TFC Prospectus PDF

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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 2nd Issue of Rated, Listed and Secured Term Finance Certificates (Engro Rupiya Certificates - 2nd Issue) of PKR 2,000 Million With Green Shoe Option of Additional PKR 1,000 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

June 01, 2011 August 31, 2011 (Both Days Inclusive)
During Banking Hours
Date of Publication of this Prospectus is May 24, 2011
ENGRO CORPORATION LIMITED TFC PROSPECTUS

GLOSSARY Engro Corp. or Company or Issuer 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 investors subscription money is realized and credited into any of the TFC Collection accounts maintained by the Bankers to the Issue. Typically, it takes two working days for subscription money to realize in case of payments made through locally drawn instruments and up to seven working days for outstation instruments Earnings per Share Government of Pakistan The period from the Date of Investment till the Issue Date Profit for the Interim Period Initial Public Offering Independent Power Producer September 16, 2011 which will be the first day after the interim profit payment Issue of TFCs through this Prospectus Karachi Stock Exchange (Guarantee) Limited Lahore 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 put option the amount to be redeemed should either be PkR 5,000/- or in multiples thereof Karachi Stock Exchange (Guarantee) Limited (KSE) and Lahore Stock Exchange (Guarantee) Limited (LSE) Term Finance Certificate IGI Investment Bank Ltd Withholding Tax
EPS GoP Interim Period Interim Profit IPO IPP Issue Date Issue KSE LSE OUTSTANDING ISSUE PRICE
PACRA Put Option
STOCK EXCHANGES TFC TFC Trustee WHT

TABLE OF CONTENTS
Page Number PART I 1. APPROVALS, CONSENTS AND LISTING ON THE STOCK EXCHANGES PART II 2. TERM FINANCE CERTIFICATES AND RELATED MATTERS PART III 3. COMMISSIONS, BROKERAGE AND OTHER EXPENSES OF THE ISSUE PART IV 4. HISTORY AND PROSPECTS PART V 5. FINANCIAL INFORMATION & CREDIT RATING REPORT PART VI 6. TRUSTEE AND SECURITY PART VII 7. MANAGEMENT OF THE COMPANY PART VIII 8. MISCELLANEOUS INFORMATION PART IX 9. APPLICATION AND ALLOTMENT INSTRUCTIONS PART X 10. SIGNATORIES TO THE PROSPECTUS PART XI 11. MEMORANDUM OF ASSOCIATION PART XII 12. APPLICATION FORM PART XIII 13. REDEMPTION NOTICE
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Summary of the Issue Issuer Purpose of the Issue Engro Corporation Limited (Engro) The proceeds of the Issue will be mostly utilized to provide subordinated loans to Engro Corporation subsidiaries including Fertilizer, PowerGen, and Foods to replace their existing debt already drawn or to be drawn. (For details refer to para 2.11) PKR 2,000 million with Green Shoe Option of additional PKR 1,000 million 3 years from the Issue Date 14.5% p.a.(Fixed)
Issue Amount Tenor Profit Rate
Profit payment frequency Semi Annually Profit Accrual Minimum Investment Denomination of TFC Subscription Period TFC Schedule From the Date of Investment Rs. 25,000/Rs. 5,000/- or in multiples thereof 3 months Date of opening of subscription period Date of closing of subscription period Date of Interim Profit Payment1 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 First come first served TFCs may be held either in physical form or in book entry (scrip-less) form through CDS of CDCPL 100% of the principal amount in the thirty-sixth (36th) month (For details refer to para 2.14) 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 2.14.2) June 01, 2011 August 31, 2011 September 15, 2011 September 16, 2011 March 15, 2012 September 15, 2012 March 15, 2013 September 15, 2013 March 15, 2014 September 15, 2014 September 15, 2014 September 15, 2014
Allotment basis Holding of TFCs Principal Redemption Put Option (Early Redemption)
Please refer to para 2.14.3

Security The TFC has been secured by way of first ranking pari passu 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 Engro Corp. and excluding its shares in Engro Powergen Qadirpur Limited (formerly known as Engro Energy Limited) and Engro Polymer & Chemicals Limited (Charged Assets) at 125% of the outstanding principal amount. This charge is pari passu with the existing charge for the first TFC Issue (Trust Deed dated September 17, 2010) and has 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 over the Charged Assets (For details refer to para 6.1) (i) MCB Bank Limited (ii) Standard Chartered Bank (Pakistan) Limited (iii) Bank Alfalah Limited (iv) NIB Bank Limited (v) Bank Al Habib Limited (vi) Allied Bank Limited (vii) Habib Bank Limited (viii) United Bank Limited (ix) JS Bank Limited (x) Askari Bank Limited (xi) Citibank N.A. Pakistan (xii) Faysal Bank Limited (xiii) Samba Bank Limited IGI Investment Bank Limited (IGI)
Bankers to the Issue
Trustee
Registrar & Transfer Agent Central Depository Company of Pakistan Limited (CDCPL) Entity Rating Instrument Rating Risk Factors Listing Pre-IPO Underwriting AA (Double A) by PACRA (For details refer to para 5.6) AA (Double A) by PACRA (For details refer to para 5.6) For details refer to para 4.4 Karachi Stock Exchange (KSE), Lahore Stock Exchange (LSE) None None

PART I
1. 1.1. APPROVALS, CONSENTS AND LISTING ON THE STOCK EXCHANGES 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, 1984 (the Ordinance) has been obtained for the issue, circulation and publication of this Prospectus. DISCLAIMER: It must be distinctly understood that in giving this approval, the Securities and Exchange Commission of Pakistan (SECP) does not take any responsibility for the financial soundness of the Company and any of its schemes stated herein or for the correctness of any of the statements made or opinions expressed with regards to them by Engro Corporation Limited (Engro Corp. or the Company or the Issuer) in this Prospectus. SECP has not evaluated quality of the issue and its approval for the issue, circulation and publication of this prospectus should not be construed as any commitment of the same. The public/investors should conduct their own independent due diligence and analysis regarding the quality of the issue before investment in the TFC being offered through this prospectus. 1.2. CLEARANCE OF THE PROSPECTUS BY THE STOCK EXCHANGES This Prospectus for the second issue of rated, listed and secured Term Finance Certificates (TFCs) has been cleared by both the Karachi Stock Exchange (Guarantee) Limited (KSE) and the Lahore Stock Exchange (Guarantee) Limited (LSE) in accordance with the requirements under their Listing Regulations. DISCLAIMER: The publication of this document does not represent solicitation by the Stock Exchanges. The contents of this document do not constitute an invitation to invest in TFC or subscribe for any securities or other financial instrument by the Stock Exchanges, nor should it or any part of it form the basis of, or be relied upon in any connection with any contract or commitment whatsoever of the Stock Exchanges. It is clarified that information in this prospectus should not be construed as advice on any particular matter by the Stock Exchanges and must not be treated as a substitute for specific advice. The Stock Exchanges disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon this document to any one, arising from any reason, including, but not limited to, inaccuracies, incompleteness and/or mistakes, for decisions and/or actions taken based on this document. The Stock Exchanges neither take responsibility for the correctness of contents of this document nor the ability of the Company to fulfill its obligations thereunder. Advice from a suitably qualified professional should always be sought by investors in relation to any particular investment.

1.3. FILING OF PROSPECTUS AND OTHER DOCUMENTS WITH THE REGISTRAR OF COMPANIES The Company has delivered to the Registrar of Companies, Karachi as required under section 57 (3) and (4) of the Companies Ordinance 1984, a copy of this Prospectus signed by all the Directors of the Company together with the following documents attached thereto: a) A Letter No. D 590 dated March 15, 2011 from A.F.FERGUSON & CO. consenting to the issue of the Prospectus, which contains in Part V certain statements and reports issued by them as experts (which consent has not been withdrawn) Copies of contracts mentioned in Part VIII of the Prospectus 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 57(5) of the Ordinance 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. The Company has filed written confirmations of such consents, as required under section 184 of the Ordinance
b) c)
d)
1.4.
LISTING ON STOCK EXCHANGES Application has been made to KSE and LSE for permission to deal in and for quotation of TFCs of the Company. If, for any reason, the application for listing is not accepted by both KSE and LSE, the Company undertakes to publish immediately in the press a notice to that effect and thereafter to refund the subscription money with markup at 14.5% per annum and if any such money is not refunded within eight days after the Company becomes liable to refund it, the directors of the Company shall be liable to refund the money from the expiration of the said eight day together with surcharge at the rate of 1.5% per month as required under the provisions of Section 72 of the Ordinance.

PART II
2. 2.1. TERM FINANCE CERTIFICATES AND RELATED MATTERS 2nd ISSUE OF LISTED TFCS TO THE GENERAL PUBLIC The second issue consists of PKR 2,000 million with green shoe option of additional PKR 1,000 million to be issued in the form of rated, 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. This will be the second TFC Issue 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, each set having an aggregate face value of PKR 5,000/- or in multiples thereof. The minimum amount of application for the subscription of TFCs is PKR 25,000/. The TFC is structured to redeem 100% of the principal amount in the thirty-sixth (36th) month. The redemption value of the TFCs shall be specified on the TFC itself. For more details, please refer to para 2.14. There is no pre-IPO placement; 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. However, if the target amount of. PKR 2,000 million with green shoe option of additional PKR 1,000 million is subscribed before the end of subscription date, subscription period will be closed immediately. Since there is no minimum subscription requirement, all subscription amounts up to the target amount (inclusive of the green shoe option) will be listed on the KSE and the LSE. Profit Rate Profit on the TFC will be paid every 6 months at a fixed rate of 14.5% per annum which is higher than the latest offering of the 3 year National Savings Bond (NSB) that offers 12.5% per annum (March 02, 20102 ). Moreover, apart from being tradable on the Exchange, the TFCs can also be redeemed directly from the Company anytime (see para 2.14.2) whereas in case of NSBs the early redemption option does not exist. The TFCs also offer a higher rate than the comparable 3 year PIBs that were auctioned at an effective weighted average yield of 13.99% per annum on April 27, 20113 . Moreover, the minimum investment size is Rs. 25,000/- for Engro TFCs whereas PIBs are typically purchased by Institutional Investors in big lots and not available for purchase in smaller amounts for individual investors. 2.2. SECURED TERM FINANCE CERTIFICATES The TFC has been secured by way of first ranking pari passu 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 Engro Corp. and excluding its shares in Engro Powergen Qadirpur Limited (formerly known as Engro Energy Limited) and Engro Polymer & Chemicals Limited (Charged Assets) at 125% of the outstanding principal amount. This charge is pari passu with the existing charge for the first TFC Issue (Trust Deed dated September 17, 2010), and has 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. (For details refer to para 6.1)
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http://www.savings.gov.pk/nsb.asp http://www.sbp.org.pk/ecodata/Auction-Investment.pdf

2.3. OPENING AND CLOSING OF SUBSCRIPTION LIST THE SUBSCRIPTION LIST WILL OPEN FOR 3 MONTHS AT THE COMMENCEMENT OF BANKING HOURS ON JUNE 01, 2011 AND CLOSE AT THE END OF BANKING HOURS ON AUGUST 31, 2011 (BOTH DAYS INCLUSIVE) 2.4. INVESTOR ELIGIBILITY Investors include the following: Pakistani citizens resident in or outside Pakistan or Persons holding two nationalities including Pakistani nationality; Foreign Nationals whether living in or outside Pakistan; Companies, bodies corporate or other legal entities incorporated or established in or outside Pakistan (to the extent permitted by their constitutive documents and existing regulations, as the case may be); Mutual Funds, Provident/pension/gratuity funds/trusts, (subject to the terms of the Trust Deed and existing regulations); and Branches in Pakistan of companies and bodies corporate incorporated outside Pakistan.
ADDITIONAL INSTRUCTIONS FOR FOREIGN/NON-RESIDENT INVESTORS 1. In case of foreign investors who are not individuals, applications must be accompanied with a letter on applicants letterhead stating the legal status of the applicant, place of incorporation and operations and line of business. A copy of memorandum of association or an equivalent document should also be enclosed, if available. Where applications are made by virtue of Power of Attorney, the same must be lodged with the application. Copies of these documents can be attested by the bank manager/officer in the country of applicants residence. Applicants may also subscribe using their Special Convertible Rupee Account (SCRA) as set out under the State Bank of Pakistans Foreign Exchange Manual.
2. 2.5.
MINIMUM AMOUNT OF APPLICATIONS AND BASIS OF ALLOTMENT OF TFCs a) b) c) The minimum amount of application for subscription of TFCs is PKR 25,000/Applications for TFCs below the aggregate face value of PKR 25,000/- will not be entertained. Applications for TFCs by the general public, including institutions and individuals, must be made for a minimum of the aggregate face value of PKR 25,000/- or in multiples of PKR 5,000/- for amounts above PKR 25,000/-. 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 2,000 million with green-shoe option of additional PKR 1,000 million is subscribed. In case Bankers to the Issue on any given day accept subscriptions which result in the target amount being exceeded, then all applications in excess of the target amount will be returned to the applicants along with profit at the rate of 14.5% 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. Therefore, there will be no oversubscription. In order to ensure that allotment of TFCs is made to the applicants on first come first served basis, the Bankers to the Issue shall mark each Subscription Application with the date and time of their receipt. 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. Allotment of TFCs shall be subject to scrutiny of applications for subscription.
d)
e)

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 by Engro Corp. to provide subordinated loans to its subsidiaries to replace existing debt already drawn or to be drawn. For detail please refer to para 2.11 below. 2.8. ISSUE, CREDIT AND DISPATCH OF TFCs The Company shall credit or dispatch, as the case may be, TFCs within thirty (30) days from the Date of Investment. 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 April 07, 2011 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 of either KSE or LSE, it will pay to the respective Exchange a penalty of PKR 5000/- per day for the period during which the default continues. The Stock Exchange concerned 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. TRANSFER OF TFCs 2.9.1 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 and will be eligible for transfer after the Issue Date. 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. 2.10. TFCs ISSUED IN PRECEDING YEARS This is the second TFC Issue by the Company. Following are the details of the first TFC Issue:

