribed and paid-up capital Share premium Employee share option compensation reserve Hedging reserve Revaluation reserve on business combination Exchange revaluation reserve General reserve Unappropriated profit 2.550.387. Block-4 Scheme No.240 8.778 26.ENGRO CORPORATION LIMITED TFC PROSPECTUS 5.238 2. 2010 D 068 Rupees in thousand Issued.061 318.061 288.429.900 (43.185) 4.250.25 87. based on the audited financial statements for the year ended December 31. HC-3.719) 4.240 9.550. Clifton Karachi Dear Sirs AUDITORS‟ CERTIFICATE FOR BREAK-UP VALUE OF SHARES As requested.429.979.

10 each of (i) Engro Corporation Limited – the Company (formerly Engro Chemical Pakistan Limited) was 82. 2010.943 thousand. 2010. amounting to Rs.819 Rupees per share Break-up value per share (after final dividend and bonus issue) 80. and issue of bonus shares amounting to Rs. Chartered Accountants Karachi MANAGEMENT NOTE As per the unaudited accounts of the Company as at June 30.F. while approving the financial statements for the year ended December 31.ENGRO CORPORATION LIMITED TFC PROSPECTUS Final Dividend / Bonus Issue 2009 The Board of Directors of the Company on January 22.88 Yours truly Sd/_____________________ A.736. and (ii) the Company and its subsidiaries (the Group) was 86. The aforementioned break-up values after taking into consideration the effect thereof. 2009. 595. declared final cash dividend @ Rs.885 thousand. the break-up values of the ordinary shares of Rs.22 77.41. from unappropriated profit. 60 .736.819 327. 2 per share.FERGUSON & CO. 297. would be as follows: The Company The Group Number of shares Number of ordinary shares in issue (after bonus issue) 327.62.

2010 61 .ENGRO CORPORATION LIMITED TFC PROSPECTUS 5.4 UNAUDITED ACCOUNTS AS AT JUNE 30.

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5 CREDIT RATING REPORT 69 .ENGRO CORPORATION LIMITED TFC PROSPECTUS 5.

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ENGRO CORPORATION LIMITED TFC PROSPECTUS
PART VI 6. 6.1. TRUSTEE AND SECURITY THE SECURITY The TFC has been secured by way of first ranking floating charge over all the present and future movable properties (including investments) of Engro Corporation Limited but excluding present and future trade marks and copyrights of ECL and excluding its shares in Engro Energy Limited and Engro Polymer & Chemicals Limited (“Charged Assets”) at 125% of the outstanding principal amount. These charges have been created in favor of IGI Investment Bank Limited (“Security Trustee”) for safeguarding interest of the TFC holders. The Company may, with prior written consent of the Trustee, create further first ranking pari passu charges. (i) Nature of Charge Engro Corporation Limited has created first ranking floating charge over all the present and future movable properties (including investments) of Engro Corporation Limited but excluding present and future trade marks and copyrights of ECL and excluding its shares in Engro Energy Limited and Engro Polymer & Chemicals Limited (“Charged Assets”) in favour of IGI Investment Bank Limited, as Security backing the TFC. The Company shall be free to transfer and sell part of Charged Assets without consent or NOC of the Security Trustee or the TFC Holders, as long as the total value of charge in favour of the Trustee after such sale/transfer does not fall below 125% of the outstanding principal amount then secured. However, the Company shall intimate the Security Trustee, the changes in the assets backing the TFC within seven working days of such changes, if any. The Company may, with prior written consent of the Trustee, create further first ranking pari passu charges. (ii) Detail of assets backing the TFC (a) Shares as Security Engro Corporation Limited is the Parent (holding) Company and its main assets are in the form of shares held in its subsidiaries and affiliates. Details of shares held by Engro Corporation Limited as on June 30, 2010 for the purpose of security for this TFC Issue is as under: Shares of Rs. 10 each 10,000 250,000 542,300,000 9,276,000 25,066,667 298,000,000 45,000,000 Percentage Holding
100% 100% 100% 100% 62.67%

Subsidiaries and Affiliates
Engro Eximp (Pvt) Ltd. Engro Management Services (Pvt) Ltd. Engro Foods Ltd. Engro PowerGen Ltd. Avanceon Ltd. Engro Fertilizer Ltd.

Breakup Value per share (PkR)
147,256.80 10.21 7.64 55.69 0.76

Total Value (PkR Million) 1,472.57 2.55 4,141.44 516.55 19.04 11,795.11 591.06

100% 50%

39.58 13.13

Engro Vopak Terminal Ltd. (JV)

79

667 N.ENGRO CORPORATION LIMITED TFC PROSPECTUS Arabian Sea Country Club (Affiliate) Total (b) other assets These include cars. The book value of all such other assets as at June 30. and The interests of the TFC holders are safeguarded by taking the actions that it deems necessary (as prescribed by the Declaration of Trust) in the event of any breach of terms and conditions of TFC Instrument and the Declaration of Trust by ECL. and other such assets of values which are minor compared to shareholdings. upon the occurrence of an Event of Default.3. computers.000 per annum. THE TRUST DEED The Trust Deed dated September 17. EVENTS OF DEFAULT AND SECURITY ENFORCEMENT PROCEDURE The event of default will be governed under Article 8 of the Declaration of Trust executed between the Company and the Trustee to the Issue. The fee shall be payable at the beginning of each year commencing from the date of signing of the Trust Deed and on each subsequent anniversary thereof. Presently.2. N. 2010. and the Security shall become immediately enforceable by a declaration of the Trustee.A.33 The terms and conditions of the Declaration of Trust and Security Documents are adhered to.032. It is clarified. the Trustee may enforce ECL‟s obligations in accordance with the terms of the Trust Deed. The Obligations shall become immediately due and payable. is PkR 86. there are no charges on the above mentioned assets backing the TFC. The bankers to the Issue have been instructed to inform the Trustee on a regular basis of the subscriptions received. IGI Investment Bank Limited has been appointed to act as Trustee for the issue. however. 6. In the event of ECL defaulting on any of its obligations under the terms of the Declaration of Trust. As per the terms of the Declaration of Trust executed between ECL and the Trustee.000 920. the Trustee will ensure the following:  500. The Issuer shall pay to IGI Investment Bank Limited a trustee fee of PKR 500.A 18. The proceeds of any such enforcement shall be distributed to the TFC Holders at the time on a pari passu basis in proportion to the amounts owed to each TFC holder pursuant to the TFCs.538. notified to the Issuer.000/-.  6. 6.4. that in the event of default. the TFC holders acting through the Trustee shall be entitled to initiate legal proceedings against the Company for recovery of the outstanding amount payable under the TFCs. 80 .402. 2010 (“Declaration of Trust”) executed between the Company and “IGI Investment Bank Limited” specifies the rights and obligations of the Trustee.A. THE TRUSTEE In order to safeguard the interests of the TFC holders. N.

