2015 PDF

fields of
connection
Annual Report 2015
111-211-211
engrofertilizers.com
about the cover
contents
Company Information Financial Statements
Company Information 06 Standalone Financials 74
Notice of the meeting 07 Consolidated Financials 136
Engro Fertilizers at a Glance 12 Proxy Form
Our History 14 Electronic Transmission Consent Form
Our Milestones 16 Video Conferencing Facility Form
Our Core Values 18
Corporate Governance
Board of Directors 22
Directors’ Profiles 24
Board Committees 28
Functional Committees 29
Our Governance Framework 30
Statement of Compliance with
the Code of Corporate Governance 31
Directors’ Report
CEO’s Message 36
Key Numbers 38
Business Review 40
Horizontal and Vertical Analyses 46
Summary 52
Financial Ratios 53
Statement of Value Addition and Distribution 57
Key Shareholding and Share Traded 58
Shareholder Information 62
Pattern of Shareholding 63
Category of Shareholding 66
Awards and Achievements 68
Our Brands 70
© 2016, Engro
All Rights Reserved. No part of this publication may be reproduced

without the prior written permission of the publisher.
fields of growth
Company Information
company information notice of the meeting
Board of Directors Auditors NOTICE IS HEREBY GIVEN that the Seventh Annual General Meeting of Engro
Khalid Siraj Subhani A.F. Ferguson & Company Fertilizers Limited will be held at Marriott Hotel, Abdullah Haroon Road, Karachi on
Ruhail Mohammed Chartered Accountants
Abdul Samad Dawood State Life Building No. 1-C
Monday, March 28, 2016 at 10 a.m. to transact the following business:
Inamullah Naveed Khan I.I. Chundrigar Road
Javed Akbar Karachi-74000, Pakistan A. Ordinary Business: (2) The Share Transfer Books of the Company will be
Naz Khan Tel: +92(21) 32426682-6 / 32426711-5 closed from Tuesday, March 15, 2016 to Monday,
(1) To receive and consider the Audited Accounts for the March 28, 2016 (both days inclusive). Transfers received
Shabbir Hashmi Fax +92(21) 32415007 / 32427938 year ended December 31, 2015 and the Directors' and
Shahid Hamid Pracha in order at the office of our Registrar, M/s. FAMCO
Auditors' Reports thereon. ASSOCIATES (PVT.) LTD, 8-F, next to Hotel Faran,
Cost Auditors
Company Secretary Nursery, Block 6, PECHS, Shahra-e-Faisal, Karachi
(2) To declare a final dividend at the rate of PKR 3.00 (30%) [PABX Nos. (92-21) 34380101-5] and email info.shares@-
J.A.S.B. & Associates for the year ended December 31, 2015
Faiz Chapra famco.com.pk by the close of business (5:00 p.m) on
Chartered Accountants
No. 4 Uni Tower Monday, March 14, 2016 will be treated to have been in
Bankers (3) To appoint Auditors and fix their remuneration. time for the purposes of payment of final dividend to the
I.I. Chundrigar Road
Karachi-74000, Pakistan transferees and to attend and vote at the meeting.
Allied Bank Limited (4) To elect 08 directors in accordance with the Companies
Askari Bank Limited Tel: +92(21)32468154-5 / 32468158 Ordinance, 1984. The retiring Directors are M/s Syed
Fax +92(21) 32468157 (3) A member entitled to attend and vote at this Meeting
Bank Alfalah Limited Khalid Siraj Subhani, Ruhail Mohammed, Javed Akbar, shall be entitled to appoint another person, as his/her
Bank Al Habib Limited Abdul Samad Dawood, Shabbir Hashmi, Naz Khan,
Registered Office proxy to attend, speak and vote instead of him/her,
Bank Islami Pakistan Limited Inamullah Naveed Khan and Shahid Hamid Pracha. and a proxy so appointed shall have such rights, as
The Bank of Punjab
7th Floor, The Harbor Front Building, respects attending,speaking and voting at the
Burj Bank Limited B. Special Business:
HC # 3, Marine Drive, Block 4, Clifton, Meeting as are available to a member. Proxies, in
Citi Bank .N.A.
Karachi-75600, Pakistan (5) To consider, and if thought fit, to pass the following order to be effective, must be received by the
Dubai Islamic Bank (Pakistan) Limited
Tel: +92(21) 35297501 – 35297510 resolution as Special Resolution: Company not less than 48 hours before the Meeting.
Faysal Bank Limited
Fax:+92(21) 35810669 A proxy need not be a member of the Company.
Habib Bank Limited
Website: www.engrofertilizers.com RESOLVED THAT the consent of the Company in
Habib Metropolitan Bank Limited
JS Bank Limited General Meeting be and is hereby accorded to (4) Submission of Copy of CNIC/NTN Details
MCB Bank Limited lend/provide to Engro Corporation Limited, a short (Mandatory)
Meezan Bank Limited term loan / financing facility of up to PKR 6 billion. The
National Bank of Pakistan facility will initially be for a period of one year, but Pursuant to the directives of the Securities and
Samba Bank Limited renewal of the same for four further periods of one Exchange Commission of Pakistan CNIC number of
Silk Bank Limited year each be and is also hereby approved. individuals is mandatorily required to be mentioned on
Soneri Bank Limited dividend warrants and pursuant to the provisions of
Standard Chartered Bank (Pakistan) Limited (6) To consider, and if thought fit, to pass the following Finance Act 2015, the rate of deduction of income tax
Summit Bank Limited resolution as a Special Resolution: under section 150 of the Income Tax Ordinance 2001
United Bank Limited from dividend payment have been revised as: for filers
RESOLVED that the Articles of Association of the Company of Income Tax return 12.5% and Non filer of Income
be amended by adding a new Article 54A as follows: Tax return 17.5%. In case of Joint account, each
holder is to be treated individually as either a filer or
The provisions and requirements for e-voting as non-filer and tax will be deducted on the basis of
prescribed by the SECP from time to time shall be shareholding of each joint holder as may be notified by
deemed to be incorporated in these Articles, irrespective the shareholder, in writing as follows, to our Share
of the other provisions of these Articles of Association and Registrars, or if no notification, each joint holder shall
notwithstanding anything contradictory therein be assumed to have an equal number of shares.
Company Folio/CDS Total Principal Shareholder Joint Shareholder
N.B Name Account No. Shares
(1) The Directors of the Company have fixed, under sub-section Name & Shareholding Name & Shareholding
CNIC No. Proportion CNIC No. Proportion
(1) of Section 178 of the Companies Ordinance, 1984, No. of Shares No. of Shares
the number of elected directors of the Company at 08.
06 | engro fertilizers Annual Report 2015 | 07

The CNIC number/NTN details is now mandatory and is term liquidity management within the Company and the Engro Half year ended June 30, 2015, reviewed accounts of advance out of borrowed funds; (II) detail of guarantees
required for checking the tax status as per the Active group could be further strengthened. As a Group-wide policy Engro Corporation Limited (standalone): / assets pledged for obtaining such funds, if any; and
Taxpayers List (ATL) issued by Federal Board of Revenue initiative to achieve operational efficiencies for the benefit of (III) repayment schedules of borrowing of the investing
(FBR) from time to time. the Company and the Group, the Company seeks approval Assets Amounts in thousand company;
to enable it to lend and make available to Engro Corporation
Individuals including all joint holders holding physical share (ECorp) short term financing facilities. The above is being Property plant & equipment 91,361 The intent is generally only to lend to Engro Corp when
certificates are therefore requested to submit a copy of their proposed only for short term liquidity management (including Long term investments 30,452,386 Engro Fert has excess liquidity. However, there may
valid CNIC to the company or its Registrar if not already but not restricted to commercial papers and other short term be circumstances where Engro Fert may have overdraft
Loans, advances & prepayments
provided. For shareholders other than individuals, the checking financing instruments), where the company has surplus liquidity lines un-utilized and may still lend to its parent by utilizing
(including long term) 10,014,987
will be done by matching the NTN number, therefore the and/or Engro Corporation requires liquidity. Engro Corporation, as such lines. If this is done the answers to the queries
Short term investments 4,689,378
Corporate shareholders having CDC accounts are requested a reciprocal arrangement will be obtaining its shareholders’ are that (I) it will be justified by Engro Corp paying a
in their own interest to provide a copy of NTN certificate to check approval to make similar facilities available to the Company where Other Assets 750,572 markup rate better than the rate payable by Engro Fert
their names in the ATL before the book closure date to their it has excess liquidity and / or where the Company requires liquidity. Total Assets 45,998,684 and Engro Corp also making a similar facility available
respective participants/CDC, whereas corporate shareholders Liabilities to the company and (II) Engro Fert secures its
holding physical share certificates should send a copy of the information required under S.R.O. 27 (1) / overdraft line by a joint first pari passu charge over its
Borrowings 4,370,935
their NTN certificate to the Company or its Share Registrar. 2012 for loans & advances is provided below: charged assets as defined in the joint deed of floating
Trade and other payables 576,856
The Shareholders while sending CNIC or NTN certificates, as charge and (III) the normal repayment schedules of
the case may be must quote their respective folio numbers. (i) Name of the associated company or associated Other Liabilities 352,921 short term loans are for a maximum of one year.
undertaking along with criteria based on which the Total Liabilities 5,300,712
In case of non-receipt of the copy of a valid CNIC, the Company associated relationship is established; Equity 40,697,972 (x) Particulars of collateral security to be obtained against
would be unable to comply with SRO 831(1)/2012 dated July loan to the borrowing company or undertaking, if any;
05 2012 of SECP and therefore will be constrained under SECP Engro Fertilizer Limited (Engro Fert) is a subsidiary Income Statement
Order dated July 06, 2015 under section 251(2) of the Companies company of Engro Corporation Limited (Engro Corp) Dividend & Royalty income 4,306,460 No security will be obtained since Engro Corporation
Ordinance, 1984 to withhold the dispatch of dividend warrants which holds 78.77% of its shares. is the largest shareholder of Engro Fert and a very
Operating Profit 11,585,609
of such shareholders. Further, all the shareholders are advised solid and profitable holding company. Both
Profit after Tax 11,027,129
to immediately check their status on ATL and may, if required (ii) Amount of loans or advances; companies are confident that any financing
take necessary action for inclusion of their name in the ATL. The arrangement will be ultimately repaid.
(vi) Average borrowing cost of the investing company or in
Company as per the new Law, shall apply 17.5% rate of withholding Up to PKR 6 billion.
case of absence of borrowing the Karachi Inter Bank
tax if the shareholder’s name, with relevant details, does not (xi) If the loans or advances carry conversion feature i.e. it
offered Rate for the relevant period;
appear on the ATL, available on the FBR website on the first (iii) Purpose of loans or advances and benefits likely to is convertible into securities, this fact along with
day of book closure and deposit the same in the Government accrue to the investing company and its members complete detail including conversion formula,
Average Short Term Borrowing Cost of Engro Fert as at
Treasury as this has to be done within the prescribed time. from such loans or advances; circumstances in which the conversion may take
December 31, 2015 is KIBOR + 0.83%. However this
place and the time when the conversion may be
keeps on changing.
Withholding Tax exemption from the dividend income, shall This will enable Engro Fert to lend to Engro Corp exercisable;
only be allowed if copy of valid tax exemption certificate is during the times it has excess liquidity and / or Engro
(vii) Rate of interest, mark up, profit, fees or commission
made available to FAMCO Associates (Pvt.) Ltd., by the first Corporation requires liquidity giving the Company the None
etc. to be charged;
day of Book Closure. opportunity to benefit from better terms including
earning a higher return. This will improve the (xii) Repayment schedule and terms of loans or advances
The rate will be better than the mark-up payable by
Statement under Section 160 of the Companies profitability of the Company benefitting the to be given to the investee company;
Engro Fert on its borrowings of like or similar maturities
Ordinance, 1984 shareholders.
and where it has no borrowings, the rate will not be
Facility granted for a period of one year, renewable for
less than KIBOR for the relevant period and will also
This Statement is annexed to the Notice of the Seventh (iv) In case any loan has already been granted to the said four further periods of one year each. The other terms
be better than the rates Engro Fert can obtain for
Annual General Meeting of Engro Fertilizers Limited to be associated company or associated undertaking, the are mentioned above.
deposits or investments with financial institutions.
held on Monday, March 28, 2016, at which certain Special complete details thereof;
Business is to be transacted. The purpose of this Statement is (xiii) Salient feature of all agreements entered or to be
(viii) Sources of funds from where loans or advances will
to set forth the material facts concerning such Special Business. None entered with its associated company or associated
be given;
undertaking with regards to proposed investment;
Item (5) of the Agenda (v) Financial position, including main items of balance
Internal cash generation: However see IX below.
sheet and profit and loss account of the associated As detailed above
The management of the Company and Engro Corporation company or associated undertaking on the basis of its
(ix) Where loans or advances are being granted using
(its parent) have been evaluating a mechanism whereby short latest financial statements;
borrowed funds,- (I) justification for granting loan or

(xiv) Direct or indirect interest of directors, sponsors, Item (6) of the Agenda
majority shareholders and their relatives, if any, in the
associated company or associated undertaking or the To give effect to the Companies (E-Voting) Regulations 2016,
transaction under consideration; shareholders’ approval is being sought to amend the Articles
of Association of the Company to enable e-voting
The Directors of Engro Fertilizers have no personal
interest in the matter, however, some directors of
Engro Fertilizers' Board are also directors of Engro
Corporation's Board and hold shares in Engro
Corporation Limited: Mr. Abdul Samad Dawood
66,310 shares and Mr. Syed Khalid Siraj Subhani
865,714 shares. The following directors of Engro
Corporation Limited hold shares in Engro Fertilizers
Limited: Mr. Hussain Dawood 1,168,016 shares, Mr.
Shahzada Dawood 1,157,105 shares, Mr. Abdul
Samad Dawood 6,631 shares, Mr. Muhammad Abdul
Aleem 126,364 shares, and Mr. Syed Khalid Siraj
Subhani 236,571 shares.
(xv) Any other important details necessary for the

members to understand the transaction;
N/A
By Order of the Board
Karachi, Faiz Chapra

February 08, 2016 Company Secretary

at a glance
PKR
111.9bn
Market
Capitalization
AA-
Long term
34%
PACRA rating
PKR
38bn
Contribution
1,150 Urea Market
Share
Employee
to National Strength
Exchequer
PKR
69%
66.2bn
Employee
Engagement
Index
Wealth
Generated

our history
As the nation’s first branded fertilizer manufacturer, the Company helped modernize In 2015, Engro was fast growing and had already In 2013, the Company forayed into the capital markets and
diversified its business portfolio in as many as seven tapped them to raise the necessary capital required to
traditional farming practices and boost farm yields, directly impacting the quality of different industries. The continuous expansions and fund development capex on securing additional gas
life for farmers and their families, and for the nation at large. Farmer education diversifications in Company’s enterprises necessitated a supplies along with restructuring of the balance sheet to
broad restructuring in Engro Chemicals Pakistan Ltd. optimize the capital structure of the company. The IPO was
programs increased consumption of fertilizers in Pakistan, paving way for the
which subsequently demerged to form a new Engro a roaring success being oversubscribed four times in the
Company’s branded urea called “Engro” –an acronym for “Energy for Growth”. subsidiary –Engro Fertilizers Limited. book building process whilst being oversubscribed for
three times at the time of public issue.
Our story begins with one company’s enterprising decision education programs increased consumption of After the necessary legal procedures and approvals, the Sindh
to strive ahead and invest when another had bowed out. In fertilizers in Pakistan, paving way for the Company’s High Court sanctioned the demerger on December 9, 2009. The As we forge ahead we aim to built on our world class
1957, Pak Stanvac –an Esso/Mobil joint venture –stumbled branded urea called “Engro” –an acronym for “Energy demerger became effective from January 1, 2010. Subsequently, experience of five decades to forward our purpose driven
upon vast deposits rich in natural gas in Mari while pursuing for Growth”. all fertilizer business assets and liabilities have been transferred to growth strategy of being a leader in the fertilizer industry
viable oil exploration in Sind. With Pak Stanvac focused Engro Fertilizers Limited against the issue of shares to the parent with a global pressence.
exclusively on oil exploration, the discovery shifted the In 1978, Esso became Exxon as part of an international company Engro Corp.
impetus to Esso which decided to invest on the massive name change. The Company was, therefore, renamed
industrial potential of Mari gas field. Esso proposed Exxon Chemical Pakistan Limited. The Company undertook its largest urea expansion project
establishment of a giant urea plant in Daharki, about ten in 2007.
miles from the Mari gas fields, which would use natural gas In 1991, Exxon decided to divest its fertilizer business on a
produced as its primary raw material to turn out urea fertilizer. global basis. The employees of Exxon Chemical Pakistan The state of the art plant enVen 3.0, stands tall at 125
Limited –in partnership with leading international and local meters –dubbed the tallest structure in Pakistan. The total
Talks with the Government of Pakistan bore fruit in 1964, financial institutions –bought out Exxon’s 75% equity. This cost of this expansion is approximately US$ 1.1 Billion, with
and an agreement was signed allowing Esso to set up a was, and perhaps still is, the most successful employee the expanded facility making Engro one of the largest urea
urea plant with an annual capacity of 173,000 tons. Esso buy-out in Pakistan’s corporate history. Renamed Engro manufacturers in Pakistan, besides substantially cutting the
brought in state-of-the-art design; commercially tried Chemicals Pakistan Limited, the Company went from cost of urea imports to national exchequer.
facilities; and a highly distinguished pool of technical strength to strength with its consistent financial performance;
expertise to ensure a smooth start up. Total investment made growth of its core fertilizer business; and diversification into
was US$ 46M –the single largest foreign investment in other enterprises. A major plant capacity upgrade at
Pakistan to date then. The plant started production on 4 Daharki coincided with the employee led buy-out in 1991.
December 1968. Engro also relocated fertilizer manufacturing plants from
the UK and US to its Daharki plant site –an international
To boost sales, a full-fledged marketing organization first. As years followed, Engro Chemicals Pakistan Limited
was established which undertook agronomic programs started venturing into other sectors namely: foods, energy,
to educate farmers of Pakistan. As the nation’s first chemical storage and handling, trading, industrial
branded fertilizer manufacturer, the Company helped automation and petrochemicals.
modernize traditional farming practices and boost farm
yields, directly impacting the quality of life for farmers
and their families, and for the nation at large. Farmer
our milestones
1957
Mari gas field discovered by
1964
Signed agreement with the government
2010
Enven plant started producing urea. Demerger
2011
Enven capitalized and started
Esso Mobil joint venture to set up a urea plant with an annual of Engro Chemicals Pakistan Limited and commercial production
capacity of 173,000 tons transfer of fertilizer business to a separate
company, Engro Fertilizers Limited. Engro
Chemicals renamed Engro Corporation Limited
1965
The company was incorporated as Esso
1968
Urea plant commissioned
2013
Successful IPO conducted.
2014
Achieved highest ever Urea sales in the
Pakistan Fertilizer Limited, to manufacture Oversubscribed 3x during the process history of Engro Fertilizers of 1.818 Mn Tons
and market fertilizers consequently resulting in highest ever
market share of 32% for urea in 2014
1991
Exxon divests its equity from fertilizer
2007
Started construction of world’s largest
2015
Highest ever production of Urea (1,968 KT)
business globally; the Company is single-train urea plant - enVen as well as highest ever Urea sales (1,878 KT)
renamed as Engro Chemicals Pakistan
Limited through an employee led buyout Only fertilizer company registered with
Dupont to achieve a Level 4 rating in Safety
Management Systems

our core values
At Engro Fertilizers, we support our leadership culture through unique systems and
policies, which ensure open communication, foster an environment of employee and
partner privacy, and guarantee the well-being and safety of our employees. Innovation & Risk Taking
Success requires us to continually strive to produce breakthrough ideas that result in
improved solutions and services. We encourage challenges to the status quo and seek
organizational environments in which ideas are generated, nurtured and developed.
Our core values form the basis of everything we do at Engro Fertilizers: from formal decision making to how we conduct our Engro appreciates employees for well thought out risks taken in all realms of business
business to spot awards and recognition. At Engro Fertilizers, we never forget what we stand for. Following are our core values: and for the results achieved due to them, acknowledging the fact that not all risks will
result in success.
Ethics & Integrity Our People

We do care how results are achieved and will demonstrate honest and ethical We strongly believe in the dignity and value of people. We must consistently treat each
behavior in all our activities. Choosing the course of highest integrity is our intent and other with respect and strive to create an organizational environment in which
we will establish and maintain the highest professional and personal standards. A individuals are fairly treated, encouraged and empowered to contribute, grow and
well-founded reputation for scrupulous dealing is itself a priceless asset. develop themselves and help to develop each other. We do not tolerate any form of
harassment or discrimination.
Health, Safety & Environment Community & Society

We will manage and utilize resources and operations in such a way that the safety and We believe that a successful business creates much bigger economic impact and value in
health of our people, neighbors, customers and visitors is ensured. We believe our the community, which dwarfs any philanthropic contribution. Hence, at Engro, sustainable
safety, health and environmental responsibilities extend beyond protection and business development is to be anchored in commitment to engage with key stakeholders in
enhancement of our own facilities. the community and society.

fields of progress
Corporate Governance
board of directors
Left to Right
Inamullah Naveed Khan
Khalid Siraj Subhani
Naz Khan
Ruhail Mohammed
Abdul Samad Dawood
Javed Akbar
Shahid Hamid Pracha
Shabbir Hashmi
directors’ profiles
Khalid Siraj Subhani Ruhail Mohammed Abdul Samad Dawood Inamullah Naveed Khan
Chairman Chief Executive Officer Director Director
Khalid S. Subhani is the President of Engro Corporation Ruhail Mohammed is currently the Chief Executive Officer of Abdul Samad Dawood is the Chief Executive Officer of
Limited since 2015. Engro Fertilizers Limited, a state of the art urea manufacturing Dawood Hercules Corporation Limited.He is the Chairman Inamullah Naveed Khan is currently Vice President
facility in Pakistan, the Company today has an approximate of Engro Foods Limited, He is also Director on the Boards of Manufacturing of Engro Fertilizers. Prior to his current
He is the Chairman of the Board of Engro Fertilizers Limited., strength of 3,000 employees, with a sales revenue of approx. Dawood Corporation Private Limited, Engro Fertilizers Limited, position, he was Project Executive of the Billion dollar, Enven
Engro Eximp (Private) Limited, Engro Eximp AgriProducts Rs. 90 Billion, and market capitalization of approx. Rs. 100 Billion. Dawood Lawrencepur Limited, Tenaga Generasi Limited, 1.3 Grassroots Ammonia-Urea Project at Daharki. He holds a
(Private) Limited, Engro Polymer & Chemicals Limited, Engro Reon, The Hub Power Company Limited, Hub Power Civil Engineering degree from University College of
Polymer Trading (Private) Limited, Engro Powergen Limited, Prior to his current position, he was the Chief Financial Officer Holding Ltd, Patek Private Limited and Towershare Private Engineering, Taxila and has completed programs on advance
Engro Powergen Qadirpur Limited, Engro Vopak Terminal of Engro Corporation Limited and also the Chief Executive Limited, Mr Dawood is a graduate in Economics from management from INSEAD-France, Kellogg-USA and an
Limited, Engro Elengy Terminal (Private) Limited, Elengy Terminal Officer of Engro Powergen Limited (which owns a 217 MW University College London, UK and a certified Director of assignment at Exxon Chemicals, Redwater – Canada.
Pakistan Limited and Thar Power Company Ltd. He has also IPP). He holds an MBA degree in Finance from the Institute Corporate Governance from the Pakistan Institute of
served as Chairman of the Board of Avanceon in the past. of Business Administration Karachi, and is also a Chartered Corporate Governance. He was recently appointed Italian Inam has 35-years of industry experience. 15-years have
Mr. Subhani is a Director on the Board of Engro Corporation Financial Analyst (USA). Honorary Consul General in Lahore. Mr. Dawood is also a been in Engineering, Procurement and Construction (EPC)
Limited, Engro Foods Limited, Sindh Engro Coal Mining member of the Young Presidents Organization. He joined the of 4-world scale Ammonia, Urea and Methanol Complexes
Company Limited. He is also a Director on the Board of The Ruhail has over 30 years of experience in General Management, Board in 2009. with Snamprogetti SpA of Italy, Exxon Chemicals and Engro
Hub Power Company Limited and Laraib Energy Limited. Change Management, Business Development, Strategy & Fertilizers. He was member of the core engineering team of
Financial Planning and People Development. He has PakVen-600, Ammonia-Urea relocation project and was
Mr. Subhani began his career in the Manufacturing Division worked in these areas in Pakistan, UAE and Europe. assigned at Ammonia dismantling site at Pascagoula-USA
at Exxon Chemical Pakistan Limited in 1983 and has held a for one year. He also led the debottlenecking project namely
variety of leadership roles within the Company, including long He is on the Board of various Engro companies. In addition, 750-KT at Daharki and was Engineering and Construction
term assignment with Esso Chemical Canada. He has served he is also on the Boards of Hub Power Company Limited Manager for ECES-850 KT revamp project. His other
as Manager for New Projects, General Manager for Operations, and Pakhtunkhwa Energy Development Organization. 20-years’ experience has been in Planning, Cost Engineering,
Vice President for Manufacturing, Senior Vice President for Procurement, Project Engineering, Maintenance and
Manufacturing and New Ventures and as President & Chief Administration at Engro Fertilizers Manufacturing Complex
Executive Officer for Engro Fertilizers Limited. at Daharki. He is also secretary of PCESSDC board.
He is a member of the Pakistan Engineering Council, Business

Advisory Council of the Society for Human Resource
Management (SHRM) Forum Pakistan, Academic Council of
Institute of Business Administration – Sukkur, Faculty
Selection Board of Institute of Business Administration –
Sukkur, and Standing Committee on Environment of
Federation of Pakistan Chambers of Commerce & Industry.
He graduated from NED University of Engineering and

Technology, Pakistan with a degree in Chemical Engineering
and has completed programs on advance management
from MIT and Hass School of Business Management,
University of Berkeley, USA.