Date of Issue Issue Size Subscription Period Date of Listing Pre-IPO Tenor Principal Purpose Profit Rate Security Trustee Credit Rating Listing Interim (January 31, 2011) 1st (July 31, 2011) 2nd (January 31, 2012) 3rd (July 31, 2012) 4th (January 31, 2013) 5th (July 31, 2013) 6th (January 31, 2014) Early Redemption Amount Principal Outstanding October 15, 2010 PKR 4,000 million inclusive of Green Shoe option of PKR 2,000 million October 15, 2010 January 08, 2011 February 15, 2011 None 3 years To finance cash needs of Engro Corporation for investments in its subsidiaries 14.5% per annum (Fixed) First ranking floating charge over certain assets of Engro Corporation Limited IGI Investment Bank Limited AA (PACRA) Karachi Stock Exchange Profit Payment Schedule Principal Repayment Schedule PKR 113,538,233.49 PKR 287,424,800.00 PKR 792,896 PKR 287,367,315.04 PKR 792,737 PKR 287,309,841.58 PKR 792,579 PKR 287,252,379.61 PKR 792,420 PKR 287,194,929.13 PKR 792,262 PKR 287,137,490.15 PKR 3,960,517,105 PKR 35,520,000.00 (as on April 12, 2011) PKR 3,964,480,000.00 (as on April 12, 2011)
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 mostly utilized to provide subordinated loans to its subsidiaries including Fertilizer, PowerGen, and Foods to replace their existing debt already drawn or to be drawn. Some of the proceeds will also be retained by the Company to provide funds for servicing redemptions, if any, arising from the issuance of the TFC. 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 None of the TFC holders have any special or other interest in the property or profit of the Company other than that as holders of the TFC certificates of the Company. 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.
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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. 2.14.1TFCs 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 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 Profit Payment 3 years The TFC is structured to redeem 100% of the Principal amount in the 36th month 14.5% per annum An interim profit payment at the rate of 14.5% for the period from the Date of Investment till the Issue Date will be made. All subsequent profits will be payable semi-annually in arrears on the outstanding Principal amount from the Issue Date
The redemption schedule for TFCs subscribed on the opening date of subscription and 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 0 6 12 18 24 30 36 25,000 Total 25,000 Profit @ 14.5% 1,057.29 1,812.50 1,812.50 1,812.50 1,812.50 1,812.50 1,812.50 11,932.29 Zakat @ Withholding 2.5% Tax @ 10% 105.73 181.25 181.25 181.25 181.25 181.25 625.00 181.25 625.00 1,193.23 Total Principal Principal Payment Payment in % Outstanding 951.56 0.00% 25,000 1,631.25 0.00% 25,000 1,631.25 0.00% 25,000 1,631.25 0.00% 25,000 1,631.25 0.00% 25,000 1,631.25 0.00% 25,000 26,006.25 100.00% 35,114.06 100.00%
Notes: The above redemption schedule includes interim profit payment of PKR 1,057.29 for the period from the opening date of subscription till the Issue Date 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.
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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 put option the amount to be redeemed should either be PKR 5,000/- or in multiples thereof. Profit will be paid till the date the Company makes the redemption payment. 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 Standard Chartered Bank (Pakistan) Limited
In case of TFCs held in CDS, TFC holders can exercise the Put Option as per the Central Depository Company of Pakistan Limited Regulations. TFCs applied for redemption will not be tradable in the secondary market. In case of physical certificates, the investor will have to surrender the certificates along with the redemption notice. TFCs held in CDS will be cancelled when the redemption notice is received by the Company. By way of an example, the redemption schedule for TFCs subscribed on the opening date of subscription for an aggregate face value of PkR 25,000 based on profit rate of 14.5% per annum and redeemed at the end of 27th month from the Issue Date is set out in the table below:
Principal Months Redemption 0 6 12 18 24 27 24,500 Total 24,500 Profit @ 14.5% 1,057.29 1,812.50 1,812.50 1,812.50 1,812.50 906.25 9,213.54 Zakat @ Withholding 2.5% Tax @ 10% 105.73 181.25 181.25 181.25 181.25 612.50 90.63 612.50 921.35 Total Principal Principal Payment Payment in % Outstanding 951.56 0.00% 25,000 1,631.25 0.00% 25,000 1,631.25 0.00% 25,000 1,631.25 0.00% 25,000 1,631.25 0.00% 25,000 24,703.13 98.00% 32,179.69
Notes: The above redemption schedule includes interim profit payment of PKR 1,057.29 for the period from the opening date of subscription till the Issue Date 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. The above redemption schedule includes deduction of a service charge of 2% of the outstanding Issue Price of the TFC. Profit will be paid to the TFC holder till the date the Company pays the redemption amount and will be computed on 365 day year basis. PLEASE NOTE THAT THE ISSUER HAS NO CALL OPTION.
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2.14.3 Profit Payments Profit will be paid at a fixed rate of 14.5% per annum from the Date of Investment. To bring all TFCs at par, an interim profit payment for the period from the Date of Investment till the Issue Date will be made. From the Issue Date, all subsequent profits will be payable semi-annually in arrears on the outstanding Principal amount. 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 Third Fourth Fifth Sixth & Final Profit Period Interim Period September 16, 2011 to March 15, 2012 March 16, 2012 to September 15, 2012 September 16, 2012 to March 15, 2013 March 16, 2013 to September 15, 2013 September 16, 2013 to March 15, 2014 March 16, 2014 to September 15, 2014 Profit Payment Date September 15, 2011 March 15, 2012 September 15, 2012 March 15, 2013 September 15, 2013 March 15, 2014 September 15, 2014
2.15. REDEMPTION RESERVE In view of the secured nature and good credit rating (AA), the Company is expected to have adequate funds to meet its financial obligations arising from the issue of TFCs. Therefore, no redemption reserve is being created for the redemption of TFCs. 2.16. DEDUCTION OF ZAKAT Zakat is deductible in case of TFCs held by Muslim citizens of Pakistan, except where a statutory declaration of exemption is filed, and in case of certain non-corporate entities such as Trusts, Funds (subject to being qualified for non-deduction of Zakat in terms of the Zakat and Ushr Ordinance, 1980) etc. 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, whichever is lower, at the rate of 2.50% on such dates as the concerned TFC becomes due for redemption in a Zakat year. 2.17. INCOME TAX Any income derived from the Term Finance Certificates shall be subject to income tax as per the Income Tax Ordinance, 2001. According to this Ordinance, the tax shall be deducted @ 10% of the gross amount of profit paid as per the First Schedule, Part 3, Division 1, Para (a), and shall be deemed to be the final discharge of tax liability on the profit arising to a tax payer other than a company, under subsection 3 of Section 151 of the Income Tax Ordinance, 2001. Currently, there is an additional surcharge of 15% of the total income tax amount which is applicable till June 30, 2011. Subsequent tax rates will be applicable as per the then prevailing rates. 2.18. DEDUCTION OF WITHHOLDING TAX Engro Corp. is required to withhold tax at the rate of 10% (or the then prevailing rate), from profit payments to all investors except companies and resident individuals whose investment amount is up to PKR 150,000 under Clause 59, part (IV), Second Schedule of Income Tax Ordinance 2001. Currently, there is an additional surcharge of 15% of the total income tax amount which is applicable till June 30, 2011. Subsequent tax rates will be applicable as per the then prevailing rates.
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2.19. 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, 2001. 2.20. CAPITAL VALUE TAX & WITHOLDING TAX ON SALE/PURCHASE OF TFCs Pursuant to the provisions of Section 233A of the Income Tax Ordinance, 2001 & Capital Value Tax (Finance Act 1989) the following charges are applicable on sale/purchase of securities: 0.02% Capital Value Tax (CVT) will be charged on purchase of all modaraba certificates and instruments of redeemable capital as defined in the Companies Ordinance, 1984 0.01% Withholding Tax (WHT) will be charged on sale of all shares, modaraba certificates, and instruments of redeemable capital as defined in the Companies Ordinance, 1984.
2.21. MARKET MAKING The TFCs will be listed on KSE and LSE. JS Global Capital Limited will act as Market Maker for the issue. The role of the market maker will be to offer bid & ask quotes for the TFCs at a spread of 0.50% and 1.50% in yield, or equivalent price terms, for marketable or non-marketable lots respectively. Price will be determined by market maker in light of prevailing liquidity, interest rates and credit risk on the issuer. Marketable lots are defined as any amount upto PKR 1 million face value with minimum face value of PKR 25,000 and Non-Marketable lots are defined as any amount less than PKR 25,000 face value or more than PKR 1 million face value. Market Maker will trade TFCs which are either available for transfer with CDS or physically in the form of printed certificates. 2.22. DISCLOSURE OF DEFERRED TAXATION Deferred tax is recognized using the balance sheet method, providing for all temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. 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. 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. The balance of deferred tax liability for Engro Corporation Limited as at December 31, 2010 is PKR 1,297. Break up is as follows: Accelerated depreciation Retirement & other Service benefits Amounts in 000 PKR 1,822 PKR (525) PKR 1,297
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PART III
3. 3.1. COMMISSIONS, BROKERAGE AND OTHER EXPENSES OF THE ISSUE COMMISSION TO THE BANKERS TO THE ISSUE A commission at the rate of 0.5% of the amount collected, 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. 3.2. BROKERAGE For the public offer, the Company will pay brokerage to the members of KSE, LSE and ISE at the rate of 0.25% of the value of TFCs actually sold through them. 3.3. EXPENSES OF THE ISSUE The maximum initial expenses of the issue paid or payable by the Company inclusive of all commissions are estimated to be PKR 107,152,500/-. The details of the expenses of the issue are as follows:
Expenses Category Commission to the Bankers to the Issue Promotion by the Bankers to the Issue Brokerage to the members of Stock Exchanges Stamp Duty Sindh Rating Fee Initial Initial Listing Fee of the Stock Exchanges Processing Fee of the Securities & Exchange Commission of Pakistan Annual Listing Fee of the Stock Exchanges Service Charges of the Lahore Stock Exchange CDCPL Fee Trustee Fee Registrar Fee Annual Market Making Fee to JS Global Capital Limited Printing & Publication Expenses of Prospectus Marketing Legal Expenses Out of Pocket Expenses Total Rate 0.50% 0.25% 0.15% Amount in PKR 15,000,000 21,000,000 7,500,000 4,500,000 1,000,000 1,000,000 100,000 90,000 25,000 67,500 500,000 370,000 1,000,000 1,500,000 50,000,000 1,000,000 2,500,000 107,152,500
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PART IV
4. 4.1. HISTORY AND PROSPECTS BACKGROUND AND HISTORY Established in 1965 as a fertilizer company and subsequently named Exxon Chemical Pakistan Limited, the Company was renamed Engro Chemical Pakistan Limited (ECPL) in 1991 when Exxon decided to divest out of the fertilizer business globally. ECPL was later renamed Engro Corporation Limited on January 01, 2010, and its fertilizer business demerged into a new company Engro Fertilizers Limited. 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. A significant part of this change is the demerger and transfer of Engros expanding fertilizer business into a separate wholly owned subsidiary. Shareholding Structure As of December 31, 2010, the shareholding structure of Engro Corporation Limited was as follows: Shareholding Breakdown Shareholder Category Joint Stock Companies Dawood Hercules Chemical Ltd. Individuals Financial Institutions Insurance Companies Central Insurance Co. Ltd. Modaraba Companies Investment Companies Cooperative Societies Others Total No. of Shares held 151,019,764 124,982,408 77,433,363 40,114,698 21,247,883 11,608,251 17,625,884 6,260,194 30,243 14,004,790 327,736,819 % Shareholding 46.07% 23.63% 12.23% 6.48% 5.32% 1.91% 0.09% 4.27% 100.00%
In March 2011, there has been a 20% bonus issue which has increased the total shareholding to 393,284,183 shares. Engro Corporation Limited is listed on the Karachi, Lahore and Islamabad stock exchanges and has a total paid-up capital1 of PKR 3,277.37 million where as total market2 capitalization stood at PKR 63,518.67 million. As a testament to Engro Corp.s blue chip corporate status, 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. Further, Engro Corps corporate and social responsibility initiatives have been recognized internationally at various forums. Engro Corporation Limited has diverse business interests in fertilizer, PVC, bulk chemical storage, food processing, power generation etc. through various subsidiaries and joint ventures. The following is a summary financial snapshot of Engro Corporation Limited on a consolidated basis:
1 2
Audited accounts as of December 31, 2010 As of December 31, 2010
16

Year Ended December * (Rs. 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) 4.2. PRINCIPAL PRODUCTS Engro Corporation Limited is a holding company and is responsible for the long term vision and profitable growth of the Company and its subsidiaries and affiliates. Following are the subsidiaries and affiliates of the Company as at December 31, 2010: Subsidiaries and Affiliates Engro Polymer & Chemicals Ltd. Engro Eximp (Pvt) Ltd. Engro Management Services (Pvt) Ltd. Engro Foods Ltd. Engro PowerGen Ltd. Avanceon Ltd. Engro Powergen Qadirpur Ltd. Engro Fertilizers Ltd. Engro Vopak Terminal Ltd. (Joint Venture) Arabian Sea Country Club (Affiliate) 4.3. FINANCIAL OVERVIEW Engro Corp.s income comprises of dividends received from its subsidiaries and royalty income from its fertilizer business. 4.4. RISK FACTORS Business Risks i. Diversification In order to diversify future cash flows of the Company, Engro Corp. has been diversifying and expanding in a number of sectors including foods, power generation, information technology, PVC manufacturing and bulk chemical handling and storage business. The Company also aims to capitalize on the synergies between its various subsidiaries and joint ventures. This exposes the Company to the risks that diversification may pose. No. of shares held by Engro Corp. 372,810,000 48,010,000 250,000 700,000,000 36,476,000 25,066,667 32,000,000 1,072,800,000 45,000,000 500,000 Percentage Holding 56.19% 100% 100% 100% 100% 62.67% 10% 100% 50% N.A. 2010 79,976 6,790 34,115 164,778 130,663 3,277 8.49 19.90 104.09 20.72 6.00 193.81 9.35 2009 58,152 3,807 29,344 132,105 102,761 2,979 6.55 12.97 98.49 12.78 6.00 183.27 14.34 2008 40,973 4,126 23,548 80,802 57,254 2,128 10.07 17.52 110.65 19.39 6.00 96.46 4.97 2007 34,121 2,877 18,278 49,236 30,958 1,935 8.43 15.74 94.47 14.87 7.00 265.75 17.87 2006 20,240 2,107 9,796 20,054 10,258 1,682 10.41 21.51 58.23 12.53 9.00 169.00 13.49
st
2005 18,757 2,279 7,541 14,397 6,856 1,529 12.15 30.22 49.31 14.91 11.00 164.45 11.03
*As of 31 December
17