h) a moratorium is declared in respect of any Financial Indebtedness of the Issuer. each of the following events constitute an Event of Default and is reproduced below: a) the failure of the Issuer to: i. winding-up. and / or elects to become a party to or is subject to any proceedings or procedure under any law for the relief of financially distressed debtors. d) any representation or warranty made or deemed to be made or repeated by the Issuer in or pursuant to this Declaration is found to be incorrect and / or misleading in any material respect. and / or is unable or admits in writing its inability to pay its debts as they mature.1 of the Declaration. redeem any Coupon on its respective Redemption Date and to pay the Redemption Amount and / or any portion thereof on such Redemption Date. by reason of actual or anticipated financial difficulties. voluntarily or involuntarily becomes the subject of bankruptcy or insolvency proceedings except for proceedings which are frivolous in nature. g) the Issuer is unable or admits its inability to meet its payment obligations in respect of its Financial Indebtedness as the same fall due. legal proceedings or other procedure or steps are taken in relation to the suspension of payments. ii. except for proceedings which are frivolous in nature.ENGRO CORPORATION LIMITED TFC PROSPECTUS Under Section 8. and / or a receiver or an administrator is appointed for all or any material part of its assets or business. e) the Issuer enters into an arrangement for the benefit of its creditors in respect of any Financial Indebtedness. iv. dissolution.1. administration or reorganisation (by 81 . to the Trustee. pay any amounts payable by the Issuer under this Declaration and such failure continues for a period of three (3) consecutive days irrespective of whether or not a demand for the payment of the same has been made upon the Issuer. suspends making payments on any of its Financial Indebtedness or. f) the Issuer: i. commences negotiations with one or more of its creditors with a view to rescheduling its Financial Indebtedness or any portion thereof. b) default by the Issuer in the performance or observance of or compliance with any of its other material obligations or undertakings under the Declaration of Trust and Deed of Floating Charge. i) any corporate action. ii. c) an event of default (howsoever described and / or defined) occurs under a Transaction Document. iii.

legal. scheme of arrangement or otherwise) of the Issuer other than a solvent liquidation or reorganisation. k) any governmental agency nationalizes. w) the Issuer suspends. o) any commitment for any Financial Indebtedness of the Issuer is cancelled or suspended by a creditor of the Issuer. or cease to be. whichever is earlier. acquires or expropriates (with or without compensation) any material or all the assets of the Issuer including but not restricted to the Secured Assets. t) any court or arbitrator passes a final non-appealable judgment or arbitral award for payment. to carry on all or a substantial part of its business or to change the nature of its business from that undertaken at the date of this Declaration. q) any obligation or obligations of the Issuer under this Declaration or any Transaction Document are not. valid. m) any other event or circumstance arising out of the Issuer‟s negligence or default which results in a Material Adverse Effect. as a result of an event of default (however described). p) it is or becomes unlawful for the Issuer to perform any of its material obligations under this Declaration. n) any Financial Indebtedness of the Issuer is declared to be or otherwise becomes due and payable prior to its specified maturity as a result of an event of default (howsoever described). r) the Issuer repudiates this Declaration or evidences an intention to repudiate this Declaration. s) any Security Document ceases to be in full force and effect or is declared to be void or is repudiated and the conditions resulting in the repudiation are not remedied and / or replacement Security Documents are not executed within a period of fifteen (15) days from the date on which the Security Documents become void and /or are repudiated. x) any event or series of events (whether related or not) occurs which would have a Material Adverse Effect. l) the Issuer fails to meet any of its material obligations under this Declaration and the same has a Material Adverse Effect. v) the Issuer fails to comply with the covenants set out in this Declaration and such failure continues for a period of thirty (30) days from the date of receipt of a notice by the Issuer from the Trustee in respect of the same or from the date on which the Issuer has knowledge of the same. or threatens to suspend or cease. u) the Issuer fails to comply with any law or regulation to which it may be subject and the same has a Material Adverse Effect. j) enforcement of any Security Interest over substantial assets of the Issuer. binding or enforceable and the cessation individually or cumulatively has a Material Adverse Effect. ceases. 82 . against the Issuer and the Issuer fails to effect such payment within thirty (30) days from the date on which the obligation to pay arises.ENGRO CORPORATION LIMITED TFC PROSPECTUS way of voluntary arrangement.

KARACHI.1.T. MANAGEMENT OF THE COMPANY BOARD OF DIRECTORS OF ENGRO CORPORATION LIMITED The Company‟s affairs are governed by a Board of Directors. PAKISTAN Directorships held in other Companies/Organizations  Dawood Hercules Chemicals Limited  Pakistan Business Council  Pakistan Poverty Alleviation Fund  Beaconhouse National University  Pakistan Center for Philanthrophy  Karachi Education Initiative/Karachi School for Business & Leadership  Karachi Education Initiative (UK)  Asia House. KHAN ROAD. The CEO has an overall responsibility to manage the portfolio of businesses of the Company.ENGRO CORPORATION LIMITED TFC PROSPECTUS PART VII 7. KARACHI. BLOCK 4. DAWOOD CENTRE. THE HARBOR FRONT BUILDING. M. CLIFTON. London  Dawood Corporation (Private) Limited  Patek (Private) Limited  Sach International (Private) Limited  The Dawood Foundation         Engro Foods Limited Engro Vopak Terminal Limited Engro Polymer & Chemicals Limited The Pakistan Business Council Lahore University of Management Sciences Avanceon Limited Advanced Automation LP Karachi Education Initiative/Karachi School for Business & Leadership Pakistan Institute of ASAD UMAR Chief Executive 8TH FLOOR. 7. Director‟s Name HUSSAIN DAWOOD Chairman Address 11th FLOOR. which currently consists of the Chief Executive Officer (“CEO”) and twelve other Directors. MARINE DRIVE. HC # 3. PAKISTAN  83 .

