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Executive Summary

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

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

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

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

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

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

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Company IntroductionCompany Introduction

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

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

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

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

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

In April 2003 Engro acquired 51% intrest in the Automation & Control Division of Innovative (Private) Limited, a Lahore (Pakistan) based company that provides process control industrial solutions in the knowledge based services sector. The joint venture has been named as "Innovative Automation & Engineering (Private) Limited (IAEL)".The aquisition was part of Engro’s diversification strategy.

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

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

Growing with PrideGrowing with Pride

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Mission StatementMission Statement

Our mission is two fold:

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

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

Agricultural sectors.

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

Where we are going

Our VisionOur Vision

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

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Values that we live by

Core ValuesCore Values

Our employee’s performance can only flourish in a sound work environment. That is why Engro is committed to supporting it leadership culture through systems and

policies that foster open communication, maintain employees and partner privacy, and assure employee’s health and safety.

SAFETY, HEALTH & ENVIRONMENTSAFETY, HEALTH & ENVIRONMENT

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

ETHICS AND INTEGRITYETHICS AND INTEGRITY

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

LEADERSHIPLEADERSHIP

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

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QUALITY & CONITNUOUSE IMPROVEMENTQUALITY & CONITNUOUSE IMPROVEMENT

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

ENTHUSIASTIC PURSUIT OF PROFITENTHUSIASTIC PURSUIT OF PROFIT

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

EXTERNAL & COMMUNITY INVOLVEMENTEXTERNAL & COMMUNITY INVOLVEMENT

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

CANDID & OPEN COMMUNICATIONS CANDID & OPEN COMMUNICATIONS

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

ENJOYMENT & FUN ENJOYMENT & FUN

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

INNOVATIONINNOVATION

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

INDIVIDUAL GROWTH & DEVELOPMENTINDIVIDUAL GROWTH & DEVELOPMENT

We strongly believe in the dignity and value of people. We must consistently treat each other with respect and strive to create an organizational environment in which

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individuals are encouraged and empowered to contribute, grow and develop themselves and help to develop each other.

TEAMWORK & PARTNERSHIPTEAMWORK & PARTNERSHIP

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

DIVERSITY & INTERNATIONAL FOCUSDIVERSITY & INTERNATIONAL FOCUS

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

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Board of DirectorsBoard of Directors

Hussain DawoodChairman

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

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

He is a MBA from the Kellogg School of Management, Northwestern University, USA, and a graduate in Metallurgy from Sheffield University, UK. He joined the ECPL Board in 2003.

Asad UmarChief Executive

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

Arshad NasarDirector

Is currently the Chairman and Chief Executive Officer of Oil & Gas Development Company Limited. He holds a Masters degree in Economics as well as Political Science. He joined ECPL Board in 2002.

Prior to his current assignment, he was the Country Chairman and Managing Director of Caltex Oil Pakistan Limited and has served as a

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

Asif QadirDirector

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

Isar AhmadDirector

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

Khalid MansoorDirector

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

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Khalid Siraj SubhaniDirector

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

Ruhail MohammedDirector

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

Shahzada DawoodDirector

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

Shabbir HashmiDirector

Joined Actis Assets Limited (formerly CDC Group Plc) in 1994. He leads private equity investment activities out of Karachi for Pakistan and Bangladesh. Prior to joining Actis he worked for 8 years with the World Bank and US Aid specialising in the energy sector. He is an Engineer from DCET, Pakistan and holds an MBA from JF Kennedy University, USA. He has previously been on Engro’s Board as CDC nominee in 2001/02 and rejoined the Board in 2006 as an independent director.