Mitigants Engro Corporation Limited has a successful track record in profitably managing its associated businesses. Individual companies are run by independent teams of professional and competent management personnel. Where required, as in Engro Foods Limited, Engro Corp. has hired experienced professionals. Further, all ventures are backed by extensive due diligence and/or through participation of world-renowned joint venture partners (Vopak in Engro Vopak Terminal Limited, and Mitsubishi Corporation in Engro Asahi) to provide the necessary technical expertise. Engro Corps 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 Powergen Qadirpur Limited (formerly known as Engro Energy Limited) achieving commercial operations date in record time. Instrument Risks i. Default Risk Given the secured nature of the instrument, while there is a default risk, the chances of default are very low as confirmed by the TFC Rating. Mitigants Instrument has been secured by first ranking pari passu floating charge over the shareholding of Engro Corp. in some of its subsidiary companies and affiliates and certain other assets of the Company at 125% of the outstanding principal amount. Furthermore, 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. The Instrument has been assigned rating of AA (Double A) by PACRA. ii. 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. Mitigants The TFCs are to be listed on KSE and LSE, which will act as provider of liquidity for TFCs during the life of the instrument by facilitating secondary market trades. In addition, the market maker would also make market for the instrument. Investors can also exercise the Put Option anytime from the Date of Investment as explained in detail in para 2.14.2. iii. Interest Rate or Price Risk Fluctuations in interest rates, and underlying inflation, may adversely affect the yield to the investors. Mitigants The structure of the product is such that the investor can redeem the TFCs anytime after the Date of Investment.
18

iv. Capital Market Risk The TFC issue will be listed on KSE and LSE and the TFC holders will be able to sell or buy TFCs through the members of KSE and LSE and through market maker subsequent to the listing of the issue. Price of TFCs will depend on the bond market behavior and the performance of the Company. Hence price may rise or fall and result in increase or decrease in the value of TFCs to any extent. v. 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. vi. 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. Any unforeseen events such as problems arising out of lower than projected production and sales by subsidiaries and affiliates, and consequent receipt of dividends by the Company have not been taken into account. The investors assume the risk that due to the unforeseen events the Company may not be able to maintain consistent growth. vii. Changes in Tax Regime Any adverse change in the existing Tax regime for investment in TFCs, may affect the redemption and profit for the TFC investors. viii. 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. Exchange Rate Risk Depreciation of the Rupee may adversely affect the yield to the overseas investors. Note: It is stated that all material risk factors with respect to this issue have been disclosed to the best of our knowledge and belief and that nothing has been concealed in this respect.
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PART V
FINANCIAL INFORMATION & CREDIT RATING REPORT 5.1 AUDITORS CERTIFICATE March 15, 2011 D 588
The Board of Directors Engro Corporation Limited 7th & 8th Floor, The Harbour Front Building HC No. 3, Marine Drive, Block 4, Clifton Karachi 75600, Pakistan
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, 1984 FOR THE PURPOSE OF INCLUSION IN THE PROSPECTUS FOR TERM FINANCE CERTIFICATES BY ENGRO CORPORATION LIMITED We have, 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, 1984, reviewed the audited unconsolidated financial statements of Engro Corporation Limited (the Company) and the audited consolidated financial statements of the Company and its subsidiaries (the Group) for the five years ended December 31, 2006 to December 31 2010, for inclusion in the prospectus for proposed issue of rated, listed and secured Term Finance Certificates by the Company. The financial statements of the Company and the Group for the years ended December 31, 2006 to December 31, 2008 were audited by KPMG Taseer Hadi & Co., Chartered Accountants whereas the financial statements for the years ended December 31, 2009 and December 31, 2010 have been audited by us. The auditors issued an unqualified opinion on the financial statements for the year ended December 31, 2006. Whereas for the years ended December 31, 2007, 2008, 2009 and 2010, the auditors opinion was also unqualified in all respects except that due to a fire at the Companys premises on August 19, 2007, certain records, documents and books of accounts of the Company relating to prior years were destroyed. Records in electronic form remained intact and certain hard copy records relating to financial year 2006 have not been recreated. Further, the auditors report for the years 2007, 2008 and 2009 included an emphasis of matter paragraph that the Company has recognized the effect of acquisition of taxable losses of a subsidiary company, pending designation from the Securities and Exchange Commission of Pakistan (SECP) as company entitled for Group Relief under the Income Tax Ordinance, 2001. As disclosed in the 2010 financial statements, the subsidiary company during the year was designated as part of the Group of Engro Corporation Limited by the SECP and the Companys appeal against the disallowance of the aforementioned Group Relief was also decided in the Companys favour by the Appellate Tribunal for the years ended December 31, 2006 and 2007. No emphasis of matter paragraph has been included in the auditors report for the year ended December 31, 2010.
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The Group comprises of Engro Corporation Limited and seven subsidiary companies. The percentage of shareholding in the subsidiary companies, alongwith the details of their respective auditors are as follows:
Name of the Subsidiary Companies Percentage of holding Years Ended December 31, 2006 to Engro Eximp (Private) Limited 100% December 31, 2008 December 31, 2009 and December 31, 2010 December 31, 2006 to Engro Management Services (Private) Limited December 31, 2008 100% December 31, 2009 and December 31, 2010 December 31, 2006 Engro Foods Limited 100% to December 31, 2010 December 31, 2006 Engro Polymer & Chemicals Limited 56.19% to December 31, 2010 December 31, 2006 and December 31, 2007 Avanceon Limited 62.67% December 31, 2008 to December 31, 2010 December 31, 2008 Engro PowerGen Limited 100% December 31, 2009 and December 31, 2010 June 29, 2009, the date of incorporation, to December 31, 2010 A. F. Ferguson & Co. KPMG Taseer Hadi & Co. A. F. Ferguson & Co. Fakharuddin Yousaf Ali & Co. A. F. Ferguson & Co. A. F. Ferguson & Co. A. F. Ferguson & Co. KPMG Taseer Hadi & Co. KPMG Taseer Hadi & Co. Auditors
A. F. Ferguson & Co.
Engro Fertilizers Limited
100%
A. F. Ferguson & Co.
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In accordance with section 53(1) read with clause 28 of Section 2 of Part I of the Second Schedule to the Companies Ordinance, 1984, we report that: 1. ENGRO CORPORATION LIMITED AND THE GROUP SUMMARY OF ASSETS, LIABILITIES AND SHAREHOLDERS EQUITY AS AT DECEMBER 31, 2010 The summary of assets, liabilities and shareholders equity of the Company and the Group as at December 31, 2010 were as follows: The The Group Company Rupees (Amounts in thousand) ASSETS Non-Current Assets Property, plant and equipment Exploration and evaluation expenditure Biological assets Intangible assets Long term investments Deferred employee compensation expense Long term loans and advances Current Assets Stores, spares and loose tools Stock-in-trade Trade debts Deferred employee compensation expense Loans, advances, deposits and prepayments Other receivables Derivative financial instruments Taxes recoverable Short term investments Cash and bank balances TOTAL ASSETS 139,910 197,453 1,970,603 806,584 3,114,550 31,010,943 4,910,941 8,843,677 5,131,408 4,829 2,474,076 1,287,827 3,148 2,494,314 4,426,188 4,120,031 33,696,439 164,778,452 136,178 26,136,701 1,623,514 27,896,393 128,712,148 356,286 428,293 877,323 514,505 193,458 131,082,013
1.1
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The Company Rupees (Amounts in thousand) EQUITY AND LIABILITIES Equity Share Capital Authorised 350,000,000 ordinary shares of Rs. 10 each Issued, subscribed and paid-up Share premium Employee share option compensation reserve Hedging reserve Revaluation reserve on business combination Maintenance reserve Exchange revaluation reserve General reserve Unappropriated profit Non Controlling Interest Total Equity Non-Current Liabilities Borrowings Derivative financial instruments Obligations under finance lease Deferred taxation Employee housing subsidy Retirement and other service benefits obligations Deferred liabilities Current Liabilities Trade and other payables Accrued interest / mark-up Current portion of : - borrowings - obligations under finance lease - deferred liabilities Short-term borrowings Derivative financial instruments Taxation Unclaimed dividends Total Liabilities TOTAL EQUITY AND LIABILITIES 267,044 65,000 3,384,536 57,247 180,630 3,954,457 3,957,304 31,010,943 12,614,214 2,619,453 15,543,787 13,310 23,047 5,715,775 1,040,829 180,630 37,751,045 130,663,437 164,778,452 1,550 1,297 2,847 89,151,849 805,154 18,998 2,471,226 347,886 117,279 92,912,392 3,500,000 3,277,369 10,550,061 74,813 4,429,240 8,722,156 23,776,270 27,053,639 27,053,639 3,500,000 3,277,369 10,550,061 162,455 (927,438) 104,698 197,577 28,883 4,429,240 12,776,146 27,321,622 30,598,991 3,516,024 34,115,015 The Group
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(Amounts in thousand) 1.2 CONTINGENCIES AND COMMITMENTS Contingencies and commitments reported in the financial statements as at December 31, 2010 have been reproduced below: 1.2.1 Guarantees The Company Rupees Corporate Guarantees issued in favour of Subsidiary Companies: - Engro Fertilizers Limited (1.2.2) - Engro Powergen Qadirpur Limited (formerly, Engro Energy Limited); a subsidiary of Engro PowerGen Limited (1.2.3) - Avanceon Limited The Group
65,642,000
65,642,000
857,000 242,000
857,000 242,000
1.2.2 In addition to above, the Company has also issued a corporate guarantee to International Finance Corporation (IFC) for USD 80,000 under the Amended Agreement entered into by the Subsidiary Company with IFC. As at December 31, 2010, USD 50,000 has been availed while USD 30,000 is still undisbursed. Further, IFC has an option to convert a tranche of the disbursed loan amounting to USD 15,000, into ordinary shares of the Company at Rs. 205 per ordinary share (Rs.186.84 as at December 31, 2010) calculated at the dollar rupee exchange rate prevailing on the business day prior to the date of notices issued by IFC to exercise the conversion option. Such option is to be exercised within a period of no more than five years from the date of disbursement of loan. The Company has entered during the year into an agreement with the Subsidiary Company that in the event IFC exercises the aforementioned conversion option, the IFC loan amount then outstanding against the Subsidiary Company would stand reduced by the conversion option amount and the Subsidiary Company would pay the rupee equivalent of the corresponding conversion amount to the Company which would simultaneously be given to the Subsidiary Company as a subordinated loan, carrying mark-up payable by the Company for rupee finances of like maturities plus a margin of 1%. The effect of IFC conversion in substance would result in a loan from the Company having the same repayment terms / dates as that of the extinguished loan of IFC i.e. three half yearly installments commencing from September 15, 2015. 1.2.3 The Company has provided Corporate Guarantee amounting to USD 10,000 issued to Allied Bank Limited to open DSRA letter of credit in favour of the Subsidiary Companys senior long term lenders. 1.2.4 Project completion support to lenders The Company has extended project completion support to the lenders of Engro Powergen Qadirpur Limited (formerly, Engro Energy Limited), a subsidiary of Engro PowerGen Limited for US$ 15,400. The project support is contingent upon occurrence or non-occurrence of specified future events. The project is complete and lender NOCs are awaited.
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(Amounts in thousand) 1.2.5 Claims including pending lawsuits Claims including pending lawsuits against the Subsidiary Company (Engro Fertilizers Limited), not acknowledged as debts amounts to Rs.36,018. 1.2.6 Bank guarantees Bank guarantees of Rs. 3,830,939 have been issued in favour of third parties. This includes bank guarantee which has been given by Engro Powergen Qadirpur Limited (formerly, Engro Energy Limited), a subsidiary of Engro PowerGen Limited, to Sui Northern Gas Pipelines Limited (SNGPL) amounting to Rs. 1,596,126 in accordance with the terms of Gas Supply Agreement with the SNGPL. As per the aforesaid agreement, Engro Powergen Qadirpur Limited is required to provide bank guarantee in favor of SNGPL for an amount equivalent to three months contractual quantities of gas. 1.2.7 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 Honeywell shipments and to IGI Insurance Company Limited as security against insurance guarantees issued by them in favor of AES Lalpir and Nestle Ltd for performance of contracts amounting to Rs. 10,003. 1.2.8 Recovery of penalties imposed by the State Bank of Pakistan The Subsidiary Company (Engro Fertilizers Limited) is contesting the penalty of Rs. 99,936 paid and expensed in 1997, 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. A partial refund of Rs. 62,618 was, however, recovered in 1999 from SBP and the recovery of the balance amount is dependent on the Courts decision. 1.2.9 Arbitration proceedings for recovery of marketing incidentals The Subsidiary Company (Engro Fertilizers Limited) 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. The sole arbitrator in the second case has awarded the Company Rs. 47,800 whereas the award for the earlier years is awaited. The award for the second arbitration has not been recognised due to inherent uncertainties arising from its challenge in the High Court of Sindh. 1.2.10 Lawsuit filed by previous co-workers over a portion of the land During the year, a lawsuit has been filed against Engro Foods Supply Chain (Private) Limited), a subsidiary of Engro Foods Limited in the Civil Court, Sheikhupura by certain previous coworkers claiming pre-emptive rights over a portion of the land, acquired by Engro Foods Supply Chain (Private) Limited of rice processing plant. Engro Foods Supply Chain (Private) Limited has filed its written statement thereagainst and the case is currently being heard. However, Engro Foods Supply Chain (Private) Limited, based on the opinion of legal advisor is confident that the matter will be decided in its favour.
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(Amounts in thousand) 1.2.11 Commitments The Company Rupees (i) (ii) Property, plant and equipment Letter of credits other than for capital expenditure 2,446,137 The Group
143,732
(iii)
Avanceon LP (USA), a subsidiary of Avanceon Limited, is obligated under non-cancellable operating leases for computer & office equipment which expire at various dates through 2011. The future lease commitments related to non-cancellable operating leases as of December 31, 2010 are as follows: Rupees Not later than one year Later than one year and not later than five years Later than five years 1,212 1,212
(iv)
Avanceon Limited leases its facilities from Cornerstone Investments (a related party) under an operating lease at a monthly rental of Rs. 2,349. The lease shall expire on April 30, 2011 and future commitments in respect thereof amounts to Rs. 9,396 all of which are due not later than one year. The Subsidiary Company (Engro Polymer and Chemicals Limited) has entered into operating lease arrangements with Al-Rahim Trading Terminal and Dawood Hercules Limited - a related party, for storage and handling of Ethylene Di Chloride (EDC) and Caustic soda, respectively. The total lease rentals due under these lease arrangements are payable in monthly installments till July 31, 2019. The future aggregate lease payments under these arrangements are as follows: Rupees Not later than one year Later than one year and not later than five years Later than five years 59,840 57,600 50,400 167,840
(v)
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(Amounts in thousand) 2. ENGRO CORPORATION LIMITED PROFIT AND LOSS ACCOUNT FOR THE YEARS ENDED DECEMBER 31, 2006 TO DECEMBER 31, 2010
2010 Year ended December 31, 2009 2008 2007 Rupees 30,171,520 (23,240,176) 6,931,344 (1,945,176) 4,986,168 1,885,000 88,467 (424,110) (1,320,579) (1,744,689) 5,214,946 (1,257,696) 3,957,250 23,317,198 (17,120,635) 6,196,563 (1,657,815) 4,538,748 2,605,396 148,934 (579,556) (1,508,948) (2,088,504) 5,204,574 (964,144) 4,240,430 23,183,222 (18,262,793) 4,920,429 (1,641,724) 3,278,705 1,618,701 212,559 (339,430) (535,023) (874,453) 4,235,512 (1,080,929) 3,154,583 2006
Net sales Cost of sales GROSS PROFIT Selling and distribution expenses
17,601,783 (13,364,524) 4,237,259 (1,481,730) 2,755,529 970,600 368,254 (287,176) (362,551) (649,727) 3,444,656 (897,330) 2,547,326
Dividend income Royalty income Administrative expenses Other operating income Other operating expenses Finance cost
1,640,000 257,584 (388,652) 433,947 (38,773) (92,131) (130,904) 1,811,975 (136,016) 1,675,959
PROFIT BEFORE TAXATION Taxation PROFIT AFTER TAXATION
Note: 1. The above figures are as reported in the respective years published financial statements except certain items that have been rearranged for consistency of classification. Effective January 1, 2010, Engro Corporation Limited now functions as a Holding Company consequent to demerger of the Fertilizer Undertaking to the Subsidiary Company, Engro Fertilizers Limited, through a Scheme of Arrangement, as referred to in section 5.1.1. For earnings per share, refer section 6 of this report.
2.
3.
27