STREET 11. PAKISTAN      ISAR AHMAD 11th FLOOR. KARACHI.25. PAKISTAN            Corporate Governance Engro Powergen Limited Pakistan Chemical and Energy Sector Skills Development Company Engro Fertilizers Limited State Bank of Pakistan Engro Eximp (Private) Limited Open Society Institute of Pakistan Pakistan Industrial Development Corporation Foundation for Advancement of Sciences & Technology (FAST) Funds for Inclusion of People with Disabilities (FIPD) National University Engro Fertilizers Limited Engro Polymer & Chemicals Limited Engro Foods Limited Dawood Lawrencepur Limited Dawood Hercules Chemicals Limited Central Insurance Company Limited Tenaga Generasi Limited Engro Polymer & Chemicals Limited LMKR Holdings (Private) Limited Engro Powergen Limited UBL Fund Managers Engro Fertilizers Limited Sindh Engro Coal Mining Company Limited Avanceon Limited Dawood Corporation (Private) Limited Dawood Hercules Chemicals Limited Dawood Lawrencepur Limited Engro Foods Limited SHAHZADA DAWOOD 11th FLOOR. DAWOOD CENTER M. PAKISTAN 84 . PAKISTAN       SHABBIR HASHMI 90/1. M.T.KHAN ROAD KARACHI. FALCON ENCLAVE AIR FORCE OFFICERS SOCIETY(AFOS) TUFAIL ROAD LAHORE CANTT. KHAN ROAD.T. DAWOOD CENTRE.PHASE VI KARACHI.ENGRO CORPORATION LIMITED TFC PROSPECTUS       ARSHAD NASAR NO. KHAYABAN-E-SEHAR DHA.

PHASE IV. PAKISTAN      Engro Polymer & Chemicals Limited Engro Vopak Terminal Limited National Management Foundation . UK ENGRO POLYMER & CHEMICALS LTD.  Engro Polymer & Chemicals Limited 85 .T.Lums Sach International (Private) Limited Engro Powergen Limited Petek (Private) Limited Pebbles (Private) Limited The Dawood Foundation Engro Fertilizers Limited Tenaga Generasi Limited Central Insurance Company Limited Dawood Hercules Chemicals Limited Dawood Corporation (Private) Limited Inbox Business Technologies (Private) Limited Patek (Private) Limited Sach International (Private) Limited Sui Northern Gas Pipelines Limited The Dawood Foundation Pebbles (Private) Limited Tenaga Generasi Limited Dawood Lawrencepur Limited Engro Fertilizers Limited Dewan Drilling Limited Dewan Petroleum (Private) Limited National Clearing Company of Pakistan Limited Al-Meezan Investment Management limited Sindh Engro Coal Mining Company Limited _ SAAD RAJA ASIF QADIR 31 BELLFIELD AVENUE HARROW. M. 5TH GIZRI STREET. PAKISTAN             MUHAMMAD ALIUDDIN ANSARI 30-G. KARACHI. MIDDLESEX HA3 6ST.ENGRO CORPORATION LIMITED TFC PROSPECTUS           ABDUL SAMAD DAWOOD 10TH FLOOR. DHA. KHAN ROAD. DAWOOD CENTRE. KARACHI.

As part of social responsibilities. PROFILE OF THE CHAIRMAN OF THE BOARD OF DIRECTORS Mr.KHAN ROAD. Pakistan Poverty Alleviation Fund Engro Polymer & Chemicals Limited Engro Vopak Terminal Limited Engro Fertilizers Limited Engro Eximp (Private) Limited Engro Polymer & Chemicals Limited Engro Energy Limited Engro Powergen Limited Sindh Engro Coal Mining Company Limited Engro Management Services (Private) Limited Avanceon Limited Engro Foods Limited Sigma Leasing Corporation Limited Engro Energy Limited Engro Powergen Limited Engro Fertilizers Limited Engro Eximp (Private) Limited KHALID MANSOOR 7TH FLOOR. PAKISTAN                 Engro Polymer Trading (Private) Limited Inbox Business Technologies (Private) Limited Unicol Limited Engro Powergen Limited Engro Fertilizers Limited Sindh Engro Coal Mining Company Ltd. BLOCK 4. one of the largest World bank-financed social funds across the world. CLIFTON. HC # 3. Commonwealth business council. CLIFTON. HC # 3. PAKISTAN 7TH FLOOR. PAKISTAN        KHALID S. KARACHI. In Lahore and was recently conferred the award “Ufficiale Ordine al Merito della Repubblica italiana”. Hussain Dawood is the Chairman of Engro Corporation Limited. KARACHI. KARACHI. SUBHANI 8TH FLOOR. Mr. He is a global charter Member of the Indus Entrepreneurs and the member of the World Economic Forum in Davos. Dawood Hercules Chemicals Limited and the Karachi Education Initiative/Karachi School for Business & Leadership. Pakistan Business council.T.Dawood is an MBA from Kellogg School of 86 . He is also a Director on the Board of the Pakistan Centre for Philanthropy. BLOCK 4. PAKISTAN RUHAIL MOHAMMAD Chief Financial Officer 7. MARINE DRIVE. MARINE DRIVE. MARINE DRIVE. CLIFTON. THE HARBOR FRONT BUILDING.2. KARACHI. HC # 3. THE HARBOR FRONT BUILDING. He is on the honorary council of Italy. M. Beacon House National University. & Asia house London. BLOCK 4. he Chairs the board of the Pakistan Poverty Alleviation fund. THE HARBOR FRONT BUILDING. by the Italian government.ENGRO CORPORATION LIMITED TFC PROSPECTUS BAHRIA COMPLEX-I.

