Directory of Human Resource Management e.

Publications
June (2011) Vol. 1, Issue 1

CASE STUDY ON:

ENGRO CHEMICAL PAKISTAN LIMITED SUCCESS; WITH FOCUS
ON EFFORTS UNDERTAKEN BY ENGRO FERTILIZERS TO
IMPROVE OCCUPATIONAL HEALTH AND SAFETY STANDARDS

Author: Beenish Ameer

Student, Department of Management Sciences, The Islamia University of
Bahawalpur, Pakistan.
Email: beenishameer14@gmail.com

HRMARS, Pakistan www.hrmars.com

 Directory of Human Resource Management e.Publications
June (2011) Vol. 1, Issue 1

Agriculture accounts for approximately 23% of Pakistan's GDP, provides direct and indirect
employment to over 70% of the country's workforce and results in earnings of over 60% of
export dollars.

Engro Chemical Pakistan Limited (ECPL) is a listed public company incorporated in Pakistan. In
1991, Exxon chemical fertilizer limited decided to divest its fertilizer business on a global basis.
The employees of Exxon Chemical Pakistan Limited, in partnership with leading international
and local financial institutions, bought out Exxons 75% equity. This was at the time and perhaps
still is the most successful employee buy-out in the corporate history of Pakistan. Renamed as
Engro Chemical Pakistan Limited, the Company has gone from strength to strength, reflected in
its consistent financial performance, growth of the core fertilizer business, and diversification
into other businesses.

The company has since diversified and expanded into several businesses ranging from dairy to
bulk handling. ENGRO today consists of the core fertilizer business with a capacity of 975K tpa
for urea and several subsidiaries namely Engro Foods Limited (EFL), Engro Vopak Terminal
Limited (EVTL), Engro Eximp Limited (EXIMP), Engro Power Gen Limited (EPGL), Engro
Energy Limited (EEL), Engro Polymer & Chemicals Limited (EPCL) and Avanceon Limited
(EIAL).
ECPL having good reputation in market by strong brand name and management practices and
principle inherited from EXXON CHEMICAL USA, after the management buy out in 1991.

The principal activities of ECPL are the manufacturing, purchasing, and marketing of fertilizers.
The Company's fertilizer brand, Engro', is the second highest selling urea brand in Pakistan. The
Company's financial and management strength is denoted by its AA- rating by the Pakistan
Credit Rating Agency.

The fertilizer industry in Pakistan is of an oligopolistic nature, with the four major players in the
market - Engro, FFC, FFBL and Dawood Hercules. Considering the urea market, FFC and FFBL
have the highest share of urea production i.e. 48%, Engro 15%, Dawood Hercules 6% and 20%
is imported and distributed through NFML. And considering the phosphorus market, FFC and
FFBL captured high share of 47%, Engro 28%, Agri tech 2%, RG 1% and around 22% is
imported. But the Engro urea doesnt command the same market premium as competitors Fuji
fertilizers product sona Sona urea is sold in the Punjab province, whereas engro has strong
niche in sindh. The in-house diversification includes, NPK Fertilizer business, seed business,
phosphate and micronutrient business
The demand of fertilizer was very badly affected due to soil erosion and loss of land, which is
because of recent flood in Pakistan.. The demand of the urea in Pakistan stood 4.2MT compared
to 4.6MT last year showing a decrease of 10%, while the demand of DAP stood 0.7MT
compared to 1.2MT signifying a decrease of 40% compared to the same period last year.
Considering the performance of Engro Fertilizer, the sales of the Engro urea remained 665kt
compared to 688kt last year showing a decrease of 3.4% compared to average industry drop of
10% in the same period. The sales of Zarkhez have decreased to 66kt from 73kt signifying a
decrease of 10% and the sale of phosphate decreased from 235kt to 196kt showing a decrease of
16.5%. The overall sales of the Engro Fertilizers in the current 9-month period were around 12
billion compared to 20 billion of the same period last year, showing a decrease of 38%.

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 Directory of Human Resource Management e.Publications
June (2011) Vol. 1, Issue 1

Despite the decrease in the sales, the gross profit margin of the company has increased to 46%
against the 23% of the last year. The gross profit margin has increased throughout the industry
due to low import cost of DAP in the first two quarters and an increase in the price of urea from
730 to 830 rupees in the domestic market. The gross profit margin remained higher than average
industry 40%.The demand for fertilizer has increased significantly in the year 2010, the world
fertilizer sales and consumption has increased by 13% and 7% respectively due to the Rabi
season, increase in the rain-fed area and water availability due to floods, increasing food prices
in the country and due to general reliance on productivity to meet the food needs of the growing
population.