(Amounts in thousand)
3.
ENGRO CORPORATION LIMITED AND ITS SUBSIDIARY COMPANIES (THE GROUP) CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEARS ENDED DECEMBER 31, 2006 TO DECEMBER 31, 2010
2010 Year ended December 31, 2009 2008 2007 Rupees 58,152,368 (44,658,196) 13,494,172 40,973,047 (30,111,348) 10,861,699 34,120,611 (26,138,366) 7,982,245 2006
Net sales Cost of sales GROSS PROFIT Selling and distribution expenses
79,975,765 (59,702,130) 20,273,635
20,240,035 (15,097,181) 5,142,854
(8,289,680) 11,983,955
(6,215,316) 7,278,856 390,157 (843,561) (2,221,739) (3,065,300)
(4,253,652) 6,608,047 1,038,314 (969,583) (1,737,953) (2,707,536)
(3,582,695) 4,399,550 509,829 (482,558) (717,658) (1,200,216)
(2,320,924) 2,821,930 421,625 (297,690) (438,240) (735,930)
Other operating income Other operating expenses Finance cost
897,321 (957,982) (4,200,886) (5,158,868)
Share of income from joint venture PROFIT BEFORE TAXATION Taxation PROFIT AFTER TAXATION
554,725 8,277,133 (1,836,131) 6,441,002
458,570 5,062,283 (1,343,481) 3,718,802
245,193 5,184,018 (977,328) 4,206,690
243,666 3,952,829 (1,119,041) 2,833,788
409,568 2,917,193 (778,351) 2,138,842
Attributable to : - Owners of the Company - Non Controlling Interest 6,790,049 (349,047) 6,441,002 3,806,918 (88,116) 3,718,802 4,125,754 80,936 4,206,690 2,876,520 (42,732) 2,833,788 2,106,891 31,951 2,138,842
Note: 1. The above figures are as reported in the respective years published financial statements except certain items that have been rearranged for consistency of classification. For earnings per share, refer section 6 of this report.
2.
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(Amounts in thousand) 4. 4.1 WE FURTHER REPORT THAT: Details of dividend declared by the Company for the years ended December 31, 2006 to December 31, 2010 are as follows:
Year ended December 31, 2010 Cash dividend Ru pees in thousand Rate of dividend (Rupees per share) Bonus issue Rupees in thousand 655,473 297,943 1,966,419 6 1,787,655 6 1,276,896 6 1,303,815 7 1,514,106 9 2009 2008 2007 2006
5.
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, 2006 to December 31, 2010:
5.1 5.1.1
Financial statements for the year ended December 31, 2010 Scheme of Arrangement The Board of Directors in their meeting on April 28, 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 (Retained Undertaking). In this regard, a wholly owned subsidiary namely Engro Fertilizers Limited was incorporated on June 29, 2009. The division was effected on January 1, 2010 (the Effective Date) through a Scheme of Arrangement (the Scheme) whereby: 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 (section 5.1.2); and the retention of the Retained Undertaking in the Company along with the change of name of the Company to Engro Corporation Limited. Engro Corporation Limited henceforth will function as a Holding Company to oversee the business of the new fertilizer subsidiary as well as business of its other existing subsidiaries/associates.
5.1.2
Bifurcated Balance Sheet as at January 1, 2010 In order to determine the net assets of the Retained Undertaking and the Fertilizer Undertaking for the aforementioned transfer / demerger of the Company, the assets and liabilities of the Company as at January 1, 2010 were bifurcated, as per the Scheme, between the Fertilizer Undertaking and Retained Undertaking.
29