the authority to conduct business of the Company is vested with its Board of Directors and they may exercise all such powers of the Company as are not required by the Companies Ordinance. PROFILE OF THE PRESIDENT AND CHIEF EXECUTIVE OFFICER Asad Umar is President and Chief Executive of Engro Corporation Limited. 1984 or the Articles of Association of the Company or by a special resolution.000/. Engro Fertilizers Limited. He is also the chairman of Engro Management Services (Private) Limited and a member of the Corporate Governance Committee of the Karachi Stock Exchange.3. Engro Energy Limited.5. Pakistan Institute of Corporate Governance. the Board of ECL consists of thirteen (13) Directors. 1984. He joined Engro in 1992. POWERS OF DIRECTORS As required under section 196 of the Companies Ordinance.ENGRO CORPORATION LIMITED TFC PROSPECTUS Management. 7. He is Bar-at-Law from Lincolns Inn and holds LLB Hons degree from LSE. He is on the Boards of Engro Foods Limited. 1984. State Bank of Pakistan and Trustee of Lahore University of Management Sciences (LUMS). UK. Engro Powergen Limited. Northwestern University. 7. 7. He joined the board in 2003.at least in his own name and not jointly with any other person or his nomination in writing 87 . Avanceon Limited. Mr. A Masters in Business Administration. 7. Chief Executive Officer of Engro Fertilizers Limited and Chairman of all Engro Subsidiaries and joint Ventures. Engro Eximp (Pvt) Limited and Sigma Leasing Corporation Limited and Chief Executive of Engro Management Services (Pvt) Limited. QUALIFICATION OF DIRECTORS The qualification of a director shall be holding of shares in the Company of nominal value of Rs 25.4. OVERDUE LOANS There are no overdue loans (local and foreign currency) on the Company. Umar is also on the Board of the Pakistan Business Council. A Masters in Business Administration in Finance. He has held key assignments with the company and with Exxon Chemical in Canada. 7.8. At present. University of London. he joined the board in 2000. PROFILE OF THE CHIEF FINANCIAL OFFICER Ruhail Mohammed is Senior Vice President and Chief Financial Officer of Engro Corporation Limited (Formerly Engro Chemical Pakistan Limited). and a graduate in Metallurgy from Sheffield University. UAE and Europe. He has worked for many years in various senior positions in Pakistan. Engro Foods Supply Chain (Pvt) Limited. Karachi Education Initiative. and the Articles of Association of the Company. PROFILE OF THE COMPANY SECRETARY Andalib Alavi is General Manager Legal & Company Secretary of Engro Corporation Limited (formerly Engro Chemicals Pakistan Limited) and manages the legal affairs of all the Engro group companies. 7. required to be exercised by the Company in the general meeting of the shareholders. NUMBER OF DIRECTORS Pursuant to section 174 of the Companies Ordinance.9.7. he joined the Board in 2006. 7.6. the number of directors of a listed company should not be less than seven (7). USA.

7. The Directors may also be paid all traveling.12. 7.25. drawing. The Directors may also be deemed to be interested to the extent of any shares held by each of them in the Company and/or the TFCs applied for and allotted to them through the public issue. charge or other 88 .or more. 7. INTEREST OF DIRECTORS The Directors may be deemed to be interested to the extent of fees payable to them for attending board meetings. perpetual or redeemable debentures or debenture stock or any mortgage. ELECTION OF DIRECTORS The Directors shall comply with the provisions of section 174 to 178. The Directors performing whole time service to the Company may also be deemed to be interested in the remuneration payable to them by the Company. properly incurred by them in attending and returning from meetings of the Directors or any Committee of the Directors or general meetings of the company or in connection with the business of the Company. provided that a Director who is an executive of the Company shall not be entitled to any remuneration for attending meetings of the Board or a Committee formed by the Board.14.000/. 7. AMOUNT OF BENEFITS TO PROMOTERS AND OFFICERS DURING THE LAST TWO YEARS No benefit has been given or is intended to be given by the Company to the promoters and officers of the Company other than remuneration for services rendered by them as full time executives of the Company. INTEREST OF DIRECTORS IN PROPERTY ACQUIRED BY THE COMPANY None of the Directors of the Company had or has any interest in any property acquired by the Company within the last two years.13. BORROWING POWERS The Directors may from time to time raise or borrow any sum or sums of money or make any arrangement for finance for the purpose of the Company. the terms of remuneration for such office shall be sanctioned by an Ordinary Resolution of the Company.15. hotel and other expenses. 2009.11. REMUNERATION OF DIRECTORS The remuneration of a Director for attending meetings of the Board or a Committee formed by the Board shall from time to time be determined by the Board of Directors. 7. accepting or endorsing on behalf of the Company any promissory notes or bills of exchange or by issuing bonds. except that remuneration of directors who are executives of the Company shall be decided by the Board of Directors. 7. The Director may raise or secure the payment of such sum or sums or financial arrangement in such manner and upon such terms and conditions in all respects as they think fit and in particular by making. as his or their representative. The present Directors of the Company were elected effective April 22. Where a Director or a firm of which such Director is a partner or a private Company of which such Director is a director holds an office of profit under the Company other than the office of Chief Executive or an office as legal or technical adviser or banker. 180 and 184 of the Ordinance relating to the election of Directors and matters ancillary thereto.10.ENGRO CORPORATION LIMITED TFC PROSPECTUS by a member or members holding shares of the nominal value of Rs.

ENGRO CORPORATION LIMITED TFC PROSPECTUS security on the undertaking or the whole or any part of the property of the Company (both present and future) but no such charge shall be created on unpaid capital of the Company.16. 89 . 7. VOTING RIGHTS The TFCs shall not carry any voting rights in relation to the Company.

Chundrigar Road.1 MATERIAL CONTRACTS / DOCUMENTS Deed of Floating Charge dated September 17.ENGRO CORPORATION LIMITED TFC PROSPECTUS PART VIII 8. Clearance letter dated August 18.. LEGAL ADVISOR OF THE COMPANY 8. BANKERS TO THE ISSUE Citibank N. 2010 from Karachi Stock Exchange. 1-C I.2.H. Karachi Tel: 111 211 211 Fax: 35636741 Website: www. Main Shahra-e-Faisal.4.4 90 . Harbor Front Building Marine Drive. Clifton. S. 2010 by PACRA.3. 8. Block 4. 99-B. AUDITORS 8. Chartered Accountants State Life Building No.7. Karachi Andalib Alavi General Manager Legal & Company Secretary Central Depository Company of Pakistan Limited CDC House. Credit Rating Report dated August 02.1.M.6.S.C.5. Pakistan MCB Bank Limited Standard Chartered Bank (Pakistan) Limited Bank Alfalah Limited NIB Bank Limited United Bank Limited Habib Bank Limited Bank Al Habib Limited Allied Bank Limited JS Bank Limited Askari Bank Limited 8.com A. Karachi-74400.2 8. Declaration of Trust Agreement dated September 17. MISCELLANEOUS INFORMATION 8. 2010 between the Company and IGI Investment Bank Limited.3 8. Pakistan 8.Ferguson & Co.I. 2010 between the Company and IGI Investment Bank Limited.7.7. REGISTERED OFFICE / HEAD OFFICE Engro Corporation Limited th th 7 & 8 Floor. REGISTRAR / TRANSFER AGENT 8. REDEMPTION BANKS (TO EXERCISE PUT OPTION) Standard Chartered Bank (Pakistan) Limited MCB Bank Limited 8.A.F. 8.engro.7.7. Block „B‟.