Engro Chemical Pakistan Ltd plans to build a $1 billion phosphate fertilizer plant in North
Africa to feed demand in Pakistan and Western Europe, The proposed North African fertilizer
plant will produce about one million metric tons a year, almost three times more than Fujis joint
venture.. The company also maintains a hybrid seed business and has made progress in the
development of its own hybrid seeds. Recently in 2010, keeping in view the immense
diversification of Engro Chemical Pakistan Limited, it was decided to rename the company as
Engro Corporation as the holding company

Engro has always emphasized quality assurance in its product and its operations. Engro has
commitment to sustainable development. Engro operates in highly secure markets with stable
demand being the forte of their business models, financial charges erode the earnings
substantially and reduce value addition for the stake holder.
ECPL is regarded as a professional company having one of the best management teams in the
country practicing the highest standards of corporate governance and business strategy. The
management of Engro has recently indicated interest in demerging its fertilizer(Core) business
from itself by creating an entity which is solely responsible for fertilizer business. The intention
is to decentralize certain functions for efficiency Purposes. The company intends to spin-off its
fertilizer related assets and liabilities to a newly formed entity Engro Fertilizer Limited and
renaming the parent company
as Engro Corp.
In addition to meeting sales targets, ECPL's marketing strategy has focused on farmers'
education on the effective use of fertilizers. The market development program includes
characteristics like soil testing, crop demonstrations, farmer meetings, and training its marketing
manpower and dealers. Over the years, ECPL's advertising campaigns have introduced mass
education to aid farmers in choosing the most favorable package for their crops. The sales and
promotion efforts have provided valuable merchandising assistance to ECPL dealers.

Engro is a premier regional enterprise and takes pride in nurturing a culture embodying strong
ethical, pro-health and open values. We aim at fostering a culture that inspires people to
innovate, act positively and contribute to the company and environment. Strong ethical practices
have been fundamental to Engros philosophy and operation. Engro embodies corporate
integrity; all its employees are expected to abide by our ethical principles embedded in the
Statement of Ethics and Responsible Business Conduct.

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 Directory of Human Resource Management e.Publications
June (2011) Vol. 1, Issue 1

The company's approach to corporate and social responsibility (CSR) is built on respect for the
environment and maintaining strong relationship with all key stakeholders. These are
stakeholders of engro, employees are 1664, customers are 68000, consumers are 3,100,000,
vendors are 3,500 , shareholders are 11365, dairy farmers are 51,000, students are 4,300, patient
are 32,500.so total lives touched engro is 3,275,334. Engro cares for the natural environment
through responsible management of resources. They promote safety in the workplace and
progressive human resource practices because they benefit their employees, who are essential to
their success .They, invest in their communities because strong, healthy communities provide the
foundation for strong healthy relationships for company to grow.
Engro has also signed up with the UN Global Compact to confirm its supports for the ten
principles with respect to human rights, labor rights, the protection of the environment and anti-
corruption.
.
ENGRO is one of the most dynamic and progressive institutions in Pakistan. Its Mantra of
Energy for Growth is well represented in the nature and business of its Subsidiaries.
Undeniably, the company has become an icon of augmentation and Value addition for its stake
holders. They have an opportunity to enhance business/sales activities by understanding
customers businesses better. Capitalize on competitor's weaknesses and target the market
opportunities available to them. Scout for potential acquisition targets, with detailed insight into
the companies strategic, financial and operational performance.
.In fact ECPL is growing by leaps and bound and they prove that they say Growing with pride.

QUESTIONS:
Q: 1 what is mission statement for ENGRO CHEMICAL PAKISTAN LIMITED?
Q: 2 what are the core values for ENGRO and how this company use its core values in decision
making?
Q: 3 ENGRO is most successful fertilizer company, so what do think what step it can take to get
more success?
Q: 4 what are the key actors and forces that enhance success of ENGRO chemical Pakistan
limited?
Q: 5 SWOT analysis of engro chemical Pakistan limited?
Q.6 How engro management capabilities is helpful in achieving its strong performance?

QUESTIONS SOLUTION
Q1. What will be mission statement for ENGRO chemical Pakistan limited?

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

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 Directory of Human Resource Management e.Publications
June (2011) Vol. 1, Issue 1

To create wealth by building new businesses based on Country's strengths in

Petrochemicals, Information Technology, Infrastructure and other Agricultural sectors .

Q2. What are core values for ENGRO and how this company uses its core values in
decision making?