(Amounts in thousand) The net assets of the Fertilizer Undertaking transferred to Engro Fertilizers Limited as at January 1, 2010 amounted to Rs. 10,739,144, as summarized below:
Rupees Total assets Less: Total liabilities Net assets transferred to Engro Fertilizers Limited Add: Hedging reserve (negative) - refer note below Adjustment pertaining to transfer of Fertilizer Undertaking 76,695,164 66,565,739 10,129,425 609,719 10,739,144
Engro Fertilizers Limited in return issued 9,999,993, in addition to existing 7, fully paid ordinary shares of Rs. 10 each plus share premium to the Company against the aforementioned adjustment as follows:
Rupees Shares at par value Share premium 100,000 10,639,144 10,739,144
Hedging Reserve As per the Scheme of Arrangement, the hedging reserve and revaluation surplus/reserves as at January 1, 2010 is to be transferred to Engro Fertilizers Limited, 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. 100,000 share capital. Such omission of hedging reserve created a difference of an equivalent amount in the balance sheet. Therefore, this being an inadvertent omission in the Scheme of Arrangement, the management has also included the hedging reserve (negative) in the determination of share premium to eliminate the aforementioned difference. Further, in the opinion of the Companys management, supported by the legal advisor, 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. 5.1.3 Investment in subsidiaries The Company, during the year, transferred 272,000,000 ordinary shares of Rs. 10 each (85% of share capital) in Engro Powergen Qadirpur Limited (formerly, Engro Energy Limited) to Engro PowerGen Limited, a wholly owned subsidiary of the Company, against cash consideration, 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. With regard to the remaining 10% holding, the Company may divest it but no firm decision has been taken as at December 31, 2010. During the year, the Company also subscribed to: 80,410,000 right shares of Rs. 10 each at par, issued by Engro Polymer and Chemicals Limited; 30,466,000 right shares of Rs. 10 each at a premium of Rs. 90 per share, issued by Engro PowerGen Limited; and 157,700,000 right shares of Rs. 10 each at par, issued by Engro Foods Limited.
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(Amounts in thousand) 5.1.4 Subsidiary Companies Engro Fertilizers Limited Engro Fertilizers Limited has been involved in the construction and setup of the Urea expansion project (Enven Plant) adjacent to existing Dharki Plant. The capacity of Enven Plant will be 1.3 million tons of Urea per annum, but could not continue for a reasonable period, as required for commissioning of commercial production, due to curtailment of gas by Sui Northern Gas Pipeline Limited (SNGPL) for forty five days from January 7, 2011. The production is now expected to commence by end of February 2011 and commercial production will be declared once fully tested. Engro Polymer & Chemicals Limited In 2006, the Company commenced work on its expansion and backward integration project comprising setting up of a new PVC plant, Ethylene Di Chloride (EDC), Chlor-alkali, Vinyl Chloride Monomer (VCM) and Power plants. Commercial operations of the PVC, EDC, Chlor-alkali and Power Plant (Gas Turbines) commenced in 2009 whereas the VCM Plant declared commercial operations during the year on September 30, 2010, upon which the integrated chemical complex stands complete. Engro PowerGen Limited Engro Powergen Limited has been granted a Letter of Intent (LOI) on October 12, 2010 by the Alternate Energy Development Board (AEDB) for establishing an approximately 50 MW Wind Power Generation Project in Gharo Wind Corridor. Under the LOI, the Company is required to complete the feasibility study and achieve various milestones stated therein within a period of eighteen months thereof. Engro Powergen Qadirpur Limited (formerly, Engro Energy Limited) (a subsidiary of Engro PowerGen Limited) completed construction and testing of its 217.3 MW combined cycle power plant and has commenced commercial operations on March 27, 2010. The electricity generated is transmitted to the National Transmission and Despatch Company (NTDC) under the Power Purchase Agreement (PPA) dated October 26, 2007, valid for a period of 25 years. During the year, Sindh Engro Coal Mining Company Limited (SECMC) (a subsidiary of Engro PowerGen Limited) has been allocated an area of 79.6 sq. km in Thar Coal Field, District Thar, pursuant to Memorandum of Understanding (MoU), dated March 31, 2010, signed between the Sindh Engro Coal Mining Company Limited and GoS/SCA, to carry out a feasibility study. As agreed in the MoU, GoS/SCA requested the Director General Mines and Mineral Development Department, Government of Sindh to issue an exploration license for the aforementioned area to the Sindh Engro Coal Mining Company Limited, which was granted on August 8, 2010. Further on successful completion of technical feasibility Sindh Engro Coal Mining Company Limited, as directed by GoS vide its letter dated November 12, 2010, has applied to Director General Mines and Minerals Development Department on November 30, 2010 for the mining lease for a period of 30 years, extendable to mine's life. However, efforts are being made for closure on timely availability of all the required infrastructure and tariff to confirm economic viability of the Project. Further, the Project's approval, through Sindh Engro Coal Mining Company Limited, is linked to and dependent on the feasibility of mine mouth power plant (approximately 600-1200 MW) to be owned and constructed by Engro PowerGen Limited. A separate feasibility in this regard shell be conducted by Engro PowerGen Limited.
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(Amounts in thousand) Engro Foods limited During the year, Engro Foods Limited has commenced commercial production of juices, hence further widening the portfolio of its products. Further, Engro Foods Supply Chain (Private) Limited (a subsidiary of Engro Foods Limited) is currently involved in the construction and set-up of a rice processing plant in District Sheikhupura. During the year, the drying unit of the plant was commissioned and commercial production commenced from November 7, 2010 whereas the milling unit of the plant is currently under construction and its commissioning is expected to be completed in the first half of 2011. 5.1.5 Engro Rupiya Certificates (1st Issue) During the year subscription money aggregating to Rs. 3,384,536 (net of transaction cost of Rs. 178,319) was received by the Company from the general public against the issuance of Term Finance Certificates (Engro Rupiya Certificates). The Certificates are available till January 14, 2011 on first come first serve basis or earlier if the issue amount of Rs. 4,000,000 is reached. The profit is payable semi-annually at the fixed rate of 14.5% from the date of investment by the Certificate holders. The Certificates are structured to redeem 0.1% of principal in five equal semiannual installments in the first thirty months and the remaining 99.9% principal in thirty sixth month from the date of issue. The Certificate holder, however, may ask the Company for early redemption at any time from the date of investment subject to service charge of 2% of the outstanding issue price. These Certificates are secured by way of first ranking floating charge over all the present and future movable properties of the Company except for present and future trade mark, copy rights and certain investment in subsidiary companies. IGI Investment Bank Limited has been appointed as trustees in respect of these certificates. 5.1.6 Group relief and other matters As a result of demerger, as referred to in section 5.1.1, the below major issues pertaining to Fertilizer Undertaking of the Company have been transferred to Engro Fertilizers Limited. Group Relief and others 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 the Income Tax Ordinance, 2001 (the Ordinance) on losses acquired for an equivalent cash consideration from its wholly owned subsidiary, Engro Foods Limited, amounting to Rs. 428,744, Rs. 622,103 and Rs. 450,000 respectively. The tax department raised a demand of Rs. 476,479 (rectified to Rs. 406,644), Rs. 910,845 and Rs. 1,670,814 for financial years 2006, 2007 and 2008 respectively, mainly on account of disallowance of Group Relief (in all three years), inter corporate dividend (in 2007 and 2008) and write down of inventories to net realisable value (in 2008) besides certain other issues. Uptill last year, the Company had paid Rs. 170,000 and Rs. 400,000 for 2006 and 2007 respectively. 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). However, for financial year 2007 the issue of Group Relief was decided by the Commissioner Inland Revenue (Appeals I) in Company's favour against which the tax department filed an appeal with ITAT. During the current year, the Engro Fertilizers Limited paid Rs. 600,000 for financial year 2008, while stay for payment for the balance amount was granted by the tax department till December 31, 2010. Appeal has also been filed by the Engro Fertilizers Limited with the Commissioner Inland Revenue (Appeals I). The tax department upon expiry of the stay period has raised a payment demand of Rs. 509,218 on January 27, 2011, against which the management intends to apply its refunds pending with the tax department.
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(Amounts in thousand) The main contention for disallowance of Group Relief, among others, being the non-designation of the Company and the Engro Foods Limited as 'companies' entitled to Group Relief by the Securities & Exchange Commission of Pakistan (SECP), a requirement of section 59B of the Ordinance. The Company had applied for such a designation but remained pending with SECP for want of related regulations not framed then. These regulations were framed by SECP subsequently in December 2008 and on resubmission of application, the Company alongwith other subsidiaries have been registered as a Group. Designation has also been granted for Group Relief and Group Taxation during the year. During the year, orders were received for cases pending at ITAT relating to financial years 2006 and 2007. The major issues of Group Taxation and Group Relief have been decided in the Engro Fertilizers Limiteds favour in both the years. Further, all the assessments of the Holding Company, for income years 1995 to 2002 which were in appeal at the ITAT level have been decided during the year. The major one being apportionment of gross profit and expenses between normal income and Final Tax Regime (FTR) income has been remanded back to the tax department by ITAT with specific directions for apportionment of gross profit on the basis of turnover as claimed by the Company. Engro Fertilizers Limited, therefore has written back provision amounting to Rs.463,784, in respect of the aforementioned years. The tax department however, may file reference application against the ITAT decisions before the Sindh High Court. Sales tax on import of Mono Ammonium Phosphate (MAP) During 2008, Model Customs Collectorate raised a sales tax demand of Rs. 57,135 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. The Company had paid the demand made under protest and filed an appeal before the Collector, Sales Tax and Federal Excise. Further, the Ministry of Food, Agriculture and Livestock had also recommended through its letter dated June 27, 2008 that the said grade of MAP should be assessed at deemed value of import with retrospective effect. An appeal has been filed before the Collector, Sales Tax and Federal Excise and the management is confident that it will be decided in the Engro Fertilizers Limiteds favour and the aforementioned amount paid under protest would be fully recovered. 5.1.7 Embedded derivatives and exchange differences Tariff of Engro Powergen Qadirpur Limited (formerly, Engro Energy Limited), a subsidiary of Engro PowerGen Limited, like other power companies, comprises of various price components with indexations falling within the ambit of embedded derivatives. Such embedded derivative as per International Accounting Standard (IAS) 39, '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, an accounting policy adopted by Engro Powergen Qadirpur Limited. The economic characteristics and risks of most of Engro Powergen Qadirpur Limited's tariff indexations are closely related to the economic characteristics and risks of the Power Purchase Agreement (the Host Contract). Hence have not been separated and accounted for under IAS 39 as a derivative. Engro Powergen Qadirpur Limited, however, has sought clarification from the Institute of Chartered Accountants of Pakistan (ICAP) in respect of the indexations pertaining to (i) USD/PKR exchange rate (applicable to Engro Powergen Qadirpur Limiteds price components of debt, return on equity, return on equity during construction); and (ii) US CPI & USD/PKR exchange rate (applicable to Engro Powergen Qadirpur Limited's price components of fixed and variable operations and maintenance foreign). In addition, Engro Powergen Qadirpur Limited has also requested ICAP to prescribe a definite basis or guidelines for the valuation of such embedded derivatives considering the subjectivity involved therein. Further, as indexation of USD/PKR exchange rate related to debt component being not recognized separately as embedded derivative, the Engro Powergen Qadirpur Limited taking cognizance of the 'matching principle' requested the Securities and Exchange Commission of Pakistan (SECP) to allow deferment of recognizing exchange loss on translation of borrowings under IAS 21 - Foreign Currency Transactions in the statement of comprehensive income till the clarification sought on the recognition of the foreign currency indexations from ICAP has been received.
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(Amounts in thousand) Subsequent to year end, SECP vide S.R.O 87(1)/2011 dated February 3, 2011 has granted waiver from the requirements of IAS 21 and IAS 39 to all the Independent Power Projects (IPPs), not covered under Circular 11 of 2008, for a period of one year. Whereby, capitalization of exchange differences, as allowed to IPPs under the 1994 power policy, is also allowed to all IPPs having foreign currency loans. Further, such IPPs shall not be permitted to recognise embedded derivatives as required under IAS 39. In view of the above S.R.O, exchange loss amounting to Rs. 294,000 has been capitalised to Property, plant and equipment and has not recognised the aforementioned embedded derivatives. 5.1.8 Employee Share Option Scheme Engro Corporation Limited Consequent to the demerger, as referred to in section 5.1.1, the employees transferred to Engro Fertilizers Limited have surrendered their existing share options against which new share options have been granted under a new scheme of Engro Fertilizers Limited. Further, consequent to the issue of right shares in 2008 and in the current year, the entitlements were increased to 5,500,000 shares and 7,700,000 shares respectively and the exercise price was adjusted to Rs. 267.73 per share and Rs. 205.52 per share respectively. These changes have been duly approved by the Securities and Exchange Commission of Pakistan (SECP). Engro Fertilizers Limited As stated above, the employees transferred to Engro Fertilizers Limited and holding share options of the Company have been, on surrender thereof, granted share options under a new Employee Share Option Scheme (the Scheme) of the Engro Fertilizers Limited. Under the Scheme, employees have been granted options to purchase 4,937,100 ordinary shares of Engro Fertilizers Limited at an exercise price of Rs. 98 per ordinary share. As per the Scheme, the entitlements and exercise price are subject to adjustments because of issue of right shares and bonus shares. The number of options granted to an employee are the same as the number of options of the Company surrendered by them. No amounts are paid or payable by the recipient on receipt of the option. The options carry neither right to dividends nor voting rights. Vesting period for employees who were initially granted options on or before June 30, 2008 in the Company, has started from January 1, 2010 and has ended on December 31, 2010, whereafter these options can be exercised within a period of two years ending December 31, 2012. For options which were initially granted by the Company after June 30, 2008, the vesting period will end such number of days after December 31, 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. However, the later options can also only be exercised upto December 31, 2012. 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, whereas the formal approval was granted subsequently on June 10, 2010. As the vesting period has started from January 1, 2010 and the Scheme being considered a continuation of the old Scheme announced by the Company, a charge based on fair value of share options i.e. Rs. 11.94 per share, calculated as on January 1, 2010, has been recognised in the financial statements. Engro Fertilizers Limited used Black Scholes pricing model to calculate the fair value of share options at the grant date. 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 Rs. 11.94 Rs. 87.61 Rs. 98.00 41.64% 12.21% 5.71%
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(Amounts in thousand) 5.1.9 Non-adjusting event after balance sheet date The Companys Board of Directors in its meeting held on February 14, 2011 has proposed the following for approval of the members at the Annual General Meeting to be held on March 31, 2011: 5.2 an increase in the authorised share capital of the Company from Rs.3,500,000 to Rs.4,500,000; a final cash dividend of Rs.2 per share (section 4.1); a bonus issue in the ratio of 1 share for every 5 shares held i.e. 20% bonus (section 4.1); and an investment of Rs.562,000 in Engro Polymer & Chemicals Limited by way of subscription of right shares.
Financial statements for the year ended December 31, 2009
5.2.1 Scheme of Arrangement The Board of Directors of the Company in their meeting of April 28, 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 as more fully explained in section 5.1.1 & 5.1.2. The de-merger required the approval of the High Court of Sindh. After obtaining the requisite approvals from the creditors and the shareholders of the Company, the High Court approved the Scheme of Arrangement (Scheme) on December 9, 2009. The Scheme came into effect on January 1, 2010 (Effective Date). 5.2.2 Subsidiary Companies Engro Fertilizers Limited and Engro Eximp (Private) Limited Consequent to restructuring of its businesses by the Company, effective January 1, 2010, the entire trading operations of fertilizer business of the Company (i.e purchase of fertilizers from the Engro Eximp (Private) Limited (EXIMP) and sale to dealers) has been transferred to EXIMP. Accordingly, the stock in hand of the Company as at December 31, 2009 of goods purchased from the EXIMP has been returned. Effective January 01, 2010, Engro Fertilizer Limited, will act as the selling agent of EXIMP. Engro Polymer & Chemicals Limited The new PVC plant commenced commercial production on January 1, 2009. Further, on August 1, 2009, the Subsidiary Company commenced commercial operations of Ethylene Di Chloride (EDC), Chlor-alkali and Power plants (Gas turbines). The Vinyl Chloride Monomer (VCM) plant is still in the test production phase. These plants have been set up adjacent to the Subsidiary Companys existing PVC facilities in the Port Qasim Industrial Area. Furthermore, during the year, the Subsidiary Company has also commenced supply of surplus power generated from Power plants to Karachi Electric Supply Corporation (KESC), under an agreement. Engro Energy Limited The Shareholders in the Extraordinary General Meeting (EOGM) held on November 27, 2009 have consented to the Companys proposed transfer of 304 million ordinary shares of Rs. 10 each in Engro Energy Limited, to Engro PowerGen Limited (EPL) in exchange for the same number of fully paid-up shares of EPL. Such a transfer, to be effected upon completion of legal and other formalities, is on account of the Companys overall restructuring of its businesses to enable all direct subsidiaries to operate as holding companies for their respective lines of business.
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(Amounts in thousand) Engro Foods Limited During the year, Engro Foods Limited has commenced commercial production of ice cream, which is presently being sold only in selected parts of the country. Further, during the year, Engro Foods Limited incorporated a new wholly owned subsidiary on November 3, 2009, Engro Foods Supply Chain (Private) Limited (the sub-subsidiary). The principal activity of this sub - subsidiary is to produce, manufacture and trade all kinds of raw, processed and prepared food products including agriculture, dairy and farming products. In this regard, 491 acres of land at Muridke, Baweray Akalian, District Sheikhupura has been acquired to construct a rice processing plant, the commissioning of which is expected to be completed in the last quarter of 2010. 5.2.3 Employee Share Option Scheme During the year, due to issue of right shares, the exercise price of employee share option scheme (refer 5.2.2) was adjusted by the Company to Rs. 205.52 per share and total entitlements were increased to 7.7 million shares. Consequent to the demerger (refer 5.1.1), 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. 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. 5.2.4 Foreign Exchange Forward Contract During the year, the Company identified that the fair values of foreign exchange forward contracts as at December 31, 2008 were overstated by Rs. 3,123,787. This has been adjusted in the current year by restating the comparative figure from Rs. 4,297,960 to Rs. 1,174,173. This however, has no impact on the profit for the year ended December 31, 2008, as the fair values were recognised in the hedging reserve. 5.2.5 Issue of right shares with premium The Company issued 40% right shares of Rs. 50 per share to the shareholders including premium of Rs. 40 per share. The total issue including share premium amounted to Rs. 4,248,604 net of transaction cost on such issue. 5.3 Financial statements for the year ended December 31, 2008
5.3.1 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 1,362,275 1,950,000 15,100
During the year, percentage of investment in Engro Polymer and Chemicals Limited decreased from 65.92% to 56.19% while investment in Engro Energy Limited decreased from 100% to 95%. During the year, the Company incorporated a wholly owned subsidiary by the name of Engro PowerGen Limited with the objective to undertake power projects, by investing Rs. 15,100.
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(Amounts in thousand) 5.3.2 Employee Share Option Scheme Engro Chemical Pakistan Limited During the year, due to issue of right shares, the exercise price of Employee Share Option Scheme was adjusted by the Company to Rs. 267.73 per share and total entitlements were increased to 5.5 million shares. Further, the Company proposed certain changes relating to grant date in the originally approved scheme. The Securities and Exchange Commission of Pakistan, through their letter SMD/CIW/ESOS/04/2008 dated July 10, 2008, cleared these changes subject to the approval of shareholders, which was obtained in the Extra Ordinary General Meeting (EGM) held on December 22, 2008. The effect of grant of share options has been incorporated in the financial statements using August 23, 2007 as the grant date, the date when the scheme was originally approved by the shareholders. Accordingly, equity and assets for the year ended December 31, 2007 have been restated. 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, 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. 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. No amounts are paid or payable by the recipient on receipt of the option. The options carry neither right to dividends nor voting rights. Vesting period has started from the date of grant and shall end on December 31, 2009, where after these options can be exercised within a period of two years. Future employees who join by October 31, 2008 and those who are promoted by the same date, may also be granted options, however, the length of vesting period shall be the same as enjoyed by first recipients of options. During the year, EPCL proposed certain changes relating to 'grant date' in the originally approved Scheme. These changes were approved by the shareholders in their EGM held on June 27, 2008, and subsequently by SECP on September 25, 2008. As per the approved change to the Scheme the 'grant date' is the date of EGM held on October 8, 2007, when the Scheme was originally approved. The effect of the change in the grant date has been recognized in the consolidated financial statements. 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, 2008. 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. The options are exercisable in two years at exercise prices of Rs. 15 and Rs. 17 per share during the financial years ended December 31, 2011 and 2012 respectively. 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. No amounts are paid or payable by the recipient on receipt of the option. The options carry neither right to dividends nor voting rights. Vesting period has started from the date of grant and shall end on December 31, 2010, where after these options can be exercised within a period of two years. Future employees who join by June 30, 2009 and those who are promoted by the same date, may also be granted options, however, the length of vesting period shall be the same as enjoyed by first recipients of options.
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(Amounts in thousand) Engro Foods Limited The shareholders of Engro Foods Limited (EFL), in their meeting held on October 8, 2007, have approved an Employee Share Option Scheme (the Scheme), for granting of options to its certain eligible critical employees upto twenty one million new ordinary shares. The Scheme has been approved by the SECP on July 10, 2008 (the date of grant). Under the Scheme, vesting period commenced from the date of grant and will end on December 31, 2010. Those eligible employees who joined the Subsidiary Company after the date of grant but before December 31, 2008 are also entitled to these options, however, 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. The maximum number of options to be issued to an eligible employee is for two million five hundred thousand ordinary shares. The options are exercisable within four years at exercise prices of Rs. 17, Rs. 19, Rs. 21 and Rs. 23 per share during the financial years ended December 31, 2011, 2012, 2013 and 2014 respectively. 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, 2008. According to the Scheme, 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 31.5 per ordinary share. The number of options granted is calculated in accordance with the ability and criticality of employee to the business, subject to approval by the Compensation Committee. The options carry neither right to dividends nor voting rights. Vesting period shall start from the date of grant and shall end on December 31, 2009, where after the options can be exercised within a period of two years. 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. 5.3.3 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, for a notional amount of USD 50,000 which will increase to USD 150,000 during 2009, amortizing upto September 2014. Under the Swap agreement, the Company would receive USD-Libor from Citibank N.A. Pakistan on notional amount and pay fixed 3.47% which will be settled semiannually. The fair value of the interest rate swap at the year end is negative and amounted to Rs. 648,277. 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, for a notional amount of USD 85,000 amortizing upto April 2016. Under the Swap agreement, the Company would receive USD-Libor from Standard Chartered Bank on notional amount and pay fixed 3.73% which will be settled semi-annually. The fair value of the interest rate swap at the year end is negative and amounted to Rs. 424,933.
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(Amounts in thousand) 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$ 15,000. Under the swap agreement, EPCL would receive USD-LIBOR from the bank on notional amount and pay fixed 3.385% which will be settled semi-annually. The fair value of the interest rate swap as at December 31, 2008 is negative and amounted to Rs. 60.154. 5.3.4 Issue of right shares with premium The Company issued 10% right shares of Rs. 175 per share to the shareholders including premium of Rs. 165 per share. The total issue including share premium amounted to Rs. 3,382,214 net of transaction cost on such issue. 5.3.5 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. Under this scheme the Company plans to disburse Rs. 540,000 as housing subsidy, which would be amortised over a period of 2.5 years of employee service. To date the Company has disbursed an amount of Rs. 152,223 and recorded an amortization in the profit and loss account amounting to Rs. 73,319. In the condensed interim financial statements for the period ended September 30, 2008 housing subsidy has been disclosed as an equity transaction whereas it is a liability transaction. Accordingly, appropriate amendments have been made in the financial statements for the year ended December 31, 2008. 5.4 Financial statements for the year ended December 31, 2007
5.4.1 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 Polymer and Chemicals Limited Engro Innovative Automation (Private) Limited Rupees 1,579,725 797,500 1,429,661 300,000
During the year, percentage of investment in Engro Polymer and Chemicals Limited (formerly Engro Asahi Polymer and Chemicals Limited) has decreased from 80% to 65.92% while investment in Engro Innovative Automation (Pvt) limited has increased from 51% to 62.67%. 5.4.2 Significant Event During the third quarter of the financial year, a fire broke out at PNSC Building, Karachi where the Head Offices of the Company and some of its Subsidiaries were located. Immediately following this event the Company and its Subsidiaries whose Head Office were located at PNSC building, launched their Disaster Recovery Plan due to which operational disruption and financial impact resulting from this incident remained minimal.
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(Amounts in thousand) Along with the offices of the Company and of Engro Foods Limited, Engro Energy Limited, Engro Eximp (Private) Limited and Engro Management Service (Private) Limited, the fire also destroyed a substantial portion of their hard copy records related to the financial years 2005, 2006 and the period January 01, 2007 to August 19, 2007 although electronic data remained largely intact due to their Disaster Recovery Plan. 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. Records related to the already reported financial years 2005 and 2006 have not been recreated to date. 5.4.3 Currency options and Forward Exchange Contracts During the first half of the year, the Company purchased currency option contracts having a cost of Rs. 360,485 for tenure of six months to hedge its Euro - Dollar currency exposure of Euros 342,620 representing the anticipated outflows for Urea Expansion Project. On maturity, 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. At year end the Company had forward exchange contracts to purchase Euros 297,399 at various maturity dates matching the anticipated payment dates for commitments with respect to Urea Expansion Project. The fair value of these contracts amounted to USD 32,642 at the year end. 5.4.4 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, 2001. In accordance with the provisions of the Plan, as approved by shareholders at an Extra Ordinary General Meeting held on August 23, 2007, senior employees who are critical to the business operations will be granted options to purchase ordinary shares at an exercise price of Rs. 277 per ordinary share. The total number of options that may be granted are for five million newly issued shares. 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. No amounts are payable by the recipient on receipt of the option. The option carries neither rights to dividend nor voting rights. Vesting period shall begin from the date when scheme is cleared by SECP and shall end on December 31, 2010, where after the options can be exercised. No amount has been recognized in the current financial statements as clearance from SECP has not been received. 5.4.5 Issue of right shares with premium The Company issued 15% right shares of Rs. 125 per share to the shareholders including premium of Rs. 115 per share. The total issue including share premium amounted to Rs. 3,147,960 net of transaction cost on such issue. 5.5 Financial statements for the year ended December 31, 2006
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(Amounts in thousand) 5.5.1 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 98,000 854,300 527,539
During the year, 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. 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. This acquisition resulted in a net fair value adjustment (negative goodwill) of Rs. 392,506 out of this amount of Rs. 197,316 pertaining to 50% of equity already held was taken to equity and Rs. 195,190 pertaining to 30% of equity acquired was taken to other income. 5.5.2 Issue of right shares with premium The Company issued 10% right shares at Rs. 80 per share to the shareholders including premium of Rs. 70 per share. The total issue including share premium amounted to Rs. 1,221,309 net of transaction cost on such issue. 5.5.3 Change in accounting policy During 2006 the Company changed its accounting policy relating to appropriations to reserves, whereby such appropriations are recognised in the year in which these are approved. Upto last year appropriations to reserves were recognised in the financial statements of the period to which it related. 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, approved post balance sheet date, by a company. This change in accounting policy did not have any effect on the Companys total equity. 6. 6.1 EARNINGS PER SHARE - Basic and Diluted The details of audited earnings per share, basic and diluted, of the Company and the Group are as follows: Year e nded December 31, 2010 2009 2008 2007 2006 Rupees per share Earnings per share - The Company 5.11 12.73 15.03 11.99 10.09 - The Group 20.72 12.24 14.67 10.98 8.99 The earnings per share for the years ended December 31, 2006 to 2009 have been restated to incorporate the effect of issuance of right shares and bonus issue upto December 31, 2010. Accordingly, these do not include the effect of bonus shares issued subsequent to December 31, 2010. Yours truly Sd/_____________________ A.F.FERGUSON & CO. Chartered Accountants Karachi
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5.1 AUDITORS CERTIFICATE ON THE ISSUED, SUBSCRIBED AND PAID-UP CAPITAL The Board of Directors Engro Corporation Limited 7th & 8th Floor, The Harbour Front Building HC No. 3, Marine Drive, Block 4, Clifton Karachi 75600, Pakistan Dear Sirs AUDITORS CERTFICATE ON ISSUED, SUBSCRIBED AND PAID-UP SHARE CAPITAL We have verified from the books of account and records of Engro Corporation Limited that the issued, subscribed and paid-up share capital of the Company as at December 31, 2010 was Rs. 3,277,369 thousand comprising of the following: March 15, 2011 D 581
No. of Shares 185,354,484 142,382,335 327,736,819 Ordinary shares of Rs.10 each fully paid in cash Ordinary shares of Rs. 10 each issued as fully paid bonus shares
Rupees in thousand 1,853,545 1,423,824 3,277,369
Yours truly Sd/_____________________ A.F.FERGUSON & CO. Chartered Accountants Karachi MANAGEMENT NOTE Bonus shares have been issued in the ratio of 1 share for every 5 shares held (i.e. 20%) thereby increasing the issued, subscribed and paid-up share capital to Rs. 3,932,84 thousand as at March 31, 2011
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5.3 AUDITORS CERTIFICATE FOR BREAK-UP VALUE OF SHARES The Board of Directors Engro Corporation Limited 7th & 8th Floor, The Harbour Front Building HC No. 3, Marine Drive, Block 4, Clifton Karachi 75600, Pakistan Dear Sirs AUDITORS CERTIFICATE FOR BREAK-UP VALUE OF SHARES As requested, we confirm that the break-up values of the ordinary shares of Rs. 10 each of (i) Engro Corporation Limited (the Company); and (ii) the Company and its subsidiaries (the Group), based on the audited financial statements for the year ended December 31, 2010, are as follows: March 15, 2011 D 582
The Company
The Group
(Rupees in thousand) Issued, subscribed and paid-up capital Share premium Employee share option compensation reserve Hedging reserve Revaluation reserve on business Maintenance reserve Exchange revaluation reserve General reserve Unappropriated profit 3,277,369 10,550,061 74,813 4,429,240 8,722,156 23,776,270 27,053,639 3,277,369 10,550,061 162,455 (927,438) 104,698 197,577 28,883 4,429,240 12,776,146 27,321,622 30,598,991
(Number of shares) Number of ordinary shares in issue 327,736,819 327,736,819
(Rupees per share) Break-up value per share (before final dividend) 82.55 93.36
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Final Dividend / Bonus Issue 2010 The Board of Directors of the Company on February 14, 2011, while approving the financial statements for the year ended December 31, 2010, has approved (i) final cash dividend @ Rs. 2 per share, amounting to Rs. 655,474 thousand, and (ii) bonus issue amounting to Rs. 655,474 thousand, from unappropriated profit for approval of the members at the Annual General Meeting to be held on March 31, 2011. The revised break-up values after taking into consideration the aforementioned effects would be as follows:
The Company The Group
(Number of shares) Number of ordinary shares in issue (after bonus issue) 393,284,183 393,284,183
(Rupees per share) Break-up value per share (after final dividend and bonus issue)
67.12
76.14
Yours truly Sd/_____________________ A.F.FERGUSON & CO. Chartered Accountants Karachi
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5.4 AUDITED ACCOUNTS AS AT DECEMBER 31, 2010
45
46
47
48
49
50
51