the Auditor‟s Certificates.7.14. VENDORS The Company has no Vendors in terms of Clause 12 of section 1 Part 1 of the Second Schedule of the Ordinance. 8.903.12. every Director or officer of the Company and every person employed by the Company as auditor shall be indemnified out of the funds of the Company against all liability incurred by him as such Director.8.5 8. 8. 91 . A copy of the Memorandum of Association annexed to this Prospectus is being published with all issues hereof except those released as newspaper advertisement. INDEMNITY As per the Article 123 of Company‟s Articles of Association. contains the objects for which the Company was incorporated and the business that the Company is authorized to undertake. 2009.644 Year Stock Dividend No. 8. INSPECTION OF DOCUMENTS AND CONTRACTS All the Balance Sheets and Profit & Loss Accounts. the Deed of Floating Charge. 2010 from Securities & Exchange Commission of Pakistan. Approval letter dated September 22. CAPITALIZATION OF RESERVES 1H 2010 Nil Nil 2009 10% 29. and was capitalized in 2010. in which judgment is given in his favor. and the approval letters from Securities & Exchange Commission of Pakistan 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. 2010. inter alia. or in connection with any application under Section 488 of the Ordinance in which relief is granted to him by the Court. of Shares The 10% Stock Dividend appearing in 2009 was announced by the Board of Directors on January 22. Copies of the Memorandum and the Articles of Association. LEGAL PROCEEDINGS There are no cases by or against the Company. Trust Deed. whether civil or criminal.11. the Credit Rating Report.256 2008 Nil Nil 2007 Nil Nil 2006 Nil Nil 2005 Nil Nil 2004 Nil Nil 2003 Nil Nil 2002 10% 13. officer or Auditor in defending any proceedings.9. or in which he is acquitted. 8.ENGRO CORPORATION LIMITED TFC PROSPECTUS 8. 813. the Clearance letter from Karachi Stock Exchange. 8.794. MEMORANDUM OF ASSOCIATION The Memorandum of Association.10. for the year ended December 31. REVALUATION OF FIXED ASSETS The Company has not reflected any revaluation of fixed assets in their Financial Statements.

Engro Eximp (Pvt) Ltd.19% 100% 100% 100% 100% 62.A. Engro Energy Ltd. Engro Vopak Terminal Ltd. 2010. are as follows: Company Engro Polymer & Chemicals Ltd.000 500.300.15.ENGRO CORPORATION LIMITED TFC PROSPECTUS 8. SUBSIDIARY COMPANIES Extent of the interest of Engro Corporation Limited (the holding company) in the equity of its subsidiaries as at June 30.000 250. is as follows: Subsidiary companies Engro Eximp (Pvt) Ltd. of Shares 292.67% 95% 100% 50% N. Avanceon Ltd. Engro PowerGen Ltd.000 10. Shareholding 100% 100% 100% 100% 56% 63% 100% 95% 8.000 Shareholding of ECL 56.066. Engro Management Services (Pvt) Ltd. Avanceon Ltd. 2010.000. INVESTMENT IN ASSOCIATED COMPANIES Investments in associated undertakings as per the unaudited accounts of June 30. Engro Fertilizer Ltd. Engro Energy Ltd.010.000 45.000 10. Engro Foods Ltd.16.000 542. Engro Foods Ltd. Engro PowerGen Ltd. Engro Management Services (Pvt) Ltd. Engro Fertilizer Ltd. 92 .667 304.000 25. Arabian Sea Country Club No.400.000. Engro Polymer & Chemicals Ltd.000 6.000.

Oath Commissioner or Head Master of High School or bank manager in the country of applicant‟s residence (ii) Original CNIC/Passport. provident/pension/gratuity funds/trusts and other legal entities must be accompanied by an attested photocopy of their 93 . along with one attested photocopy. and Branches in Pakistan of companies and bodies corporate incorporated outside Pakistan. 3) Copies of Prospectus and application forms can be obtained from the members of Karachi Stock Exchange (Guarantee) Limited. 4) The applicants opting for scripless form of TFCs are required to complete the relevant sections of the application. bodies corporate or other legal entities incorporated or established in or outside Pakistan (to the extent permitted by their constitutive documents and existing regulations. and the registered office of Engro Corporation Limited.ENGRO CORPORATION LIMITED TFC PROSPECTUS PART IX 9. both the signatures should be affixed on the application form. Foreign Nationals whether living in or outside Pakistan Companies. corporate bodies. (subject to the terms of the Trust Deed and existing regulations). as the case may be). must be produced for verification to the banker to the issue at the time of presenting the application. 5) Name (s) and address (es) must be written in full block letters. In case of discrepancy between the information provided in the application form and the information already held by CDS. In accordance with provisions of the Central Depositories Act. after verification. d) e) 2) APPLICATION MUST BE MADE ON THE COMMISSION‟S APPROVED APPLICATION FORM OR A LEGIBLE PHOTOCOPY THEREOF ON A PAPER OF A4 SIZE WEIGHING ATLEAST 62 GM. 6) All applications must bear the name and signature of the applicant. Copy of these documents can be attested by any Federal/Provincial Government Gazetted Officer. In case of difference of signature with the Computerized National Identity Card (CNIC) or National Identity Card for Overseas Pakistanis (NICOP) or Passport. 7) APPLICATIONS MADE BY INDIVIDUAL INVESTORS (i) In case of individual investors. credit of such TFCs is allowed ONLY in the applicant‟s own CDC Account after the close of subscription. an attested photocopy of CNIC (in case of RPs)//Passport (in case of NRPs and FIs) as the case may be. Councilor. Engro Corporation‟s website. Mutual Funds. the Company reserves the right to issue TFCs in physical form. be retained by the bank branch along with the application. 8) APPLICATIONS MADE BY INSTITUTIONAL INVESTORS (i) Applications made by companies. APPLICATION AND ALLOTMENT INSTRUCTIONS GENERAL INSTRUCTIONS 1) Eligible investors includes: a) b) c) Pakistani citizens resident in or outside Pakistan or Persons holding two nationalities including Pakistani nationality. should be enclosed and the number of CNIC/Passport should be written against the name of the applicant. the Bankers to the Issue and their branches. in English and should not be abbreviated. The attested photocopy will. Provident/pension/gratuity funds/trusts. 1997 and the CDC Regulations. mutual funds.