Engro core values are under as follow;

Safety, Health & Environment

Leadership
Teamwork & Partnership
Diversity & International Focus
Quality & Continuos Improvement
Ethics & Integrity
External Community Involvement
Candid & Open communication
Innovation
Individual Growth & Development
Enthusiastic Pursuit of Profit
Enjoyment & Fun

Their core values are well defined and we have a framework in place that enables them to seek
the commitment from all levels and deliver on goals and expectations. Engro's commitment to
sustainable development is contained in their vision, mission statement and their core value that
drive their decision making process. The company's approach to corporate and social
responsibility (CSR) is built on respect for the environment and maintaining strong relationship
with all key stakeholders.

Their Core Values reflect what we stand for and how we want to do business as a brand, as a
company and as individuals.

Q3. ENGRO Is most successful fertilizer company, so what do you think what step it can
take to get more success?

Enhance business/sales activities by understanding customers businesses better.

Get detailed information and financial and strategic analysis on companies operating
in your industry.
Identify prospective partners and suppliers with key data on their businesses and
locations.
Capitalize on competitor's weaknesses and target the market opportunities available
to them.
Scout for potential acquisition targets, with detailed insight into the companies
strategic, financial and operational performance.

HRMARS, Pakistan www.hrmars.com

 Directory of Human Resource Management e.Publications
June (2011) Vol. 1, Issue 1

- Compare your companys financial trends with those of your peers / competitors.

Q4. What are key actors and forces that enhance success of ENGRO chemical Pakistan
limited?
Engro has never been company to rest its laurels. The key actors and forces that enhance success
of ECLP are
Engro has always emphasized quality assurance in its product and its operations.
Engro's commitment to sustainable development. Sustainability is at the heart of Engro's
values and is central to the growth and continued success of their company.
They promote safety in the workplace and progressive human resource practices, they
benefit their employees, who are essential to their success.
ECPL is regarded as a professional company having one of the best management teams in
the country practicing the highest standards of corporate governance and business
strategy.
Engro is committed to supporting it leadership culture through systems and policies that
foster open communication, maintain employees and partner privacy, and assure
employees health and safety.
The company's approach to corporate and social responsibility (CSR) is built on respect
for the environment and maintaining strong relationship with all key stakeholders.
Brand leadership.
Manufacturing technology.
Economies of scale.
Core values.
Diversification of business.
Management of organization is professional; they are ready to compete all challenges.
In ECLP channel network is working, all company policies and information is shared
with employees thats why they are going success.
Corporate strategy.

Swot analyss of ECPL?

STRENGTH:

Strong performance management(management practices and principle inherited from

EXXON CHEMICAL USA ,after the management buyout in 1991)
Subsidize gas pricing during the last 10 years has resulted in strong accumulated reserve;
low gearing will provide finance strength to company in coming years.
50% joint venture, ENGRO vopak has completed. Four years of profitable operations.
FURTHER DIVIDE INCOME WILL HEDGE AGAINSTECPL,s core business.
Strong customer and product research.
Large market share of Engro innovative and chemicals.
Having good reputation in market by strong brand name.

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 Directory of Human Resource Management e.Publications
June (2011) Vol. 1, Issue 1

WEAKNESSES:

While engro vopak is performing satisfactorily deterioration in operating results of engro

a SAHI could result in A SAHI calling financial support from ECPL.
Engro urea doesnt command the same market premium as competitors Fuji fertilizers
product sona Sona urea is sold in the Punjab province, whereas engro has strong niche in
sindh province.
Unable to fulfill demand of local powder milk market.

OPPORTUNITIES:

New petrochemical projects will help to improve profitability.

Reduction in business risk through capturing a larger segment of value addition chain.
Agriculture business projects like blended fertilizers, and hybrid seed.etc.
May merge with their global business to eliminate competitors.
Has potential to innovate and differentiate companys product to sustain a competitive
advantage.

THREATS:
Competitive or technological threats are highlighted.
major internal factors which will affect the companys performance e.g. size, strength,
cost, revenues and strategy as well as external factors e.g. competitive positioning and
industry trends.
Perception and price differentiation.
High inflation rate.
Decreasing GDP growth rate.
Low purchasing power.
Increase interest rate.
Decreasing investment.
Recessionary period in business cycle.
Engro food is currently facing increase in sale tax.

How engro management capabilities are helpful in achieving its strong performance?

HRMARS, Pakistan www.hrmars.com

 Directory of Human Resource Management e.Publications
June (2011) Vol. 1, Issue 1

ECPL is regarded as a professional company having one of the best management teams in the
country practicing the highest standards of corporate governance and business strategy. Among
its achievements are:

Strong financial performance.

Ability to develop and execute cost effective and strategic expansion projects.
Comprehensive approach towards diversification in the petrochemical and agro-chemical
industry.
Investor and market confidence; ECPL is a 22-time recipient of the Karachi Stock
Exchange's Top 25 Companies Award (in the award's 25 year history).

HRMARS, Pakistan www.hrmars.com