5.5 UNAUDITED ACCOUNTS AS AT MARCH 31, 2011
52
53
54
55
56
57
58

5.6 CREDIT RATING REPORT
59
60
61
62
63
64
65
66
67
68
69
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PART VI
6. 6.1. TRUSTEE AND SECURITY THE SECURITY The TFC has been secured by way of first ranking pari passu 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 Engro Corp. and excluding its shares in Engro Powergen Qadirpur Limited (formerly known as Engro Energy Limited) and Engro Polymer & Chemicals Limited (Charged Assets) at 125% of the outstanding principal amount. This charge is pari passu with the existing charge for the first TFC Issue (Trust Deed dated September 17, 2010), and has 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 pari passu 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 Engro Corp. and excluding its shares in Engro Powergen Qadirpur Limited (formerly known as 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. This charge is pari passu with the existing charge for the first TFC Issue (Trust Deed dated September 17, 2010) and 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 December 31, 2010 for the purpose of security for this TFC Issue is as under:
Subsidiaries and Affiliates
Engro Eximp (Pvt) Ltd. Engro Management Services (Pvt) Ltd. Engro Foods Ltd. Engro PowerGen Ltd. Avanceon Ltd. Engro Fertilizer Ltd.
Shares of Rs. 10 each 48,010,000 250,000 700,000,000 36,476,000 25,066,667 1,072,800,000 45,000,000 500,000 1,928,102,667
Percentage Holding
100% 100% 100% 100% 62.67%
Breakup Value per share (PkR)

23.57 10.56 7.92 105.99 1.16
Total Value (PkR Million) 1,131.70 2.64 5,544.34 3,866.02 29.12 13,639.59 526.90 N.A 24,740.32
100% 50% N.A.
12.71 11.71 N.A.
Engro Vopak Terminal Ltd. (JV) Arabian Sea Country Club (Affiliate) Total
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(b) other assets These include cars, computers, and other such assets of values which are minor compared to shareholdings. The book value of all such other assets as at December 31, 2010, is PkR 136,178,000/-. 6.2. THE TRUSTEE In order to safeguard the interests of the TFC holders, IGI Investment Bank Limited has been appointed to act as Trustee for the issue. The Issuer shall pay to IGI Investment Bank Limited a trustee fee of PKR 500,000 per annum. 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. The bankers to the Issue have been instructed to inform the Trustee on a regular basis of the subscriptions received. As per the terms of the Declaration of Trust executed between Engro Corporation Limited and the Trustee, the Trustee will ensure the following:
The terms and conditions of the Declaration of Trust and Security Documents are adhered to; 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 Engro Corp.
6.3.
THE TRUST DEED The Trust Deed dated April 07, 2011 (Declaration of Trust) executed between the Company and IGI Investment Bank Limited specifies the rights and obligations of the Trustee. In the event of Engro Corp. defaulting on any of its obligations under the terms of the Declaration of Trust, the Trustee may enforce Engro Corps obligations in accordance with the terms of the Trust Deed. 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.
6.4.
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. It is clarified, however, 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. The Obligations shall become immediately due and payable, and the Security shall become immediately enforceable by a declaration of the Trustee, notified to the Issuer, upon the occurrence of an Event of Default. Under Section 8.1.1 of the Declaration, each of the following events constitute an Event of Default and is reproduced below:
a) the failure of the Issuer to: i. redeem any Coupon on its respective Redemption Date and to pay the Redemption Amount and / or any portion thereof on such Redemption Date;
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ii. 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;
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; c) an event of default (howsoever described and / or defined) occurs under a Transaction Document; 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; e) the Issuer enters into an arrangement for the benefit of its creditors in respect of any Financial Indebtedness; f) the Issuer: i. ii. voluntarily or involuntarily becomes the subject of bankruptcy or insolvency proceedings except for proceedings which are frivolous in nature; 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, except for proceedings which are frivolous in nature; and / or is unable or admits in writing its inability to pay its debts as they mature, to the Trustee; and / or a receiver or an administrator is appointed for all or any material part of its assets or business;
iii. iv.
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, suspends making payments on any of its Financial Indebtedness or, by reason of actual or anticipated financial difficulties, commences negotiations with one or more of its creditors with a view to rescheduling its Financial Indebtedness or any portion thereof; h) a moratorium is declared in respect of any Financial Indebtedness of the Issuer; i) any corporate action, legal proceedings or other procedure or steps are taken in relation to the suspension of payments, winding-up, dissolution, administration or reorganisation (by way of voluntary arrangement, scheme of arrangement or otherwise) of the Issuer other than a solvent liquidation or reorganisation; enforcement of any Security Interest over substantial assets of the Issuer;
j)
k) any governmental agency nationalizes, acquires or expropriates (with or without compensation) any material or all the assets of the Issuer including but not restricted to the Secured Assets; l) the Issuer fails to meet any of its material obligations under this Declaration and the same has a Material Adverse Effect;
m) any other event or circumstance arising out of the Issuers negligence or default which results in a Material Adverse Effect; 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);
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o) any commitment for any Financial Indebtedness of the Issuer is cancelled or suspended by a creditor of the Issuer, 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; q) any obligation or obligations of the Issuer under this Declaration or any Transaction Document are not, or cease to be, legal, valid, binding or enforceable and the cessation individually or cumulatively has a Material Adverse Effect; 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; t) any court or arbitrator passes a final non-appealable judgment or arbitral award for payment, 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; 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; 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, whichever is earlier; w) the Issuer suspends, ceases, or threatens to suspend or cease, 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; x) any event or series of events (whether related or not) occurs which would have a Material Adverse Effect.
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PART VII
7. 7.1. MANAGEMENT OF THE COMPANY BOARD OF DIRECTORS OF ENGRO CORPORATION LIMITED The Company's affairs are governed by a Board of Directors, which currently consists of the Chief Executive Officer ("CEO") and twelve other Directors. The CEO has an overall responsibility to manage the portfolio of businesses of the Company. Directors Name HUSSAIN DAWOOD Chairman Address 11th FLOOR, DAWOOD CENTRE, M.T. KHAN ROAD, KARACHI. PAKISTAN Directorships held in other Companies/Organizations Dawood Hercules Chemicals Limited Dawood Corporation (Private) Limited Patek (Private) Limited Sach International (Private) Limited Sirius (Private) Limited Engro Foods Limited Engro Vopak Terminal Limited Engro Polymer & Chemicals Limited Engro Powergen Qadirpur Limited Avanceon Limited Engro Powergen Limited Pakistan Chemical and Energy Sector Skills Development Company Engro Fertilizers Limited Engro Eximp (Private) Limited Pakistan Industrial Development Corporation Engro Fertilizers Limited
ASAD UMAR Chief Executive
8TH FLOOR, THE HARBOR FRONT BUILDING, HC # 3, MARINE DRIVE, BLOCK 4, CLIFTON, KARACHI, PAKISTAN
ARSHAD NASAR
NO.25, FALCON ENCLAVE AIR FORCE OFFICERS SOCIETY(AFOS) TUFAIL ROAD LAHORE CANTT. PAKISTAN 11TH FLOOR, DAWOOD CENTRE, M.T. KHAN ROAD, KARACHI, PAKISTAN
ISAR AHMAD
Engro Polymer & Chemicals Limited Engro Foods Limited Dawood Lawrencepur Limited Dawood Hercules Chemicals Limited Dawood Hercules Fertilizers Limited Central Insurance Company Limited Tenaga Generasi Limited
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SHABBIR HASHMI 90/1, STREET 11, KHAYABAN-E-SEHAR DHA, PHASE VI KARACHI, PAKISTAN Engro Polymer & Chemicals Limited LMKR Holdings (Private) Limited Engro Powergen Limited Engro Powergen Qadirpur 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 Engro Polymer & Chemicals Limited Engro Vopak Terminal Limited Sach International (Private) Limited Engro Powergen Limited Petek (Private) Limited Pebbles (Private) Limited Engro Fertilizers Limited Tenaga Generasi Limited DH Fertilizers Limited Sirius (Private) 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 Pebbles (Private) Limited Tenaga Generasi Limited Dawood Lawrencepur Limited DH Fertilizers Limited Engro Fertilizers Limited Modern Industries (Private) Limited Sirius (Private) Limited
SHAHZADA DAWOOD
11th FLOOR, DAWOOD CENTER M.T.KHAN ROAD KARACHI. PAKISTAN
ABDUL SAMAD DAWOOD
10TH FLOOR, DAWOOD CENTRE, M.T. KHAN ROAD, KARACHI, Pakistan
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MUHAMMAD ALIUDDIN ANSARI 30-G, 5TH GIZRI STREET, PHASE IV, DHA, KARACHI, PAKISTAN 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
31 BELLFIELD AVENUE HARROW, MIDDLESEX HA3 6ST, UK ENGRO POLYMER & CHEMICALS LTD. BAHRIA COMPLEX-I, M.T.KHAN ROAD, KARACHI, PAKISTAN
ASIF QADIR
Engro Polymer & Chemicals Limited Engro Polymer Trading (Private) Limited Inbox Business Technologies (Private) Limited Unicol Limited Engro Powergen Limited Engro Powergen Qadirpur Limited Engro Fertilizers Limited Sindh Engro Coal Mining Company Ltd. Pakistan Poverty Alleviation Fund Engro Polymer & Chemicals Limited Engro Vopak Terminal Limited Engro Fertilizers Limited Engro Eximp (Private) Limited Engro Polymer & Chemicals Limited Engro Powergen Qadirpur Limited Engro Powergen Limited Sindh Engro Coal Mining Company Limited
KHALID S. SUBHANI
8TH FLOOR, THE HARBOR FRONT BUILDING, HC # 3, MARINE DRIVE, BLOCK 4, CLIFTON, KARACHI, PAKISTAN 7th Floor, The Harbor Front Building, HC # 3, Marine Drive, Block 4, Clifton, Karachi, Pakistan
KHALID MANSOOR
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RUHAIL MOHAMMED Chief Financial Officer 7TH FLOOR, THE HARBOR FRONT BUILDING, HC # 3, MARINE DRIVE, BLOCK 4, CLIFTON, KARACHI, PAKISTAN Engro Management Services (Private) Limited Avanceon Limited Engro Foods Limited Sigma Leasing Corporation Limited Engro Powergen Qadirpur Limited Engro Powergen Limited Engro Fertilizers Limited Engro Eximp (Private) Limited National Commodity Exchange Limited
7.2.
PROFILE OF THE CHAIRMAN OF THE BOARD OF DIRECTORS Mr. Hussain Dawood is the Chairman of Engro Corporation Limited, Dawood Hercules Chemicals Limited and the Karachi Education Initiative/Karachi School for Business & Leadership. He is also a Director on the Board of the Pakistan Centre for Philanthropy. Pakistan Business council, Commonwealth business council, Beacon House National University, & Asia house London. He is a global charter Member of the Indus Entrepreneurs and the member of the World Economic Forum in Davos. He is on the honorary council of Italy, In Lahore and was recently conferred the award Ufficiale Ordine al Merito della Repubblica italiana, by the Italian government. As part of social responsibilities, he Chairs the board of the Pakistan Poverty Alleviation fund, one of the largest World bank-financed social funds across the world. Mr.Dawood is an MBA from Kellogg School of Management, Northwestern University, USA, and a graduate in Metallurgy from Sheffield University, UK. He joined the board in 2003.
7.3.
PROFILE OF THE PRESIDENT AND CHIEF EXECUTIVE OFFICER Asad Umar is President and Chief Executive of Engro Corporation Limited, Chief Executive Officer of Engro Fertilizers Limited and Chairman of all Engro Subsidiaries and joint Ventures. He has held key assignments with the company and with Exxon Chemical in Canada. Mr. Umar is also on the Board of the Pakistan Business Council, Karachi Education Initiative, Pakistan Institute of Corporate Governance, State Bank of Pakistan and Trustee of Lahore University of Management Sciences (LUMS). A Masters in Business Administration, he joined the board in 2000.
7.4.
PROFILE OF THE COMPANY SECRETARY Andalib Alavi is Vice President Legal & Company Secretary of Engro Corporation Limited and manages the legal affairs of all the Engro group companies. He is also the chairman of Engro Management Services (Private) Limited and a member of the Corporate Governance Committee of the Karachi Stock Exchange. He is Bar-at-Law from Lincolns Inn and holds LLB Hons degree from LSE, University of London. He joined Engro in 1992.
7.5.
PROFILE OF THE CHIEF FINANCIAL OFFICER Ruhail Mohammed is Senior Vice President and Chief Financial Officer of Engro Corporation Limited. He has worked for many years in various senior positions in Pakistan, UAE and Europe. He is on the Boards of Engro Foods Limited, Engro Powergen Qadirpur Limited, Avanceon Limited, Engro Powergen Limited, Engro Fertilizers Limited, Engro Foods Supply Chain (Pvt) Limited, Engro Eximp (Pvt) Limited and Sigma Leasing Corporation Limited and Chief Executive of Engro Management Services (Pvt) Limited. A Masters in Business Administration in Finance, he joined the Board in 2006.
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7.6. OVERDUE LOANS There are no overdue loans (local and foreign currency) on the Company. 7.7. POWERS OF DIRECTORS As required under section 196 of the Companies Ordinance, 1984, and the Articles of Association of the Company, 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, 1984 or the Articles of Association of the Company or by a special resolution, required to be exercised by the Company in the general meeting of the shareholders. 7.8. NUMBER OF DIRECTORS Pursuant to section 174 of the Companies Ordinance, 1984, the number of directors of a listed company should not be less than seven (7). At present, the Board of Engro Corp. consists of thirteen (13) Directors. 7.9. QUALIFICATION OF DIRECTORS The qualification of a director shall be holding of shares in the Company of nominal value of Rs 25,000/- at least in his own name and not jointly with any other person or his nomination in writing by a member or members holding shares of the nominal value of Rs.25,000/- or more, as his or their representative. 7.10. 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, 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. The Directors may also be paid all traveling, hotel and other expenses, 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. 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, the terms of remuneration for such office shall be sanctioned by an Ordinary Resolution of the Company, except that remuneration of directors who are executives of the Company shall be decided by the Board of Directors. 7.11. 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. 7.12. INTEREST OF DIRECTORS The Directors may be deemed to be interested to the extent of fees payable to them for attending board meetings. The Directors performing whole time service to the Company may also be deemed to be interested in the remuneration payable to them by the Company. The Directors may also be deemed to be interested to the extent of any shares held by each of them in the Company and/or the TFCs applied for and allotted to them through the public issue.
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7.13. 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. 7.14. ELECTION OF DIRECTORS The Directors shall comply with the provisions of section 174 to 178, 180 and 184 of the Ordinance relating to the election of Directors and matters ancillary thereto. The present Directors of the Company were elected effective April 22, 2009. 7.15. 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 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, drawing, accepting or endorsing on behalf of the Company any promissory notes or bills of exchange or by issuing bonds, perpetual or redeemable debentures or debenture stock or any mortgage, charge or other 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. 7.16. VOTING RIGHTS The TFCs shall not carry any voting rights in relation to the Company.
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PART VIII
8.
8.1.
MISCELLANEOUS INFORMATION
REGISTERED OFFICE / HEAD OFFICE Engro Corporation Limited 7th & 8th Floor, Harbor Front Building Marine Drive, Block 4, Clifton, Karachi Tel: 111 211 211 Fax: 35636741 Website: www.engrorupiya.com A.F.Ferguson & Co. Chartered Accountants State Life Building No. 1-C I.I.Chundrigar Road, Karachi Andalib Alavi Vice President Legal & Company Secretary Central Depository Company of Pakistan Limited CDC House, 99-B, Block B, S.M.C.H.S., Main Shahra-e-Faisal, Karachi-74400, Pakistan i ii iii iv v vi vii viii ix x xi xii xiii i ii 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 Citibank N.A. Pakistan Faysal Bank Limited Samba Bank Limited Standard Chartered Bank (Pakistan) Limited MCB Bank Limited
8.2.
AUDITORS
8.3.
LEGAL ADVISOR OF THE COMPANY
8.4.
REGISTRAR / TRANSFER AGENT
8.5.
BANKERS TO THE ISSUE
8.6. REDEMPTION BANKS (TO EXERCISE PUT OPTION)
8.7.
MATERIAL CONTRACTS / DOCUMENTS 8.7.1 Deed of Floating Charge dated April 07, 2011 between the Company and IGI Investment Bank Limited; 8.7.2 Declaration of Trust Agreement dated April 07, 2011 between the Company and IGI Investment Bank Limited; 8.7.3 Credit Rating Report dated April 08, 2011 by PACRA;
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8.7.4 Clearance letter dated May 06, 2011 from Karachi Stock Exchange; 8.7.5 Clearance letter dated May 10, 2011 from Lahore Stock Exchange; 8.7.6 Approval letter dated May 20, 2011 from Securities & Exchange Commission of Pakistan. 8.8. INSPECTION OF DOCUMENTS AND CONTRACTS All the Balance Sheets and Profit & Loss Accounts, Copies of the Memorandum and the Articles of Association, the Auditors Certificates, Trust Deed, the Deed of Floating Charge, the Credit Rating Report, the Clearance letter from KSE and LSE, 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. 8.9. LEGAL PROCEEDINGS There are no cases by or against the Company. 8.10. INDEMNITY As per the Article 123 of Companys Articles of Association, 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, officer or Auditor in defending any proceedings, whether civil or criminal, in which judgment is given in his favor, or in which he is acquitted, or in connection with any application under Section 488 of the Ordinance in which relief is granted to him by the Court. 8.11. CAPITALIZATION OF RESERVES
Year Stock Dividend No. of Shares 2010 20% 65,547,364 2009 10% 29,794,256 2008 Nil Nil 2007 Nil Nil 2006 Nil Nil 2005 Nil Nil 2004 Nil Nil 2003 Nil Nil 2002 10% 13,903,644
The Stock Dividends appearing in 2009 & 2010 were announced with the full year results but were capitalized in the following years. 8.12. REVALUATION OF FIXED ASSETS The Company has not reflected any revaluation of fixed assets in their Financial Statements. 813. MEMORANDUM OF ASSOCIATION The Memorandum of Association, inter alia, contains the objects for which the Company was incorporated and the business that the Company is authorized to undertake. A copy of the Memorandum of Association annexed to this Prospectus is being published with all issues hereof except those released as newspaper advertisement. 8.14. VENDORS The Company has no Vendors in terms of Clause 12 of section 1 Part 1 of the Second Schedule of the Ordinance.
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8.15. SUBSIDIARY COMPANIES Extent of the interest of Engro Corporation Limited (the holding company) in the equity of its subsidiaries as at December 31, 2010, is as follows:
Subsidiary companies Engro Eximp (Pvt) Ltd. Engro Management Services (Pvt) Ltd. Engro Foods Ltd. Engro PowerGen Ltd. Engro Polymer & Chemicals Ltd. Avanceon Ltd. Engro Fertilizers Ltd. Engro Powergen Qadirpur Ltd. Shareholding 100% 100% 100% 100% 56% 63% 100% 10%
8.16. INVESTMENT IN ASSOCIATED COMPANIES Investments in associated undertakings as per the audited accounts of December 31, 2010, are as follows:
Company Engro Polymer & Chemicals Ltd.
Engro Eximp (Pvt) Ltd. Engro Management Services (Pvt) Ltd. Engro Foods Ltd. Engro PowerGen Ltd. Avanceon Ltd. Engro Powergen Qadirpur Ltd. Engro Fertilizers Ltd.
Engro Vopak Terminal Ltd. Arabian Sea Country Club
No. of Shares 372,810,000 48,010,000 250,000 700,000,000 36,476,000 25,066,667 32,000,000 1,072,800,000 45,000,000 500,000
Shareholding of Engro Corp. 56.19%