Please note that joint application will be considered as a single application for the purpose of allotment of TFCs. 14) 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. 12) Applicants should ensure that the bank branch. it will be credited to the CDS account mentioned on the face of the form and where any amount is refundable.ENGRO CORPORATION LIMITED TFC PROSPECTUS Memorandum and Articles of Association or equivalent instrument / document. in whole or in part. completes the relevant portion of the application form. the same must be lodged with the application. if available. to the person named first on the application form. the same should also be submitted along with the application. be retained by the bank branch along with the application 9) In case of joint application. the same will be refunded by cheque or other means by post. 94 . each applicant must sign the application form and submit attested copies of their CNICs/Passport. Copies of these documents can be attested by the bank manager in the country of applicant‟s residence. applications must be accompanied with a letter on applicant‟s letterhead stating the legal status of the applicant. Bank Manager. 15) Bankers to the Issue are prohibited to recover any charges from the subscribers for collecting subscription applications. 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 at the time of presenting the application. Where applications are made by virtue of Power of Attorney. 13) Applicants should retain the bottom portion of their application forms as provisional acknowledgement of submission of their applications. place of incorporation and operations and line of business. The attested copies. profit or return. Councilor. ADDITIONAL INSTRUCTIONS FOR FOREIGN/NON-RESIDENT INVESTORS 16) In case of foreign investors who are not individuals. 10) 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 “Engro Corporation Limited Rupiya Certificate” and crossed “A/C PAYEE ONLY”. to which the application is submitted. 11) Applications are not to be made by minors and/or persons of unsound mind. A copy of memorandum of association or an equivalent document should also be enclosed. without interest. will after verification. The TFCs will be dispatched to the person whose name appears first on the application form while in case of CDS. or through the bank where the application was submitted. 17) Applicants may also subscribe using their Special Convertible Rupee Account (SCRA) as set out under the State Bank of Pakistan‟s Foreign Exchange Manual. This should not be construed as an acceptance of the application or a guarantee that the applicant will be allotted the number of TFCs for which the application has been made. the applicants are advised not to pay any extra charges to the bankers to the issue. Any Federal/Provincial Government Gazetted Officer. Where applications are made by virtue of Power of Attorney. Hence.

shall not be entertained.000/-.for amounts above PKR 25.for amounts above PKR 25. 4. if any. BANKERS TO THE ISSUE Code 01 02 03 04 05 06 8.A.000/-. Applications.nor in multiples of PKR 5.ENGRO CORPORATION LIMITED TFC PROSPECTUS BASIS OF ALLOTMENT 1. 3. 5. Allotment of TFCs 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. which do not meet the above requirements. applicants are advised to fill in accurate mailing address and CDS account details. 2. Therefore. 6. The applicants are.shall be rejected.000/. which are neither for Rs 25.000/.000/. Application for TFCs must be made for a minimum of the aggregate face value of PKR 25. Pakistan OVERSEAS BANKERS TO THE ISSUE Code 01 02 03 04 Name of Banks Habib Bank Limited - Code 05 06 07 08 Name of Banks - - 95 . The Registrar will dispatch TFCs to successful applicants or credit the respective CDS accounts of the successful applicants (as the case maybe). The minimum amount of application for subscription of TFCs is Rs. or applications which are incomplete will not be accepted. Applications. or in multiples of PKR 5. Allotment/Transfer of TFCs to applicants shall be made in accordance with the allotment criteria/ instructions disclosed in the Prospectus. 7.000/. therefore.000/.25. Name of Banks MCB Bank Limited Standard Chartered Bank (Pakistan) Limited Bank Alfalah Limited NIB Bank Limited United Bank Limited Habib Bank Limited Code 07 08 09 10 11 Name of Banks Bank AlHabib Limited Allied Bank Limited JS Bank Limited Askari Bank Limited Citibank N. required to fill in all data fields in the Application Form. Application for TFCs below the total value of Rs.000/-. 25.

S.K U.S.ENGRO CORPORATION LIMITED TFC PROSPECTUS 9.E K. Occupation Code Code 01 02 03 04 05 Occupation Business Business Executive Service Housewife Household Code 06 07 08 09 10 Occupation Professional Student Agriculturist Industrialist Other 10.A.A Oman Code 006 007 008 009 010 Name of Banks Iran Bangladesh China Bahrain Other 96 .A U. Nationality Code Code 001 002 003 004 005 Name of Banks U.

Ruhail Mohammed Mr. Subhani Mr. SIGNATORIES TO THE PROSPECTUS Names of Directors Mr. Shahzada Dawood Mr. Asif Qadir Mr. Saad Raja Mr. Hussain Dawood Mr. Asad Umar Mr. Muhammad Aliuddin Ansari Mr.ENGRO CORPORATION LIMITED TFC PROSPECTUS PART X 10. Shabbir Hashmi Mr. Isar Ahmad Mr. Khalid S. Arshad Nasar Mr. Abdul Samad Dawood Signature -Sd-Sd-Sd-Sd-Sd-Sd-Sd-Sd-Sd-Sd-Sd-Sd-Sd- Witness 1: Name: Signature: _________-Sd-_____________ Place: Karachi Witness 2: Name: Signature: _________-Sd-_____________ Place: Karachi 97 . Khalid Mansoor Mr.

received or processed and to do all or such things as are incidental or conducive to the carrying on of telecommunication related businesses including without limitation manufacturing. made or manufactured therefrom and any substance obtained by mixing any of the foregoing with other substances (hereinafter all referred to as “fertilizers and chemical products”) and to purchase or otherwise acquire. marketing and provision of facilities and services subject to any prior approvals required under the law. agricultural products and equipment including but not limited to farming including without limitation corporate farming. seeds. and generally deal in fertilizers and chemical products. develop or carry on any business or activity related with any form of energy. exchange or otherwise dispose of. transmitted. trade. produced. at all stages of exploration. treat. howsoever produced. 3. To undertake. generating. hold. sell. including. use. The objects for which the Company is established are: (1) To manufacture. signals and data and materials in all forms. experiment with. export. MEMORANDUM OF ASSOCIATION THE COMPANIES ORDINANCE. 1984 COMPANY LIMITED BY SHARES Memorandum of Association OF ENGRO CORPORATION LIMITED 1. pesticides and other plant remedies and the food business at each and every stage of production and distribution and to do all such things as are incidental or conductive to the carrying on of such businesses. (2) (3) (4) 98 . refining. To undertake and carry on all type of business related to all aspects of agriculture. supply. develop or carry on any business or activity relating to telecommunications including fixed and wireless and including telephone. producing. 2. prepared.ENGRO CORPORATION LIMITED TFC PROSPECTUS PART XI 11. The name of the Company is ENGRO CORPORATION LIMITED The Registered Office of the Company will be situated in the Province of Sind. reduce and process all kinds of artificial manures and fertilizers. without limitation petroleum. produce. cellular. distributing and supply and to do all or such things as are incidental or conducive to the carrying on of energy. store. petroleum. package. transporting. gas and power including electric power. refine. images. distribute. chemicals and minerals and any products and by-products which may be derived. handle. compounded. transport. developed. cable or satellite communication and including of speech. market. sounds. To undertake. selling. import.