Javed Akbar Naz Khan Shabbir Hashmi Shahid Hamid Pracha
Director Director Director Director
Javed Akbar has undergraduate and post-graduate Naz Khan is the Chief Financial Officer at Engro Corporation Shabbir Hashmi has more than 30 years of project finance Shahid Hamid chairs the Boards of Dawood Lawrencepur
qualification in Chemical Engineering from the United Limited and the Chief Executive Officer at Engro Eximp and private equity experience. At Actis Capital, one of the Limited, Tenaga Generasi Limited, Reon Limited and Sach
Kingdom, and has over 40 years of experience in fertilizer Agriproducts. Prior to her current position, she also worked largest private equity investors in the emerging market, he International (Pvt) Limited. In addition to Engro Fertilizers
and chemical business with Exxon, Engro and Vopak. He as Chief Executive Officer of KASB Funds Limited. Her had led the Pakistan operations. Prior to Actis, he was Limited, he is a director of Engro Powergen Limited and
has managed Exxon and Engro fertilizers plants and their association with Pakistan’s capital markets spans over 19 responsible for a large regional portfolio of CDC Group Plc Engro Powergen Qadirpur Limited. He has been associated
expansions in Pakistan, worked in Exxon’s Chemical years during which she has been actively involved in primary for Pakistan and Bangladesh. He also had a long stint with with the Dawood Hercules Group since 2007 and formerly
Technology divisions in USA and Canada, and served as as well as secondary markets for both debt and equity USAID and later briefly with the World Bank in Pakistan, served on the Engro Corporation Limited and Hub Power
Human Resources Manager in Exxon Pakistan. He was part securities. She has also held key positions of Executive specializing in planning and development of the energy Company Limited boards. He retired as Chief Executive of
of the buyout team when Exxon divested its stake in Engro. Director, Head of Money Market and Fixed Income, Head of sector of the country. In the past, he has held more than 24 Dawood Hercules Corporation in October 2014 after previously
Investment Advisory Division and Co-Head of Investment board directorships as a nominee of CDC/Actis and 11 working as the CEO of The Dawood Foundation, the philanthropic
Prior to his retirement in 2006, he was Chief Executive of Banking Division at KASB Securities Limited, where she led directorships as an independent. Currently, he is serving as arm of the group. Whilst in that role, he was concurrently the
Engro Vopak Terminal Limited, a joint venture between major capital market transactions on the debt and equity an independent director on the on the boards of UBL Fund first CEO of The Karachi Education Initiative, the sponsoring
Engro and Royal Vopak of Holland. After his retirement, he side. Ms. Khan has also worked as a consultant for the Managers, Engro Fertilizer, Engro Powergen Qadirpur and entity of the Karachi School for Business & Leadership.
established a consulting company specializing in analyzing Asian Development Bank on Mortgage Backed Securities. LMKR Holdings. He is also on the board of governors of The
and forecasting petroleum, petrochemical and energy She is a graduate from Mount Holyoke College, MA, USA. Help Care Society which is operating K-12 schools in Lahore Mr. Pracha is a graduate electrical engineer from the
industry trends and providing strategic insight. He is on the for underprivileged children. He is an engineer from Dawood University of Salford, UK and prior to joining the Dawood
boards of Engro Fertilizers Limited, Engro Powergen Limited, College of Engineering & Technology, Pakistan and holds an Hercules Group, spent a major part of his career with ICI
Engro Powergen Qadirpur Limited, Engro Vopak Terminal MBA from J.F. Kennedy University, USA Plc’s Pakistan operations in a variety of senior roles including
Limited, and Javed Akbar Associates (Private) Limited. He a period of international secondment with the parent
also serves on the panel of Energy Experts Group and company in the UK. He joined the Board in 2013.
environmental experts of Sindh Environmental Protection
Agency. He joined the board in 2010.

board committees functional committees
The Board has established the following two committees: These committees act at the operational level in an advisory capacity to the Chief
Executive, providing recommendations relating to businesses and employee matters.
Board Compensation Committee The Board Audit Committee
The committee meets multiple times through the year to The committee meets atleast once every quarter and assists MANCOM Committee for Organizational
review and recommend all elements of the Compensation, the Board in fulfilling its oversight responsibilities, primarily in and Employee Development (COED)
MANCOM is headed by the President & CEO, and includes
Organization and Employee Development policies relating to reviewing and reporting financial and non-financial
the functional heads of all departments. The committee The COED is responsible for the review of Compensation,
the senior executives' remuneration and to approve all information to shareholders, systems of internal control and
meets to discuss Company’s performance and works in an Organization, Training and Development matters of all employees.
matters related to the remuneration of the executives of all risk management and the audit process. It has the power to
advisory capacity to the President & CEO. The members of COED at Engro Fertilizers are as follows:
companies and members of the management committee. call for information from management and to consult directly
with the external auditors or their advisors as considered
Members Members
The Chief Executive Officer attends Board Compensation appropriate.
Ruhail Mohammed – Chairman Ruhail Mohammed – Chairman
Committee meetings by invitation. The committee met three
Ahmad Shakoor Ahmad Shakoor
times during 2015. The Chief Financial Officer regularly attends the Board Audit
Asim Butt Asim Butt
Committee meetings by invitation to present the accounts.
Atif Kaludi Inamullah Naveed Khan
Members After each meeting, the Chairman of the Committee reports
Inamullah Naveed Khan M. Asif Sultan Tajik
Khalid Siraj Subhani – Chairman to the Board. The Committee met four times during 2015.
M. Asif Sultan Tajik Muddassar Y. Rathore
Abdul Samad Dawood – Member
Mudassar Y. Rathore Mohsin Ali Mangi
Javed Akbar – Member Members
Mohsin A. Mangi
Javed Akbar – Chairman
The Secretary of the COED is M. Asif Sultan Tajik.
The Secretary of the Committee is M. Asif Sultan Tajik, VP Abdul Samad Dawood – Member
The Secretary of MANCOM is Khusrau Nadir Gilani.
HR & Administration. Shabbir Hashmi – Member
The Secretary of the Committee is Syed Mohammed Ali, Corporate HSE Committee Six Sigma Corporate Council
Manager Corporate Audit. This committee is responsible for bringing in exellence in the This council oversees the implimentation of Six Sigma.
sectors of Health, Safety and Environment.
Members
Members Ruhail Mohammed – Chairman
Ruhail Mohammed – Chairman M. Asif Sultan Tajik
Ahmad Shakoor Asim Butt
Asim Butt Ahmad Shakoor
Atif Kaludi Inamullah Naveed Khan
Inamullah Naveed Khan Mudassar Y. Rathore
M. Asif Sultan Tajik Mohsin A. Mangi
Mudassar Y. Rathore Mohammad Adnan Tariq
Mohsin A. Mangi
The Secretary of the Six Sigma Corporate Council is Usman
The Secretary of the Corporate HSE Committee is Aziz Khan.
Mahmood Siddiqui.

statement of compliance with
our governance framework the code of corporate governance
With a strong legacy system spanning over four decades, Engro Fertilizers This statement is being presented to comply with the Code of Corporate Governance (the CCG) contained in Regulations of
Pakistan Stock Exchange (formerly Karachi Stock Exchange, in which the Lahore and Islamabad stock exchanges have
continues to optimize its governance framework by institutionalizing its core values, merged) for the purpose of establishing a framework of good governance, whereby a listed company is managed in
policies and principles across the board. compliance with the best practices of corporate governance.
Compliance Statement The Board Audit Committee receives reports on the The Company has applied the principles contained in the CCG in the following manner:
system of internal financial controls from the external and
The Board of Directors has throughout the year 2015 1. The Company encourages representation of independent non-executive directors and directors representing minority
internal auditors and reviews the process for monitoring
complied with the 'Code of Corporate Governance' as per interests on its Board of Directors. As at December 31, 2015 the Board included the following members:
the effectiveness of internal controls.
the listing requirements of the stock exchanges and the
'Corporate and Financial Reporting Framework' of the
There is a companywide policy governing appraisal and Category Name
Securities & Exchange Commission of Pakistan.
approval of investment expenditure and asset disposals.
Post completion reviews are performed on all material Independent Directors Shabbir Hashmi
Risk Management Process investment expenditure. Javed Akbar
Management at Engro Fertilizers periodically reviews
Audit: Executive Director Ruhail Mohammed
major financial and operating risks faced by the business.
Engro Fertilizers has an Internal Audit function. The Board Inamullah Naveed Khan
We also continue to operate an Enterprise-wide Risk
Audit Committee annually reviews the appropriateness of
(ERM) system to proactively highlight risks associated with
resources and authority of this function. The Head of Internal Non-Executive Directors Abdul Samad Dawood
the business and deploy mitigation strategies that feed
Audit functionally reports to the Audit Committee. The Board
into our governance framework. Shahid Hamid Pracha
Audit Committee approves the audit program, based on an
Naz Khan
annual risk assessment of the operating areas. The Internal
Internal Control Framework Khalid S. Subhani
Audit function carries out reviews on the financial, operational
Responsibility: and compliance controls, and reports on findings to the
The Board is ultimately responsible for the Company’s Board Audit Committee, Chief Executive and the divisional The independent directors meet the criteria of independence under clause i (b) of the CCG. Of the non-executive directors,
system of internal control and for reviewing its effectiveness. management. Naz Khan, and Khalid S. Subhani are executives in other Engro Group Companies.
However, such a system is designed to manage rather Directors:
than eliminate the risk of failure to achieve business As at December 31, 2015 the Board comprises of two 2. The Directors have confirmed that none of them is serving as a Director on more than seven listed companies, including
objectives, and can provide only reasonable and not executive Directors, two independent Directors, four this Company (excluding the listed subsidiaries of listed holding companies where applicable.)
absolute assurance against material misstatement or loss. non-executive Directors of whom two are executives in other
Engro companies, who have the collective responsibility for 3. All the resident Directors of the Companies are registered as Tax payers and none of them has defaulted in payment of any
The Board, whilst maintaining its overall responsibility for ensuring that the affairs of Engro Fertilizers are managed loan to a banking company, a DFI or an NBFI, or being a member of a stock exchange has been declared as a defaulter by
managing risk within the Company, has delegated the competently and with integrity. that stock exchange.
detailed design and operation of the system of internal
controls to the Chief Executive. A non-executive Director, Mr. Syed Khalid Siraj Subhani, 4. One casual vacancy occurred on the Board during the year which was filled up by the directors within 90 days.
chairs the Board and the Chief Executive Officer is Mr. Ruhail
Framework: Mohammed. Biographical details of the Directors are given 5. The Company has prepared a “Code of Conduct” comprising of Ethics and Business Practices policies and has ensured
The company maintains an established control framework earlier in this section. A Board of Directors’ meeting calendar that appropriate steps have been taken to disseminate it throughout the Company along with its supporting policies and
comprising clear structures, authority limits, and is issued annually that schedules the matters reserved for procedures.
accountabilities, well understood policies and procedures discussion and approval. The full Board met 06 times this
and budgeting for review processes. All policies and year and discussed matters relating to inter alia long term 6. The Board has developed a vision/mission statement, overall corporate strategy and significant policies of the Company.
control procedures are documented in manuals. The planning, giving consideration both to the opportunities and A complete record of particulars of significant policies along with the dates on which they were approved or amended has
Board establishes corporate strategy and the Company's risks of future strategy. been maintained.
business objectives. Divisional management integrates
these objectives into divisional business strategies with All Board members are given appropriate documentation in 7. All the powers of the Board have been duly exercised and decisions on material transactions, including appointment and
supporting financial objectives. advance of each Board meeting. This normally includes a determination of remuneration and terms and conditions of employment of the CEO and the meeting fees payable to the
detailed analysis on businesses and full papers on matters
Review: non- executive directors, have been taken by the Board .
where the Board will be required to make a decision or give
The Board meets quarterly to consider the Company‘s its approval.
financial performance, financial and operating budgets 8. All meetings of the Board were presided over by the Chairman and the Board met at least once in every quarter. Written
and forecasts, business growth and development plans, notices of the Board meetings, along with the agenda and working papers were circulated at least seven days before the
capital expenditure proposals and other key performance meetings. The minutes of the meetings were appropriately recorded and circulated.
indicators.

9. Six directors have attended the directors training course conducted by the Pakistan Institute of Corporate Governance
(PICG). One of the directors is exempted from taking the directors training course and the remaining one director is
scheduled to attend the course this year.
10. The Board has approved appointment of CFO, Company Secretary and Head of Internal Audit, including their
remuneration and terms and conditions of employment.
11 The Directors' report for this year has been prepared in compliance with the requirements of the CCG and fully describes
the salient matters required to be disclosed.
12. The financial statements of the Company were duly endorsed by the CEO and the CFO before approval of the Board.
13. The Directors, CEO and executives do not hold any interest in the shares of the Company other than that disclosed in the
pattern of shareholding.
14. The Company has complied with all the corporate and financial reporting requirements of the CCG.
15. The Board has formed an Audit Committee comprising three members of whom two members are independent
directors and one is a non-executive director and the Chairman of the Committee is an independent director.
16. The meetings of the Audit Committee were held at least once every quarter prior to approval of interim and final results of
the Company and as required by the CCG. The terms of reference of the committee have been formed and advised to the
Committee for compliance.
17. The Board has formed a Human Resource and Remuneration Committee. It comprises three members, of whom one is
an independent director and two are non-executive directors and the Chairman of the Committee is a non-executive director.
18. The Board has set up an effective internal audit function manned by suitably qualified and experienced personnel that are
involved in the internal audit function on a full time basis and are conversant with policies and procedures of the Company.
19. The statutory auditors of the Company have confirmed that they have been given a satisfactory rating under the quality
control review program of the Institute of Chartered Accountants of Pakistan (ICAP), that they or any of the partners of the
firm, their spouses and minor children do not hold shares of the company and that the firm and all its partners are in
compliance with International Federation of Accountants (IFAC) guidelines on code of ethics as adopted by the ICAP.
20. The statutory auditors or the persons associated with them have not been appointed to provide other services except in
accordance with the listing regulations and the auditors have confirmed that they have observed IFAC guidelines in this regard.
21. The “closed period”, prior to the announcement of interim/final results, and business decisions, which may materially affect
the market price of the Company's securities, was determined and intimated to directors, employees and stock
exchanges except for an urgent Board meeting.
22. Material/price sensitive information has been disseminated among all market participants at once through the stock exchanges.
23. We confirm that all other material principles enshrined in the CCG have been complied with.
Khalid Siraj Subhani Ruhail Mohammed

Chairman Chief Executive Officer

fields of progress
Director’s Report
CEO’s message
As we forge ahead our aim is to outperform in both operational and financial
terms and develop deeper connections with our customers and communities
that host us.
As we strive to enhance the country’s food security, Engro reinforcing. In the year 2015 we continued to emphasize our
Fertilizers together with its partners is committed to creating new undying commitment to nurture societies by spending 1% of
value for our customers, communities and the nation at large. our Profit before Tax on various social causes with education
and health being the flagship areas of focus along with
Our financial performance for the year 2015 is reflective of the community engagement. During the year we deployed a
transformation in the scale of the Company in the past few team of community officers as part of our focus to deepen
years. Sales of PKR 88,032 million are 43% higher as compared community engagement at Ghotki and neighboring
to last year while earnings per share of PKR 11.14 versus communities. We believe this effort will help us understand
PKR 6.29 last year speak of the successful year that we have the needs of the community and devise specific programs
had on the back of robust performance of the Company. and initiatives which will be better in sync with the demands
of the local communities and would, therefore, eventually
While the local agricultural market has certainly expanded help us create a more long term and sustainable impact.
over the period, these figures also reflect steady gains in
market share and an outstanding track record of innovation. At Engro Fertilizers we have always taken pride in our people
In addition, continuing focus on operational efficiency while and the year 2015 was no different. Through the year we
increasing profitability on one side of the spectrum has also deployed various measures to improve employee
resulted in the Company declaring highest-ever profitability of engagement whilst also delivering training through an
PKR 15,027 million (standalone) – which is 83% higher than integrated needs assessment exercise in order to maintain a
last year. pipeline of an engaged, talented workforce, which is diverse
and rewarded on merit.
As we forge ahead our aim is to outperform in both operational
and financial terms and develop deeper connections with our In the end, on behalf of the Board and the Management
customers and communities that host us. Firmly rooted in Committee, I would like to thank all our employees for
the agricultural chain of the country, Engro Fertilizers remains making Engro Fertilizers what it is today and for bringing the
committed to deploying initiatives that enhance local production Company to this exciting stage of its development. I know
and provides value and food security to the nation. We believe that I can count on their energy, enthusiasm and dedication
that as a trail-blazing organization we are best suited to create as we work together to forge a meaningful contribution to the
unique solutions to meet farmer needs that will ultimately development of the agricultural sector in Pakistan.
lead to sustained market share growth across all dimensions
of our business. Building on to this philosophy in 2015 we
have launched the Farmer Connect program whereby we aim
to increase farm productivity of small to medium growers
through capacity building and implementation of innovative
techniques for resource optimization and efficiency. We
believe in the years to come the Farmer Connect program
Ruhail Mohammed
will prove a key milestone in delivering on our strategic priorities
Chief Executive Officer
of delivering superior customer and shareholder value.
I have reiterated time and again that in order to prosper we

need the communities we serve and operate in to prosper:
and that over the long term, healthy communities, healthy
economies and healthy business performance are all mutually

key numbers
1,968 KT
Urea
1,878 KT
Urea sales
Production
PKR PKR
87.6 bn 15.02 bn 87%
Capacity
Revenue in Highest ever Utilization of
2015 PAT Urea Plant

business review
On behalf of the Board of Directors’ of Engro Fertilizers Limited, we are pleased Zarkhez PKR 42,332 million (2014: PKR 34,478 million).
The Company’s blended fertilizers’ (Zarkhez & Engro NP)
to submit the Directors report and the audited financial statements of the sales for the year increased by 8% to 135 KT compared to During the year, PACRA has upgraded the long term credit
Company for the year ended December 31, 2015. 125 KT during 2014 led by higher NP sales. Overall domestic rating from A+ to AA-. The short term rating was also
Potash industry saw a decline of 16% from 2014 due to poor upgraded from A1 to A1+.
Overview The meltdown in global oil prices, has had a significant impact crop economics. However, the market share of Zarkhez
on international urea prices in 2015 which have come down increased to 51% (42% in 2014) contributing to a lower than Our Commitment to HSE
Engro Fertilizers Limited continued to deliver a strong from USD 304/Ton (CFR Karachi) at the beginning of the year industry decline in actual sales volumes.
operational and financial performance in 2015 on the back of The Company adhered to its tradition of focusing on Health,
to USD 252/Ton at year end equivalents to PKR 1,900/bag.
gas availability for both plants; second year running. The Financial Review Safety and Environment with a Total Recordable Injury Rate
Company posted a profit after tax of PKR 15,027 million Gas Scenario (TRIR) of 0.15.
(standalone) in 2015 representing an increase of 83% over Sales revenue for 2015 was PKR 88,032 million which was
PKR 8,208 million in 2014. In addition to the gas availability Engro Fertilizers Limited continued to receive the gas higher by 43% as compared to the corresponding period In 2015, Daharki operations remained without any Lost
for both plants, the performance was largely due to applicability allocation of 60 MMSCFD gas from Guddu/Mari Shallow (2014: PKR 61,425 million). Increase in sales revenue is Workday Injury (LWI) and with a TRIR of 0.20. The
of concessionary gas pricing for Enven from March 16, 2015. throughout the year 2015 based on ECC’s decision in primarily due to the addition of Phosphates business, manufacturing facility also completed 11 million Man-Hours
As a result of deleveraging in 2014, and refinancing & December 2014 in respect of the Company installing gas revenue which clocked at PKR 23,606 million in 2015. without any LWI which spells out the Company’s
repricing of debt in 2015, the Company was able to make compressors for Guddu Power Plant (GENCO II) at its own commitment to health and safety of its people, processes
significant savings in financial charges throughout the year. cost. The Company’s overall urea capacity utilization in 2015 Gross profit for the year 2015 was PKR 32,308 million as and the environment.
was 87% vs 80% in 2014. compared to PKR 22,603 million for the same period last
Subsequent to the shareholder approval in the Extraordinary year. In addition to the Phosphates business, concessionary Throughout the year various drives were run at the site to
General Meeting in the first quarter of 2015, the Company Post enactment of the GIDC Act 2015, the Company has pricing added to the YoY growth in gross profit. improve behaviors to reduce injuries whilst a dedicated
completed the acquisition of 100% shareholding of Engro obtained stay orders against the retrospective applicability of hand-injuries program titled “Boltay Haath” was introduced
EXIMP (Private) Limited, and thereby, brought the complete GIDC. However, on the request of the Government, and Financial charges decreased by PKR 1,998 million to PKR which proved to be best-in-class and a game changer as far
fertilizer trading business. Post acquisition consolidated without compromising its legal stance, the Company has 4,627 million (2014: PKR 6,625 million). This variation is mainly as behavioral modifications is concerned. The program
profit after tax is PKR 14,819 million. paid the complete accrued amount of PKR 15,200 million on account of deleveraging in 2014, refinancing & repricing focused on the theme of introducing a new working norm or
against non-concessionary gas supplied. Currently, the of debt in 2015 and declining interest rates in the country. “No Work – Without Gloves” which was well received,
Market Review Company is paying GIDC on all non-concessionary gas. Other income reduced to PKR 1,781 million from PKR 2,449 adopted and practiced at all levels of the site.
million in 2015 due to payment of GIDC and dividends during
Pakistan’s urea industry demand dropped slightly in 2015 by The Company has also obtained a stay order against GIDC 2015 resulting in lower surplus cash vs. last year.
1% vs. 2014 to 5,573 KT. The decline was mainly due to a The Company’s manufacturing facility at Daharki also
applicability on concessionary gas and therefore no GIDC is achieved excellence (Level 4) in all the three areas of Health,
decrease in demand during Kharif season as a result of being paid or accrued for concessionary gas supplied to the EPS improved to PKR 11.14 as compared to EPS of PKR
monsoon rains. Furthermore due to poor crop economics Safety and Environment post DuPont’s audit of Occupational
new urea plant. GIDC on concessionary gas is in direct 6.29 last year. Health and Industrial Hygiene (OHIH) program in November.
farmers chose not to sow early BT cotton also contributing contravention with the Fertilizer Policy and our Gas supply
to the same. However, high demand during 4Q covered for The achievement in OHIH was attained through a number of
contracts on the basis of which we invested USD 1.1 Billion Dividend initiatives taken by the site during 2015 which included:
lower demand in 3Q. Though the industry shrank, share of to expand our fertilizer manufacturing capacity.
locally produced branded urea increased to 91% vs. 86.6% The Board is pleased to propose a final dividend of PKR 3.00
in 2014. This was mainly due to higher domestic production, per share for the year ended December 31, 2015 for approval ° Health Risk Assessments strengthened and aligned with
Segment Analysis PHAs
5,285 KT vs. 4,891 KT in 2014, as a result of higher gas of the members at the Annual General Meeting to be held on
Urea
availability to the industry. March 28, 2016.
Engro Fertilizer Ltd produced 1,968 KT of urea, 8% higher
° Quantitative Ergonomics evaluations were conducted for
than 1,819 KT produced in 2014 and also produced its
Domestic urea prices were largely stable in the first half of Capital Structure critical tasks
fastest ever 1.5 million tons of urea in 278 days. The
2015. Gas prices for the all other segments including fertilizer Company reported a urea sales volume of 1,878 KT in 2015, In 2015, the Company concentrated its efforts on reducing
sector were increased effective September 1, 2015, which ° Heat Stress Surveys and improvement of Asbestos and
3% higher than 2014. Resultantly, Engro’s 2015 urea market cost of financing; towards this end, the Company, backed by NARF handling at site
was followed by an increase in urea prices by all share increased to 34% from 32% last year while market the robust financial performance and support of its lenders,
manufacturers. This, followed by the announcement of share in branded urea remained stable at 37%. refinanced and repriced close to PKR 4,500 million of its
farmer package by the Government, led to an uncertainty on ° Training refresher for all employees and contractors of
local loan portfolio. Talks continue to extend these gains with the site
urea prices. Pending clarity from the government on the Phosphates further optimization of our loan portfolio in the coming year.
farmer package, manufactures announced discounts The Company sold 391 KT of DAP, which constitutes a 22%
effectively reversing majority of the price increase. The Company received another first this year when the
market share in the industry for the brand Engro DAP during Long term borrowings at year end 2015 were PKR 36,026 Management Club at the plant achieved the HACCP (Hazard
Subsequent clarity on the farmer package did not give any the year. With the decline in commodity prices in the world, million (2014: PKR 44,003 million).
relief on urea demand, forcing manufacturers to absorb most Analysis and Critical Control Points) system certification for
DAP prices followed a similar trend with prices falling from Food – making the Daharki facility the only residential colony
of the increased gas price impact. USD 490/Ton (CFR Pakistan) at the start of the year to USD The shareholder's equity as at December 31, 2015 stands at having a mess facility certified on HACCP guidelines.
400/Ton at the end of the year.

During 2015, the drive on improving process safety The Company remains cognizant of its responsibility to the During the year the adopted schools have also seen increased Our Commitment to our People
continued and key personnel were trained on new communities that host us and to build on our commitment in enrolment by 8% in the last year, and a reduction in the dropout
The Company’s success thus far can be attributed to one
techniques of process safety which included Safety Integrity 2015 the Daharki manufacturing facility resolved a key issue rate by 4%, in part due to having doubled the teaching capacity
factor above others: we have consistently sought to attract,
Level, Layer of Protections and Functional Safety Training for the surrounding community – sewage treatment. During in each school to ensure a teacher to student ratio of 1:25.
hire and retain some of the most talented people in Pakistan.
amongst others. The manufacturing facility enhanced its the year an innovative sewage treatment technology called Moreover, the Company has also established Learning
Our ability to create high performance teams in a culture of
emergency response program by installing cameras at high “Constructed Wetland” was introduced at one of the Resource Centers (LRCs), Environmental Club and provided
inclusiveness, professionalism and excellence is what drives
points for monitoring any leak or spill at Crisis Management Company’s (Community Awareness & Emergency science and sports materials to the schools to enhance
our success more than anything else. To this end, the
Cell thereby bolstering the security of the site. In order to Response) CAER villages. Moreover, the facility also reduced learning of students.
Company strives to become the employer of choice for the
improve behavioral safety across the board a “Contractors its environmental foot print by recycling the effluent treated
most talented people in Pakistan and around the world.
Safety Observation Program” has been launched in which water for irrigation purposes thereby reducing the fresh The Company’s flagship Katcha School project continued to
contractors are encouraged to observe, report and intake of site. be operated as per plan whereby 12 Katcha Schools continue
In order to ensure that we remain the most sought-after
participate in correcting the gaps/deficiencies found at site. to educate the communities surrounding the riverine belt.
employer amongst college graduates as well as experienced
Moreover, during the year the Company completed the
professionals, we embarked on a drive to digitize our
The Company’s commitment to the environment was lauded construction of the Nazar Mohammad Middle school which
recruitment by launching the integrated recruitment portal.
by the World Wide Fund for Nature (WWF) when the Daharki is the second middle school in the Company’s School Education
Through the year we on-boarded 28 GTEs /MTs and 40
offices scored best in Pakistan during the Green Office Program. The middle school has been established with grant
Interns through our GTE, MT and Internship Drive which ran
Recertification audit done by WWF with a score of 83.4%. from Community Development Project of Sindh Government.
across key universities of Pakistan.
Our Consolidated HSE Performance The Sahara Community School also continued to deliver
The company also prides itself in creating a welcoming
quality education in our neighboring communities throughout
Business Man hours TRIR Recordable injuries Fatalities Lost-work injuries environment, both in terms of the physical space it offers as
the year. With upgraded facilities and extension of classes till
well as the culture of the firm. Engro is particularly proud of
matriculation, the program has become comprehensive in its
Fertilizer 11,725,426 0.15 09 00 00 the diversity within its firm’s culture. We make it a point to
educational offerings to the community.
recruit people from different backgrounds, and have been
Health successful in increasing the proportion of women who work
Our Social Investments with implementing partner SEED Venture to further job at the company. At present the Company employs 36 female
creation and livelihood enhancement for vocational training Our Health projects continued to provide essential services MPTs; 07 female GTEs whilst there is a consistent program
Since its inception Engro Fertilizers has maintained a significant
graduates. In addition, an incubation park for carpentry and to the communities with the Sahara Clinic treating a total of in place to promote female workforce in our folds. To cater to
social footprint across the communities that host us. Our social
UPS trades was created to further enhance entrepreneurship 13,422 patients whilst the Snake-bite Treatment Facility the needs of the female employees Engro Day Care centre
investments constitute a variety of programs in different sectors which
for the purpose of job creation whilst also builds on the treated a total of 11,399. As part of improving the infrastructure started in 2010 and is now also used by male employees,
are primarily centered on the communities surrounding our plant site.
portfolio of the vocational courses. In 2015 a total of 344 facilities of the community the Company constructed whose spouses work elsewhere.
vocational graduates were trained with 96 receiving jobs, drainage schemes, renovated the health and school facilities
Community Engagement
while 65 DAE graduates secured 29 jobs and received 8 out in the communities, constructed wetland in one of the Recognizing that diversity comes in many forms, Engro is
In 2015 company put greater emphasis on improving the of the top 10 positions in the Sindh Board Examinations. neighboring villages, established an RO plant and also particularly proud of a policy that encourages affirmative
community engagement in Ghotki. A team of community officers carried out improvement activities across the sports facilities. action with regard to the recruitment of people with disabilities
was put in place which has improved the relationship with Going forward a digital placement structure is in the process (PWD). In 2015 1 PWD was hired in the marketing division
neighboring communities. Increased social investments and of development, to facilitate student recruitment and track Farmer Connect Program which brings the total number of PWD’s at Engro Fertilizers
community engagement activities in the neighboring villages academic and alumni students, allowing for impact to be to 4. The Company also continues to proactively engage with
During the year 2015 a Farmer Connect program was piloted
and Daharki town have also helped us create a sustainable measured on an ongoing basis. various organizations including NOWPDP, NGOs, LCDDP &
which aimed to enhance our engagement efforts with the
impact by understanding the needs of the communities and SNDF Disability forums to facilitate in resourcing of PWDs.
farmers by introducing a training and capacity building
then devising programs accordingly. Education
program in the last quarter of 2015. The program has been
The year 2015 was a watershed year for our educational started in rice-wheat belt of Punjab and has started training Through the year 2015 the Company maintained its
Technical Training College (TTC) aggressive approach towards training and development of
programs running in the Daharki vicinity. The Company’s 10 farmers through structured training programs.
The Technical Training College at Daharki – an independent adopted schools in Daharki received a USAID grant of PKR all its employees with trainings rolled out for 85% of the total
concern which Engro helped establish – is pivotal to the 22 million to improve reading skills for primary grades 1-5, in Envision management employees of the Company. In addition we
Company’s skills training programs. The TTC offers 3 year addition to commencing adult literacy classes for 200 also conducted the first EMBA Assistance Cycle to assess
EnVison, an employee volunteering program, provided
Diploma in Associated Engineering (DAE) in Chemical and community women, through the introduction of Information and select suitable candidates for assistance. In addition we
various opportunities to employees to participate in activities
Mechanical technologies along with shorter-term vocational Communication Technology (ICT) in each school. Going also introduced specific skills training programs with Haldor
linked to various social causes. Employees based in Daharki,
training programs providing opportunity to the local youth to forward we aim to establish computer labs in each school, Topsoe and GE for our engineers.
Karachi and other locations took active part in different
meet the industry demand. with in-built pedagogical capacity building initiatives carried
activities thus culminating in amassing a total of 3,101 hours
out through teacher training programs. The Company recognizes that while compensation policies
in volunteerism work.
This year the TTC commenced an entrepreneurship module may attract talent, in order to retain them at the company,