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Hierarchy StructureHierarchy Structure

President

Vice President

HR

Vice president Finance

Special Projects/

Expansion Projects

Manager Internal Audit

Manger Public Affairs

Vice President Marketing

Vice President Manufacturin

g

Company Secretary

Compensation and Benefits

Recruitment

Training and Development

Accounting

Treasury

Industrial Trade

Purchasing

Legal

Sales

Planning and

Development

Technical Services

Production

Maintenances

Process Engineering

Instrumental / Fleet

Administration

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PRODUCT PORTFOLIOPRODUCT PORTFOLIO

Fertilizers

A specific product line that focuses on balanced crop nutrition and higher yield for the farmer

Nitrogenous Fertilizers  

  ENGRO Urea - A trusted name with farmers

 

Compound Fertilizers  

  ENGRO Zarkhez- Towards Balanced Fertilization

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Phosphatic Fertilizers

  ENGRO Di-Ammonium Phosphate (DAP) & Zorawar - Leading Phosphatic fertilizers

Engro Urea

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

 

Engro DAP

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

 

 

Engro Zorawar

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

Engro Zarkhez

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

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Chemical Handling & StorageChemical Handling & Storage

Developing Pakistan's First Cyrogenic Storage Facility

Chemical Handling & StorageChemical Handling & Storage by Engro Vopak Terminal LimitedA state of the art jetty and terminal at Port Qasim, Karachi for handling and storage of LPG and bulk liquid chemicals.

     Storage Capacity 69,000 m3Number of Tanks 20 Draft Sea Berth 10 meters

Jetty CapacityVessels up to 75,000 dwt (currently 45,000 dwt) at 13 meters draft

Access Sea/Road/PipelineProducts Handled & Stored Paraxylene

    Acetic AcidPhosphoric Acid (Handling only)Vinyl Chloride MonomerAcrylonitrileLiquefied Petroleum Gas

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Mono Ethylene Glycol

PVC ResinPVC Resin

Expansion and backward integration

PVC ResinPVC Resin by Engro Polymer & Chemicals Limited

Polyvinyl chloride (PVC) Resin: A synthetic resin, composed of repeating units of vinyl Chloride. It is very versatile and is used in a wide variety of products1. SABZ PVC AU-58AU-58 is a medium-low molecular weight suspension resin. It offers high fusion rate in processing, and has a narrow particle size range. It is very low in fish-eyes, gel count and foreign matter and has excellent heat stability and clarity. It is recommended for transparent and opaque rigid / semi-rigid PVC applications.

Applications Rigid PVC sheet, PVC bottles, injection moulded PVC products like non-pressure PVC pipe fittings and conduit fittings, rigid PVC extruded film and sheet. 2. SABZ PVC AU-60  

AU-60 is a medium-low molecular weight suspension resin. It offers high fusion rate in processing and has a narrow particle size range. It is very low in fish-eyes, gel

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count and foreign matter and has excellent heat stability and clarity. It is recommended for transparent and opaque rigid PVC applications.

ApplicationsRigid PVC sheet, PVC bottles, injection moulded PVC fittings for pressure application, rigid PVC extruded film and sheet, PVC welding rods. 3. SABZ PVC AU-67S  AU-67S is a medium molecular weight suspension resin. It has a porous particle structure and large interior surface. It has high plasticizer take up and absorption rate. On mixing, it results in free-flowing powder with dry feel. It is very low in fish-eyes and foreign matter. This grade has been specially designed for both transparent and opaque plasticized applications.

ApplicationsPVC shoes, sandals and soles (expanded and compact), PVC film, sheet and artificial leather, PVC cables, PVC garden hose and tubes with reinforcements, tubular film and tubing, PVC flooring and tiles, PVC water stops / expansion joints and plasticized PVC compounds. 4. SABZ PVC AU-67RAU-67R is a medium molecular weight suspension resin. It has a narrow range of particle size distribution, high bulk density, and excellent dry-flow properties. This results into a high and uniform production rate in the extrusion process. This grade has been specially designed, and is recommended for rigid PVC applications.