moorings. hay and straw. pull down. construct and pave roads. factories. or otherwise acquire. mills. to drain. maintenance and improvement or working of. of or on any such lands. shops. (11) to own.ENGRO CORPORATION LIMITED TFC PROSPECTUS gas and power related service and facilities subject to any prior approval required under the law. steam works. pipelines. mortgage or let the same. growers of and dealers in grain. to sell. develop and/or carry on all or any business or activity relating to Information Technology and to do all or such things as are incidental or conducive to the carrying on of Information Technology related manufacturing. purchase of otherwise acquire. lease. machine shops. viaducts. establish. tenants and others and to advance money to them. refining. tanks. cultivate. tramways. ways. operate carry out control. harbour abutment. sale and distribution of fertilizers and chemical products. towns and villages on any such lands and to carry on all or any of the businesses of farmers. paths and walks. alter. telegraphs. work. lease. establish. wells. and enter into contracts and arrangements of all kinds with builders. dealers in agricultural equipment. erection. hydroelectric plants. transport. furnish. improve and landscape grounds. get in. warehouses. animal or vegetable. dairymen. contribute or subscribe to the constructions. aerodromes and landing fields. any roads. and develop gas. laboratories. fuel stores. install. laboratories. equipment. repair. to purchase. apparatus. maintain. pipes. wireless. improve and prepare the same for building or commercial purposes. minerals and chemical and other substances. jetties. telephones. lay out. process. maintain and operate pipelines and other conveyors for the transportation of gases. manage. processing. acquire. store. stores. fit up and improve buildings to lay out. sell and trade in any goods usually traded in any of the above businesses and to carry on any other businesses which may be advantageously carried on by the Company in connection therewith. exchange or otherwise acquire and to construct. animal feeds and provisions of all kinds and to buy. conveyors. purchase. minerals and chemical and other substances of all kinds and to pipe. construct. operate. to own. maintain. boilers. farm. poultry. treat. sell. refine. irrigate and otherwise work or use any lands over which the Company has any rights and to dispose of or otherwise deal with any farm or other products. dredging facilities. to construct. lease. workshops. and purveyours and vendors of dairy products. property owners. any lands and to lay out. work. install. license. water courses. aqueducts canals. milk contractors. and to lay out sites for and establish temporary or permanent camps. gather. decorate. dairy farmers. and other facilities for the manufacture. improve. or aid in. manage. gas works. power houses. maintain. bridges. lay. to own. wharves. millers. take on lease or in exchange. nurserymen. docks. storage installation. supply and deal in all such substances. to buy. alleys. breakwaters. streets. storage. seeds-men. liquids. 99 . build. electric lighting and power works. acquire. foundries. manage and maintain plants. (6) (7) (8) (9) (10) to clear. erect. (5) To undertake. services and facilities subject to any prior approvals required under the law. refineries. piers.

association. exercise. wagons. guarantee the contracts of. Consultants or Managing Agents of and to provide services to any business or concern that the Company may find convenient or advantageous. build. hospitals. the construction. hire and let out for hire. lodging houses. launches. firm or person. (13) to purchase. employees. airplanes. trade marks. tank cars. gardens. or for chartering and affreightment and otherwise to obtain the possession of. improvement. (15) to act as Managers. brevets d‟invention. or otherwise with any company. or the acquisition of which may seem calculated directly or indirectly to benefit the Company. or about to carry on or engage in. railways and motor transportation. locomotives. reciprocal concessions.ENGRO CORPORATION LIMITED TFC PROSPECTUS hangars. customers and visitors and to purchase or otherwise to acquire any shares or interest in any ships or vessels. dwelling houses. charter. licences. operate and dispose off. places of amusement. sell dispose of. (14) to apply for. vessels. reading rooms. to advance the Company‟s interests and to contribute to. barges. or indirectly. association. pleasure grounds. affreight. co-operation. Registrars. dispensaries. any business or transaction which this Company is authorized to carry on or engage in. take. or otherwise acquire. works and conveniences which may be calculated. inventions or rights. directly. patent rights. and use. motor trucks and tractors. tugs. helicopters. and to take any lease or enter into any working agreement in respect thereof. and other forms of transport and rolling stock. Secretaries. and to expend money in experimenting upon. develop. motor transportation or in any companies possessed of or interested in any ships. maintenance working. take on lease or tenancy. restaurants. shares and 100 . management. or any secret or other information as to any invention. airplanes. firm or person carrying on or engaged in. deal with. and to develop. conferring any exclusive or non-exclusive or limited right to their use. concessions and the like. testing or improving any such patents. places of worships. carrying out of control thereof. or otherwise turn to account the property. Agents. Treasurers. process or thing which may seem capable of being used for any of the purposes of the Company. or otherwise acquire. improve. and protect and renew in any part of the world any patents. immoveable and moveable. and to lend money to. acquire. (12) to purchase. lorries. railways. mortgage or let any estate or interest in and to take and acquire options over any property. baths. or any business or transaction capable of being conducted so as directly or indirectly to benefit the Company. union of interest. lease mortgage. rights or information so acquired. purchase. or grant licenses in respect of. helicopters. and to use. designs. clubs. turn to account. joint adventure. and employ or turn to account ships. subsidies or otherwise assist or take part in. and otherwise to provide for any employ the same in the conveyance of property and merchandise of all kinds and the transportation of personnel. automobiles. and to purchase. office and other buildings. lighters. or rights of any kind. helicopters. or otherwise assist any such company. boats and vessels of all kinds. garages. sell or otherwise dispose of the same in such manner as may be thought expedient. airplanes. machinery and other appliances. (16) to enter into partnership or any arrangement for sharing profits. parks. guard towers. hotels.