there are certain intangibles that need to present in order to Statement of Director Responsibilities Board Meetings and Attendance
induce employees to stay on at the firm. Building on this
The directors confirm compliance with Corporate and In 2015, the Board of Directors held 6 meetings to cover its complete cycle of activities. The attendance record of the Directors is
premise specific employer value propositions were as follows:
Financial Reporting Framework of the SECP Code of
introduced which included car lease and house financing at
Corporate Governance for the following:
special rates, tax return filing services and discounted fitness Director’s Name Meetings Attended
and recreational club memberships amongst others.
1. The financial statements, prepared by the management Muhammad Aliuddin Ansari 3*
Pension, Gratuity and Provident Fund of the company, present fairly its state of affairs, the result Ruhail Mohammed 6
of its operations, cash flows and changes in equity. Javed Akbar 6
The employees of the Company participate in Retirement
Funds maintained by Engro Corporation (the Parent Naz Khan 6
2. Proper books of accounts of the company have been
Company). The Company contributes to plans that provide maintained. Abdul Samad Dawood 4
post-employment and retirement benefits for its employees. Shabbir Hashmi 6
These include defined contribution (DC) and defined benefit 3. Appropriate accounting policies have been consistently Shahid Hamid Pracha 6
(DB) pension plans (both curtailed), DC provident fund, DC applied in preparation of the financial statements except Syed Khalid Siraj Subhani 6
gratuity plan and DB gratuity plan. The value of net assets of for changes resulting on initial application of standards, Inamullah Naveed Khan 3**
Provident Fund (as at June 30, 2015), Gratuity funds (as at amendments or interpretations to existing standards.
December 31, 2014) and Pension Funds (as at December 31, Accounting estimates are based on reasonable prudent * Mr. Muhammad Aliuddin Ansari resigned on May 11, 2015
2014) based on their respective audited accounts are: judgment. ** Mr. Inamullah Naveed Khan joined on August 08, 2015
° Provident Fund: PKR 3,064 million (EFert’s share: ~PKR 4. International Financial Reporting Standards, as BCC Attendance
1,290 million). applicable in Pakistan, have been followed in preparation In 2015, the Board Compensation Committee held 3 meetings to cover its complete cycle of activities. The attendance record of
of the financial statements and any departures there from the Directors is as follows:
° DC Pension Fund: PKR 675 million (EFert’s share: ~PKR have been adequately disclosed and explained.
317 million). Member’s Name Meetings Attended
5. The system of internal control is sound in design and has Ali Ansari 1*
° DB Pension Fund: PKR 34 million (All EFert) been effectively implemented and monitored. Javed Akbar 2
° DC Gratuity Fund: PKR 1,032 million (EFert’s share: Khalid Siraj Subhani 2**
6. There are no significant doubts upon the company's
~PKR 436 million) ability to continue as a going concern. Abdul Samad Dawood 2
* Mr. Muhammad Aliuddin Ansari resigned on May 11, 2015

° DB NMPT Gratuity Fund: PKR 152 million (All EFert) 7. There is no material departure from the best practices of ** Mr. Khalid Siraj Subhani joined on May 11, 2015
corporate governance, as detailed in the listing regulations.
° DB MPT Gratuity Fund: PKR 264 million (All EFert) BAC Attendance
8. Six directors have attended the directors training course
Auditors In 2015, the Board Audit Committee held 4 meetings to cover its complete cycle of activities. The attendance record of the
conducted by the Pakistan Institute of Corporate
Directors is as follows:
The existing auditors, A.F. Ferguson & Co., Chartered Governance (PICG). One of the directors is exempted
Accountants retire and being eligible, have offered from taking the directors training course and the remaining Member’s Name Meetings Attended
themselves for re-appointment. The Board Audit Committee one director is scheduled to attend the course this year.
Javed Akbar 4
recommends their appointment as auditors for the year
Abdul Samad Dawood 2
ending December 31, 2016.
Shabbir Hashmi 4
Pattern of Shareholding
Major shareholder of Engro Fertilizers Limited is ECORP.
Other shareholders are local institutions and the general
public. A statement of the general pattern of shareholding
along with pattern of shareholding of certain classes of
shareholders whose disclosure is required under the legal
reporting framework and the statement of purchase and sale
of shares by Directors, Executives and their spouses including
minor children during 2015 is shown later in this report.
Ruhail Mohammed Javed Akbar
Cheif Executive Officer Director

horizontal analysis
Balance Sheet
(Amounts in millions) 2015 15 Vs. 14 2014 14 Vs. 13 2013 13 Vs. 12 2012 12 Vs. 11 2011
Rs. % Rs. % Rs. % Rs. % Rs.
EQUITY AND LIABILITIES
EQUITY
Share capital 13,309 0.9 13,183 7.8 12,228 14.0 10,728 - 10,728
Share Premium 3,132 38.5 2,261 20,454.5 11 - 11 - 11
Advance against issue of shares - - - (100.0) 2,119 100.0 - - -
Hedging reserve (4) (90.0) (40) (72.9) (148) (54.3) (324) (34.9) (498)
Remeasurement of post employment benefits (41) 192.9 (14) (33.0) (21) 100.0 - - -
Unappropraited Profit 26,130 36.9 19,088 75.4 10,880 102.1 5,383 (35.3) 8,317
Employee share option compensation reserve - - - - - - - (100.0) 58
42,526 23.3 34,478 37.5 25,069 58.7 15,798 (15.1) 18,616
NON-CURRENT LIABILITIES
Borrowings 25,290 (29.9) 36,091 (31.8) 52,896 9.1 48,482 (14.0) 56,398
Subordinated Loan from Holding Company - - - (100.0) 3,000 - 3,000 - 3,000
Derivative Financial Instruments - (100.0) 7 (99.5) 1,531 207.4 498 (8.6) 545
Deferred Liabilities 6,493 24.2 5,227 12.3 4,655 37.7 3,381 (25.2) 4,521
Employee housing subsidy - - - - - - - (100.0) 19
Service benefits obligations 124 9.7 113 8.6 104 5.1 99 13.8 87
31,907 (23.0) 41,438 (33.4) 62,186 12.1 55,460 (14.1) 64,570
CURRENT LIABILITIES
Trade and other payables 16,887 (31.7) 24,727 37.3 18,012 126.4 7,957 54.4 5,154
Accrued interest / mark-up 844 (38.0) 1,362 (8.0) 1,480 (17.2) 1,788 (14.4) 2,088
Taxes payable 2,061 204.9 675 100.0 - - - - -
Current portion of
Borrowings 10,737 35.7 7,913 170.6 2,924 (80.4) 14,896 49.2 9,987
Retirment and other service benefits obligations 48 11.6 43 (2.0) 44 10.0 40 21.2 33
Short-term borrowings - - - - - (100.0) 1,000 24,900.0 4
Unclaimed dividends 6 100.0 - - - - - - -
Derivative financial instruments 366 (66.4) 1,090 411.6 213 (62.4) 566 33.2 425
30,949 (13.6) 35,810 57.9 22,673 (13.6) 26,247 48.4 17,691
TOTAL EQUITY AND LIABILITIES 105,382 (5.7) 111,726 1.6 109,928 12.7 97,505 (3.3) 100,877
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 72,193 (3.7) 74,963 (5.5) 79,315 (4.3) 82,878 (4.0) 86,332
Intangible assets 106 (10.2) 118 (14.5) 138 (14.8) 162 20.0 135
Long term loans and advances 160 70.2 94 (13.8) 109 29.8 84 15.1 73
Long term Investments 4,383 100.0 - - - - - - -
76,842 2.2 75,175 (5.5) 79,562 (4.3) 83,124 (3.9) 86,540
CURRENT ASSETS
Store, spares and loose tools 4,639 (1.6) 4,714 7.9 4,369 6.4 4,107 (2.4) 4,210
Stock-in-trade 6,942 530.5 1,101 (20.3) 1,382 (18.1) 1,687 (8.0) 1,834
Trade debts 2,262 198.8 757 (0.2) 758 (27.5) 1,046 636.6 142
Derivative financial instruments 29 100.0 - (100.0) 130 100.0 1 (99.5) 184
Subordinated loan to subsidiary 900 100.0 - - - - - - -
Loans, advances, deposits and prepayments 588 35.8 433 (30.8) 626 58.5 395 (114.7) 1,411
Other receivables 1,330 6,900.0 19 (32.6) 28 (54.1) 61 (95.7) 192
Taxes recoverable - - - (100.0) 557 (72.2) 2,000 941.7 1,869
Short-term Investments 10,985 (56.2) 25,084 38.9 18,058 585.3 2,635 (41.0) 3,902
Cash and bank balances 865 (80.5) 4,443 (0.3) 4,458 82.0 2,449 (37.2) 593
28,540 21.2 36,551 20.4 30,366 111.2 14.381 0.3 14,337
TOTAL ASSETS 105,382 (5.7) 111,726 1.6 109,928 12.7 97,505 (3.3) 100,877

vertical analysis
Balance Sheet
(Amounts in millons) 2015 2014 2013 2012 2011
Rs. % Rs. % Rs. % Rs. % Rs. %
EQUITY AND LIABILITIES
EQUITY
Share capital 13,309 12.6 13,183 11.8 12,228 11.1 10,728 11.0 10,728 10.6
Share Premium 3,132 3.0 2,261 2.0 11 - 11 - 11 -
Advance against issue of shares - - - - 2,119 1.9 - - - -
Hedging reserve (4) (0.0) (40) (0.0) (148) (0.1) (324) (0.3) (498) (0.5)
Remeasurement of post employment benefits (41) (0.0) (14) (0.0) (21) - - - - -
Unappropraited Profit 26,130 24.8 19,088 17.1 10,880 9.9 5,383 - 8,317 8.2
Employee share option compensation reserve - - - - - - - - 58 0.1
42,526 40.3 34,478 30.9 25,069 22.8 15,798 16.2 18,616 18.5
NON-CURRENT LIABILITIES
Borrowing 25,290 24.0 36,091 32.3 52,896 48.1 48,482 49.7 56,398 55.9
Subordinated Loan from Holding Company - - - - 3,000 2.7 3,000 3.1 3,000 3.0
Derivative Financial Instruments - - 7 0.0 1,531 1.4 498 0.5 545 0.5
Deferred Liabilities 6,493 6.2 5,227 4.7 4,655 4.2 3,381 3.5 4,521 4.5
Employee housing subsidy - - - - - - - - 19 -
Service benefits obligations 124 0.1 113 0.1 104 0.1 99 0.1 87 0.1
31,907 30.3 41,438 37.0 62,186 56.6 55,460 56.9 64,570 64.0
CURRENT LIABILITIES
Trade and other payables 16,887 16.0 24,727 22.1 18,012 16.4 7,957 8.2 5,154 5.1
Accrued interest / mark-up 844 0.8 1,362 1.2 1,480 1.3 1,788 1.8 2,088 2.1
Taxes payable 2,061 2.0 675 0.6 - - - - - -
Current portion of
Borrowings 10,737 10.2 7,913 7.1 2,924 2.7 14,896 15.3 9,987 9.9
Retirment and other service benefits obligations 48 0.0 43 0.0 44 - 40 0.0 33 -
Short-term borrowings - - - - - - 1,000 1.0 4 -
Unclaimed dividends 6 0.0 - - - - - - - -
Derivative financial instruments 366 0.3 1,090 1.0 213 0.2 566 0.6 425 0.4
30,949 29.4 35,810 32.1 22,673 20.6 26,247 26.9 17,691 17.5
TOTAL EQUITY AND LIABILITIES 105,382 100 111,726 100 109,928 100 97,505 100 100,877 100
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 72,193 68.5 74,963 67.1 79,315 72.2 82,878 85.0 86,332 85.6
Intangible assets 106 0.1 118 0.1 138 0.1 162 0.2 135 0.1
Long term loans and advances 160 0.2 94 0.1 109 0.1 84 0.2 73 0.1
Long term Investements 4,383 4.2 - - - - - - - -
76,842 72.9 75,175 67.3 79,562 72.4 83,124 85.3 86,540 85.8
CURRENT ASSETS
Store, spares and loose tools 4,639 4.4 4,714 4.2 4,369 4.0 4,107 4.2 4,210 4.2
Stock-in-trade 6,942 6.6 1,101 1.0 1,382 1.3 1,687 1.7 1,834 1.8
Trade debts 2,262 2.1 757 0.7 758 0.7 1,046 1.1 142 0.1
Derivative financial instruments 29 0.0 - - 130 0.1 1 - 184 0.2
Subordinated loan to subsidiary 900 0.9 - - - - - - -
Loans, advances, deposits and prepayments 588 0.6 433 0.4 626 0.6 395 0.4 1,411 1.4
Other receivables 1,330 1.3 19 0.0 28 - 61 0.1 192 0.2
Taxes recoverable - - - - 557 0.5 2,000 2.1 1,869 1.9
Short-term Investments 10,985 10.4 25,084 22.5 18,058 16.4 2,635 2.7 3,902 3.9
Cash and bank balances 865 0.8 4,443 4.0 4,458 4.1 2,449 2.5 593 0.6
28,540 27.1 36,551 32.7 30,366 27.6 14,381 14.7 14,337 14.2
TOTAL ASSETS 105,382 100 111,726 100 109,928 100 97,505 100 100,877 100

horizontal and vertical analyses
Profit and Loss Account
(Amounts in millions) 2015 15 Vs. 14 2014 14 Vs. 13 2013 13 Vs. 12 2012 12 Vs. 11 2011
Rs. % Rs. % Rs. % Rs. % Rs.
Horizontal Analysis
Sales 87,615 42.6 61,425 22.5 50,129 63.7 30,627 (2.3) 31,353
Cost of Sales 55,435 42.8 38,822 38.6 28,008 34.9 20,766 42.0 14,620
Gross profit 32,180 42.4 22,603 2.2 22,121 124.3 9,861 (41.1) 16,733
Distribution and marketing expenses 5,453 22.8 4,441 26.5 3,511 40.4 2,500 11.4 2,245
Administrative expenses 863 11.8 772 28.5 601 3.1 583 6.2 549
Other expenses 1,814 37.6 1,318 53.6 858 111.3 406 (30.2) 582
Other income 1,707 (30.3) 2,449 112.7 1,151 203.7 379 (67.4) 1,164
Operating profit/(loss) 25,757 39.1 18,521 1.2 18,302 152.6 6,751 (53.5) 14,521
Finance cost 4,588 (30.8) 6,626 (33.2) 9,918 (7.3) 10,703 40.0 7,644
Net profit before taxation 21,169 78.0 11,895 41.9 8,384 312.1 (3,952) (157.5) 6,877
Provision for taxation (6,142) 66.6 (3,687) 27.7 (2,887) 383.9 (1,017) (144.4) 2,289
Net profit after taxation 15,027 83.1 8,208 49.3 5,497 287.3 (2,935) (164.0) 4,588
2015 2014 2013 2012 2011

Rs. % Rs. % Rs. % Rs. % Rs. %
Vertical Analysis
Sales 87,615 100 61,425 100 50,129 100 30,627 100 31,353 100.0
Cost of Sales 55,435 63.3 38,822 63.2 28,008 55.9 20,766 67.8 14,620 46.6
Gross profit 32,180 36.7 22,603 36.80 22,121 44.1 9,861 32.2 16,733 53.4
Distribution and marketing expenses 5,453 6.2 4,441 7.2 3,511 7.0 2,500 8.2 2,245 7.2
Administrative expenses 863 1.0 772 1.3 601 1.2 583 1.9 549 1.8
Other expenses 1,814 2.1 1,318 2.1 858 1.7 406 1.3 582 1.9
Other income 1,707 1.9 2,449 4.0 1,151 2.3 379 1.2 1,164 3.7
Operating profit/(loss) 25,757 29.4 18,521 30.2 18,302 36.5 6,751 22.0 14,521 46.2
Finance cost 4,588 5.2 6,626 10.8 9,918 19.8 10,703 34.9 7,644 24.4
Net profit before taxation 21,169 24.2 11,895 19.4 8,384 16.7 (3,952) (12.9) 6,877 21.8
Provision for taxation (6,142) (7.0) (3,687) (6.00) (2,887) 5.8 (1,017) (3.3) 2,289 7.3
Net profit after taxation 15,027 17.2 8,208 13.4 5,497 10.9 (2,935) (9.6) 4,588 14.5

summary financial ratios
(Amounts in millions) 2015 2014 2013 2012 2011 2015 2014 2013 2012 2011
Summary of Balance Sheet Profitability Ratios

Share capital 13,309 13,183 12,228 10,728 10,728 Gross Profit ratio % 36.73 36.80 44.13 32.20 53.37
Reserves 29,217 21,295 12,841 5,070 7,889 Net Profit / (loss) to Sales % 17.15 13.36 10.97 (9.58) 14.63
Shareholders’ funds / Equity 42,526 34,478 25,069 15,798 18,616 EBITDA Margin to Sales % 34.82 37.89 46.30 38.34 56.37
Long term borrowings 25,290 36,091 55,896 51,482 59,398 Return on Equity % 39.03 27.57 26.90 (17.05) 28.45
Capital employed 78,552 78,481 83,889 82,176 88,001 Return on Capital Employed % 32.80 22.81 22.04 9.13 14.02
Deferred liabilities 6,493 5,227 4,655 3,381 4,521
Property,plant & equipment 72,192 74,963 79,315 82,878 86,332 Liquidity Ratios
Long term assets 76,842 75,175 79,563 83,124 86,540 Current ratio Times 0.92 1.02 1.34 0.55 0.81
Current assets 28,540 36,551 30,366 14,381 14,337 Quick / Acid test ratio Times 0.55 0.86 1.09 0.32 0.47
Cash to Current Liabilities Times 0.03 0.12 0.20 0.09 0.03
Summary of Profit and Loss Cash flow from
Sales 87,615 61,425 50,129 30,626 31,353 Operations to Sales Times 0.05 0.31 0.49 0.21 0.30
Gross profit 32,180 22,603 22,121 9,861 16,733
Operating profit 25,757 18,521 18,302 6,752 14,521 Activity / Turnover Ratio
Profit / (loss) before tax 21,169 11,895 8,384 (3,952) 6,877 No. of Days Inventory Days 26 12 20 31 34
Profit / (loss) after tax 15,027 8,208 5,497 (2,935) 4,588 Inventory turnover Times 13.78 31.28 18.25 11.78 10.70
EBITDA 30,509 23,273 23,259 11,741 17,673 Total Assets turnover ratio % 80.71 55.10 46 31 31
Fixed Assets turnover ratio % 121 81.90 63 37 36
Summary of Cash Flows
Net cash flow from operating activities 4,641 19,317 24,813 6,371 9,279 Investment / Market Ratios
Net cash flow from investing activities 17,661 (22,604) (560) (1,857) (3,517) Earnings per Share (Restated) Rs./ share 11.30 6.29 4.66 (2.59) 4.05
Net cash flow from financing activities (16,384) (13,692) (5,821) (4,920) (4,589) Earnings per Share (Historical) Rs./ share 11.30 6.29 4.66 (2.74) 4.28
Changes in cash & cash equivalents 5,918 (16,978) 18,432 (406) 1,173 Breakup value per share Rs./ share 31.95 26.15 19.32* 14.73 17.35
Cash & cash equivalents – Year end 11,456 5,538 22,516 4,085 4,491
Capital Structure Ratios
Summary of Actual Production Debt to Capital Employed ratio % 46 56 70 81 79
Urea 1,967,552 1,818,937 1,561,575 974,425 1,279,378 Interest Cover ratio Times 5.61 2.80 1.84 0.63 1.90
NPK 126,074 117,193 92,839 67,755 113,172
* Calcuated on the basis of revised paid up share capital including 75 million shares issued through IPO.

statement of value addition
and distribution
Cash Flow Analysis (Rs. in million) (Rupees in Million) 2015 2014
Net cash flow from operating activities Net cash used in investing activities Wealth Generated
Net cash flow from financing activities Cash & cash equivalent — year end
Total revenue inclusive of sales-tax and other income 105,052 74,497
Bought-in-materials and services (38,900) (17,931)
25,000 66,152 56,566
Wealth Distributed
20,000
Taxes, duties and development surcharge to Govt. of Pakistan 38,348 33,929
15,000
Salaries, benefits and other costs of employees 3,369 3,011
10,000 Dividend to Shareholders 7,986 -
Mark-up / interest expense on borrowed money 4,588 6,626
5,000
Donation towards education, health, environment and natural disaster 68 40
0
Retained for reinvestment & future growth, depreciation,
2013
(5,000) 2011 amortisation and retained profit 11,793 12,960
2012
(10,000) 66,152 56,566
(15,000)
(20,000)
2014
(25,000) 2015
18%
Variance Analysis (Rs. in million) 23% 60%
0%
8,208 +9,577 (1,012) (91) (742) (496) +2,037 (2,454) 15,027
20,000 7%
18,000
Allocation of wealth 0% Allocation of wealth
58%
generated during generated during
16,000
14,000 2015 12% 2014

12%
12,000
10,000 5%
5%
8,000
6,000
4,000
To Society To Providers of Debt Capital
2,000
0 To Government To Employees
PAT Gross Selling & Administrative Other Other Finance Taxation PAT Retained for reinvestment, To Shareholders
2014 Profit Distribution Expenses Income Operating Cost 2015 depreciation and amortisation
Expenses

key shareholding and shares traded
Information of shareholding required under reporting framework is as follows: CDC - TRUSTEE FIRST HABIB STOCK FUND 98,000
CDC - TRUSTEE HBL - STOCK FUND 895,000
Shareholder’s Catergory CDC - TRUSTEE HBL IPF EQUITY SUB FUND 19,000
CDC - TRUSTEE HBL MULTI - ASSET FUND 127,000
1. Associated Companies, undertakings & related parties CDC - TRUSTEE HBL MUSTAHEKUM SARMAYA FUND 1 190,000
CDC - TRUSTEE KSE MEEZAN INDEX FUND 360,000
Engro Corporation Limited 1,048,508,049
CDC - TRUSTEE LAKSON EQUITY FUND 1,696,300
CDC - TRUSTEE MCB PAKISTAN ASSET ALLOCATION FUND 640,000
2. Directors, CEO & their spouses & minor children
CDC - TRUSTEE MCB PAKISTAN ISLAMIC STOCK FUND 520,000
Mr. Syed Khalid Siraj Subhani 236,572 CDC - TRUSTEE MCB PAKISTAN STOCK MARKET FUND 3,167,500
Mr. Ruhail Mohammed 10,445 CDC - TRUSTEE MEEZAN BALANCED FUND 302,500
Mr. Javed Akbar 26,524 CDC - TRUSTEE MEEZAN ISLAMIC FUND 3,829,500
Mr. Abdul Samad Dawood 6,632 CDC - TRUSTEE MEEZAN TAHAFFUZ PENSION FUND - EQUITY SUB FUND 190,500
Mr.Shabbir Hashmi 14,555 CDC - TRUSTEE NAFA INCOME OPPORTUNITY FUND 4,500
Ms. Naz Khan 1 CDC - TRUSTEE NAFA INCOME OPPORTUNITY FUND - MT 69,500
Mr.Inamullah Naveed Khan 339,821 CDC - TRUSTEE NAFA ISLAMIC ASSET ALLOCATION FUND 1,464,500
Mr.Shahid Hamid Pracha 1 CDC - TRUSTEE NAFA ISLAMIC PRINCIPAL PROTECTED FUND - I 328,500
CDC - TRUSTEE NAFA ISLAMIC PRINCIPAL PROTECTED FUND - II 314,000
3 Executives 2,620,808
CDC - TRUSTEE NAFA ISLAMIC STOCK FUND 1,130,500
(Approximately)
CDC - TRUSTEE NAFA MULTI ASSET FUND 295,500
4. Public Sector Companies & Corporations 1,779,064 CDC - TRUSTEE NAFA STOCK FUND 3,041,000
CDC - TRUSTEE NATIONAL INVESTMENT (UNIT) TRUST 1,968,327
5. Banks, Development Finance Institutions, 43,952,655 CDC - TRUSTEE NIT ISLAMIC EQUITY FUND 2,444,000
Non-Banking Finance Institutions, Insurance CDC - TRUSTEE NIT-EQUITY MARKET OPPORTUNITY FUND 1,579,614
Companies, Takaful, Modaraba and Pension Funds CDC - TRUSTEE PAKISTAN CAPITAL MARKET FUND 340,000
CDC - TRUSTEE PAKISTAN SARMAYA MEHFOOZ FUND 100,000
6. Mutual Funds CDC - TRUSTEE PICIC GROWTH FUND 9,302,000
CDC - TRUSTEE PICIC INCOME FUND - MT 25,500
ASIAN STOCKS FUNDS LTD. 1 CDC - TRUSTEE PICIC INVESTMENT FUND 5,055,000
CDC - TRUSTEE ABL INCOME FUND 412,500 CDC - TRUSTEE PICIC ISLAMIC STOCK FUND 195,000
CDC - TRUSTEE ABL ISLAMIC PENSION FUND - EQUITY SUB FUND 27,500 CDC - TRUSTEE PICIC STOCK FUND 132,500
CDC - TRUSTEE ABL PENSION FUND - EQUITY SUB FUND 26,000 CDC - TRUSTEE PIML ISLAMIC EQUITY FUND 54,000
CDC - TRUSTEE ABL STOCK FUND 1,114,000 CDC - TRUSTEE PIML STRATEGIC MULTI ASSET FUND 40,000
CDC - TRUSTEE AKD AGGRESSIVE INCOME FUND - MT 68,500 CDC - TRUSTEE PIML VALUE EQUITY FUND 67,000
CDC - TRUSTEE AKD INDEX TRACKER FUND 71,575 CDC - TRUSTEE UBL ASSET ALLOCATION FUND 254,000
CDC - TRUSTEE AL MEEZAN MUTUAL FUND 204,000 CDC - TRUSTEE UBL STOCK ADVANTAGE FUND 795,500
CDC - TRUSTEE AL-AMEEN ISLAMIC ASSET ALLOCATION FUND 734,000 CDC-TRUSTEE FIRST HABIB ISLAMIC BALANCED FUND 60,000
CDC - TRUSTEE AL-AMEEN SHARIAH STOCK FUND 3,171,000 CDC-TRUSTEE HBL ISLAMIC STOCK FUND 197,500
CDC - TRUSTEE ALFALAH GHP ISLAMIC STOCK FUND 37,500 CDC-TRUSTEE NAFA ASSET ALLOCATION FUND 286,500
CDC - TRUSTEE ALFALAH GHP STOCK FUND 168,000 CDC-TRUSTEE NAFA SAVINGS PLUS FUND - MT 118,500
CDC - TRUSTEE ALFALAH GHP VALUE FUND 39,390 CDC-TRUSTEE NITIPF EQUITY SUB-FUND 50,000
CDC - TRUSTEE APF-EQUITY SUB FUND 90,000 CDC-TRUSTEE NITPF EQUITY SUB-FUND 20,000
CDC - TRUSTEE APIF - EQUITY SUB FUND 165,000 CDC-TRUSTEE PAK. INT. ELEMENT ISLAMIC ASSET ALLOCATION FUND 435,000
CDC - TRUSTEE ASKARI HIGH YIELD SCHEME - MT 1,500 MCBFSL - TRUSTEE ABL ISLAMIC STOCK FUND 921,000
CDC - TRUSTEE ATLAS INCOME FUND - MT 560,000 MCBFSL - TRUSTEE PAK OMAN ADVANTAGE ASSET ALLOCATION FUND 15,000
CDC - TRUSTEE ATLAS ISLAMIC STOCK FUND 750,000 MCBFSL - TRUSTEE PAK OMAN ISLAMIC ASSET ALLOCATION FUND 15,000
CDC - TRUSTEE ATLAS STOCK MARKET FUND 1,100,000 MCBFSL TRUSTEE MCB PAKISTAN FREQUENT PAYOUT FUND 500
CDC - TRUSTEE FAYSAL INCOME & GROWTH FUND - MT 30,000 TRI. STAR MUTUAL FUND LTD. 91
CDC - TRUSTEE FAYSAL SAVINGS GROWTH FUND - MT 52,000 TRUSTEE-RAHIM IQBAL RAFIQ & CO.EMPLOYEES PROVIDENT FUND 1,500
CDC - TRUSTEE FIRST CAPITAL MUTUAL FUND 58,000 Total : 52,038,398
CDC - TRUSTEE FIRST HABIB INCOME FUND - MT 1,600