100% 100% 100% 100% 62.67% 10%
100% 50% N.A.
8.17. LONG TERM BORROWINGS OF THE COMPANY AND ITS SUBSIDIARIES Long Term borrowings of the Company and its subsidiaries as per the audited accounts of December 31, 2010, are as follows:
Company Engro Corporation Limited Engro Polymer & Chemicals Ltd.
Engro Foods Ltd. Engro PowerGen Ltd. Avanceon Ltd. Engro Fertilizers Ltd. Total
Amount (Rs. 000) 3,384,536 12,264,653 5,740,051 11,865,850 128,860 71,311,686 104,695,636
83

PART IX
9. 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; Foreign Nationals whether living in or outside Pakistan Companies, bodies corporate or other legal entities incorporated or established in or outside Pakistan (to the extent permitted by their constitutive documents and existing regulations, as the case may be); Mutual Funds, Provident/pension/gratuity funds/trusts, (subject to the terms of the Trust Deed and existing regulations); and Branches in Pakistan of companies and bodies corporate incorporated outside Pakistan.
d) e) 2)
APPLICATION MUST BE MADE ON THE COMMISSIONS APPROVED APPLICATION FORM OR A LEGIBLE PHOTOCOPY THEREOF ON A PAPER OF A4 SIZE WEIGHING ATLEAST 62 GM. Copies of Prospectus and application forms can be obtained from the members of Karachi Stock Exchange (Guarantee) Limited, Lahore Stock Exchange (Guarantee) Limited, the Bankers to the Issue and their branches, and the registered office of Engro Corporation Limited. The Prospectus and the application forms can also be downloaded from the website:[https://www.engrorupiya.com] The applicants opting for scripless form of TFCs are required to complete the relevant sections of the application. In accordance with provisions of the Central Depositories Act, 1997 and the CDC Regulations, credit of such TFCs is allowed ONLY in the applicants own CDC Account. In case of discrepancy between the information provided in the application form and the information already held by CDS, the Company reserves the right to issue TFCs in physical form. Name (s) and address (es) must be written in full block letters, in English and should not be abbreviated. All applications must bear the name and signature of the applicant. In case of difference of signature with the Computerized National Identity Card (CNIC) or National Identity Card for Overseas Pakistanis (NICOP) or Passport, both the signatures should be affixed on the application form. APPLICATIONS MADE BY INDIVIDUAL INVESTORS (i) In case of individual investors, an attested photocopy of CNIC (in case of RPs)//Passport (in case of NRPs and FIs) as the case may be, should be enclosed and the number of CNIC/Passport should be written against the name of the applicant. Copy of these documents can be attested by any Federal/Provincial Government Gazetted Officer, Councilor, Oath Commissioner or Head Master of High School or bank manager in the country of applicants residence Original CNIC/Passport, along with one attested photocopy, must be produced for verification to the banker to the issue at the time of presenting the application. The attested photocopy will, after verification, be retained by the bank branch along with the application.
3)
4)
5) 6)
7)
(ii)
84

8) APPLICATIONS MADE BY INSTITUTIONAL INVESTORS (i) Applications made by companies, corporate bodies, mutual funds, provident/pension/gratuity funds/trusts and other legal entities must be accompanied by an attested photocopy of their Memorandum and Articles of Association or equivalent instrument / document. Where applications are made by virtue of Power of Attorney, the same should also be submitted along with the application. Any Federal/Provincial Government Gazetted Officer, Councilor, Bank Manager, Oath Commissioner and Head Master of High School or bank manager in the country of applicants residence can attest copies of such documents 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. The attested copies, will after verification, be retained by the bank branch along with the application
(ii)
9)
Joint application in the name of more than two persons will not be accepted. In case of joint application, each applicant must sign the application form and submit attested copies of their CNICs/Passport. The TFCs will be dispatched to the Principal Holder, while in case of CDS, it will be credited to the CDS account mentioned on the face of the form and where any amount is refundable, in whole or in part, the same will be refunded by cheque or other means by post, or through the bank where the application was submitted, to the principal holder. Please note that joint application will be considered as a single application for the purpose of allotment of TFCs. The person to be nominated shall not be a person other than the following relatives of the member, namely, a spouse, father, mother, brother, sister and son or daughter, including a step or adopted child. The nominee must sign the application form and submit attested copies of their CNICs/Passport. Subscription money must be paid by cheque drawn on applicants own bank account or pay order/bank draft payable to one of the Bankers to the Issue Engro Rupiya Certificate and crossed A/C PAYEE ONLY. The applicant should have at least one bank account with any of the commercial banks but not necessarily with the Bankers to the Issue. The applicants not having a bank account at all (nonaccount holders) are not allowed to submit application for subscription of TFCs. Applications are not to be made by minors and/or persons of unsound mind. Applicants should ensure that the bank branch, to which the application is submitted, completes the relevant portion of the application form. Applicants should retain the bottom portion of their application forms as provisional acknowledgement of submission of their applications. This should not be construed as an acceptance of the application or a guarantee that the applicant will be allotted the number of TFCs for which the application has been made. 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. Bankers to the Issue are prohibited to recover any charges from the subscribers for collecting subscription applications. Hence, the applicants are advised not to pay any extra charges to the bankers to the issue. For the applications made through pay order/bank draft, it would be permissible for a banker to the issue to deduct the bank charges while making refund of subscription money to unsuccessful applicants through pay order/bank draft individually for each application.
10)
11)
12)
13) 14) 15)
16)
17)
18)
85

19) It would be permissible for a Banker to the Issue to refund subscription money to unsuccessful applicants having an account in its bank by crediting such account instead of remitting the same by cheque, pay order or bank draft. Applicants should, therefore, not fail to give their bank account numbers.
ADDITIONAL INSTRUCTIONS FOR FOREIGN/NON-RESIDENT INVESTORS 20) In case of foreign investors who are not individuals, applications must be accompanied with a letter on applicants letterhead stating the legal status of the applicant, place of incorporation and operations and line of business. A copy of memorandum of association or an equivalent document should also be enclosed, if available. Where applications are made by virtue of Power of Attorney, the same must be lodged with the application. Copies of these documents can be attested by the bank manager in the country of applicants residence. Applicants may also subscribe using their Special Convertible Rupee Account (SCRA) as set out under the State Bank of Pakistans Foreign Exchange Manual.
21)
BASIS OF ALLOTMENT 1. 2. The minimum amount of application for subscription of TFCs is Rs. 25,000/-. Application for TFCs below the total value of Rs.25,000/- shall not be entertained. Application for TFCs must be made for a minimum of the aggregate face value of PKR 25,000/, or in multiples of PKR 5,000/- for amounts above PKR 25,000/-. Applications, which are neither for Rs 25,000/- nor in multiples of PKR 5,000/- for amounts above PKR 25,000/- shall be rejected. Allotment/Transfer of TFCs to applicants shall be made in accordance with the allotment criteria/ instructions disclosed in the Prospectus. 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. Applications, which do not meet the above requirements, or applications which are incomplete will not be accepted. The applicants are, therefore, required to fill in all data fields in the Application Form. The Registrar will dispatch TFCs to successful applicants or credit the respective CDS accounts of the successful applicants (as the case maybe). Therefore, applicants are advised to fill in accurate mailing address and CDS account details, if any. BANKERS TO THE ISSUE
Code 01 02 03 04 05 06 07 Name of Banks MCB Bank Limited Standard Chartered Bank (Pakistan) Limited Bank Alfalah Limited NIB Bank Limited United Bank Limited Habib Bank Limited Bank Al Habib Lim ited Code 08 09 10 11 12 13 Name of Banks Allied Bank Limited JS Bank Limited Askari Bank Limited Citibank N.A. Pakistan Faysal Bank Limited Samba Bank Limited
3. 4.
5.
6.
7.
86

8. OVERSEAS BANKERS TO THE ISSUE
Code 01 02 03 04 Name of Banks Code 05 06 07 08 Name of Banks
9.
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.
Nationality Code
Code 001 002 003 004 005 Name of Banks U.S.A U.K U.A.E K.S.A Oman Code 006 007 008 009 010 Name of Banks Iran Bangladesh China Bahrain Other
87

PART X
10. SIGNATORIES TO THE PROSPECTUS Names of Directors Mr. Asad Umar Mr. Isar Ahmad Mr. Shahzada Dawood Mr. Shabbir Hashmi Mr. Khalid Mansoor Mr. Ruhail Mohammed Mr. Arshad Nasar Mr. Saad Raja Mr. Asif Qadir Mr. Khalid S. Subhani Mr. Hussain Dawood Mr. Muhammad Aliuddin Ansari Mr. Abdul Samad Dawood Signature -Sd-Sd-Sd-Sd-Sd-Sd-Sd-Sd-Sd-Sd-Sd-Sd-Sd-
Witness 1: Name: Place: Karachi Witness 2: Name: Place: Karachi Signature: _________-Sd-_____________ Signature: _________-Sd-_____________
88