hold. stocks. (23) to sell. (17) to acquire and undertake the whole or any part of the business. dispose of and deal in shares. corporate or governmental body. execute and issue promissory notes. underwrite. debenture stocks. stock. or for any other consideration. person. or other securities or obligations of any institution. lease. endorse. subscribe for or otherwise acquire all or any part of the shares. bills of exchange. debentures. (18) to establish or promote or concur in establishing or promoting any company or companies for the purpose of acquiring all or any of the property. buy. whether secured or unsecured. assets or undertaking or the Company or any part thereof for shares. bills of lading. make accept. debentures. sell. and in particular by the issue of debentures or debenture stock (perpetual or otherwise) and to secure the repayment of any money borrowed raised or owing. person or company. deal in. institution or corporate or governmental body. debentures or other securities of any such other companies. and also by a similar mortgage. (20) to receive money on deposit or loan and borrow or raise money in such manner as the Company shall think fit. and to guarantee the performance of any contract or obligation and the payment of money of or by any such persons or companies and generally to give guarantees and indemnities. with or into any other companies. charge or lien to secure and guarantee the performance by the Company or any other person or company of any obligation undertaken by the Company or any other person or company as the case may be. debentures and other negotiable or transferable instruments. bonds. firms or persons. purchase or otherwise acquire and to hold. including its uncalled capital. mortgage or otherwise dispose of the property. underwrite. property and liabilities of any person or company carrying on or proposing to carry on any business which the Company is authorised to carry on. 101 . either in whole or in part. firms or persons. and to sell. by mortgage. or which can be carried on in conjunction therewith or which is capable of being conducted so as directly or indirectly to benefit the Company. (21) to draw. charge or lien upon all or any of the property or assets of the Company (both present and future). (19) to lend and advance money or give credit to such persons or companies and on such terms as may seem expedient. or otherwise deal with the same. whether or not having objects altogether or in part similar to those of the Company.ENGRO CORPORATION LIMITED TFC PROSPECTUS securities of any such company or association. rights and liabilities of the Company or for any other purpose which may seem directly or indirectly calculated to benefit the Company to amalgamate or consolidate or merge with a view to effecting a union of interests. or possessed of property suitable for the purposes of the Company. warrants. with or without guarantee. firm or person. reissue. association. negotiate. discount. (22) to subscribe for. and to place or guarantee the placing of. associations. annuity or other obligations of any other company.

concessions and franchises as may seem expedient. employees. that may seem conducive to the Company‟s objects or any one of them and to obtain from such government or authority any rights. (25) to enter into any arrangements and contracts with any government or authority supreme. or any company. dispose of. present and former directors and other officers. placing or underwriting or procuring the underwriting of shares. respectively. including brokerage and commissions for obtaining applications for or taking. (28) to pay out of the funds of Company all expenses which the Company may lawfully pay with respect to the formation. promotion and registration of the Company or the issue of its capital. agreements. trusts and conveniences. of any place in which the Company may have interests. local. national. actions or steps taken by any Governmental authority or body. administrative or other acts or authorisations of any government or authority competent in that behalf for enabling the Company to carry any of its objects into effect and for effecting any modification of the Company‟s constitution. municipal or otherwise. corporeal or incorporeal. and to carry on any negotiations or operations for the purpose of directly or indirectly carrying out the objects of the Company or furthering the interests of its Members and to oppose any proceedings. and any right. municipal. which may seem calculated. to prejudice the interests of the Company or it s Members.ENGRO CORPORATION LIMITED TFC PROSPECTUS (24) to obtain any legislative. institutions. directly or indirectly. and to carry out. privileges. turn to account or otherwise deal with all or any part of the property and assets. exchange. employees and servants of the Company and others and to establish and support or aid in the establishment and support of associations. deliver. lease. or the dependents or connections of such persons. supreme. licences. trainees and servants. to take all necessary or proper steps with the authorities. transfer. debentures or other securities of the Company. exercise or comply with any such arrangements. officials. options. agents. immovable and movable. assign. (29) to pay for any rights or property acquired by the Company and to remunerate any person or company whether by cash payment or by the 102 . hypothecate. (26) to remunerate Directors. develop. privileges. firm or person. gratuities and allowances and to provide houses. general or useful purpose and for the purpose of this paragraph the words “employees” and “ex-employees” shall include. and to grant pensions. pledge. title and interest of the Company therein. improve. rights. concessions and licences and to procure the Company to be registered or recognized in any part of the world. or for any other purpose which may seem expedient. privileges. amenities and conveniences of all kinds and to make payments towards insurance and to subscribe or guarantee money for charitable or benevolent objects or for any exhibition or for any public. local or otherwise. association. tangible or intangible. applications. mortgage. agents. sell. concessions and licences. funds. calculated to benefit employees or ex-employees of the Company. including rights. judicial. (27) to manage.

except where used in reference to this Company.000. or otherwise. trustees or otherwise.(Rupees ten) each. by circulars and exhibition of works of art or interest. training and demonstration programmes and by advertising in the press. (34) to do all such other things as may be deemed incidental or conducive to the attainment of the above objects or any of them. firms. The Share Capital of the Company is Rs. and whether domiciled in Pakistan or elsewhere. rewards and donations. (30) to adopt such means of making known the products of the Company as may seem expedient and in particular by undertaking educationa l. agents. The liability of the Members is limited. (31) to undertake. and either alone or in conjunction with others. 10/. shall in no way be limited or restricted (except when the context expressly requires) by reference to or inference from the terms of any other sub clauses or the name of the Company but may be carried out in as full and ample a manner and construed in as wide a sense as if each of the said sub clause defined the object of a separate and distinct Company and the Company shall have full power to exercise all or any of the powers conferred by any part of this clause in any part of the world. 103 . (35) The objects specified in each of the sub clauses of the main clause 3 shall be regarded as independent objects. trustees. sub-contractors. 4. (33) to distribute among the Members in specie any property of the Company. debentures or other securities of the Company credited as paid up in full or in part. and either alone or in conjunction with others. (32) to do all or any of the above things. by publication of books and periodicals and by granting prizes. and accordingly.000 Ordinary Shares of Rs. and either by or through agents. 3. commercial and industrial operations and undertakings in any part of the world. assist and participate in financial. but so that no distribution amounting to a reduction of capital be made except with the sanction (if any) for the time being required by l aw. shall be deemed to include any partnership or body of persons.ENGRO CORPORATION LIMITED TFC PROSPECTUS allotment of shares.000. and both singly and in connection with other persons. or any proceeds of sale or disposal of any property of the Company. And it is hereby declared that the word “company” in this clause.500. whether corporate or unincorporate. or otherwise. associations and companies and corporations. 5.000 (Rupees Three billion and five hundred million) divided into 350. either as principals. contractors.

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