7. Shareholders Holding five percent or more Voting Rights in the Listed Company: RATE /
S.NO. NAME DATE SALE/PURCHASE NO OF SHARES
PER SHARE
Engro Corporation Limited 1,048,508,049
48. Ruhail Mohammed 4-Sep-15 Sold 42500 98
8. Details of purchase/sale of shares by Directors, Executives* and their spouses/minor children during 2015 49. Masood H. Khatri 9-Sep-15 Sold 7000 95.75
50. Ruhail Mohammed 10-Sep-15 Sold 50000 95.37
RATE / 51. Khuram Abbas Zaidi 15-Sep-15 Bought 1000 91.91
S.NO. NAME DATE SALE/PURCHASE NO OF SHARES 52. Khuram Abbas Zaidi 15-Sep-15 Bought 1000 91.81
PER SHARE
53. Rabia Khan 11-Sep-15 Sold 40310 95.02
1. Sameer Amin 5-Jan-15 Bought 1000 81.35
54. Muhamad Munawar Ahmed Shahid 28-Sep-15 Bought 5000 92
2. M. Asif Sultan Tajik 9-Jan-15 Bought 50000 79.8
55. Muhamamd Akbar Kaimkhani 9-Oct-15 Bought 4500 91.9
3. Muhammad Idrees 14-Jan-15 Sold 286 76
56. Rameez Nafees 10-Aug-15 Sold 500 92
4. Salman Devjiani 6-Jan-15 Sold 1000 80.25
57. Yasmine Rashid 14-Oct-15 Sold 2000 92
5. Salman Devjiani 12-Jan-15 Bought 1000 78.25
58. Muddassar Yaqub 29-Oct-15 Sold 55000 93
6. Mohammad Bux Soomro 19-Jan-15 Sold 4000 78.7
59. Mohmammad Bux Soomro 7-Dec-15 Sold 2500 85.56
7. Naeem Farrukh 26-Jan-15 Sold 1178 81
8. Syed Irshad Ul Haq Haqqi 8-Jan-15 Sold 10000 79.49 * For the purpose of declaration of share trades all employees of the company are considered as “Executives”.
9. Masood H. Khatri 30-Jan-15 Sold 10000 85.49
10. Ahsen Saeed 30-Jan-15 Sold 5000 84
11. Haider Ali Isani 2-Feb-15 Bought 5500 85.5
12. Amer Ghafoor 29-Jan-15 Sold 15000 81.5
13. Amer Ghafoor 30-Jan-15 Sold 25000 82.8
14. Malik Mohammad Nawaz 30-Jan-15 Sold 500 85.49
15. Ali Akbar 9-Feb-15 Bought 1500 92.14
16. Abid Munir 14-Jan-15 Bought 7000 77.1
17. Syed Muhammad Raza 11-Feb-15 Sold 5000 89
18. Malik Mohammad Nawaz 10-Feb-15 Sold 700 91.53
19. Ghulam Qadir 13-Feb-15 Bought 1000 85
20. Muhammad Aamir 18-Feb-15 Sold 1000 84.21
21. Zehra Mujahid 26-Feb-15 Bought 10000 84
22. Umed Ali Mallah 2-Mar-15 Bought 9500 87.9
23. Muhammad Akbar Kaimkhani 9-Mar-15 Sold 7000 86.79
24. Nadeem Ahmed 2-Feb-15 Sold 26500 81.3
25. Ghulam Qadir 6-Mar-15 Bought 500 88
26. Haider Ali Isani 13-Apr-15 Bought 5000 86
27. Shazia Rasheed 13-Apr-15 Bought 16000 85.5
28. Muhammad Rashid 16-Apr-15 Sold 12000 83.75
29. Hamid Anjum 25-May-15 Sold 16500 85.08
30. Muhammad Atif 9-Jun-15 Sold 250 9050
31. Saleem Lallany 16-Jun-15 Sold 20000 90
32. Saleem Lallany 18-Jun-15 Sold 15000 90.63
33. Zafar Shamim 19-Jun-15 Sold 500 89.5
34. Malik Mohammad Nawaz 22-Jun-15 Sold 2000 87.9
35. Raza Mohammad Burero 24-Jun-15 Bought 1300 87.96
36. Zafar Altaf 29-Jun-15 Sold 1500 88.15
37. Zafar Altaf 29-Jun-15 Sold 100 88.1
38. Salman Abdullah Gora 1-Jul-15 Sold 2000 90
39. Salman Abdullah Gora 2-Jul-15 Sold 1000 91.45
40. Wasimullah Laghari 7-Jul-15 Sold 1000 94.63
41. Salman Abdullah Gora 16-Jul-15 Sold 4500 95.5
42. Muhammad Bux Soomro 24-Jul-15 Sold 2000 94.6
43. Muhammad Ali 12-Aug-15 Sold 1500 98.25
44. Yasmine Rashid 13-Aug-15 Sold 1000 96.85
45. Muhammad Atif 25-Aug-15 Sold 1500 93
46. Muhammad Saeed Shakir 31-Aug-15 Sold 500 95.39
47. Ali Akbar 4-Sep-15 Sold 1500 98.26

shareholder information pattern of shareholding
Annual General Meeting Islamabad to participate in the meeting through video conference, As at December 31, 2015
the company may arrange video conference facility in that city.
The annual shareholders meeting will be held at 10:00 a.m. on March Shareholding
28, 2016 at Karachi Marriott Hotel, Abdullah Haroon Road, Karachi. No. of Shareholders Total Shares Held
In this regard please fill up the Request for Video Conferencing From To
Facility Form given in the Annexure Section at the end of this report 4,442 1 100 137,112
Shareholders as of March 15, 2015 are encouraged to participate
and submit it to registered address of the Company 10 days before
and vote. 11,527 101 500 5,176,031
holding of the annual general meeting.
3,984 501 1,000 3,661,091
Any shareholder may appoint a proxy to vote on his or her behalf.
E-Dividend Mandate (Optional) 3,185 1,001 5,000 7,668,088
Proxies should be filed with the company at least 48 hours before
the meeting time. In pursuance of the directions given by the Securities and Exchange 663 5,001 10,000 5,236,686
Commission of Pakistan vide Circular No. 18 of 2012 dated June 273 10,001 15,000 3,471,970
CDC Shareholders or their Proxies are requested to bring with 5, 2012, we hereby give you the opportunity to authorize the 167 15,001 20,000 3,030,641
them copies of their Computerized National Identity Card or Company to directly credit in your bank account the cash 112 20,001 25,000 2,613,312
passport along with the Participant’s ID number and their dividend declared by the Company now and in the future.
account number at the time of attending the Annual General 78 25,001 30,000 2,194,066
Meeting in order to facilitate their identification. Please note that this E-dividend mandate is optional and not compulsory, 44 30,001 35,000 1,451,456
in case you do not wish your dividend to be directly credited into 49 35,001 40,000 1,883,679
Ownership your bank account then the same shall be paid to you directly. 31 40,001 45,000 1,313,990
On December 31, 2015 there were 25,028, shareholders on 57 45,001 50,000 2,798,503
In case you wish that the cash dividend declared by the Company is
record of the Company’s ordinary shares. 24 50,001 55,000 1,279,400
directly credited to your bank account instead of issue of dividend
warrants to you, then please provide the information mentioned on 26 55,001 60,000 1,513,275
Election of Directors
the Form placed on the Company’s website www.engrofertilizers.com 12 60,001 65,000 755,596
Any person who seeks to contest the election of directors shall and send the same to your brokers or the Central Depository 23 65,001 70,000 1,572,036
file with the Company at its Registered Office not later than fourteen Company Ltd. (in case the shares are held on the CDC) or to our
Registrars, FAMCO Associates (Pvt) Ltd., at their address mentioned 11 70,001 75,000 800,317
days before the date of the said Meeting a notice of his/her intention
to offer himself/herself for election as a director in terms of below (in case the shares are held in paper certificate form). 13 75,001 80,000 1,025,143
Section 178(3) of the Companies Ordinance, 1984 together with: 5 80,001 85,000 411,500
Quarterly Results 4 85,001 90,000 348,663
(a) Consent to act as director in Form 28, duly completed, as The Company issues quarterly financial statements. The planned 7 90,001 95,000 650,830
required under Section 184(1) of the Companies Ordinance, dates for release of the quarterly results in 2016 are:
1984; and 32 95,001 100,000 3,177,128
• 1st quarter : 25 April 6 100,001 105,000 615,558
(b) A detailed personal profile along with office address for • 2nd quarter: 10 August 6 105,001 110,000 650,508
placement onto the Company’s website in accordance with • 3rd quarter: 25 October
2 110,001 115,000 222,500
SRO No. 634(1)/2014 dated July 10, 20154 issued by the
The Company holds quarterly briefings with Security Analysts to 7 115,001 120,000 835,500
Securities and Exchange Commission of Pakistan (SECP).
discuss the results and the business environment. These 8 120,001 125,000 987,631
sessions are planned to be held on:
Transmission of Annual Reports through E-Mail 4 125,001 130,000 511,364
The SECP has allowed the circulation of annual Reports to the • 1st quarter : 26 April 3 130,001 135,000 401,931
members of the Company through email. Therefore, all members • 2nd quarter: 11 August 1 135,001 140,000 140,000
• 3rd quarter: 26 October
of the Company who want to receive a soft copy of the Annual 4 140,001 145,000 567,646
Report are requested to send their email addresses on the consent All annual/quarterly reports and presentations from quarterly 6 145,001 150,000 900,000
form to the Company’s Share Registrar. The Company shall, however briefings are regularly posted at the Company’s website: 3 150,001 155,000 455,780
additionally also provide hard copies of the Annual Report to such www.engro.com and www.engrofertilizers.com
members, on request, free of cost, within seven days of receipt of 6 155,001 160,000 947,081
such request. The standard consent form for electronic transmission The Company reserves the right to change any of the above 4 160,001 165,000 647,658
is available at the Company’s website www.engrofertilizers.com. dates. 4 165,001 170,000 675,187
Change of Address 3 170,001 175,000 521,500
Alternatively, members can fill up the Electronic transmission consent
Form given in the Annexure Section at the end of this report.
3 175,001 180,000 535,000
All registered shareholders should send information on changes
of address to: 1 180,001 185,000 181,000
Holding of General Meetings through 2 185,001 190,000 380,000
Video Conference Facility M/s. FAMCO Associates (Private) Limited 7 190,001 195,000 1,355,400
8-F, Next to Hotel Faran Nursery,
Members can also avail video conference facility in Lahore and Block-6 P.E.C.H.S. Shahra-e-Faisal 10 195,001 200,000 1,991,904
Islamabad. If the Company receives consent at least 10 days Karachi-74000 5 200,001 205,000 1,014,812
prior to date of meeting, from members holding in aggregate 2 205,001 210,000 413,525
10% or more shareholding and residing at either Lahore and/or
2 210,001 215,000 426,140

As at December 31, 2015 As at December 31, 2015
Shareholding Shareholding
No. of Shareholders Total Shares Held No. of Shareholders Total Shares Held
From To From To
1 215,001 220,000 217,690 1 620,001 625,000 625,000
4 220,001 225,000 895,971 1 635,001 640,000 640,000
1 225,001 230,000 230,000 1 640,001 645,000 643,491
4 230,001 235,000 932,720 3 645,001 650,000 1,943,982
1 235,001 240,000 235,082 1 650,001 655,000 653,500
2 245,001 250,000 500,000 1 670,001 675,000 671,789
1 250,001 255,000 254,000 1 685,001 690,000 685,500
1 260,001 265,000 264,550 1 695,001 700,000 700,000
2 265,001 270,000 537,862 1 725,001 730,000 730,000
2 275,001 280,000 560,000 1 730,001 735,000 734,000
1 280,001 285,000 284,500 2 745,001 750,000 1,499,000
2 285,001 290,000 574,600 2 795,001 800,000 1,595,500
1 290,001 295,000 291,474 1 825,001 830,000 828,221
3 295,001 300,000 895,500 1 830,001 835,000 832,785
4 300,001 305,000 1,205,000 1 855,001 860,000 858,500
1 310,001 315,000 314,000 2 885,001 890,000 1,777,783
2 315,001 320,000 632,500 2 890,001 895,000 1,790,000
1 325,001 330,000 328,500 2 895,001 900,000 1,800,000
1 330,001 335,000 335,000 1 910,001 915,000 914,000
2 335,001 340,000 679,820 1 920,001 925,000 921,000
1 340,001 345,000 342,500 1 935,001 940,000 936,000
2 345,001 350,000 700,000 1 945,001 950,000 950,000
1 350,001 355,000 354,500 1 1,040,001 1,045,000 1,043,356
3 355,001 360,000 1,077,500 2 1,055,001 1,060,000 2,120,000
2 370,001 375,000 742,128 1 1,070,001 1,075,000 1,070,440
1 375,001 380,000 376,000 1 1,095,001 1,100,000 1,100,000
2 385,001 390,000 777,570 1 1,110,001 1,115,000 1,114,000
2 395,001 400,000 792,213 2 1,115,001 1,120,000 2,237,495
1 400,001 405,000 402,382 1 1,130,001 1,135,000 1,130,500
1 405,001 410,000 405,500 1 1,155,001 1,160,000 1,157,105
1 410,001 415,000 412,500 1 1,165,001 1,170,000 1,168,016
3 420,001 425,000 1,270,900 1 1,170,001 1,175,000 1,175,000
1 425,001 430,000 425,476 1 1,200,001 1,205,000 1,204,437
2 430,001 435,000 868,500 1 1,255,001 1,260,000 1,258,500
2 455,001 460,000 920,000 1 1,280,001 1,285,000 1,283,180
2 460,001 465,000 927,000 1 1,340,001 1,345,000 1,343,020
1 475,001 480,000 480,000 1 1,345,001 1,350,000 1,346,579
3 495,001 500,000 1,495,500 1 1,450,001 1,455,000 1,453,900
1 510,001 515,000 515,000 1 1,460,001 1,465,000 1,464,500
2 515,001 520,000 1,040,000 1 1,465,001 1,470,000 1,470,000
1 520,001 525,000 521,700 1 1,555,001 1,560,000 1,557,667
1 525,001 530,000 528,220 1 1,575,001 1,580,000 1,579,614
1 540,001 545,000 543,500 1 1,635,001 1,640,000 1,637,572
2 555,001 560,000 1,116,000 1 1,695,001 1,700,000 1,696,300
1 565,001 570,000 569,000 1 1,925,001 1,930,000 1,929,500
1 595,001 600,000 600,000 1 1,965,001 1,970,000 1,968,327

category of shareholding
As at December 31, 2015 As at December 31, 2015 is as follows:
Shareholding No. of No. of Total Shares Held

No. of Shareholders Total Shares Held
From To Shareholders Category Shareholders Shares Percentage
1 2,440,001 2,445,000 2,444,000
1 2,455,001 2,460,000 2,458,328 Directors, Chief Executive Officer, and their spouse
1 2,595,001 2,600,000 2,598,200 and minor children. 15 634,551 0.05
1 2,625,001 2,630,000 2,625,500 Associated Companies, undertakings and related parties. 2 1,048,508,049 78.78
1 2,845,001 2,850,000 2,850,000 NIT & ICP - - -
2 2,995,001 3,000,000 6,000,000 Banks Development Financial Institutions,
1 3,040,001 3,045,000 3,041,000 Non Banking Financial Institutions. 39 27,929,731 2.10
1 3,165,001 3,170,000 3,167,500 Insurance Companies 19 12,477,759 0.94
1 3,170,001 3,175,000 3,171,000 Modarabas and Mutual Funds 76 52,074,944 3.91
1 3,255,001 3,260,000 3,260,000
Shareholders holding 10% 2 1,048,508,049 78.78
1 3,455,001 3,460,000 3,458,526
General Public (Individual) :
1 3,825,001 3,830,000 3,829,500
a. Local 24,491 99,214,109 7.45
1 3,895,001 3,900,000 3,897,553
1 3,970,001 3,975,000 3,972,000 b. Foreign
1 4,490,001 4,495,000 4,491,000 Others 386 90,093,149 6.77
1 5,050,001 5,055,000 5,055,000
1 5,385,001 5,390,000 5,386,982 Outlook may see an increase thereby possibly eliminating the need
1 5,600,001 5,605,000 5,602,000 for imports. Gas curtailment as compared to 2015 will remain
1 5,915,001 5,920,000 5,919,000 Global urea demand in 2016 is expected to grow moderately,
at the same level. Therefore, producers should be able to
while supply is expected to trend marginally higher, with new
1 5,965,001 5,970,000 5,968,600 replicate 2015’s operational performance. The Company will
capacity coming on stream in North America, China, Nigeria
1 7,995,001 8,000,000 7,999,999 look to maximize production in 2016 subject to gas availability.
and Azerbaijan. Global urea prices in 2015 followed the
1 8,065,001 8,070,000 8,067,000 commodity market trend and fell by 16% over the year.
1 9,300,001 9,305,000 9,302,000 Prices in 2016 are expected to further decline given the
1 24,695,001 24,700,000 24,700,000 Furthermore, the pressure on international DAP prices is
supply pressure. Gap between international and domestic
expected to continue in 2016 due to weak import demand
1 246,870,001 246,875,000 246,873,049 urea prices is expected to remain thin in 2016.
from major demand centers and positive supply
1 801,630,001 801,635,000 801,635,000
fundamentals. Moreover, the exhaustion of domestic
25,028 TOTAL:= 1,330,932,292 Local urea demand for 2016 is expected to remain stable
subsidy on DAP by 1H 2016, coupled with continuation of
however any further decline in farmer economics may lead to
weak farmer economics, should result in slight decline in
a decline in demand. With new developments in local gas
farmer offtake vs 2015, thereby, softening local prices also.
scenario and availability of gas via LNG, local production
Javed Akbar Ruhail Mohammed

Director Cheif Executive Officer

awards and achievements
Daharki became
the first fertilizer complex to 13,442
achieve a DuPont Guddu gas Compression
project completed in a patients treated at
Level 4 rating in Safety Sahara Clinic in 2015
Management Systems record 130 days
Engro Fertilizers
Continuous and implemented the world
Engro Fertilizers
reliable plant renowned IHS Incident
recorded 3,101 volunteer
operations for 298 Management Solution
hours in 2015
days for Operational Risk
Management

our brands

our winning formula
At Engro Fertilizers, when we talk about our undying
commitment to deliver the highest standards of quality, our focus
goes well beyond how our brands will fare amongst our target
audience to how they will impact customer lives by enriching Engro NP Zingro Engro MOP
NP formulations that contain Nitrogen and Phosphorus in almost equal Zinc is a micronutrient, it is a nutrient which the crop requires in small In addition to potash based blended fertilizer NPK, Potassium can also be
their yield, and this is precisely why we strive to combine quantity have been especially important to Pakistani farmers, given the dosages and it compliments functions of major nutrients. Over the years applied in form of straight fertilizer, out of which one widely used kind of
peculiar deficiency of both components in most of the Pakistani soils. This zinc deficiency has been well established on a variety of crops and in rice potassium based fertilizer is MOP or Muriate of Potash. We have launched
innovation & quality with customer needs and expectations. category serves the needs of a particular niche of farming community in specifically. Zingro brings to the market the trust of Engro and high Engro MOP in 50 kg SKU targeting all potash loving crops such as potato,
the country; where application of nitrogen and phosphorus is required in quality standard which has made it distinct from all the competition. It is maize, sugarcane, wheat, rice, cotton, vegetables, fruits, orchards and
almost equal proportions. Due to higher ‘N’ content a few farmers also the market leader in a highly fragmented industry. Zingro acts as a tonic tobacco. MOP contains 60% Potassium nutrient and is the most
use E-NP for top dressing. Engro started producing NP in 2005 and has and gives quick response and a better yield. Zingro contains 33% concentrated form of granular potassium. It is also relatively price
been extensively marketing the product whilst especially enjoying a high Granular Zinc Sulphate Monohydrate and is 99.99% water soluble. competitive compared to other forms of potassium available in the market.
market share in lower Sindh. Engro NP is available in 50Kg bags. It is Zingro has evolved to become the leading brand in the micronutrient The chloride content of MOP is helpful for a soil where chloride level is low.
category and is accredited to converting the image of the category to a Chloride content also improves the yield of produce as it increases disease
available in 3 different grades: 22:20 and 20:20 (imported) for lower Sindh
highly acceptable one. Zingro has won the prestigious “Brand of the resistance in crops by promoting thickness of the outer cell walls. It also
region whereas 18:18 for rest of the country.
Year” award for 2009 in the micronutrient category. improves color, flavor and storing quality of fruit and vegetables.
Engro Urea Engro DAP Engro Zarkhez Engro SSP

Engro is the first company to have setup urea production facility in For a healthy growth the plant requires three major nutrients namely Plants require three major nutrients (i.e. Nitrogen, Phosphorus and Its full form is Single Super Phosphate with nutrient value of 18% (P2O5)
Pakistan, a landmark event in agricultural sector of the country. This Nitrogen, Phosphorus and Potassium. Di-Ammonium Phosphate (DAP), Potassium) for quality & higher yield. Zarkhez, introduced in 2002, is the with added benefit of gypsum (CaSO4). Engro SSP is produced through
together with the fact that urea is the most widely used fertilizer in the which contains 46% Phosphorus, is the most widely used source of only branded fertilizer in Pakistan which contains all three nutrients. Imported Rock Phosphate. Product is procured through imports as well as
country, gives Engro Urea a special standing in the domestic fertilizer Phosphorus for the plant. DAP strengthens the roots of the plant and Presence of all the macro nutrients results in synergistic plant nutrient through local manufacturing concern. However, Engro doesn’t differentiate
market. Engro Fertilizers Limited started annual production of 173,000 improves nutrient uptake. DAP was imported in Pakistan by the fertilizer uptake. The resultant yield is of high quality; sucrose content of sugar cane between the products based on product origin. Our strategy is to leverage
tons in 1968. Through various debottlenecking and expansion steps, the import department until 1994 and since then the private sector has been increases, quality and size of potato improves, fruit and vegetables appear Engro brand image and provide the farmers with an extremely good quality
capacity has been increased to 975,000 tons per year. In the year 2011 the responsible for all imports. and taste better. Zarkhez is a high quality fertilizer containing correct product, which is not available in the market at the moment.
Company setup world’s largest single train urea plant of 1,300,000 ton proportions of the three nutrients in each of its granule thus making the
capacity. In the year 2015 the market share for urea stood at 34%. Engro Fertilizers has been importing and marketing DAP in the country fertilizer application very convenient for the farmer. In addition to convenience, Over the years SSP has faced with severe negative consequences due to a
it also helps ensure uniform and balanced nutrient application. lack of product quality, with spurious manufacturers present throughout
since 1996. Engro Fertilizers is the most trusted and one of the largest
the market, while there is an established market for this category. Engro is
importer of DAP in the country. Engro DAP is a product that maintains a
Zarkhez is currently available in three different grades of 50Kg bags with fulfilling the need for a quality player in the market for SSP which can uplift
high quality standard and is monitored through stringent quality checks.
nutrient proportions suitable for sugar cane, fruit orchards, vegetables, the farmer confidence.
Engro DAP has high water solubility and characteristic pH which ensures
potato and tobacco. The grades are popular among progressive farmers
optimal soil distribution. Engro DAP is marketed in 50kg bags.
due to its convenience, high crush strength, and appropriate granule size The target market for the product is price sensitive, low-medium income
and free flowing nature. farmers with small-medium land holdings and also normal SSP users
across Pakistan. The product is targeted on all crops.
° Zarkhez Green (NPK 8-23-18) available in 50 kg bag is consumed on
vegetables and other cash crops. It is also available in 25 kg which was
launched to particularly cater small acreage farmers of KPK.
° Zarkhez Blue (NPK 17-17-17) available in 50 kg bag is consumed on

fruits and orchards.
° Zarkhez Tobacco (NPK 15-15-15) available in 50 kg bag used for

tobacco crop.
fields of prosperity
Financial Statement
standalone financials

review report to the members on statement of
compliance with the code of corporate governance auditors’ report to the members
We have reviewed the enclosed Statement of Compliance with the best practices contained in the Code of Corporate We have audited the annexed balance sheet of Engro Fertilizers Limited as at December 31, 2015 and the related profit and loss
Governance (the Code) prepared by the Board of Directors of Engro Fertilizers Limited (the Company) for the year ended account, statement of comprehensive income, statement of changes in equity and statement of cash flows together with the
December 31, 2015 to comply with the Code contained in the Regulations of Pakistan Stock Exchange Limited (formerly Karachi notes forming part thereof, for the year then ended and we state that we have obtained all the information and explanations
Stock Exchange Limited in which Lahore and Islamabad stock exchanges have merged), where the Company is listed. which, to the best of our knowledge and belief, were necessary for the purposes of our audit.
The responsibility for compliance with the Code is that of the Board of Directors of the Company. Our responsibility is to review, It is the responsibility of the Company's management to establish and maintain a system of internal control, and prepare and
to the extent where such compliance can be objectively verified, whether the Statement of Compliance reflects the status of the present the above said statements in conformity with the approved accounting standards and the requirements of the
Company’s compliance with the provisions of the Code and report if it does not and to highlight any non-compliance with the Companies Ordinance, 1984. Our responsibility is to express an opinion on these statements based on our audit.
requirements of the Code. A review is limited primarily to inquiries of the Company’s personnel and review of various documents
prepared by the Company to comply with the Code. We conducted our audit in accordance with the auditing standards as applicable in Pakistan. These standards require that we
plan and perform the audit to obtain reasonable assurance about whether the above said statements are free of any material
As a part of our audit of the financial statements we are required to obtain an understanding of the accounting and internal misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the above said
control systems sufficient to plan the audit and develop an effective audit approach. We are not required to consider whether the statements. An audit also includes assessing the accounting policies and significant estimates made by management, as well as,
Board of Directors’ statement on internal control covers all risks and controls or to form an opinion on the effectiveness of such evaluating the overall presentation of the above said statements. We believe that our audit provides a reasonable basis for our
internal controls, the Company’s corporate governance procedures and risks. opinion and, after due verification, we report that:
The Code requires the Company to place before the Audit Committee, and upon recommendation of the Audit Committee, (a) in our opinion, proper books of account have been kept by the Company as required by the Companies Ordinance, 1984;
place before the Board of Directors for their review and approval of its related party transactions distinguishing between
transactions carried out on terms equivalent to those that prevail in arm’s length transactions and transactions which are not (b) in our opinion:
executed at arm’s length price, recording proper justification for using such alternate pricing mechanism. We are only required
and have ensured compliance of this requirement to the extent of approval of related party transactions by the Board of Directors (i) the balance sheet and profit and loss account together with the notes thereon have been drawn up in conformity with the
upon recommendation of the Audit Committee. We have not carried out any procedures to determine whether the related party Companies Ordinance, 1984, and are in agreement with the books of account and are further in accordance with
transactions were undertaken at arm’s length price or not. accounting policies consistently applied;
Based on our review, nothing has come to our attention which causes us to believe that the Statement of Compliance does not (ii) the expenditure incurred during the year was for the purpose of the Company's business; and
appropriately reflect the Company’s compliance, in all material respects, with the best practices contained in the Code as
applicable to the Company for the year ended December 31, 2015. (iii) the business conducted, investments made and the expenditure incurred during the year were in accordance with the
objects of the Company;
We draw attention to paragraph 21 of the Statement of Compliance in respect of determination and intimation of close period to
the directors, employees and stock exchanges. (c) in our opinion and to the best of our information and according to the explanations given to us, the balance sheet, profit and
loss account, statement of comprehensive income, statement of changes in equity and statement of cash flows, together
with the notes forming part thereof conform with the approved accounting standards as applicable in Pakistan, and, give the
information required by the Companies Ordinance, 1984, in the manner so required and respectively give a true and fair view
of the state of the Company's affairs as at December 31, 2015 and of the profit, total comprehensive income, changes in
equity and its cash flows for the year then ended; and
(d) in our opinion, Zakat deductible at source under the Zakat and Ushr Ordinance, 1980 (XVIII of 1980) was deducted by the
Company and deposited in the Central Zakat Fund established under Section 7 of that Ordinance.
Chartered Accountants Chartered Accountants