ApplicationsRigid PVC pipes, conduits and ducting,, PVC profiles such as doors, windows and other sections, PVC corrugated pipes, PVC shrinkable film and also twist wrap candy film, rigid PVC compounds for extrusion. 5. SABZ PVC AU-72AU-72 is a high molecular weight suspension resin. It has a high plasticizer take up and absorption rate. On mixing, it results in free-flowing powder with dry feel. It is free from gels and foreign matter. It has superior dielectric properties and physical strength, which makes it an ideal choice for electric insulated PVC cables.

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

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Power GenerationPower Generation

Our 217 MW Power Plant.

Power Generation by Engro Energy Limited

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

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Industrial AutomationIndustrial Automation

Providing process control solutions to your industrial units

Industrial Automation By Avanceon (formerly known as Engro Innovative Automation Pvt. Limited)

Market leader in industrial automation business providing process control solutions to

Industrial units. It offers Power & Energy Management Software solutions as well as

High end Software that integrate production and business application.

Human Machine InterfacesVariable Frequency DrivesDistributed Control SystemIndustrial & ERP SoftwareNon-Contact Online MeasurementVibration MonitoringAnalytical & Combo SolutionsWeighing Conveyers MotorsField & Process Instruments With other SensorsSecurity & Monitoring SolutionsControl Valves Combustion ProductsProgrammable Logic Controllers

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FoodFood

Foods by Engro Foods Limited

Olper’s: Standardized at 3.5% fat, Olper’s is a premium, UHT all-purpose milk. Olwell HCLF: (High Calcium, Low Fat) Olwell is a premium quality milk for the health conscience. Olper’s Cream : UHT Cream standardized at 40% fat Tarang: Liquid tea whitener

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Communication Network

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

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

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

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

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

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

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

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All Channel Communication Network

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

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Management FunctionsManagement Functions

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

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

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

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

2. Organizing:Managers are also responsible for arranging and structuring work to accomplish the organization’s goal. This is known as organizing. When mangers organize, they determine what tasks are to be done, who is to to do them, how the tasks are to be grouped, who reports to whom, and where decisions are to be made.

In organizing managers at Engro allocate and arrange human and non-human resources so that their plan can be carried out successfully. Like it allocate the machinery and advanced technology in production unit that must be a relating to accomplish our goals.

3. Leading:Every organization includes people, and manger’s job is to work with and through people to accomplish organizational goals. This is leading function. When mangers motivate subordinates, help resolve work group conflicts, influence individuals or team as they work, select the most effective communication channel, or deal in any way with employees behavior issues, they are leading.

Managers at Engro influence others work behavior. Labours and subordinates to get optimum task achievement even by satisfying them accordingly.

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

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

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

a)Interpersonal Roles

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

Leader builds relationship with subordinates and communicates with, motivates and coaches them that how all employees can improve their professional skills in Engro.

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

b)Informational Role

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

Disseminator at Engro transmits information internally obtained from either internal or external sources, so that all employees go through by all current situations.

Spokesperson in Engro transmits information about the organization to outsiders so people and other organizations can reach its features, benefits etc.

c)Decisional Role

Entrepreneur acts as initiator designer and encourager of change and innovation in Engro to promote diversity and best selling.

Disturbance handler Takes corrective action when organization faces important, unexpected difficulties at Engro like Technical or Mechanical fault, Labor union issues, Labour health issues etc.

Resource Allocator in Engro distributes resources of all types including time, funding, equipment and human resources so that services with in the organization

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and out side the organization should be manage in proper order to get maximum output from given resources and material.Negotiator at Engro represents the organization in major negotiation affecting the manager’s area of responsibility means negotiator talk to external affecting factors to maintain and improve the Engro’s alacrity.

Growing with Pride

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Challenges and Issue Faced

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

Urea demand is expected to be rebusting whilst phosphates demand is expected to be affecting by high international prices.

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

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

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

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

Start-up losses on NPK operationsECPL expanded into 100k NPK (blended fertilizer) plant, which came online in Apr ’01. However, initial teething problems limited sakes to 24k tons against production of 31k tons. NPK business showed a loss of PKR 109m. However, the plant is currently operating at 80% of its design capacity and some reductions in operating expense have been achieved.