PART XI
11. MEMORANDUM OF ASSOCIATION
THE COMPANIES ORDINANCE, 1984 COMPANY LIMITED BY SHARES Memorandum of Association OF ENGRO CORPORATION PAKISTAN LIMITED 1. 2. 3. The name of the Company is ENGRO CORPORATION LIMITED The Registered Office of the Company will be situated in the Province of Sind. The objects for which the Company is established are: (1) To manufacture, produce, treat, refine, reduce and process all kinds of artificial manures and fertilizers, chemicals and minerals and any products and by-products which may be derived, produced, prepared, developed, compounded, 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, sell, supply, market, distribute, exchange or otherwise dispose of, import, export, store, hold, package, transport, use, experiment with, handle, trade, and generally deal in fertilizers and chemical products. To undertake and carry on all type of business related to all aspects of agriculture, agricultural products and equipment including but not limited to farming including without limitation corporate farming, seeds, 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. To undertake, develop or carry on any business or activity relating to telecommunications including fixed and wireless and including telephone, cellular, cable or satellite communication and including of speech, sounds, images, signals and data and materials in all forms, howsoever produced, transmitted, 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, marketing and provision of facilities and services subject to any prior approvals required under the law. To undertake, develop or carry on any business or activity related with any form of energy, including, without limitation petroleum, gas and power including electric power, at all stages of exploration, refining, generating, transporting, producing, selling, distributing and supply and to do all or such things as are incidental or conducive to the carrying on of energy, petroleum, gas and power related service and facilities subject to any prior approval required under the law. To undertake, 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, services and facilities subject to any prior approvals required under the law.
(2)
(3)
(4)
(5)
89

(6) to own, lease, license, purchase of otherwise acquire, maintain, work, gather, get in, and develop gas, minerals and chemical and other substances of all kinds and to pipe, transport, store, process, refine, treat, supply and deal in all such substances; to own, purchase, acquire, lease, build, erect, install, establish, operate, manage and maintain plants, laboratories, equipment, apparatus, and other facilities for the manufacture, refining, processing, storage, sale and distribution of fertilizers and chemical products; to buy, lease, sell, exchange or otherwise acquire and to construct, lay, maintain and operate pipelines and other conveyors for the transportation of gases, liquids, minerals and chemical and other substances; to purchase, take on lease or in exchange, or otherwise acquire, any lands and to lay out, improve and prepare the same for building or commercial purposes; to sell, mortgage or let the same; to construct, alter, repair, pull down, decorate, maintain, furnish, fit up and improve buildings to lay out, construct and pave roads, streets, alleys, paths and walks, to drain, improve and landscape grounds, and enter into contracts and arrangements of all kinds with builders, property owners, tenants and others and to advance money to them; to clear, manage, farm, cultivate, 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, animal or vegetable, of or on any such lands, and to lay out sites for and establish temporary or permanent camps, towns and villages on any such lands and to carry on all or any of the businesses of farmers, dairymen, milk contractors, dairy farmers, millers, seeds-men, nurserymen, dealers in agricultural equipment, growers of and dealers in grain, hay and straw, and purveyours and vendors of dairy products, poultry, animal feeds and provisions of all kinds and to buy, 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; to own, acquire, construct, establish, install, lay out, improve, maintain, work, manage, operate carry out control, or aid in, contribute or subscribe to the constructions, erection, maintenance and improvement or working of, any roads, ways, tramways, aerodromes and landing fields, docks, wharves, piers, bridges, jetties, breakwaters, dredging facilities, moorings, harbour abutment, viaducts, aqueducts canals, water courses, wells, tanks, storage installation, refineries, pipes, pipelines, conveyors, telegraphs, telephones, wireless, gas works, steam works, electric lighting and power works, power houses, hydroelectric plants, laboratories, factories, mills, foundries, workshops, boilers, machine shops, warehouses, shops, stores, fuel stores, hangars, garages, guard towers, machinery and other appliances, hotels, clubs, restaurants, lodging houses, baths, places of worships, hospitals, dispensaries, places of amusement, pleasure grounds, parks, gardens, reading rooms, dwelling houses, office and other buildings, works and conveniences which may be calculated, directly, or indirectly, to advance the Companys interests and to contribute to, subsidies or otherwise assist or take part in, the construction, improvement, maintenance working, management, carrying out of control thereof, and to take any lease or enter into any working agreement in respect thereof; to purchase, build, charter, affreight, hire and let out for hire, or for chartering and affreightment and otherwise to obtain the possession of, and use, operate and dispose off, and employ or turn to account ships, lighters, barges, tugs, launches, boats and vessels of all kinds, automobiles, lorries, motor trucks and tractors, airplanes, helicopters, locomotives, wagons, tank cars, and other forms of transport and rolling stock, and otherwise to provide for any employ the same in the conveyance of property and merchandise of all kinds and the transportation of personnel, employees, customers and visitors and to purchase or otherwise to acquire any shares or interest in any ships or vessels, airplanes, helicopters, railways, motor transportation or in any companies possessed of or interested in any ships, vessels, airplanes, helicopters, railways and motor transportation;
(7)
(8)
(9)
(10)
(11)
(12)
90

(13) to purchase, acquire, take on lease or tenancy, sell dispose of, mortgage or let any estate or interest in and to take and acquire options over any property, immoveable and moveable, or rights of any kind, and to develop, improve, turn to account, deal with, lease mortgage, sell or otherwise dispose of the same in such manner as may be thought expedient; to apply for, purchase, or otherwise acquire, and protect and renew in any part of the world any patents, patent rights, brevets dinvention, trade marks, designs, licences, concessions and the like, conferring any exclusive or non-exclusive or limited right to their use, or any secret or other information as to any invention, process or thing which may seem capable of being used for any of the purposes of the Company, or the acquisition of which may seem calculated directly or indirectly to benefit the Company, and to use, exercise, develop, or grant licenses in respect of, or otherwise turn to account the property, rights or information so acquired, and to expend money in experimenting upon, testing or improving any such patents, inventions or rights; to act as Managers, Agents, Registrars, Secretaries, Treasurers, Consultants or Managing Agents of and to provide services to any business or concern that the Company may find convenient or advantageous; to enter into partnership or any arrangement for sharing profits, union of interest, co-operation, joint adventure, reciprocal concessions, or otherwise with any company, association, firm or person carrying on or engaged in, or about to carry on or engage in, any business or transaction which this Company is authorized to carry on or engage in, or any business or transaction capable of being conducted so as directly or indirectly to benefit the Company, and to lend money to, guarantee the contracts of, or otherwise assist any such company, association, firm or person, and to purchase, take, or otherwise acquire, shares and securities of any such company or association, firm or person, and to sell, hold, reissue, with or without guarantee, or otherwise deal with the same; to acquire and undertake the whole or any part of the business, 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, or possessed of property suitable for the purposes of the Company, 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; 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, 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, either in whole or in part, with or into any other companies, associations, firms or persons, and to place or guarantee the placing of, underwrite, subscribe for or otherwise acquire all or any part of the shares, debentures or other securities of any such other companies, association, firms or persons; to lend and advance money or give credit to such persons or companies and on such terms as may seem expedient, 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; to receive money on deposit or loan and borrow or raise money in such manner as the Company shall think fit, 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, by mortgage, charge or lien upon all or any of the property or assets of the Company (both present and future), including its uncalled capital, and also by a similar mortgage, 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;
(14)
(15)
(16)
(17)
(18)
(19)
(20)
91

(21) to draw, make accept, endorse, negotiate, buy, sell, deal in, discount, execute and issue promissory notes, bills of exchange, bills of lading, warrants, debentures and other negotiable or transferable instruments; to subscribe for, underwrite, purchase or otherwise acquire and to hold, dispose of and deal in shares, stocks, bonds, debentures, debenture stocks, annuity or other obligations of any other company, person, institution or corporate or governmental body, whether secured or unsecured; to sell, lease, mortgage or otherwise dispose of the property, assets or undertaking or the Company or any part thereof for shares, stock, debentures, or other securities or obligations of any institution, corporate or governmental body, person or company, whether or not having objects altogether or in part similar to those of the Company, or for any other consideration; to obtain any legislative, judicial, 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 Companys constitution, or for any other purpose which may seem expedient, to take all necessary or proper steps with the authorities, supreme, national, local, municipal or otherwise, of any place in which the Company may have interests, and to carry on any negotiations or operations for the purpose of directly or indirectly carrying out the objects of the Company or furthering the interests of its Members and to oppose any proceedings, applications, actions or steps taken by any Governmental authority or body, or any company, association, firm or person, which may seem calculated, directly or indirectly, to prejudice the interests of the Company or its Members; to enter into any arrangements and contracts with any government or authority supreme, municipal, local or otherwise, that may seem conducive to the Companys objects or any one of them and to obtain from such government or authority any rights, privileges, options, concessions and licences, and to carry out, exercise or comply with any such arrangements, agreements, rights, privileges, concessions and licences and to procure the Company to be registered or recognized in any part of the world; to remunerate Directors, officials, agents, employees and servants of the Company and others and to establish and support or aid in the establishment and support of associations, institutions, funds, trusts and conveniences, calculated to benefit employees or ex-employees of the Company, or the dependents or connections of such persons, and to grant pensions, gratuities and allowances and to provide houses, 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, general or useful purpose and for the purpose of this paragraph the words employees and ex-employees shall include, respectively, present and former directors and other officers, agents, employees, trainees and servants; to manage, improve, develop, sell, exchange, lease, mortgage, pledge, hypothecate, assign, transfer, deliver, dispose of, turn to account or otherwise deal with all or any part of the property and assets, immovable and movable, corporeal or incorporeal, tangible or intangible, and any right, title and interest of the Company therein, including rights, licences, privileges, concessions and franchises as may seem expedient; 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, including brokerage and commissions for obtaining applications for or taking, placing or underwriting or procuring the underwriting of shares, debentures or other securities of the Company;
(22)
(23)
(24)
(25)
(26)
(27)
(28)
92

(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 allotment of shares, debentures or other securities of the Company credited as paid up in full or in part, or otherwise; to adopt such means of making known the products of the Company as may seem expedient and in particular by undertaking educational, training and demonstration programmes and by advertising in the press, by circulars and exhibition of works of art or interest, by publication of books and periodicals and by granting prizes, rewards and donations; to undertake, assist and participate in financial, commercial and industrial operations and undertakings in any part of the world, and both singly and in connection with other persons, firms, associations and companies and corporations; to do all or any of the above things, either as principals, agents, trustees, contractors, or otherwise, and either alone or in conjunction with others, and either by or through agents, subcontractors, trustees or otherwise, and either alone or in conjunction with others; to distribute among the Members in specie any property of the Company, or any proceeds of sale or disposal of any property of the Company, 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 law; to do all such other things as may be deemed incidental or conducive to the attainment of the above objects or any of them. The objects specified in each of the sub clauses of the main clause 3 shall be regarded as independent objects, and accordingly, 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. And it is hereby declared that the word company in this clause, except where used in reference to this Company, shall be deemed to include any partnership or body of persons, whether corporate or unincorporate, and whether domiciled in Pakistan or elsewhere. 4. 5. The liability of the Members is limited. The Share Capital of the Company is Rs. 4,500,000,000 (Rupees Four billion and five hundred million) divided into 450,000,000 Ordinary Shares of Rs. 10/- (Rupees ten) each.
(30)
(31)
(32)
(33)
(34) (35)
93

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ADVICE FOR INVESTORS

ENGRO CORPORATION LIMITED

Public Subscription between

Date of Publication of this Prospectus is May 24, 2011

ENGRO CORPORATION LIMITED TFC PROSPECTUS

PACRA Put Option

STOCK EXCHANGES TFC TFC Trustee WHT

ENGRO CORPORATION LIMITED TFC PROSPECTUS

ENGRO CORPORATION LIMITED TFC PROSPECTUS

Issue Amount Tenor Profit Rate

Please refer to para 2.14.3

ENGRO CORPORATION LIMITED TFC PROSPECTUS

Bankers to the Issue

ENGRO CORPORATION LIMITED TFC PROSPECTUS

ENGRO CORPORATION LIMITED TFC PROSPECTUS

ENGRO CORPORATION LIMITED TFC PROSPECTUS

ENGRO CORPORATION LIMITED TFC PROSPECTUS

ENGRO CORPORATION LIMITED TFC PROSPECTUS

ENGRO CORPORATION LIMITED TFC PROSPECTUS

ENGRO CORPORATION LIMITED TFC PROSPECTUS

ENGRO CORPORATION LIMITED TFC PROSPECTUS

ENGRO CORPORATION LIMITED TFC PROSPECTUS

ENGRO CORPORATION LIMITED TFC PROSPECTUS

ENGRO CORPORATION LIMITED TFC PROSPECTUS

ENGRO CORPORATION LIMITED TFC PROSPECTUS

Audited accounts as of December 31, 2010 As of December 31, 2010

ENGRO CORPORATION LIMITED TFC PROSPECTUS

ENGRO CORPORATION LIMITED TFC PROSPECTUS

ENGRO CORPORATION LIMITED TFC PROSPECTUS

ENGRO CORPORATION LIMITED TFC PROSPECTUS

ENGRO CORPORATION LIMITED TFC PROSPECTUS

A. F. Ferguson & Co.

Engro Fertilizers Limited

A. F. Ferguson & Co.

ENGRO CORPORATION LIMITED TFC PROSPECTUS

ENGRO CORPORATION LIMITED TFC PROSPECTUS

ENGRO CORPORATION LIMITED TFC PROSPECTUS

ENGRO CORPORATION LIMITED TFC PROSPECTUS

ENGRO CORPORATION LIMITED TFC PROSPECTUS

ENGRO CORPORATION LIMITED TFC PROSPECTUS

PROFIT BEFORE TAXATION Taxation PROFIT AFTER TAXATION

ENGRO CORPORATION LIMITED TFC PROSPECTUS

79,975,765 (59,702,130) 20,273,635

20,240,035 (15,097,181) 5,142,854

(6,215,316) 7,278,856 390,157 (843,561) (2,221,739) (3,065,300)

(4,253,652) 6,608,047 1,038,314 (969,583) (1,737,953) (2,707,536)

(3,582,695) 4,399,550 509,829 (482,558) (717,658) (1,200,216)

(2,320,924) 2,821,930 421,625 (297,690) (438,240) (735,930)

Other operating income Other operating expenses Finance cost

897,321 (957,982) (4,200,886) (5,158,868)

554,725 8,277,133 (1,836,131) 6,441,002

458,570 5,062,283 (1,343,481) 3,718,802

245,193 5,184,018 (977,328) 4,206,690

243,666 3,952,829 (1,119,041) 2,833,788

409,568 2,917,193 (778,351) 2,138,842

ENGRO CORPORATION LIMITED TFC PROSPECTUS

ENGRO CORPORATION LIMITED TFC PROSPECTUS

Rupees Shares at par value Share premium 100,000 10,639,144 10,739,144

ENGRO CORPORATION LIMITED TFC PROSPECTUS

ENGRO CORPORATION LIMITED TFC PROSPECTUS

ENGRO CORPORATION LIMITED TFC PROSPECTUS

ENGRO CORPORATION LIMITED TFC PROSPECTUS