Karachi Karachi
Date: 01 March 2016 Date: 01 March 2016
Engagement Partner: Mohammad Zulfikar Akhtar Engagement Partner: Mohammad Zulfikar Akhtar

balance sheet
as at december 31, 2015
(Amounts in thousand) (Amounts in thousand)
Note 2015 2014 Note 2015 2014
---------------------(Rupees)-------------------- ---------------------(Rupees)--------------------
Assets Equity & Liabilities
Non-Current Assets Equity
Property, plant and equipment 4 72,192,289 74,962,817 Share capital 16 13,309,323 13,183,417
Intangible assets 5 106,487 118,336
Investment in subsidiary 6 4,383,000 - Share premium 3,132,181 2,260,784
Long term loans and advances 7 159,778 93,931 Hedging reserve 17 (4,536) (39,831)
76,841,554 75,175,084 Remeasurement of post employment benefits (40,664) (14,103)
Unappropriated profit 26,129,716 19,087,828
29,216,697 21,294,678
Current Assets Total Equity 42,526,020 34,478,095
Stores, spares and loose tools 8 4,639,142 4,713,746

Stock-in-trade 9 6,942,110 1,100,922
Liabilities
Trade debts 10 2,261,747 757,044
Non-Current Liabilities
Derivative financial instruments 19 29,207 -
Subordinated loan to subsidiary 11 900,000 -
Loans, advances, deposits and prepayments 12 588,247 432,943 Borrowings 18 25,289,658 36,090,622
Other receivables 13 1,329,998 18,991 Derivative financial instruments 19 - 6,689
Short term investments 14 10,984,555 25,084,367 Deferred liabilities 20 6,493,030 5,226,646
Cash and bank balances 15 865,302 4,443,086 Service benefits obligations 21 124,367 113,345
28,540,308 36,551,099 31,907,055 41,437,302
TOTAL ASSETS 105,381,862 111,726,183 Current Liabilities
Trade and other payables 22 16,886,856 24,726,721

Accrued interest / mark-up 843,803 1,362,300
Taxes payable 2,060,723 675,609
Current portion of:
- borrowings 18 10,736,586 7,912,729
- service benefits obligations 21 48,232 43,338
Unclaimed dividend 6,103 -
Derivative financial instruments 19 366,484 1,090,089
30,948,787 35,810,786
Total Liabilities 62,855,842 77,248,088

Contingencies and Commitments 23
TOTAL EQUITY & LIABILITIES 105,381,862 111,726,183
The annexed notes from 1 to 47 form an integral part of these financial statements.

Chief Executive Director

profit and loss account statement of comprehensive income
for the year ended december 31, 2015 for the year ended december 31, 2015
(Amounts in thousand except for earnings per share) Note 2015 2014 (Amounts in thousand) 2015 2014
---------------------(Rupees)-------------------- ---------------------(Rupees)---------------------
Profit for the year 15,027,481 8,207,960

Net sales 24 87,615,258 61,424,934
Other comprehensive income
Cost of sales 25 (55,435,451) (38,822,423)
Items potentially re-classifiable to Profit and Loss Account
Gross profit 32,179,807 22,602,511 Hedging reserve - cash flow hedges
Loss arising during the year (120,333) (1,633,625)
Selling and distribution expenses 26 (5,452,944) (4,441,379)
Less: Adjustment for amounts transferred to profit and loss account 172,238 1,797,878
Administrative expenses 27 (863,427) (772,161)
Income tax (Deferred) relating to hedging reserve (16,610) (56,440)
25,863,436 17,388,971 35,295 107,813
Items not potentially re-classifiable to Profit and Loss Account
Other income 28 1,707,059 2,449,156 Remeasurement of post employment benefits obligation (39,653) 11,221
Other operating expenses 29 (1,813,639) (1,317,743) Income tax (Deferred) relating to remeasurement of
Finance costs 30 (4,587,926) (6,625,397) post employment benefits obligation 13,092 (4,438)
(26,561) 6,783
(6,401,565) (7,943,140)
Other comprehensive income for the year, net of tax 8,734 114,596
Profit before taxation 21,168,930 11,894,987
Total comprehensive income for the year 15,036,215 8,322,556
Taxation 31 (6,141,449) (3,687,027)
Earnings per share - basic 32 11.30 6.29
Earnings per share - diluted 32 11.28 6.29
Ruhail Mohammed Javed Akbar Ruhail Mohammed Javed Akbar

Chief Executive Director Chief Executive Director

statement of changes in equity statement of cash flows
(Amounts in thousand) (Amounts in thousand) Note 2015 2014
Reserve
Capital Revenue
--------------------(Rupees)---------------------
Share Advance Share Hedging Remeasurement Unappropriated Total Cash flows from operating activities
capital against premium reserve of post profit Cash generated from operations 35 12,628,851 28,480,098
issue of employment
Retirement and other service benefits paid (42,631) (41,124)
share capital benefits
----------------------------------------------------------------------(Rupees)---------------------------------------------------------------------- Finance cost paid (4,389,722) (7,091,184)
Taxes paid (2,532,809) (835,474)
Balance as at January 1, 2014 12,228,000 2,118,750 11,144 (147,644) (20,886) 10,879,868 25,069,232 Tax loss purchased from Engro Eximp Agriproducts (Private) Limited (956,791) (1,210,522)
Transactions with owners
Long term loans and advances - net (65,847) 15,418
Shares issued during the year 750,000 (2,118,750) 1,368,750 - - - - Net cash generated from operating activities 4,641,051 19,317,212
Share issuance cost - - (97,920) - - - (97,920)
Shares issued at exercise of
Cash flows from investing activities
conversion option 205,417 - 978,810 - - - 1,184,227
955,417 (2,118,750) 2,249,640 - - - 1,086,307 Purchases of property, plant and equipment and intangibles (1,984,808) (701,027)
Total comprehensive income for Investment in Engro Eximp (4,383,000) -
the year ended December 31, 2014 Sub-ordinated loan to Subsidiary Company (900,000) -
Profit for the year - - - - - 8,207,960 8,207,960
Proceeds from disposal of property, plant and equipment 29,261 45,989
Divestments / (Investments) during the year - net 23,595,878 (23,739,109)
Other comprehensive income: Income on deposits / other financial assets 1,303,488 1,790,194
- cash flow hedges, net of tax - - - 107,813 - - 107,813
- remeasurements, net of tax - - - - 6,783 - 6,783
Net cash generated from / (utilized in) investing activities 17,660,819 (22,603,953)
- - - 107,813 6,783 8,207,960 8,322,556
Cash flows from financing activities
Balance as at December 31, 2014 13,183,417 - 2,260,784 (39,831) (14,103) 19,087,828 34,478,095
Proceeds from borrowings - net 2,430,491 3,947,598
Transactions with owners
Repayments of borrowings (10,834,589) (13,090,255)
Shares issued at exercise of Settlement of IFC option (note 18.7) - (1,495,080)
conversion option 125,906 - 871,397 - - - 997,303 Proceeds from sub-ordinated loan - 1,495,080
Dividends paid:
- Final 2014: Rs. 3.00 per share - - - - - (3,992,797) (3,992,797)
Repayment of sub-ordinated loan - (4,495,080)
- 1st interim 2015: Rs. 1.50 per share - - - - - (1,996,398) (1,996,398) Dividends paid (7,979,490) -
- 2nd interim 2015: Rs. 1.50 per share - - - - - (1,996,398) (1,996,398) Share issue costs paid - (53,989)
125,906 - 871,397 - - (7,985,593) (6,988,290)
Net cash utilised in financing activities (16,383,588) (13,691,726)
Total comprehensive income for Net increase / (decrease) in cash and cash equivalents 5,918,282 (16,978,467)
the year ended December 31, 2015
Profit for the year - - - - - 15,027,481 15,027,481 Cash and cash equivalents at beginning of the year 5,537,978 22,516,445
Other comprehensive income : Cash and cash equivalents at end of the year 35 11,456,260 5,537,978
- cash flow hedges, net of tax - - - 35,295 - - 35,295
- remeasurements, net of tax - - - - (26,561) - (26,561)
- - - 35,295 (26,561) 15,027,481 15,036,215
Balance as at December 31, 2015 13,309,323 - 3,132,181 (4,536) (40,664) 26,129,716 42,526,020 The annexed notes from 1 to 47 form an integral part of these financial statements.


notes to the financial statements
for the year ended december 31, 2015
1. Legal Status and Operations be applied where its use is already required or permitted by other standards within IFRSs. The standard only affects
the disclosures in the Company's financial statments.
1.1 Engro Fertilizers Limited (‘the Company’) is a public company incorporated on June 29, 2009 in Pakistan under the
Companies Ordinance, 1984 as a wholly owned subsidiary of Engro Corporation Limited (the Parent Company) which is a - IAS 27 (revised) ‘Separate financial statements’. This standard replaces the current IAS 27 ‘Consolidated and
subsidiary of Dawood Hercules Corporation Limited (the Ultimate Parent Company). The principal activity of the Company Separate Financial Statements’ (as amended in 2008) and includes the provisions on separate financial statements
is manufacturing, purchasing and marketing of fertilizers. The Company’s registered office is situated at 7th & 8th floors, that are left after the control provisions of IAS 27 have been included in the new IFRS 10. The Company's current
The Harbour Front Building, Plot Number HC-3, Block 4, Scheme Number 5, Clifton, Karachi. accounting treatment is already in line with the requirements of this standard.
1.2 The Company is listed on Pakistan Stock Exchange Limited (formerly Karachi Stock Exchange in which Lahore and - IAS 19 ‘Employee benefits’ (Amendment). The amendment applies to contributions from employees or third parties to
Islamabad Stock Exchanges have merged). The Company has also issued Term Finance Certificates which are listed at the defined benefit plans and clarifies the treatment of such contributions. The amendment distinguishes between
Pakistan Stock Exchange Limited. contributions that are linked to service only in the period in which they arise and those linked to service in more than
one period. The objective of the amendment is to simplify the accounting for contributions that are independent of the
1.3 Effective January 1, 2010, the Parent Company through a Scheme of Arrangement, under Section 284 to 288 of the number of years of employee service, for example employee contributions that are calculated according to a fixed
Companies Ordinance, 1984, separated its fertilizer undertaking for continuation thereof by the Company, from the rest of percentage of salary. Entities with plans that require contributions that vary with service will be required to recognise
the undertaking which was retained in the Parent Company. Further, the Parent Company was renamed from Engro the benefit of those contributions over employee’s working lives. The amendment does not have any impact on the
Chemical Pakistan Limited to Engro Corporation Limited, the principal activity of which now is to manage investments in Company's financial statements.
subsidiary companies and joint ventures.
- IAS 24 ’Related party disclosures’ (Amendment). The standard has been amended to include, as a related party, an
2. Summary of Significant Accounting Policies entity that provides key management personnel services to the reporting entity or to the parent of the reporting entity
(the ‘management entity’). Disclosure of the amounts charged to the reporting entity is required. The amendment
The significant accounting policies applied in the preparation of these financial statements are set out below. These policies does not have any impact on the Company's financial statements.
have been consistently applied to all periods presented, unless otherwise stated.
b) Standards, amendments to published standards and interpretations that are effective in 2015 but not relevant
2.1 Basis of preparation
The other new standards, amendments to published standards and interpretations that are mandatory for the financial
2.1.1 These financial statements have been prepared under the historical cost convention, except for re-measurement of certain year beginning on January 1, 2015 are considered not to be relevant or to have any significant effect on the Company's
financial assets and liabilities at fair value through profit or loss, derivative hedging instrument at fair value and recognition of financial reporting and operations.
certain staff retirement benefits at present value.
c) Standards, amendments to published standards and interpretations that are not yet effective and have not
2.1.2 These financial statements have been prepared in accordance with approved accounting standards as applicable in been early adopted by the Company
Pakistan. Approved accounting standards comprise of such International Financial Reporting Standards (IFRS) issued by
the International Accounting Standards Board as are notified under the Companies Ordinance, 1984, provisions of and The following new standards and amendments to published standards are not effective for the financial year beginning
directives issued under the Companies Ordinance, 1984. In case requirements differ, the provisions or directives of the on January 1, 2015 and have not been early adopted by the Company:
Companies Ordinance, 1984 shall prevail.
- IAS 27 (Amendment) ‘Separate financial statements’ (effective for annual periods beginning on or after January 1,
2.1.3 The preparation of financial statements in conformity with the above requirements requires the use of certain critical 2016). The amendment allows entities to use the equity method to account for investments in subsidiaries, joint
accounting estimates. It also requires management to exercise its judgment in the process of applying the Company’s ventures and associates in their separate financial statements. It is unlikely that the amendment will have any
accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and significant impact on the Company's financial statements.
estimates are significant to the financial statements are disclosed in note 3 and other relevant notes.
- Amendments to following standards as a result of annual improvements to International Financial Reporting
2.1.4 Initial application of a Standard, Amendment or an Interpretation to an existing Standard Standards issued by IASB:
a) Standards, amendments to published standards and interpretations effective in 2015 and relevant - IFRS 7 ’Financial instruments: Disclosures’ (effective for annual periods beginning on or after January 1, 2016). There
are two amendments:
The following standards, amendments to published standards and interpretations are mandatory for the financial year
beginning January 1, 2015 and are relevant to the Company: • Servicing contracts – If an entity transfers a financial assets to a third party under conditions which allow the
transferor to derecognize the asset, IFRS 7 requires disclosure of all types of continuing involvement that the entity
- IFRS 13 ‘Fair value measurement’. The standard aims to improve consistency and reduce complexity by providing a might still have in the transferred assets. The standard provides guidance about what is meant by continuing
precise definition of fair value and a single source of fair value measurement and disclosure requirements for use involvement. The amendment is prospective with an option to apply retrospectively.
across IFRSs. The requirements do not extend the use of fair value accounting but provide guidance on how it should

• Interim financial statements – the amendment clarifies that the additional disclosure required by the amendments to estimated residual value, if significant, is written off over its estimated useful life. Depreciation on addition is charged from
IFRS 7, ‘Disclosure – Offsetting financial assets and financial liabilities’ is not specifically required for all interim periods the month following the month in which the asset is available for use and on disposals up to the preceding month of disposal.
unless required by IAS 34. This amendment is retrospective.
Depreciation method, useful lives and residual values are reviewed annually.
• It is unlikely that the standard will have any significant impact on the Company's financial statements.
2.2.2 Leased assets
- IAS 19, ’Employee benefits’ (effective for annual periods beginning on or after January 1, 2016). The amendment clarifies
that, when determining the discount rate for post-employment benefit obligations, it is the currency that the liabilities are Leases in terms of which the Company assumes substantially all the risks and rewards of ownership, are classified as
denominated in that is important, not the country where they arise. The assessment of whether there is a deep market finance lease. Upon initial recognition, the leased asset is measured at an amount equal to the lower of its fair value and
in high-quality corporate bonds is based on corporate bonds in that currency, not corporate bonds in a particular present value of minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with
country. Similarly, where there is no deep market in high-quality corporate bonds in that currency, government bonds in the accounting policy applicable to similar owned asset. Outstanding obligations under the lease less finance cost
the relevant currency should be used. The amendment is retrospective but limited to the beginning of the earliest period allocated to future periods are shown as a liability.
presented. It is unlikely that the standard will have any significant impact on the Company's financial statements.
Finance cost under lease agreements are allocated to the periods during the lease term so as to produce a constant
- IAS 34 ,’Interim financial reporting’ (effective for annual periods beginning on or after July 1, 2016). This amendment periodic rate of finance cost on the remaining balance of principal liability for each period.
clarifies what is meant by the reference in the standard to ‘information disclosed elsewhere in the interim financial report’.
Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that
The amendment also amends IAS 34 to require a cross-reference from the interim financial statements to the location of
the Company will obtain ownership by the end of the lease term.
that information. The amendment is retrospective. It is unlikely that the standard will have any significant impact on the
Company's financial statements.
2.3 Intangible assets
There are number of other standards, amendments and interpretations to the published standards that are not yet a) Computer Software and Licenses
effective and are also not relevant to the Company and therefore, have not been presented here.
Costs associated with maintaining computer software programmes are recognized as an expense when incurred.
2.2 Property, plant and equipment However, costs that are directly attributable to identifiable software and have probable economic benefits exceeding the
cost beyond one year, are recognized as an intangible asset. Direct costs include the purchase cost of software (license
2.2.1 Owned assets
fee) and related overhead costs.
These are stated at historical cost less accumulated depreciation and impairment losses, if any, except freehold land and
Expenditure which enhances or extends the performance of computer software beyond its original specification and
capital work in progress which are stated at cost. Historical cost includes expenditure that is directly attributable to the
useful life is recognized as a capital improvement and added to the original cost of the software.
acquisition of the items including borrowing costs (note 2.23). The cost of self constructed assets includes the cost of
materials and direct labour, any other costs directly attributable to bringing the asset to a working condition for its intended
Computer software and license cost treated as intangible assets are amortized from the date the software is put to use
use, and the costs of dismantling and removing the items and restoring the site on which they are located. Purchased
on a straight-line basis over a period of 4 years.
software that is integral to the functionality of the related equipment is capitalised as part of that equipment.
b) Rights for future gas utilization
Where major components of an item of property, plant and equipment have different useful lives, they are accounted for as
separate items of property, plant and equipment. Rights for future gas utilization represent premium paid to the Government of Pakistan for allocation of 100 MMSCFD
natural gas for a period of 20 years for Enven plant. The rights are being amortized from the date of commercial
Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only production on a straight-line basis over the remaining allocation period.
when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item
can be measured reliably. The carrying amount of the replaced part is derecognized. All other repairs and maintenance are 2.4 Impairment of non-financial assets
charged to the profit and loss account during the financial period in which they are incurred.
Assets that are subject to depreciation / amortization are reviewed at each balance sheet date to identify circumstances
Disposal of asset is recognized when significant risk and rewards incidental to ownership have been transferred to buyers. indicating occurrence of impairment loss or reversal of previous impairment losses. An impairment loss is recognized for
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognized the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher
within ‘Other operating expenses / income’ in the profit and loss account. of an asset's fair value less cost to sale and value in use. Reversal of impairment loss is restricted to the original cost of the asset.
Depreciation is charged to the profit and loss account using the straight line method, except for catalyst whose 2.5 Investment in subsidiary
depreciation is charged on the basis of number of production days, whereby the cost of an operating asset less its
Investments in subsidiary companies are initially recognized at cost. These are subsequently measured at cost less
accumulated impairment, if any. Where impairment losses subsequently reverse, the carrying amount of the investments
are increased to the revised amounts but limited to the extent of initial cost of investments. A reversal

of impairment loss is recognized as an income. are subsequently carried at amortized cost using the effective interest method.
2.6 Non current assets (or disposal groups) held-for-sale Gains or losses arising from changes in the fair value of the ‘financial assets at fair value through profit or loss’ category are
presented in the profit and loss account within ‘other operating income / expenses’ in the period in which they arise.
Non-current assets (or disposal groups) are classified as assets held for sale when their carrying amount is to be recovered Dividend income from financial assets at fair value through profit or loss is recognized in the profit and loss account as part
principally through a sale transaction and a sale is considered highly probable. They are stated at the lower of carrying of other income when the Company’s right to receive payments is established.
amount and fair value less costs to sell if their carrying amount is to be recovered principally through a sale transaction
rather than through continuing use. Impairment losses on initial classification as held for sale and subsequent gains or Changes in fair value of monetary and non-monetary securities classified as available-for-sale are recognized in other
losses on remeasurement are recognized in the profit and loss account. comprehensive income. When securities classified as available-for-sale are sold or impaired, the accumulated fair value
adjustments recognized in statement of comprehensive income are included in the profit and loss account.
2.7 Financial assets
Interest on available-for-sale securities calculated using the effective interest method is recognized in the profit and loss
2.7.1 Classification
account as part of other income. Dividends on available for sale equity instruments are recognized in the profit and loss
account as part of other income when the Company’s right to receive payments is established.
The Company classifies its financial assets in the following categories: at fair value through profit or loss, held to maturity,
loans and receivables, and available-for-sale. The classification depends on the purpose for which the financial assets were
The Company assesses at the end of each reporting period whether there is objective evidence that a financial asset or a
acquired. Management determines the classification of its financial assets at initial recognition.
group of financial assets is impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss is
a) Financial assets at fair value through profit or loss removed from equity and recognised in the profit and loss account. Impairment losses recognised in the profit and loss
account on equity instruments are not reversed through the profit and loss account. Impairment testing of trade debts and
Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this other receivables is described in note 2.13.
category if acquired principally for the purpose of selling in the short-term. Derivatives are also categorized as held for
2.8 Financial liabilities
trading unless they are designated as hedges. Assets in this category are classified as current assets.
All financial liabilities are recognized at the time when the Company becomes a party to the contractual provisions of an
b) Loans and receivables
instrument. Financial liabilities are extinguished when these are discharged or cancelled or expire or when there is
substantial modification in the terms and conditions of the original financial liability or part of it. The terms are substantially
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an
different if the discounted present value of the cash flows under the new terms, including any fees paid net of any fees
active market. They are included in current assets, except for maturities greater than 12 months after the end of the received and discounted using the original effective interest rate, is at least ten percent different from the discounted
reporting period; which are classified as non-current assets. present value of the remaining cash flows of the original financial liability. If modification of terms is accounted for as an
extinguishment, any costs or fees incurred are recognized as part of the gain or loss on the extinguishment. If the exchange
c) Held to maturity financial assets or modification is not accounted for as an extinguishment, any costs or fees incurred adjust the carrying amount of the
liability and are amortized over the remaining term of the modified liability.
Held to maturity financial assets are non-derivative financial assets with fixed or determinable payments and fixed
maturity with a positive intention and ability to hold to maturity. 2.9 Offsetting financial instruments
d) Available-for-sale financial assets Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally
enforceable right to offset the recognized amounts and there is an intention to settle either on a net basis, or realize the
Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must
the other categories. They are included in non-current assets unless the investment matures or management intends to be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or
dispose it off within 12 months of the end of the reporting date. There were no available for sale financial assets at the the counterparty.
balance sheet date.
2.10 Derivative financial instruments and hedging activities
2.7.2 Recognition and measurement
Derivatives are recognized initially at fair value; attributable transaction cost are recognized in profit and loss account when
Regular purchases and sales of financial assets are recognized on the trade date - the date on which the Company incurred. Subsequent to initial recognition, derivatives are measured at fair values, and changes therein are accounted for
commits to purchase or sell the asset. Investments are initially recognized at fair value plus transaction costs for all financial as described below:
assets not carried at fair value through profit or loss. Financial assets carried at fair value through profit or loss are initially
recognized at fair value, and transaction costs are expensed in the profit and loss account. Financial assets are a) Cash flow hedges
derecognized when the rights to receive cash flows from the investments have expired or have been transferred and the
Company has transferred substantially all risks and rewards of ownership. Available-for-sale financial assets and financial Changes in fair value of derivative hedging instruments designated as a cash flow hedge are recognized in statement of
assets at fair value through profit or loss are subsequently carried at fair value. Held to maturity and loans and receivables comprehensive income to the extent that the hedge is effective. To the extent the hedge is ineffective, changes in fair

value are recognized in profit and loss account. new shares or options are shown in equity as a deduction, net of tax, from the proceeds.
If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated or exercised, the 2.16 Borrowings
hedge accounting is discontinued prospectively. The cumulative gain or loss previously deferred in equity remains there until
the forecast transaction occurs. When the hedged item is a non-financial asset, the amount previously deferred in equity is Borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at
transferred to carrying amount of the asset when it is recognized. In other cases the amount deferred in equity is transferred to amortized cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognized in the
profit and loss account in the same period that the hedge item affects profit and loss account. profit and loss account over the period of the borrowings using the effective interest method.
b) Other non-trading derivatives Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for
at least 12 months after the balance sheet date.
When a derivative financial instrument is not held for trading, and is not designated in a qualifying hedge relationship, all
changes in its fair value are recognized immediately in profit and loss account. 2.17 Trade and other payables
The Company holds derivative financial instruments to hedge its foreign currency and interest rate risk exposure. Further, Trade and other payables are recognized initially at fair value and subsequently measured at amortized cost using the effective
the Company has issued options to convert IFC loan on its shares as disclosed in note 18.7. The fair values of various interest method.
derivative instruments used for hedging and the conversion options are disclosed in note 19.
These are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if
2.11 Stores, spares and loose tools longer). If not, they are presented as non-current liabilities.
These are valued at weighted average cost except for items in transit which are stated at invoice value plus other charges 2.18 Current and deferred income tax
paid thereon till the balance sheet date. For items which are slow moving and / or identified as surplus to the Company's
requirements, adequate provision is made for any excess book value over estimated realizable value. The Company The tax expense for the period comprises current and deferred tax. Tax is recognized in the profit and loss account, except to the
reviews the carrying amount of stores and spares on a regular basis and provision is made for obsolescence. extent that it relates to items recognized in the statement of comprehensive income or directly in equity. In this case the tax is also
recognized in the statement of comprehensive income or directly in equity, respectively.
2.12 Stock-in-trade
Current
These are valued at the lower of cost and net realizable value. Cost is determined using weighted average method except
for raw materials in transit which are stated at cost (invoice value) plus other charges incurred thereon till the balance sheet The current income tax charge is based on the taxable income for the year calculated on the basis of the tax laws enacted or
date. Cost in relation to finished goods includes applicable purchase cost and manufacturing expenses. The cost of work substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.
in process includes material and proportionate conversion costs.
Deferred
Net realizable value signifies the estimated selling price in the ordinary course of business less all estimated costs of completion
and costs necessary to be incurred in order to make the sales. 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
2.13 Trade debts and other receivables 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.
These are recognized initially at fair value plus directly attributable transaction costs, if any and subsequently measured at
amortized cost using effective interest rate method less provision for impairment, if any. A provision for impairment is A deferred tax asset is recognized to the extent that is probable that future taxable profits will be available against which
established if there is objective evidence that the Company will not be able to collect all amounts due according to the temporary difference can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it
original terms of receivables. The amount of provision is charged to profit and loss account. Trade debts and other is no longer probable that the related tax benefit will be realized.
receivables considered irrecoverable are written-off.
2.19 Employee benefits
2.14 Cash and cash equivalents
2.19.1 Defined contribution plans
Cash and cash equivalents in the statement of cash flows includes cash in hand, balance with banks, other short-term
highly liquid investments with original maturities of three months or less, and bank overdrafts / short term borrowings. Bank A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contribution into a separate
overdrafts are shown within short term borrowings in current liabilities on the balance sheet. entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined
contribution plans are recognized as an employee benefit expense in profit and loss account when they are due. Prepaid
2.15 Share capital contributions are recognized as an asset to the extent that a cash refund or a reduction in future payments is available.
Ordinary shares are classified as equity and recognized at their face value. Incremental costs directly attributable to the issue of