Loss of Production

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

Competitive Strategies

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

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

Strengths

Strong, professional management (management practices & principles inherited from Exxon Chemicals USA, after the management buyout in 1991).

Subsidized gas pricing during the last 10 years has resulted in strong accumulated reserves. Low gearing will provide financial strength to the Company in coming years.

50% joint venture, Engro Vopak, has completed fourth year of profitable operations. Future dividend income will hedge against ECPL’s core-business risk.

Weakness

While Engro Vopak is performing satisfactorily, deterioration in operating results of Engro Asahi could result in Asahi calling on financial support from ECPL.

Engro Urea does not command the same market premium as competitor Fauji Fertilizer’s product ‘Sona’. However, Sona urea is sold mainly in the Punjab province, whereas Engro has a strong niche in Sindh province.

Opportunities

New petrochemical projects will help improve Group profitability through 1) clear synergies, and 2) reduction in business risk through capturing a larger segment of the value-addition chain.

Agriculture business projects like blended fertilizers, hybrid seeds etc.

Threats

Dumping of imported fertilizer in the local market. Government action is often protracted. During 1999, ex-Soviet states dumped huge quantities of urea in Pakistan. Even though the government imposed 10% regulatory duty, it was too little and too late to be effective.

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Takeover by the Burewala Group. The takeover attempts may subside, however the management of Engro Chemicals may become too drawn into this battle while it continues, causing reduced focus on operations.

Droughts directly affect demand. Engro urea sells primarily in southern part of the country where the droughts are more frequent.

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

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

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

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

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

FFC participated as a major shareholder in a new DAPS/Urea manufacturing complex with participation of major international/national institutions. The new company (FJFC) commenced commercial production with effect from January 01, 2000. The facility is designed to produce 551,000 metric tons of urea and 445,500 metric tons of DAP.

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

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

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  Engro Chemical Fauji Fertilizer

Market

share

19% 40%

Capacity 850,000 tons per annum (2

plants)

1,300,000 tons per annum (1

plant)

Products Aside from sale of Engro

urea, ECPL also sells

imported DAP, NP, MOP and

NPK fertilizers and hybrid

seeds.

Sells prilled urea.  

Affiliate (FFC Jordan)

manufactures granular urea

& DAP.

Brand Engro Urea – popular brand

in southern part of the

country.

Sona urea – very popular

product, esp. in northern

Pakistan. Sona is granular

urea which is perceived to be

better.

Vision To become a diversified

chemical company operating

internationally. A number of

projects involving backward

& forward integration are

under consideration.

Setting up industrial units in

the fields of petroleum

refining, paper & pulp,

mineral acid, & off-shore

fertilizer manufacturing.

Government policies

In Mar ’02, the Govt. imposed 15% GST on selling price of urea (PKR 6,660/ton) with the entire impact allowed to be passed on to the customer. In response to the above, prices in fact, have increased by 5.7% since March which is considered sufficient to protect margins. Given the decline in domestic fertilizer off-take, the Govt. has allowed export of 0.23m tons of urea in order to reduce inventories. However, exports at current prices

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are not a viable option. The local urea ex-factory price in FOB terms currently stands at US$ 120/ton. Add US$6-8 for local transportation to port and another US$20 freight to Middle East. Thus, US$146-148/ton international price would be required to make exports viable. However, Middle East bagged prices currently stand at US$ 112-115/ton.

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

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

The competitive analysis for Engro Chemical Pakistan is as fallows

Porter’s Competitive Forces Model:

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

Rivalry:

Engro Chemical Pakistan has rivalry with the other fertilizer manufacturing companies in the fertilizer Industry of Pakistan. The companies that offer rivalry to Engro Pakistan are

i. Fuaji Fertilizer Company Limitedii Dawood Herculesiii Pak Saudi Fertilizer Limited iv Pak Arab Fertilizer

Various competitive tactics among rivals lower prices that can be raise costs of doing business.