The Company contributes to:

2.20 Provisions
- defined contribution provident fund for its permanent employees. Monthly contributions are made both by the
Company and employees to the fund at the rate of 10% of basic salary. Provisions are recognized when the Company has a legal or constructive obligation as a result of past events and it is
probable that an outflow of resources will be required to settle the obligation and a reliable estimate can be made of the
- defined contribution pension fund for the benefit of those management employees who have not opted for defined amount of the obligation. Provisions are reviewed at each balance sheet date and adjusted to reflect current best estimate.
contribution gratuity fund as more fully explained in note 2.19.3. Monthly contributions are made by the Company to
the fund at rates ranging from 12.5% to 13.75% of basic salary. 2.21 Foreign currency transactions and translation
These financial statements are presented in Pakistan Rupees, which is the Company’s functional and presentation
- defined contribution gratuity fund for the benefit of those management employees who have selected to opt out of
currency. Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at
defined benefit gratuity fund and defined contribution pension plans as more fully explained in note 2.19.3. Monthly
the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and
contributions are made by the Company to the fund at the rate of 8.33% of basic salary.
from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are
2.19.2 Defined benefit plans recognized in the profit and loss account.
A defined benefit plan is a post-employment benefit plan other than the defined contribution plan. The Company's net 2.22 Revenue recognition
obligation in respect of defined benefit plans is calculated by estimating the amount of future benefit that employees have
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the amount
earned in return for their service in current and prior periods; that benefit is discounted to determine its present value. The
of revenue can be measured reliably. Revenue is measured at the fair value of the consideration received or receivable and
calculation is performed annually by a qualified actuary using the Projected Unit Credit method, related details of which are
is reduced for marketing allowances. Revenue is recognized on the following basis:
given in note 34 to the financial statements.
- Sales revenue is recognized when product is dispatched to customers;
Remeasurements (actuarial gains / losses) in respect of defined benefit plan are recognized directly in equity through other
- Income on deposits and other financial assets is recognized on accrual basis; and
comprehensive income; consequent to amendment in International Accounting Standard (IAS) 19 "Employee benefits".
- Commission income is recognized on an accrual basis in accordance with the substance of the relevant agreement.
Contributions require assumptions to be made of future outcomes which mainly include increase in remuneration, 2.23 Borrowing costs
expected long-term return on plan assets and the discount rate used to convert future cash flows to current values.
Calculations are sensitive to changes in the underlying assumptions. Borrowing costs are recognized as an expense in the period in which they are incurred except where such costs are
directly attributable to the acquisition, construction or production of a qualifying asset in which case such costs are
The Company also contributes to: capitalized as part of the cost of that asset. Borrowing costs includes exchange differences arising on foreign currency
borrowings to the extent these are regarded as an adjustment to borrowing costs and net gain / loss on the settlement of
- defined benefit funded pension scheme for its management employees. derivatives hedging instruments.
- defined benefit funded gratuity schemes for its management and non-management employees.
2.24 Research and development costs
The pension scheme provides life time pension to retired employees or to their spouses. Contributions are made annually
to these funds on the basis of actuarial recommendations. The pension scheme has been curtailed and effective from July Research and development costs are charged to profit and loss account as and when incurred.
1, 2005, no new members are inducted in this scheme.
2.25 Government grant
2.19.3 In June 2011, the Company gave a one time irrevocable offer to selected members of MPT Employees' Defined Benefit
Gratuity Fund and Defined Contribution Pension Fund to join a new MPT Employee's Defined Contribution Gratuity Fund Government grant that compensates the Company for expenses incurred is recognized in the profit and loss account on a
(the Fund), a defined contribution plan. The present value, as at June 30, 2011, of the defined benefit obligation of those systematic basis in the same period in which the expenses are recognized. Government grants are deducted from related
employees, who accepted this offer, were transferred to the Fund. Furthermore, from July 2011 onwards, the monthly expense.
contributions to Defined Contribution Pension Fund of such employees were discontinued.
2.26 Earnings per share
2.19.4 Service incentive plan
The Company presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by
The Company recognizes provision and an expense under a service incentive plan for certain category of experienced dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary
employees to continue in the Company’s employment. shares outstanding during the year. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary
shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares.
2.19.5 Employees' compensated absences
The Company accounts for compensated absences on the basis of unavailed leave balance of each employee at the end
of the period.

2.27 Transactions with related parties 4.1 Operating Assets

Land Building on Plant and Gas Catalyst Office Vehicles Total
Sales, purchases and other transactions with related parties are carried out on agreed terms and conditions. Freehold Leasehold Freehold Leasehold machinery Pipeline equipments
-----------------------------------------------------------------------------------------------------------(Rupees)----------------------------------------------------------------------------------------------
2.28 Dividend and appropriation to reserves
As at January 1, 2014
Dividend and appropriation to reserves are recognized in the financial statements in the period in which these are approved. Cost 149,575 187,320 2,573,248 367,922 90,120,695 1,706,826 1,783,177 669,566 408,718 97,967,047
Accumulated depreciation - (52,247) (749,037) (101,622) (17,540,344) (224,711) (1,245,351) (518,507) (263,863) (20,695,682)
3. Critical Accounting Estimates and Judgements Net book value 149,575 135,073 1,824,211 266,300 72,580,351 1,482,115 537,826 151,059 144,855 77,271,365
Estimates and judgments are continually evaluated and are based on historical experience and other factors, including Year ended December 31, 2014
expectations of future events that are believed to be reasonable under the circumstances. Net book value - January 1, 2014 149,575 135,073 1,824,211 266,300 72,580,351 1,482,115 537,826 151,059 144,855 77,271,365
Transfers from CWIP - - 19,608 65,615 363,864 708,137 176,997 82,973 28,164 1,445,358
3.1 Property, plant and equipment

Disposals / write offs (note 4.3)
Cost - - - - (347,810) - - (13,253) (79,656) (440,719)
The Company reviews appropriateness of the rate of depreciation, useful life, residual value used in the calculation of
Accumulated depreciation - - - - 52,053 - - 13,154 58,075 123,282
depreciation. Further where applicable, an estimate of recoverable amount of assets is made for possible impairment on an - - - - (295,757) - - (99) (21,581) (317,437)
annual basis.
Depreciation charge (note 4.2) - (4,393) (135,267) (10,428) (4,190,358) (66,646) (218,414) (53,154) (46,493) (4,725,153)
3.2 Income taxes Net book value 149,575 130,680 1,708,552 321,487 68,458,100 2,123,606 496,409 180,779 104,945 73,674,133
In making the estimates for income taxes, the management considers the applicable laws and the decisions / judgments of As at January 1, 2015
appellate authorities on certain issues in the past. Accordingly, the recognition of deferred taxes is made taking into Cost 149,575 187,320 2,592,856 433,537 90,136,749 2,414,963 1,960,174 739,286 357,226 98,971,686
account these judgments and the best estimates of future results of operations of the Company. Accumulated depreciation - (56,640) (884,304) (112,050) (21,678,649) (291,357) (1,463,765) (558,507) (252,281) (25,297,553)
Net book value 149,575 130,680 1,708,552 321,487 68,458,100 2,123,606 496,409 180,779 104,945 73,674,133
3.3 Provision for retirement and other service benefits obligations

Year ended December 31, 2015
Net book value - January 1, 2015 149,575 130,680 1,708,552 321,487 68,458,100 2,123,606 496,409 180,779 104,945 73,674,133
The present value of these obligations depend on a number of factors that are determined on actuarial basis using various
Transfers from CWIP - - 31,405 1,174 661,438 - - 87,348 37,512 818,877
assumptions. Any changes in these assumptions will impact the carrying amount of these obligations. The present value of
these obligations and the underlying assumptions are disclosed in note 34.2.3 and 34.2.8 respectively. Disposals / write offs (note 4.3)
Cost - - - - - - - (2,398) (54,794) (57,192)
Accumulated depreciation - - - - - - - 2,386 43,389 45,775
2015 2014 - - - - - - - (12) (11,405) (11,417)
-----------------(Rupees)------------------
4. Property, Plant and Equipment Depreciation charge (note 4.2) - (4,393) (135,353) (10,838) (4,200,022) (71,584) (216,820) (56,034) (33,473) (4,728,517)
Net book value 149,575 126,287 1,604,604 311,823 64,919,516 2,052,022 279,589 212,081 97,579 69,753,076
Operating assets at net book value (note 4.1) 69,753,076 73,674,133
Capital work in progress (note 4.4) 1,946,598 863,917
As at December 31, 2015
Major spare parts and stand-by equipment 492,615 424,767
Cost 149,575 187,320 2,624,261 434,711 90,798,187 2,414,963 1,960,174 824,236 339,944 99,733,371
72,192,289 74,962,817
Accumulated depreciation - (61,033) (1,019,657) (122,888) (25,878,671) (362,941) (1,680,585) (612,155) (242,365) (29,980,295)
Net book value 149,575 126,287 1,604,604 311,823 64,919,516 2,052,022 279,589 212,081 97,579 69,753,076
Annual rate of depreciation (%) - 2 to 5 2.5 to 8 2.5 5 to 10 5 No. of 10 to 25 12 to 25

production
days
4.2 Depreciation charge for the year has been allocated as follows:
2015 2014
--------------------(Rupees)---------------------
Cost of sales (note 25) 4,694,042 4,682,132

Selling and distribution expenses (note 26) 17,721 23,588
Administrative expenses (note 27) 16,754 19,433
4,728,517 4,725,153

4.3 The details of operating assets disposed / written off during the year are as follows: 4.4 Capital work in progress
2015 2014
--------------------(Rupees)---------------------
Description and Sold to Cost Accumulated Net book Sales
method of disposal depreciation value proceeds Plant and machinery 1,678,493 759,687
---------------------------------(Rupees)-------------------------------- Building and civil works including Gas pipeline 156,557 66,849
Vehicles Furniture, fixture and equipment 16,999 4,003
By Company policy to existing / Advances to suppliers 36,962 13,074
separating executives Asghar Ali Khan 2,058 1,061 997 2,058 Other ancillary cost 57,587 20,304
Asim Rasheed Qureshi 1,560 829 731 731 1,946,598 863,917
Azhar Ali Malik 1,965 1,474 491 491
Bilal Ali Shah 1,461 1,096 365 365 4.4.1 Balance as at January 1 863,917 1,640,564
Dr. Zaheer Ahmad 1,490 955 535 570 Additions during the year 1,916,961 679,549
Farooq Nazim Shah 1,960 1,470 490 490 Transferred to:
Kashif Rahim 1,510 1,133 377 378 - operating assets (note 4.1) (818,877) (1,445,358)
M. Asif Sultan Tajik 7,600 5,700 1,900 1,900 - intangible assets (note 5) (15,403) (10,838)
Majid Latif 1,965 1,474 491 491
Muhammad Ismail 1,510 1,133 377 378 Balance as at December 31 1,946,598 863,917
Muhammad Mushfiq Hussain 1,461 1,096 365 365
Nasir Iqbal 2,176 1,338 838 838 5. Intangible Assets
Nazir Jamali 1,490 1,118 372 373 Software and Rights for
S. Attaullah Shah Bokhari 1,510 1,133 377 378 licenses future gas Total
Tassawar Ali 1,500 1,057 443 443 utilization
31,216 22,067 9,149 10,249 ---------------------------------(Rupees)----------------------------------
Sale through bid Cost 239,493 102,312 341,805
Abdul Moeed Asif 666 599 67 538 Accumulated amortization (190,464) (12,877) (203,341)
Amir Jan 879 791 88 721 Net book value 49,029 89,435 138,464
Hassan Ali Warsi 900 675 225 723
Khalid Anwar 530 477 53 381 Year ended December 31, 2014
M/S U & H Textile 1,439 1,079 360 1,085 Net book value - January 1, 2014 49,029 89,435 138,464
M/S U & H Textile 588 529 59 495 Transfers from CWIP (note 4.4.1) 10,838 - 10,838
Mohammad Jawed 555 500 55 368 Amortization (note 5.1) (25,855) (5,111) (30,966)
Muhammad Akbar Awan 900 675 225 563 Net book value 34,012 84,324 118,336
Muhammad Imran 530 477 53 412
Nusrat Iqbal 1,319 1,187 132 794 As at December 31, 2014
Rana Abdus Samad 530 477 53 427 Cost 250,331 102,312 352,643
Said Faqeer 605 545 60 476 Accumulated amortization (216,319) (17,988) (234,307)
Salman 605 545 60 356 Net book value 34,012 84,324 118,336
Syed Zafar Akhtar Naqvi 666 599 67 479
Zeeshan Abdullah 915 839 76 916 Year ended December 31, 2015
11,627 9,994 1,633 8,734 Net book value - January 1, 2015 34,012 84,324 118,336
42,843 32,061 10,782 18,983 Transfers from CWIP (note 4.4.1) 15,403 - 15,403
Amortization (note 5.1) (22,142) (5,110) (27,252)
Items having net book value upto Rs. 50 each Net book value 27,273 79,214 106,487
Vehicles 11,951 11,328 623 10,019 As at December 31, 2015

Office equipment 2,398 2,386 12 259 Cost 265,734 102,312 368,046
Accumulated amortization (238,461) (23,098) (261,559)
Year ended December 31, 2015 57,192 45,775 11,417 29,261 Net book value 27,273 79,214 106,487
Year ended December 31, 2014 440,719 123,282 317,437 45,989

2015 2014 7.3 Represents interest free loans given to workers pursuant to Collective Labour Agreement.
--------------------(Rupees)---------------------
5.1 Amortization for the year has been allocated as follows: 8. Stores, Spares and Loose Tools
2015 2014
Cost of sales (note 25) 23,257 28,290 ---------------------(Rupees)--------------------
Selling and distribution expenses (note 26) 960 160
Administrative expenses (note 27) 3,035 2,516 Consumable stores 503,731 545,483
27,252 30,966 Spares 4,346,982 4,257,635
Tools 5,248 5,019
6. Investment in Subsidiary 4,855,961 4,808,137
During the year, the Company acquired 100% shareholding in Engro Eximp (Private) Limited (EEPL) from the Parent Less: Provision for surplus and slow moving items 216,819 94,391
Company. As decided by the Board of Directors of EEPL in its meeting held on February 9th 2015, EEPL has 4,639,142 4,713,746
discontinued its Coal and Agri commodities businesses. Moreover, the imported fertilizer business of EEPL is also being
phased out to the Company as part of the proposed Corporate Restructuring scheme of Engro Corporation to further 9. Stock-in-trade
strengthen synergies between the Company business lines and allow the Group to create value and increase its
footprint in agricultural inputs. Raw materials 1,190,730 714,857
Packing materials 59,937 90,475
The Board of Directors of EEPL in its meeting held on April 23, 2015 and the Board of Directors of the Company on Work in process 20,688 89,780
August 10, 2015 gave approvals to proceed with the proposed Scheme of Amalgamation (Scheme) of EEPL with the 1,271,355 895,112
Company and after relevant approvals, formalities and the Scheme being sanctioned by the Court, EEPL will
Finished goods:
amalgamate into the Company to form a single company.
- manufactured product 2,009,491 205,810
- purchased and packaged product 4,063,915 -
7. Long Term Loans and Advances - Considered good
2015 2014 6,073,406 205,810
--------------------(Rupees)--------------------
Less: Provision for NRV on finished goods 402,651 -
6,942,110 1,100,922
Executives (notes 7.1 and 7.2) 229,589 183,374
Other employees (note 7.3) 47,733 9,174 10. Trade Debts
277,322 192,548
Less: Current portion shown under current assets (note 12) Considered good
- Considered good 114,035 95,108 - Secured (note 10.1) 2,180,408 615,797
- Considered doubtful 3,509 3,509 - Unsecured 81,339 141,247
117,544 98,617 2,261,747 757,044
159,778 93,931 Considered doubtful 24,400 24,400
7.1 Reconciliation of the carrying amount of loans 2,286,147 781,444
and advances to executives Provision for impairment (note 10.2) (24,400) (24,400)
2,261,747 757,044
Balance at beginning of the year 183,374 187,302
Disbursements 200,724 144,339
Repayments / amortization (154,509) (148,267) 10.1 These debts are secured by way of bank guarantee and inland letter of credit.
Balance at end of the year 229,589 183,374
10.2 As at December 31, 2015, trade debts aggregating to Rs. 24,400 (2014: Rs. 24,400) were past due and provided for.
These receivables have been outstanding for more than 1 year from the balance sheet date.
7.2 Includes service incentive loans to executives of Rs. 111,599 (2014: Rs. 97,496). It also includes advances of Rs. 28,215
(2014: Rs. 31,309), Rs. 5,313 (2014: Rs. 24,994), Rs. 14,094 (2014: Rs. 16,383) Rs. 49,358 (2014: Rs. 13,192), Rs. 14,222
11. Sub-ordinated Loan to Subsidiary
(2014: Nil) and Rs. 6,788 (2014: Nil) to executives for car earn out assistance, long term incentive, house rent advance,
retention loan, other employee loan and employees advance salary respectively. The maximum amount outstanding at the
The Company entered into a working capital loan facility agreement with Engro Eximp (Private) Limited, (EEPL). Under
end of any month during the year ended December 31, 2015 from executives aggregated to Rs. 256,078 (2014: Rs. 229,956).
the agreement, the Company offered EEPL an unsecured working capital loan of upto Rs. 900,000. The mark up is
receivable at the rate of 3 months KIBOR +1% on quarterly basis. The amount is receivable by June 3, 2016.

2015 2014 13.2 The maximum amount due from the Parent Company, subsidiary and associated companies at the end of any month
--------------------(Rupees)--------------------- during the year aggregated as follows:
12. Loans, Advances, Deposits and Prepayments
2015 2014
Considered good ---------------------(Rupees)---------------------
Current portion of long term loans and advances to Parent Company
executives and other employees - (note 7) 114,035 95,108 - Engro Corporation Limited - 812
Advances and deposits 204,017 72,482 Subsidiary Companies
- Engro Eximp (Private) Limited 12,512 -
Prepayments - Engro Eximp FZE (Private) Limited 18,992 -
- Insurance 253,095 239,702 Associated Companies
- Others 17,100 25,651 - Engro Eximp (Private) Limited - 68,036
588,247 432,943 - Engro Foods Limited 5,913 3,027
Considered doubtful - advances and deposits (note 7) 3,509 3,509 - Engro Polymer & Chemicals Limited 10,575 6,012
Provision for impairment (note 12.1) (3,509) (3,509) - Engro Powergen Qadirpur Limited 15,059 16,457
588,247 432,943 - Engro PowerGen Limited 2,972 1,433
- Sindh Engro Coal Mining Company Limited 7,813 6,168
- Engro Eximp Agriproducts (Private) Limited - 2,252
12.1 As at December 31, 2015, advances and prepayments aggregating to Rs. 3,509 (2014: Rs. 3,509) were impaired and - Engro Foundation 3,809 282
provided for. These have been outstanding for more than 1 year from the balance sheet date. - Engro Elengy Terminal (Private) Limited 2,840 2,830
- Engro Vopak Terminal Limited 3,338 3,088
13. Other Receivables
2015 2014
---------------------(Rupees)---------------------
13.3 As at December 31, 2015, receivables aggregating to Rs. 11,076 (2014: Rs. 15,117) were past due but not impaired. The
Receivable from Government of Pakistan ( note 13.1) 1,128,957 544 ageing analysis of these receivables is as follows:
Sales tax receivable 181,653 - 2015 2014
---------------------(Rupees)---------------------
Due from subsidiary companies:
Upto 3 months 6,944 6,166
- Engro Eximp (Private) Limited 1,982 -
3 to 6 months 1,251 217
Due from associated companies:
More than 6 months 2,881 8,734
- Engro Foods Limited 301 24
11,076 15,117
- Engro Polymer & Chemicals Limited 280 -
- Engro Powergen Qadirpur Limited 4,330 100
- Engro Foundation 9 -
14. Short Term Investments
- Sindh Engro Coal Mining Company Limited 67 21
- Engro Elengy Terminal (Private) Limited 298 2,830 Financial assets at fair value through profit or loss
- Engro Vopak Terminal Limited 1,045 899
Treasury bills and other fixed income placements 10,984,555 24,085,079
Claims on foreign suppliers 10,278 13,215
Others 798 1,902 Loans and receivables
1,329,998 19,535
Reverse repurchase of treasury bills - 999,288
Less: Provision for impairment - 544
1,329,998 18,991 10,984,555 25,084,367
13.1 During the year, the Government of Pakistan notified the payment of subsidy at the rate of Rs. 500 per 50 kg bag of Di
Ammonia Phosphate (DAP), Rs.217 per 50 kg bag of Nitrophos (N) and Nitrogen, Phosphorous and Potassium (NPK)
fertilizers (based on phosphorous content) sold. The mode of payment of subsidy to the Company shall either be
adjustment against the sales tax liability or payment by the State Bank of Pakistan upon verification by the Federal Board
of Revenue.

14.1 These represent treasury bills at the interest rate ranging from 6.23% to 6.42% per annum (2014: 7.02% to 10.07% per 16.1 Movement In Issued, Subscribed And Paid Up Capital
annum); and local and foreign currency deposits with various banks, at interest rates ranging from 4.25% to 6.18% per
annum (2014: 7.25% to 9.15% per annum) and at 1.50% per annum (2014: 1.50% per annum) respectively. 2015 2014 2015 2014
-------------Number of shares------------ ----------------------(Rupees)-------------------
15. Cash and Bank Balances 1,318,341,667 1,222,800,000 At January 1 13,183,417 12,228,000
2015 2014 Ordinary shares of
----------------------(Rupees)------------------- Rs. 10 each issued
during the year as fully
Cash at banks on: - 75,000,000 paid in cash note -16.2 - 750,000
- deposit accounts (notes 15.1 and 15.2) 838,925 4,432,738
Ordinary shares of
- current accounts 19,127 3,098 Rs. 10 each issued
858,052 4,435,836 upon exercise of conversion option by
Cash in hand - imprest funds 7,250 7,250 International Finance
12,590,625 20,541,667 Corporation (IFC) note -16.3 125,906 205,437
865,302 4,443,086
1,330,932,292 1,318,341,667 13,309,323 13,183,437
15.1 Deposit accounts carried return at rates ranging from 4.00% to 6.00% per annum (2014: 6.5% to 8.98% per annum).
15.2 Includes Rs. 12,742 (2014: Rs.12,225) held in foreign currency bank accounts. 16.2 In 2013, the Company made Initial Public Offer through issue of 75 million ordinary shares of Rs. 10 each against which
shares have been issued last year.
16. Share Capital
2015 2014
--------------------(Rupees)--------------------- 16.3 These represent shares issued to IFC, pursuant to exercise of conversion option (note 18.7).
Authorized Capital
16.4 As at balance sheet date, the Parent Company held 78.8% of the share capital of the Company.
1,400,000,000 (2014: 1,400,000,000)
Ordinary shares of Rs. 10 each
17. Hedging Reserve 2015 2014
14,000,000 14,000,000 --------------------(Rupees)---------------------
Issued, subscribed and paid-up capital
258,132,299 (2014: 245,541,674) Ordinary shares of Hedging reserve on interest rate swaps (7,545) (59,450)
Rs. 10 each, fully paid in cash 2,581,323 2,455,417 Deferred tax thereon 3,009 19,619
(4,536) (39,831)
9,999,993 (2014: 9,999,993) Ordinary shares of
Rs. 10 each issued as at January 1, 2010 17.1 Hedging reserve represents the effective portion of changes in fair values of designated cash flow hedges, net off
on transfer of fertilizer undertaking 100,000 100,000 associated gains / losses recognized in initial cost of the hedged item and profit and loss account where applicable.
1,062,800,000 (2014: 1,062,800,000) Ordinary shares of

Rs. 10 each, issued as fully paid bonus shares 10,628,000 10,628,000
13,309,323 13,183,417

18. Borrowings - Secured (Non-participatory) 18.1 During the year, a number of loans including from Askari Bank Limited, Citibank N.A., Standard Chartered (Pakistan)
Installments Limited, Bank Islami Pakistan Limited and Term Finance Certificates (3rd Issue) was refinanced through a loan from United
Note Mark - up Number Commenced / 2015 2014 Bank Limited. The pricing of the new loan is 6 month KIBOR + 0.65%, while the repayment schedule matches exactly with
rate p.a. Commencing from -----------------Rupees------------------- the refinanced loans. The loan was made a part of the Inter Creditor Agreement (ICA) and thus has the same charge with
Long term finance utilized
the other Senior Lenders. The new loan does not have a Corporate Guarantee from the Parent Company unlike the other
under mark-up arrangements:
Senior Lenders.
Senior Lenders
Habib Bank Limited 6 months KIBOR + 1.1% 8 half yearly March 31, 2013 199,714 257,290 18.2 These loans were fully pre-paid during the year.
Allied Bank Limited 6 months KIBOR + 1.1% 8 half yearly June 26, 2013 399,160 514,066
Askari Bank Limited 18.1 6 months KIBOR + 1.1% 8 half yearly June 30, 2013 - 64,599 18.3 During the year, the Company negotiated re-pricing for the following borrowings:
Citibank N.A. 18.1 6 months KIBOR + 1.1% 8 half yearly July 22, 2013 - 25,840
Standard Chartered Bank
(Pakistan) Limited 18.1 6 months KIBOR + 1.1% 8 half yearly June 30, 2013 - 128,644
Bank Islami Pakistan Limited 18.1 6 months KIBOR + 2.4% 14 half yearly May 26, 2010 - 181,709
Silk Bank Limited 18.2 6 months KIBOR + 2.35% 10 half yearly January 21, 2013 - 180,000 Bank Mark - up rate per annum Effective
National Bank of Pakistan 6 months KIBOR + 1.1% 10 half yearly March 5, 2013 790,364 788,842 Original Repriced Date of
Faysal Bank Limited 18.3 6 months KIBOR + 1.2% 13 half yearly May 26, 2013 859,503 857,785
Repricing
Dubai Islamic Bank
Pakistan Limited 18.2 6 months KIBOR + 2.11% 9 half yearly June 30, 2013 - 294,409 Senior Lenders
Standard Chartered Bank Faysal Bank Limited 6 months KIBOR + 2.35% 6 months KIBOR + 1.20% 26-Nov-15
(Pakistan) Limited 18.3 6 months KIBOR + 0.9% 14 half yearly June 14, 2013 593,090 591,118 Standard Chartered Bank
Samba Bank Limited 18.3 6 months KIBOR + 0.9% 14 half yearly April 1, 2013 296,813 295,954
(Pakistan) Limited 6 months KIBOR + 2.40% 6 months KIBOR + 0.90% 17-Jun-15
National Bank of Pakistan 18.3 6 months KIBOR + 1.2% 10 half yearly September 28, 2013 545,050 543,165
Syndicated finance 18.4 6 months KIBOR + 1.8% 14 half yearly February 28, 2013 9,880,750 9,853,119 Samba Bank Limited 6 months KIBOR + 2.40% 6 months KIBOR + 0.90% 1-Jul-15
Islamic offshore finance 18.5 6 months LIBOR + 2.57% 9 half yearly March 28, 2013 3,525,468 5,312,289 National Bank of Pakistan 6 months KIBOR + 2.40% 6 months KIBOR + 1.20% 28-Sep-15
DFI Consortium finance 18.6 6 months LIBOR + 2.6% 7 payments July 29, 2013 2,789,150 3,589,561 Habib Metropolitan Bank Limited 6 months KIBOR + 2.40% 6 months KIBOR + 0.90% 21-Dec-15
Habib Metropolitan Pak Kuwait Investment Company
Bank Limited 18.3 6 months KIBOR + 0.9% 10 half yearly June 21, 2013 80,000 120,000
Pak Kuwait Investment
(Private) Limited 6 months KIBOR + 2.35% 6 months KIBOR + 1.0% 1-Nov-15
Company (Private) Limited 18.3 6 months KIBOR + 1.0% 10 half yearly April 30, 2012 99,803 199,297
United Bank Limited 18.1 6 months KIBOR + 0.65% 8 payments December 17, 2015 1,460,855 -
18.4 This represents the balance amount of a syndicated finance agreement with Habib Bank Limited, National Bank of
Subordinated Lenders
Pakistan, United Bank Limited, MCB Bank Limited, Standard Chartered Bank (Pakistan) Limited, Bank Alfalah Limited,
International Finance Allied Bank Limited, Askari Bank Limited, Habib Metropolitan Bank Limited, SUMMIT Bank Limited, SONERI Bank Limited
Corporation 18.7 6 months LIBOR + 6% 3 half yearly September 15, 2015 2,415,784 3,365,332 and PAK-LIBYA Holding Company (Private) Limited.
International Finance
Corporation 18.7 6 months LIBOR + 6% 3 half yearly September 15, 2016 2,284,468 2,458,031
18.5 This represents the balance amount of an offshore Islamic Finance Facility Agreement of USD 36,000 with Habib Bank
Dubai Islamic Bank
Pakistan Limited 18.8 6 months KIBOR + 1.75% 4 half yearly November 30,2018 800,000 800,000 Limited, National Bank of Pakistan and SAMBA Financial Group and Rs. 3,618,000 with Faysal Bank (previously share
Certificates belonged to Citi Bank N.A.), Dubai Islamic Bank Pakistan Limited and Standard Chartered Bank (Pakistan) Limited.
Term Finance Certificates
3rd Issue 18.1 6 months KIBOR + 2.4% 14 half yearly June 17, 2010 - 1,432,006
On March 31, 2015, Faysal Bank acquired Citi Bank N.A.'s share in the PKR portion of the Islamic Finance Facility.
Sukuk Certificates 18.9 6 months KIBOR + 1.5% 2 half yearly March 6, 2015 - 2,998,472
Privately Placed Subordinated
Term Finance Certificates 18.10 6,000,000 6,000,000 18.6 This represents the balance amount of a facility agreement amounting to USD 85,000 with a consortium of Development
Privately Placed Subordinated Finance Institutions comprising of DEG, FMO and OFID.
Sukuk Certificates 18.11 6 months KIBOR + 1.75% 10 half yearly January 9, 2015 3,006,272 3,151,823
36,026,244 44,003,351
Less: Current portion shown 18.7 The Parent Company entered into a C Loan Agreement (Original Agreement) dated September 29, 2009 with International
under current liabilities 10,736,586 7,912,729 Finance Corporation (IFC) for USD 50,000, divided into Tranche A (USD 15,000) and Tranche B (USD 35,000). Both
Tranche A and B were fully disbursed as at December 31, 2009 and transferred to the Company under the scheme of
25,289,658 36,090,622
demerger effective January 1, 2010. However, the option given to convert the Tranche A loan amount of USD 15,000
remained upon the Parent Company’s ordinary shares at Rs. 205 per ordinary share (reduced to Rs. 155.30 and Rs.
119.46 as at December 31, 2011 and December 31, 2012 respectively consequent to bonus issues) calculated at the dollar
rupee exchange rate prevailing on the business day prior to the date of the notices issued by IFC to exercise the conversion
option. Such option was to be exercised within a period of no more than five years from the date of disbursement of the

loan (December 28, 2009). Tranche B, however, is not convertible. The Parent Company, upon shareholders’ approval in Loans from the IFC are secured by a sub-ordinated mortgage upon immovable property of the Company and
the Annual General Meeting of February 27, 2010, has entered into an agreement with the Company that in the event sub-ordinated charge over all present and future fixed assets excluding immovable property of the Company. Further,
IFC exercises the aforementioned conversion option (Tranche A), the loan amount then outstanding against the Company Privately Placed Term Finance Certificates (PPTFCs) are secured by a subordinated floating charge over all present and
would stand reduced by the conversion option amount and the Company would pay the rupee equivalent of the future fixed assets excluding land and buildings. Subordinated Dubai Islamic Bank Pakistan Limited (DIBPL) loan and
corresponding conversion amount to the Parent Company which would simultaneously be given to the Company as a Privately Placed Subordinated Sukuk (PPSS) has a subordinate mortgage upon immovable property of the Company and
subordinated loan, carrying mark-up payable by the Parent Company for rupee finances of like maturities plus a margin of a subordinate charge over current and future fixed assets excluding immovable property of the Company.
1%. The effect of IFC conversion resulted in a loan from the Parent Company having the same repayment terms / dates as
that of Tranche A. The Parent Company has issued corporate guarantees in respect of all debts excluding a bilateral loan from UBL, a
Subordinated DIBPL loan and PPSS. For PPTFCs and loans from IFC, the Company has issued a subordinated corporate
In 2014, IFC exercised its entire conversion option for an outstanding amount of USD 15,000 of Tranche A and accordingly guarantee.
12,515,319 ordinary shares of the Parent Company were issued to the IFC.
18.13 In view of the substance of the transactions, the sale and repurchase of assets under long term finance have not been
On December 22, 2010, the Company and IFC entered into an amended agreement for further disbursement of USD recorded in these financial statements.
30,000 over and above the aforementioned disbursed amount of USD 50,000. The amount was fully disbursed as at June
30, 2011. The salient features of the Original Loan essentially remained the same and some of the terms of the loan were
further amended through an agreement dated January 29, 2014. The additional loan of USD 30,000 is divided into (i) 2015 2014
Assets Liabilities Assets Liabilities
Tranche A2 30% convertible loan on the shares of the Company at Rs. 24.00 per ordinary share calculated at the dollar
---------------------------------(Rupees)---------------------------------
rupee exchange rate prevailing on the business day prior to the date of the notices issued by IFC to exercise the conversion
19. Derivative Financial Instruments
option and (ii) Tranche B2 70% non-convertible loan. The additional loan is repayable by September 15, 2017 in three equal
installments and carries interest at 6 months LIBOR plus a spread of 6%. Conversion options on IFC loan
(note 18.7) - 298,749 - 965,326
On June 25, 2014, the Company received a notice from the IFC for exercise of option on USD 5,000 loan which, along with Cash flow hedges:
the fair value of related options on that date has been classified as equity; accordingly 20,541,667 ordinary shares of the - Foreign exchange forward
Company were allotted to the IFC. During the year, the Company received a notice from IFC for exercise of further USD contracts - net (note 19.1) 29,207 54,569 - 54,800
3,000 loan on January 9, 2015 out of the remaining USD 4,000 of Tranche A2, accordingly 12,590,625 ordinary shares of - Interest rate swaps (note 19.2) - 13,166 - 76,652
the Company have been allotted to the IFC on January 26, 2015. The fair value of the remaining conversion option, 29,207 366,484 - 1,096,778
included in derivative financial instruments, amounts to Rs. 298,749 (note 19). Less: Current portion shown under
current assets / liabilities
Conversion options on IFC loan - 298,749 - 965,326
18.8 The Company arranged a loan facility of Rs. 800,000 from Dubai Islamic Bank Pakistan Limited on December 1, 2014. This
Cash flow hedges:
loan was used to repay the sub-ordinated loan received from the Parent Company on account of exercise of IFC - Foreign exchange forward contracts 29,207 54,569 - 54,800
conversion option as more fully explained in aforementioned note. During the year, effecitve May 28, 2015, the facility price - Interest rate swaps - 13,166 - 69,963
was changed to 1.75% from 1% in accordance with the agreed terms and conditions. 29,207 366,484 - 1,090,089
- - - 6,689
18.9 This represents Sukuk Certificates of Rs. 3,000,000. Dubai Islamic Bank Pakistan Limited is the trustee for these
certificates. During the year, the amount has been fully repaid. 19.1 Foreign exchange forward contracts
18.10 This represents Privately Placed Subordinated TFCs amounting to Rs. 4,000,000 (PPTFC Issue I) and Rs. 2,000,000 The Company entered into various USD : PKR forward contracts to hedge its foreign currency exposure. As at
(PPTFC Issue II) respectively. The PPTFCs are perpetual in nature with a five year call and a ten year put option. The PPTFC December 31, 2015, the Company has forward contracts to purchase USD 96,133 (2014: USD 94,680) at various
I issue has mark-up of six months KIBOR plus 2.1% whereas the PPTFC II issue has mark-up of six months KIBOR plus maturity dates to hedge its foreign currency exposure, primarily loan obligations. The net fair value of these contracts as
1.65%. IGI Investment Bank Limited is the trustee for these TFCs. In 2011, the aforementioned TFCs have been listed on at December 31, 2015 is negative and amounted to Rs. 25,362 (2014: Rs. 54,800 negative).
the Over-The-Counter (OTC) market of the Pakistan Stock Exchange Limited.
18.11 This represents Privately Placed Subordinated Sukuk (PPSS) amounting to Rs. 3,200,000. Pak Brunei Investment
Company Limited is the Trustee while Meezan Bank Limited acts as the Investment Agent for this Sukuk. The Company
used PPSS to refinance the subordinated loan from the Parent Company.
18.12 All senior debts are secured by an equitable mortgage upon immovable property of the Company and equitable charge
over current and future fixed assets excluding immovable property of the Company.

19.2 Interest rate swap 20.3 Deferred income
The Company entered into interest rate swap agreement to hedge its interest rate exposure on floating rate committed This represents an amount of Rs. 96,627 received from Engro Powergen Qadirpur Limited, an associated company for the right
borrowing from a consortium of Development Finance Institutions for a notional amount of USD 7,727 (2014: USD 23,182) to use the Company's infrastructure facilities at Daharki Plant by the employees of Engro Powergen Qadirpur Limited for a period
amortizing upto April 2016. Under the swap agreement, the Company would receive USD-LIBOR from Standard Chartered of twenty five years. The amount is being amortized over such period.
Bank (Pakistan) Limited on notional amount and pay fixed 3.73% which will be settled semi-annually. The fair value of the
2015 2014
interest rate swap as at December 31, 2015 is negative and amounted to Rs. 13,166 (2014: Rs. 76,652 negative). ---------------------(Rupees)-------------------
2015 2014
21. Service Benefits Obligations
---------------------(Rupees)-------------------
20. Deferred Liabilities Service benefit obligation 172,599 156,683
Deferred taxation (note 20.1) 6,419,916 5,149,666 Less: Current portion shown under
Deferred income (note 20.3) 73,114 76,980 current liabilities 48,232 43,338
6,493,030 5,226,646 124,367 113,345
20.1 Deferred taxation

22. Trade and Other Payables
Creditors (note 22.1) 8,766,061 14,616,341

Credit / (Debit) balances arising on account of:
Accrued liabilities 2,059,229 1,177,824
- Accelerated depreciation allowance 13,959,978 15,485,581
Advances from customers 1,280,321 6,475,033
- Carried forward tax losses substantially
Sales tax payable - 983,406
pertaining to unabsorbed tax depreciation (976,498) (7,630,091)
Payable to:
- Recoupable minimum turnover tax (note 20.2) (2,491,715) (1,276,725)
- Engro Corporation Limited 43,960 103,602
- Fair values of hedging instruments (3,009) (19,619)
- Engro Eximp (Private) Limited (note 22.2) - 448,680
- Alternative Corporate Tax (3,962,572) (1,362,800)
- Engro Polymer & Chemicals Limited 10,181 8,774
- Provision for:
- Engro Eximp Agriproducts (Private) Limited 475 -
- staff retirement benefits (18,819) (6,321)
- Engro Eximp FZE (Private) Limited 3,267,956 -
- slow moving stores and spares and
- Elengy Terminal Pakistan Limited 275 -
doubtful receivables (87,449) (40,359)
Deposits from dealers refundable on
6,419,916 5,149,666 termination of dealership 16,297 15,623
Contractors' deposits and retentions 58,076 44,214
Workers' welfare fund 1,046,680 614,661
20.2 In 2013, the High Court of Sindh, in respect of another company, has overturned the interpretation of the Appellate Tribunal on Workers' profits participation fund 11,892 38,828
Section 113 (2)(c) of the Income Tax Ordinance, 2001 and has decided that the minimum turnover tax cannot be carried forward Others 325,453 199,735
where there is no tax paid on account of loss for the year. The Company's management is however of the view, duly supported 16,886,856 24,726,721
by legal advisor, that the above order is not correct and would not be maintained by Supreme Court. Therefore, the Company
has continued to carry forward minimum tax as reflected above.

22.1 This includes Rs. 789,775 (2014: Rs. 12,580,333) on account of the levy of Gas Infrastructure Development Cess (GIDC). 23.6 All Pakistan Textile Processing Mills Association (APTMA), Agritech Limited (Agritech), Shan Dying & Printing Industries (Private)
Limited and 27 others have each contended, through separate proceedings filed before the Lahore High Court that the supply to
During the year, the Parliament passed the GIDC Act 2015 in May 2015 which seeks to impose GIDC levy since 2011. The the Company’s expansion plant is premised on the output from Qadirpur gas field exceeding 500 mmscfd by 100 mmscfd and
Company has challenged the validity and promulgation of GIDC Act, 2015 before the Honorable High Court of Sindh, wherein the Gas Sale and Purchase Agreement (GSA) dated April 11, 2007 with Sui Northern Gas Pipeline Company Limited (SNGPL) be
the Court passed interim orders, thereby restraining Mari Gas, Oil and Gas Development Company Limited, Spud Energy Pty declared void ab initio because the output of Qadirpur has infact decreased. Agritech has additionally alleged discrimination in
Limited, Government Holdings (Private) Limited and IPR TransOil Corporation from recovering GIDC arrears till the pendency of
that it is receiving less gas than the other fertilizer companies on the SNGPL system. The Company has out rightly rejected these
the matter. Further, the Court has also passed interim orders restraining Sui Northern Gas Pipeline Limited from charging or
contentions, and is of the view that it has a strong case for the reasons that (1) 100 mmscfd gas has been allocated to the
recovering GIDC on concessionary gas. However, at the request of the Government, and without compromising on the legal
stance, the fertilizer industry agreed to pay GIDC arrears except on concessionary gas/fixed price contracts to the Government. Company through a transparent international competitive bidding process held by the Government of Pakistan, and upon
payment of valuable license fee, (2) GSA guarantees uninterrupted supply of gas to the expansion plant, with right to first 100
22.2 This includes amount of Nil (2014: Rs. 462,168) due to Engro Eximp (Private) Limited in respect of funds collected on their behalf mmscfd gas production from the Qadirpur gas field, and (3) both the Company and the Qadirpur gas field, that is to initially supply
by the Company under an agreement as a selling agent of imported fertilizers partly off set by receivable balance in respect of inter gas to the Company are located in Sindh. Also neither the gas allocation by the Government of Pakistan nor the GSA predicates
company reimbursements. the gas supply from Qadirpur field producing 100 mmscfd over 500 mmscfd. No orders have been passed in this regard and the
petition has also been adjourned sine die. However, the Company’s management, as confirmed by the legal advisor, considers
23. Contingencies and Commitments chances of petitions being allowed to be remote.
Contingencies 23.7 The Company along with other fertilizer companies, received a show cause notice from the Competition Commission of Pakistan
(CCP) for initiating action under the Competition Act, 2010 in relation to unreasonable increase in fertilizer prices. The Company
23.1 Bank guarantees of Rs.1,402,223 (2014: Rs. 1,075,119) have been issued in favor of third parties. has responded in detail that factors resulting in such increase were mainly the imposition of infrastructure cess and sales tax and
partially the gas curtailment. The CCP has issued an order in March 2013, whereby it has held that the Company enjoys a
23.2 Claims, including pending lawsuits, against the Company not acknowledged as debts amounted to Rs.109,685 (2014: dominant position in the urea market and that it has abused this position by unreasonable increases of urea prices in the period
Rs. 55,038). from December 2010 to December 2011. The CCP has also held another fertilizer company to be responsible for abusing its
dominant position. In addition, the CCP has imposed a penalty of Rs. 3,140,000 and Rs. 5,500,000 on the Company and that
23.3 The Company is contesting a penalty of Rs. 115,631 paid and expensed in 1997, imposed by the State Bank of Pakistan (SBP) for other fertilizer company respectively. An appeal has been filed in the Competition Appellate Tribunal (at present non-functional)
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 and a writ has been filed in the Sindh High Court and stay has been granted against the recovery of the imposed fine. The
Rs. 62,618 however, recovered in 1999 from SBP and the recovery of the balance amount is dependent on the Court's decision. Company's management believes that the chances of ultimate success are very good, as confirmed by legal advisor. Hence, no
provision has been made in these financial statements.
23.4 The Parent Company had commenced two separate arbitration proceedings against the Government of Pakistan for 2015 2014
non-payment of marketing incidentals relating to the years 1983-84 and 1985-86 respectively. The sole arbitrator in the second --------------------(Rupees)--------------------
case has awarded the Parent Company Rs. 47,800 whereas the award for the earlier years is awaited. The award for the second 23.8 Commitments
arbitration was challenged in High Court of Sindh. In December 2013, the High Court of Sindh has upheld the award. However, as
Commitments in respect of capital expenditure and other operational items 995,392 917,592
this can be challenged by way of further appeals, it will be recognized as income on realization thereof.
23.5 The Company had filed a constitutional petition in the High Court of Sindh, Karachi against the Ministry of Petroleum and Natural
23.9 Facilities
Resources (MPNR), Ministry of Industries and Production (MIP) and Sui Northern Gas Pipeline Company Limited (SNGPL) for The Company has funded facilities for short term finances available from various banks and institutional investors amounting to Rs.
continuous supply of 100 mmscfd gas per day to the Enven Plant and to prohibit from suspending, discontinuing or curtailing the 7,050,000 (2014: Rs. 4,350,000) along with non-funded facilities of Rs. 1,600,000 (2014: Rs. 1,300,000) for Bank Guarantees. The
aforementioned supply. The High Court of Sindh in its order dated October 18, 2011, has ordered that SNGPL should supply 100 rates of markup on funded bank overdraft facilities ranged from 7% to 12.13% per annum and all the facilities are secured by
mmscfd of gas per day to the Company’s new plant. However, five petitions have been filed in the Supreme Court of Pakistan floating charge upon all present and future stocks including raw and packaging materials, finished goods, stores and spares and
against the aforementioned order of the High Court of Sindh by SNGPL, MPNR, Agritech Limited, Pak Arab Fertilizers and other merchandise and on all present and future book debts, outstanding monies, receivable claims and bills of the Company.
Kohinoor Mills Limited along with 21 other companies (mainly engaged in textile business). The aforementioned petitions are The Company has not utilised any amount from these facilities as at the balance sheet date.
pending for further hearing. The Company’s management, as confirmed by the legal advisor consider the chances of petitions
being allowed to be remote. 2015 2014
---------------------(Rupees)--------------------
Further, the Company upon continual curtailment of gas after the aforementioned decision of the High Court has filed an 24. Net sales
application in respect of Contempt of Court under Article 199 & 204 of the Constitution of Pakistan. The Company, in the
aforementioned application has submitted that SNGPL and MPNR has failed to restore full supply of gas to the Company’s plant Gross sales:
despite the judgment of High Court in the Company’s favor. A show cause notice has also been issued against MPNR and - manufactured product 72,899,472 72,048,248
SNGPL dated December 31, 2011 by the High Court. The application is pending for hearing and no orders have yet been passed - purchased and packaged product 27,833,764 -
in this regard. - subsidy from Government of Pakistan (note 13.1) 2,611,879 -
103,345,115 72,048,248
Less: Sales tax 15,729,857 10,623,314
87,615,258 61,424,934
24.1 This includes trade discount amounting to Rs. 847,715 (2014: Rs. 4,648).

2015 2014 2015 2014

--------------------(Rupees)-------------------- --------------------(Rupees)--------------------
26. Selling and Distribution Expenses
25. Cost of Sales
Salaries, wages and staff welfare (note 26.1) 553,708 447,608
Cost of sales - manufactured product Staff recruitment, training, safety
and other expenses 61,856 62,874
Raw materials consumed 18,589,567 23,208,543 Product transportation and handling 3,504,608 2,810,382
Salaries, wages and staff welfare (note 25.1) 2,178,564 1,949,037 Royalty expense 929,158 878,797
Fuel and power 7,499,418 6,597,224 Repairs and maintenance 4,404 5,713
Repairs and maintenance 910,283 706,385 Advertising and sales promotion 49,737 42,276
Depreciation (note 4.2) 4,694,042 4,682,132 Rent, rates and taxes 206,317 67,178
Amortization (note 5.1) 23,257 28,290 Communication, stationery and other office expenses 23,011 20,806
Consumable stores 1,715,645 384,971 Travel 52,355 45,814
Staff recruitment, training, safety and other expenses 142,557 172,497 Depreciation (note 4.2) 17,721 23,588
Purchased services 406,887 367,700 Amortization (note 5.1) 960 160
Travel 50,938 55,739 Purchased services 13,866 4,631
Communication, stationery and other office expenses 21,874 33,517 Insurance 24,754 22,860
Insurance 354,351 408,919 Other expenses 10,489 8,692
Rent, rates and taxes 11,747 7,073 5,452,944 4,441,379
Other expenses 3,218 565
Manufacturing cost 36,602,348 38,602,592 26.1 Salaries, wages and staff welfare includes Rs. 39,460 (2014: Rs. 30,089) in respect of staff retirement benefits.
Add: Opening stock of work in process 89,780 71,880
Less: Closing stock of work in process (note 9) 20,688 89,780
Cost of goods manufactured 36,671,440 38,584,692 2015 2014
--------------------(Rupees)--------------------
Add: Opening stock of finished goods manufactured 205,810 443,541
27. Administrative Expenses
Less: Closing stock of finished goods manufactured (note 9) 1,982,363 205,810
Cost of sales 34,894,887 38,822,423
Staff recruitment, training, safety and other expenses 43,104 46,687
Repairs and maintenance 13,876 13,349
Cost of sales - purchased and packaged product
Rent, rates and taxes 66,733 50,083
Communication, stationery and other office expenses 38,495 47,265
Purchase of product 23,837,192 -
Travel 33,803 17,920
Add: Processing and packaging cost 391,764 -
Depreciation (note 4.2) 16,754 19,433
Less: Closing Stock - purchased and packaged product 3,688,392 -
Amortization (note 5.1) 3,035 2,516
20,540,564 -
Purchased services 167,362 179,645
55,435,451 38,822,423
Donations (note 39) 68,156 40,259
Insurance 1,650 1,398
25.1 Salaries, wages and staff welfare includes Rs. 123,709 (2014: Rs. 107,278) in respect of staff retirement benefits.
Provision against other receivables (544) 544
Other expenses 21,996 20,534
863,427 772,161

2015 2014 2015 2014

--------------------(Rupees)-------------------- --------------------(Rupees)--------------------
28. Other Income 29. Other Operating Expenses
On financial assets Workers' profits participation fund 1,136,892 638,828

Income on deposits, treasury bills and term deposit certificates 1,295,365 1,941,365 Workers' welfare fund 432,019 242,755
Income on Pakistan Investment Bond 14 73,835 Research and development (including salaries and wages) 101,425 54,339
Income on mutual funds 8,109 11,580 Auditors' remuneration (note 29.1) 6,708 8,710
Income on subordinated loan to subsidiary company 39,812 - Legal and professional charges 125,342 101,504
Loss on disposal of property, plant and equipment (note 4.3) - 271,448
On non-financial assets Provision for trade debts and loans & advances - (4,934)
Commission income (note 28.1) 660 192,921 Others 11,253 5,093
Gain on disposal of property, plant and equipment (note 4.3) 17,844 - 1,813,639 1,317,743
Rental income 4,567 4,321
Reversal of provision for infrastructure cess (note 28.2) 50,000 - 29.1 Auditors' remuneration
Gain on disposal of spares / scrap 13,895 16,277
Others (note 28.3) 276,793 208,857 Fee for:
363,759 422,376 - audit of annual financial statements 2,215 1,875
1,707,059 2,449,156 - special audit / review of half yearly financial information 350 225
- certifications and audit of retirement funds 1,817 3,810
- tax services 1,875 2,000
28.1 Represents commission earned as selling agent of imported fertilizer on behalf of Engro Eximp (Private) Limited, - reimbursement of expenses 451 800
Subsidiary Company, under an amended agreement effective January 1, 2011. 6,708 8,710
28.2 As per the interim arrangement with the Excise and Customs authorities, the bank guarantees furnished by the 30. Finance Cost
Company (Appellants before the Supreme Court) upto December 27, 2006 were discharged and returned. As agreed,
50% in value of the Bank Guarantees furnished for consignments released after the aforesaid date were permitted to be Interest / mark-up / return on:
enchased; the remaining 50% were to be retained until a judicial resolution. It was specifically agreed, as per the joint - long term borrowings 3,830,677 5,663,982
statement, that after May 31, 2011 all imports would be released on payment of 50% cash and 50% bank guarantee. - short term borrowings 63,862 28,738
Loss on fair value of IFC conversion option 28,551 210,587
The management of the Company being confident that no demand will be raised for any amount pertaining to the Foreign exchange loss - net 664,836 722,090
period prior to December 27, 2006, has reversed the provision relating to that period. 4,587,926 6,625,397
31. Taxation
28.3 This includes Rs. 141,936 (2014: Nil) in respect of damaged compressor claim and Nil (2014: Rs. 98,226)
received against insurance claim of KS Coil which was written off in 2014. Current
- for the year (note 31.3) 3,675,656 2,011,924
- for prior years (note 31.4) 242,863 (50,529)
3,918,519 1,961,395
Deferred 2,222,930 1,725,632