Bargaining Power of Customers:

At Engro Chemical Pakistan Limited there is no customer power of bargaining, because the company is already giving good quality at a reasonable rate.

Bargaining Power of Suppliers:

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

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Threat of substitute products:

Engro Pakistan as threat from their rivals in the industry, but they maintain their quality standards and manufacturing status at a relatively affordable rate.

Culture

Our employees bring expertise and

dedication to the workplace

Organizational Culture:

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

Sources of Organizational Culture:

The organization’s founder (vision and mission). Past practices of the organization ( the way things have been done ) The behavior of top management.

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

The culture of Engro consists of Two Factors:

1. Our People.2. Quality and Training.

1. Our People:

More than 700 employees bring expertise and dedication to the workplace. We value each employee, value their inputs and view. Continuously striving to become employer of choice, we provide a workplace where people feel confident, valued and inspired.

2. Quality and Training:

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Employer development is one of the pivotal areas for organizational development. To organizational competence levels, new training programs encompassing performance management, leadership and competency development are introduced.

Improvisation through Six Sigma:

the legend leads again

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

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

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

How employees learn culture:

Stories Engro is best known for its quality and diversification. The customers are satisfied from products. It is our people who make Engro a great company.Rituals In Engro all the employees are fully dedicate to their workplace and our tradition is diversification and our core values.Symbols Engro symbols motivate the employees which is “ Growing with Pride”Language In Engro mostly that language is used which is easily understandable by the employees, so the employees easily understand the culture of the organization.

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Financial Position of the Company

Stakeholders:

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

These are the stakeholders of Engro Pakistan

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

Financial Positions in Last Five Years:

See our Progress

Highlights of Year 2007

1. Sales for the year were Rs. 23.3 billion, higher by 32% due mainly to higher turn over of Phosphates and Zarkhez.

2. Profit before tax at Rs. 4.2 billion was 23% higher than 2006 principally because of higher other income from joint ventures and subsidiaries.

3. Profit after tax was 3.15 billion which is a new record of the company and is higher by 24% over the 2006 profit of Rs. 2.55 billion.

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Five Year at Glance

Million Rupees 2007 2006 2005 2004 2003Net sales 23183 17602 18276 12796 11884

Operating expense 3279 2756 2641 2233 2534

Profit before tax 4235 3445 3220 2315 2323

Profit after tax 3155 2547 2319 1611 1557

Employee costs 1050 950 804 795 749

Taxes, duties & development surcharge

5890 4633 4162 3911 3457

Worker’s fund 316 251 215 156 168

Property, plant & equipment 6109 6319 6351 6492 6648

Capital expenditure 8024 391 377 520 370

Long term investment 4108 1480 748 - 85

Long term liabilities 15423 1800 2890 2580 3236

Net current assets 11132 2042 2211 1618 1796

Dividends and SharesShareholders funds 15482 9370 7376 6586 6199

Shares outstanding at year end 193 168 153 153 153

Dividend per share. Rs. 7.0 9.0 11.0 8.5 8.0

Dividend payout rate 41% 58% 77% 81% 79%

Bonus shares _ _ _ _ _

(thousand matric tons)Engro urea production 954 969 912 870 955

Engro urea sale 874 945 840 891 930

Zarkhez/ Engro NP production 125 108 157 121 72

135 116 143 114 86

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Growing with Pride

Why Engro is Successful?

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

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

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

Key Success Factors

Brand leadership: Farmers’ perception plays a major role in determining a brand’s success;

Manufacturing technology: Newer technology helps achieve low-cost leadership within the industry

Economies of scale. Our core values. Diversification of our business. Our corporate culture

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

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Conclusion:

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

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

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

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

References:

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

www.engro.com,pk

www.engrozarari.com