6,141,449 3,687,027

31.1 During the year, the income tax department amended the assessment filed by the Company for tax year 2014. The The Company is confident that all pending issues will eventually be decided in its favor.
Company filed the appeal before Commissioner Inland Revenue (Appeals) against disallowances made through the
assessment, which mainly pertained to exchange gain and loss, loss on derivative and losses purchased from Engro 31.7 During the year, the Company received a sales tax order from the tax department for the year ended December 31, 2013
Eximp Agriproducts under section 59B of the Income Tax Ordinance, 2001. In addition the tax department raised pertaining to discharge of output tax liability, on assumed production of urea amounting to Rs. 402,875 and on
demand for the Alternative Corporate Tax through the same order, for which the company specifically obtained a stay presumption that output tax liability is not being discharged by the Company on advances received from dealers
order. The case is pending to be heard with the CIR(A) and the Company is confident of a favourable outcome. amounting to Rs. 1,844,075. The Company filed appeal with the Commissioner Inland Revenue (Appeals) which has
decided the matters in favor of the Company. The department has now challenged the decision of the CIR(A) with the
31.2 Last year, the income tax department amended the assessment filed by the Company for tax years 2010 and 2011.The Appellate Tribunal Inland Revenue, which is pending to be heard.
Company filed the appeals before Appellant Tribunal Inland Revenue (ATIR) against the said disallowances, which
through its decision during last year, provided relief in respect of certain items and confirmed certain disallowances in 31.8 Relationship between tax expense and accounting profit
favor of the tax department. The said disallowances included the charge in respect of exchange gain and loss incurred
for tax year 2010 and tax year 2011 , and loss on derivative for tax year 2011. During the year, the Company has The tax on the Company's profit before tax differs from the theoretical amount that would arise using the Company's
challenged the said decision before High Court of Sindh, which is pending to be heard and is confident of a favourable applicable tax rate as follows:
outcome. 2015 2014
--------------------(Rupees)---------------------
31.3 Includes alternative corporate tax under section 113C of the Income Tax Ordinance, 2001 (introduced vide Finance Act
2014) amounting to Rs. 2,599,772 for the year (2014: Rs. 1,362,800) and minimum turnover tax amounting to Rs
876,153 (2014: Rs. 614,249).
Tax calculated at the rate of 32% (2014: 33%) 6,774,058 3,925,346
Depreciation on exempt assets not deductible for tax purposes 3,043 3,140
The Company had filed suit in the High Court of Sindh, against the Federal Board of Revenue contesting both the
Tax effect of:
retrospective and prospective application of the above section 113C and was granted stay for prior year 2013 & 2014
- Expenses not allowed for tax 30,765 24,041
during 2014 and was granted the same during the year for the current year end.
- Final Tax Regime / separate block of income (1,511) (42,887)
Effect of:
31.4 This includes an amount of Rs. 361,258 on account of provision in accordance with section 4B 'Super Tax for
- Tax credits (159,784) (66,895)
rehabilitation of temporarily displaced persons' introduced in the Income Tax Ordinance, 2001 (the Ordinance) through
- Change in tax rates (1,069,026) (103,825)
Finance Act, 2015, whereby tax at three per cent is payable on specified income exceeding Rs. 500,000 for the year
- Prior year current and deferred tax charge 563,904 (95,893)
ended December 31, 2014 (tax year 2015). Further, the management has adjusted the prior tax charge by Rs. 118,395 in
Others - 44,000
respect of BMR credit under section 65B of the Ordinance.
Tax charge for the year 6,141,449 3,687,027
31.5 During the year, the Company has purchased losses surrendered by Engro Eximp Agriproducts (Private) Limited
32. Earnings Per Share
(associated company) to avail the benefit of Group Relief under section 59B of the Income Tax Ordinance, 2001,
amounting to Rs 2,899,368 representing business losses for financial year ended December 31, 2014. These losses
Basic earnings per share has been calculated by dividing the profit attributable to equity holders of the Company by
have been duly adjusted by the Company against taxable profit for the financial year ended December 31, 2014 (Tax
weighted average number of ordinary shares in issue during the year.
Year 2015) whilst filing its tax return for the said tax year.
32.1 Diluted earnings per share has been calculated by adjusting the weighted average number of ordinary shares
31.6 As a result of demerger, all pending tax issues of the Parent Company had been transferred to the Company. Major
outstanding for assumed conversion of equity option on IFC loan throughout the year.
issues pending before the tax authorities is described below:
In previous years, the department had filed reference applications in High Court against the below-mentioned ATIR’s
decisions in Company’s favor. No hearing has been conducted to-date. The reference application includes the following
matters:
• Group Relief (Financial year 2006 to 2008): Rs. 1,500,847

• Inter-Corporate Dividend (Financial year 2007 to 2008): Rs. 336,500
• G.P. Apportionment (Financial years 1995 to 2002): Rs. 653,000

The information necessary to calculate basic and diluted earnings per share is as follows: 33.1 The Company also makes contributions based on actuarial calculations to pension and gratuity funds and provides
2015 2014 certain household items for use of some employees. Cars are also provided for use of some employees and directors.
--------------------(Rupees)--------------------
33.2 Premium charged in the financial statements in respect of directors' indemnity insurance policy, purchased by the
Company during the year, amounted to Rs. 488 (2014: Rs. 590).
Add: Interest on IFC loan - net of tax 4,765 27,309
- Loss on revaluation of conversion options
on IFC loan - net of tax 18,074 131,358
34. Retirement and Other Service Benefits
34.1 Salient Features

Profit used for the determination of Diluted EPS 15,050,320 8,366,627
---------Numbers (in thousands)--------- The Company offers a defined post-employment gratuity benefit to permanent management and non-management
employees. In addition, until June 30, 2005, the Company offered a defined post-employment pension benefit to
Weighted average number of ordinary shares at the management employees in service which has been discontinued and the plan now only covers a handful of retired
beginning of year 1,318,342 1,222,800 pensioners.
Add : Weighted average adjustments for:
Shares issued during the year (including conversion of option) 11,728 82,404 The gratuity and pension funds are governed under the Trusts Act, 1882, Trust Deed and Rules of Fund, Companies
Weighted average number of shares for determination of basic EPS 1,330,070 1,305,204 Ordinance, 1984, the Income Tax Ordinance, 2001 and the Income Tax Rules, 2002.
Assumed conversion of USD 4,000 IFC loan - 9,836 Responsibility for governance of plan, including investment decisions and contribution schedule lie with Board of
Assumed conversion of USD 5,000 IFC loan - 5,794 Trustees of the Fund. During the year such responsibility was transferred to Board of Trustees of the Fund of its
Assumed conversion of USD 1,000 IFC loan 3,160 - Parent Company.
Exercise of conversion option on USD 3,000 IFC loan 601 - The Company faces the following risks on account of gratuity and pension funds: Final Salary Risks - The risk that the
Weighted average number of shares for determination of diluted EPS 1,333,831 1,320,834 final salary at the time of cessation of service is greater than what we assumed. Since the benefit is calculated on the
final salary, the benefit amount would also increase proportionately.
33. Remuneration of Chief Executive, Directors and Executives Asset Volatility - Most assets are invested in risk free investments of 3,5 or 10 year SSC’s, RIC’s, DSC’s or Government
Bonds. However, investments in equity instruments is subject to adverse fluctuations as a result of change in the
The aggregate amounts charged in these financial statements for remuneration, including all benefits, to chief market price.
executive, directors and executives of the Company are given below:
Discount Rate Fluctuation - The plan liabilities are calculated using a discount rate set with reference to corporate bond
2015 2014 yields. A decrease in corporate bond yields will increase plan liabilities, although this will be partially offset by an increase
Directors Executives Directors Executives in the value of the current plans’ bond holdings.
Chief Others Chief Others
Executive Executive Investment Risks - The risk of the investment underperforming and not being sufficient to meet the liabilities. This risk is
--------------------(Rupees)------------------- --------------------(Rupees)------------------- mitigated by closely monitoring the performance of investment.
Managerial remuneration 65,073 - 1,695,085 56,874 - 1,490,608 Risk of Insufficiency of Assets - This is managed by making regular contribution to the Fund as advised by the actuary.
Retirement benefits funds 5,806 - 174,624 4,768 - 143,926
Other benefits 5 - 79,893 21 - 58,659 In addition to above, the pension fund exposes the Company to Longevity Risk i.e. the pensioners survive longer than
Fees - 1,850 - - 1,550 - expected.
Total 70,884 1,850 1,949,602 61,663 1,550 1,693,193
Number of persons 34.2 Valuation Results
including those who
worked part of the year 1 7 492 1 7 447 The latest actuarial valuation of the defined benefit plans was carried out as at December 31, 2015, using the Projected
Unit Credit Method. Details of the defined benefit plans are as follows:

Defined Benefit Gratuity Defined Benefit Defined Benefit Gratuity Defined Benefit
Plans - Funded Pension Plan Plans - Funded Pension Plan
Funded (Curtailed) Funded (Curtailed)
NMPT MPT NMPT MPT
2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014
----------------------------------------------------------(Rupees)-------------------------------------------------------- ------------------------------------------------------------(Rupees)-------------------------------------------------------
34.2.1 Balance sheet reconciliation 34.2.3 Movement in defined benefit obligation
Present value of obligation 228,376 166,212 149,332 135,336 33,367 34,406 As at beginning of the year 166,212 162,184 135,336 153,367 34,406 32,218
Fair value of plan assets (169,638) (178,713) (166,957) (140,235) (40,835) (38,824) Current service cost 9,502 9,214 6,186 6,938 - -
Past service cost 6,345 - - - - -
(Surplus) / deficit of funded plans 58,738 (12,501) (17,625) (4,899) (7,468) (4,418) Interest cost 16,974 20,868 13,042 19,458 3,400 3,949
Benefits paid during the year (19,623) (10,942) (21,213) (31,133) (4,054) (3,847)
Payable to DC Gratuity Fund - - 9,736 9,736 - - Remeasurments charged
Payable in respect of inter-transfers - - 43 41 - - to OCI (note 34.2.7) 48,966 (14,775) (3,274) 10,895 (385) 2,086
Unrecognized asset - - - - 7,468 4,418 Inter-fund transfers - (337) (2) 337 - -
Liability transferred in respect of
Net (asset) / liability at end of the year 58,738 (12,501) (7,846) 4,878 - - inter group transfers - - 42,785 (24,169) - -
Liability transferred to DC Gratuity
34.2.2 Movement in net (asset) / liability recognized Fund - - (23,528) (357) - -
Net liability / (asset) at beginning As at end of the year 228,376 166,212 149,332 135,336 33,367 34,406
of the year (12,501) 63,844 4,878 (15,536) - -
(Income) / charge for the year 14,598 17,022 4,728 2,933 (464) (821) 34.2.4 Movement in fair value of plan assets
Contributions made during the
year to the fund - (63,844) - - - - At beginning of the year 178,713 98,340 140,235 177,549 38,824 38,535
Remeasurements charged Expected return on plan assets 18,223 13,060 14,500 23,463 3,864 4,770
to OCI (note 34.2.7) 56,641 (29,186) (17,452) 17,144 464 821 Contributions by the Company - 63,844 - - - -
Inter-fund transfers - (337) - 337 - - Benefits paid during the year (19,623) (10,942) (21,213) (31,133) (4,054) (3,847)
Net (asset) / liability at end of the year 58,738 (12,501) (7,846) 4,878 - - Remeasurments charged
to OCI (note 34.2.7) (7,675) 14,411 14,178 (5,475) 2,201 (634)
Assets transferred to DC
Gratuity Fund - - (23,528) - - -
Assets transferred in respect
of inter fund transfers - - 42,785 (24,169) - -
As at end of the year 169,638 178,713 166,957 140,235 40,835 38,824

Defined Benefit Gratuity Defined Benefit 34.2.9 Demographic Assumptions

Plans - Funded Pension Plan
Funded (Curtailed) Mortality rate SLIC SLIC SLIC PMA-PFA
NMPT MPT (01-05) - I (2001-05) (01-05) - I (80) - 2
2015 2014 2015 2014 2015 2014 Rate of employee turnover Light Heavy - -
------------------------------------------------------------(Rupees)-------------------------------------------------------
34.2.10 Sensitivity Analysis
34.2.5 Charge / (Reversal) for the year
The impact of 1% change in following variables on defined benefit obligation is as follows:
Current service cost 9,502 9,214 6,186 6,938 - -
Past service cost 6,345 - - - - - Increase in assumption Decrease in assumption
Net interest cost (1,249) 7,808 (1,458) (4,005) (464) (821) Gratuity Fund Pension Gratuity Fund Pension
14,598 17,022 4,728 2,933 (464) (821) NMPT MPT Fund NMPT MPT Fund
---------------------------------------------------------------------------Rupees--------------------------------------------------------------------------
34.2.6 Actual return on plan assets 16,194 21,829 20,914 30,012 3,823 3,782 Discount Rate 208,002 143,818 31,390 252,118 155,260 35,592
Long Term Salary Increases 250,959 154,497 - 208,617 144,433 -
Long Term Pension Increases - - 35,754 - - 31,223
34.2.7 Remeasurement recognized in Other Comprehensive Income Withdrawl Rates: Light 31,390 - - - - -
Withdrawl Rates: Heavy / Moderate 35,592 - - - - -
(Gain) / loss from change in
demographic assumptions - - - - - 740 34.2.11 Maturity Profile
(Gain) / loss from change in
experience assumptions 47,178 (14,430) (3,021) 10,895 (138) 1,769 Gratuity Fund Pension
(Gain) / loss from change in financial Time in Years NMPT MPT Fund
assumptions 1,788 (345) (253) - (247) (423) --------------------------------------(Rupees)---------------------------------
Remeasurement of Obligation 48,966 (14,775) (3,274) 10,895 (385) 2,086 1 20,811 37,501 4,095
Expected Return on plan assets 18,223 13,060 14,500 23,463 3,864 4,770 2 23,249 8,475 4,135
Actual Return on plan assets (16,194) (21,829) (20,914) (30,012) (3,823) (3,782) 3 8,781 45,752 4,177
Difference in fair value opening 5,646 (5,642) (7,764) 12,024 (2,242) (354) 4 24,775 54,546 4,219
Remeasurement of Plan Assets 7,675 (14,411) (14,178) 5,475 (2,201) 634 5-10 89,076 63,541 21,734
Effect of Asset Ceiling - - - - 3,050 (1,899) 11-15 180,020 45,432 22,843
Adjustment for DC transfers 16-20 447,985 1,266 24,008
pertaining to earlier periods - - - 774 - - 20+ 848,691 7,659 108,920
56,641 (29,186) (17,452) 17,144 464 821
Weighted average duration (years) 9.66 3.83 6.30
34.2.8 Principal actuarial assumptions used in the actuarial valuation
Discount rate 9.0% 10.5% 9.0% 10.5% 9.0% 10.5%

Expected per annum rate of return
on plan assets 9.0% 10.5% 9.0% 10.5% 9.0% 10.5%
Expected per annum rate of increase
in pension - - - - 1.0% 2.5%
Expected per annum rate of increase in
salaries-long term 8.0% 9.5% 10.0% 10.5% 8.0% 12.0%

34.2.12 Plan assets comprise of the following 35. Cash Used in Operations
Defined Benefit Gratuity Defined Benefit 2015 2014
Plans Funded Pension Plan ---------------------(Rupees)--------------------
Funded (Curtailed)
NMPT MPT *
Adjustment for non-cash charges and other items:
2015 2015 2015
Depreciation 4,728,517 4,725,153
Rupees (%) Rupees (%) Rupees (%)
Amortization - net 23,386 27,101
Profit on disposal of property, plant and equipment (17,844) -
Fixed income instruments 140,659 83 125,093 75 38,999 96
Loss on disposal of property, plant and equipment - 271,448
Investment in equity instruments 20,526 12 35,592 21 - -
Provision for retirement and other service benefits 58,540 49,862
Cash 8,453 5 6,272 4 1,836 4
Income on deposits / other financial assets (1,303,488) (2,026,780)
169,638 100 166,957 100 40,835 100
Finance cost 4,587,926 6,625,397
Provision for NRV on finished goods 402,651 -
Provision for surplus and slow moving
* The employees of the Company in respect of gratuity are members of Defined Benefit Gratuity Fund maintained and
stores and spares 122,428 1,444
funded by Engro Corporation Limited (the Parent Company). Accordingly, the above information is based upon the plan
Provision against other receivables - 544
assets of Engro Corporation Limited Gratuity Fund.
Reversal of provision against trade receivables - (2,673)
34.2.13 The expected return on plan assets was determined by considering the expected returns available on the assets Reversal of provision against loans and advances - (2,261)
underlying the current investment policy. Expected yields on fixed interest investments are based on Working capital changes (note 35.2) (17,142,195) 6,915,876
gross redemption yields as at the balance sheet date. 12,628,851 28,480,098
35.1 Cash And Cash Equivalents
34.2.14 Expected future cost / (reversal) for the year ending December 31, 2016 is as follows:
Rupees Cash and bank balances 865,302 4,443,086
- MPT Pension Fund (672) Short term investments 10,590,958 1,094,892
- MPT Gratuity Fund 3,424 11,456,260 5,537,978
- Non-MPT Gratuity Fund 18,318 35.2 Working capital changes
34.2.15 Historical information of staff retirement benefits: (Increase) / decrease in current assets
2015 2014 2013 2012 2011 - Stores, spares and loose tools (47,824) (346,327)
-----------------------------------------------------(Rupees)-----------------------------------------------------
- Stock-in-trade (6,243,839) 280,743
Pension Plan Funded
- Trade debts (1,504,703) 3,882
Present value of defined
benefit obligation 33,367 34,406 32,218 31,289 32,023 - Loans, advances, deposits and prepayments (155,304) 97,230
Fair value of plan assets (40,835) (38,824) (38,535) (38,313) (37,023) - Other receivables (net) (1,311,007) (5,138)
Surplus (7,468) (4,418) (6,317) (7,024) (5,000) (9,262,677) 30,390
Gratuity Plans Funded - NMPT (Decrease) / Increase in trade and other payables (7,879,518) 6,885,486
Present value of defined (17,142,195) 6,915,876
benefit obligation 228,376 166,212 162,184 122,832 121,311
Fair value of plan assets (169,638) (178,713) (98,340) (87,352) (87,019)
(Surplus) / Deficit 58,738 (12,501) 63,844 35,480 34,292
Gratuity Plans Funded - MPT
Present value of defined
benefit obligation 149,332 135,336 153,367 116,545 156,334
Surplus (17,625) (4,899) (24,182) (33,384) (13,623)
34.3 Defined contribution plans
An amount of Rs. 149,516 has been charged during the year in respect of defined contribution plans maintained by the
Parent Company.

(Amounts in thousand) 2015 2014 (Amounts in thousand)
--------------------(Rupees)---------------------
36. Financial Instruments By Category
a) Market risk
Financial assets as per balance sheet
i) Currency risk
- Loans and receivables
Loans, advances and deposits 194,436 156,030 Currency risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes
Trade debts 2,286,147 757,044 in foreign exchange rates.
Other receivables 19,388 14,011
Cash and bank balances 865,302 4,443,086 This exists due to the Company's exposure resulting from outstanding import payments, foreign currency loan liabilities
Short term Investment - 999,288 and related interest payments. A foreign exchange risk management policy has been developed and approved by the
3,365,273 6,369,459 management. The policy allows the Company to take currency exposure for limited periods within predefined limits
while open exposures are rigorously monitored. The Company ensures to the extent possible that it has options
- Fair value through profit and loss
available to manage exposure, either through forward contracts, options or prepayments, etc. subject to the prevailing
Short term investments 10,984,555 24,085,079
foreign exchange regulations.
Derivative financial instruments 29,207 -
11,013,762 24,085,079
On foreign currency borrowing of USD 89,247 as on December 31, 2015, the Company has Rupee / USD hedge of
USD 61,977.
Financial liabilities as per balance sheet
At December 31, 2015, if the currency had weakened / strengthened by 1% against the US dollar with all other variables
- Financial liabilities measured at amortized cost
held constant, post-tax profit for the year would have been lower / higher by Rs. 18,120 mainly as a result of foreign
Borrowings 36,225,027 44,003,351 exchange loss / gain on translation of US dollar denominated loans.
Trade and other payable 15,606,535 16,138,450
Accrued interest / mark-up 843,803 1,362,300 ii) Interest rate risk
52,675,365 61,504,101
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of
- Fair value through profit and loss changes in market interest rates. The Company's interest rate risk arises from long-term borrowings and short-term
Conversion option on IFC loan 298,749 965,326 investments. Borrowing are benchmarked to variable rates which expose the Company to cash flow interest rate risk,
Derivative financial instruments 67,735 131,452 whereas short-term investment are fixed rate placements and expose the Company to fair value interest rate risk.
366,484 1,096,778
The Company analyses its interest rate exposure on a regular basis by monitoring interest rate trends to determine
37. Financial Risk Management whether they should enter into hedging alternatives.
37.1 Financial risk factors The Company has entered into Interest Rate Swaps for USD 7,727 out of its non-current foreign currency borrowings of
USD 89,247 as on December 31, 2015 (note 19.2). Rates on short term loans vary as per market movement.
The Company's activities expose it to a variety of financial risks: market risk (including currency risk, interest rate risk and
other price risk), credit risk and liquidity risk. The Company's overall risk management program focuses on having cost As at December 31, 2015, if interest rates had been 1% higher / lower with all other variables held constant, post tax
efficient funding as well as to manage financial risk to minimize earnings volatility and provide maximum return to profit for the year would have been lower / higher by Rs. 360,262.
shareholders.
b) Credit risk
Risk management is carried out by the Company's Finance and Planning department under policies approved by the
Management Committee. Credit risk represents the risk of financial loss being caused if counter party fails to discharge an obligation.
Credit risk arises from deposits with banks and financial institutions, trade debts, loans, advances, deposits, bank
guarantees and other receivables. The credit risk on liquid funds is limited because the counter parties are banks with a
reasonably high credit rating or mutual funds which in turn are deposited in banks and government securities. The
Company maintains an internal policy to place funds with commercial banks and mutual funds of asset management
companies having a minimum short term credit rating of A1 and AM3 respectively. However, the Company maintains
operational balances with certain banks of lower rating for the purpose of effective collection of bank guarantees and to
cater to loan disbursements.

The Company is exposed to a concentration of credit risk on its trade debts by virtue of all its customers being The credit quality of receivables can be assessed with reference to their historical performance with no or negligible defaults
agri-based businesses in Pakistan. However, this risk is mitigated by applying individual credit limits and by securing the in recent history. The credit quality of Company's bank balances and short term investments can be assessed with reference
majority of trade debts against bank guarantees and inland letter of credit. to recent external credit ratings as follows:
The credit risk arising on account of acceptance of these bank guarantees is managed by ensuring that the bank Rating Rating
guarantees are issued by banks of reasonably high credit ratings as approved by the management. agency Short term Long term
The Company monitors the credit quality of its financial assets with reference to historical performance of such assets Allied Bank Limited PACRA A1+ AA+
and available external credit ratings. The carrying values of financial assets which are neither past due nor impaired are Askari Bank Limited JCR-VIS A-1+ AA
as under: Bank Alfalah Limited PACRA A1+ AA
Bank AL Habib Limited PACRA A1+ AA+
Bank Islami Pakistan Limited PACRA A1 A+
2015 2014 The Bank of Punjab PACRA A1+ AA-
--------------------(Rupees)---------------------
Burj Bank Limited JCR-VIS A-2 A-
Citi Bank N.A. MOODY'S P-1 A2
Loans, advances and deposits 190,927 156,030
Dubai Islamic Bank (Pakistan) Limited JCR-VIS A-1 A+
Trade debts 2,261,747 757,044
Faysal Bank Limited PACRA A1+ AA
Other receivables 19,388 14,011
Habib Bank Limited JCR-VIS A-1+ AAA
Short term investments 10,984,555 25,084,367 Habib Metropolitan Bank Limited PACRA A1+ AA+
Derivative financial instruments 29,207 - JS Bank Limited PACRA A1+ A+
Cash and bank balances 865,302 4,443,086 MCB Bank Limited PACRA A1+ AAA
14,351,126 30,454,538 Meezan Bank Limited JCR-VIS A-1+ AA
National Bank of Pakistan JCR-VIS A-1+ AAA
Samba Bank Limited JCR-VIS A-1 AA
Soneri Bank Limited PACRA A1+ AA-
Standard Chartered Bank (Pakistan) Limited PACRA A1+ AAA
Summit Bank Limited JCR-VIS A-1 A
United Bank Limited JCR-VIS A-1+ AA+
c) Liquidity risk
Liquidity risk represents the risk that the Company will encounter difficulties in meeting obligations associated with financial
liabilities.
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding
through an adequate amount of committed credit facilities. Due to dynamic nature of the business, the Company maintains
flexibility in funding by maintaining committed credit lines available.
The Company's liquidity management involves projecting cash flows and considering the level of liquid assets necessary to
meet these, monitoring balance sheet liquidity ratios against internal and external regulatory requirements and maintaining
debt financing plans.

The table below analyses the Company's financial liabilities into relevant maturity groupings based on the remaining period Level 1 Level 2 Level 3 Total
at the balance sheet date to contractual maturity dates. The amounts disclosed in the table are the contractual -------------------------------------------------(Rupees)--------------------------------------------------
undiscounted cash flows. Assets
Financial assets at fair value through profit and loss
2015 2014 - Short term investments - 10,984,555 - 10,984,555
Maturity Maturity Maturity Maturity
upto after Total upto after Total Liabilities
one year one year one year one year Derivatives
---------------------(Rupees)--------------------- ---------------------(Rupees)--------------------- - Derivative financial instruments - 67,735 - 67,735
- Conversion option on IFC loans - 298,749 - 298,749
Financial liabilities - 366,484 - 366,484
Derivatives 366,484 - 366,484 1,090,089 6,689 1,096,778
Trade and other payables 15,606,535 - 15,606,535 16,138,450 - 16,138,450
Accrued interest / mark-up 843,803 - 843,803 1,362,300 - 1,362,300 37.4 Valuation techniques used to derive Level 2 fair values
Borrowings 10,736,586 25,289,658 36,026,244 7,912,729 36,090,622 44,003,351
Level 2 fair valued instruments comprise short term investments and hedging derivatives which include forward exchange
27,553,408 25,289,658 52,843,066 26,503,568 36,097,311 62,600,879
contracts, interest rate swaps and conversion option on IFC loans. These forward foreign exchange contracts have been
fair valued using forward exchange rates that are received from the contracting banks and financial institutions. Interest rate
37.2 Capital risk management swaps are fair valued using mark to market rates received from the banks and financial institutions. The fair value of
conversion options on IFC loan is determined using the option pricing model where its determinants are derived from
The Company's objective when managing capital are to safeguard the Company's ability to continue as a going concern in observable market inputs.
order to provide returns for shareholders and benefit for other stakeholders and to maintain an optimal capital structure to
reduce the cost of capital. Short term investments comprise treasury bills and fixed income placements which are valued using discounted cash flow model.
The Company manages its capital structure and makes adjustments to it in the light of changes in economic conditions. To There were no transfers amongst the levels during the year.
maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders or issue new shares.
37.5 Fair value of financial assets and liabilities
The total long term borrowings to equity ratio as at December 31, 2015 based on total long term borrowings of Rs.
36,026,244 and total equity of Rs. 42,526,020 was 46%:54%.(2014: 56%:44%) The carrying value of all financial assets and liabilities reflected in the financial statements approximate their fair values.
The Company finances its operations through equity, borrowings and management of working capital with a view to
maintaining an appropriate mix between various sources of finance to minimize risk.
37.3 Fair value estimation
The table below analyzes financial instruments carried at fair value by valuation method. The different levels have been
defined as follows:
- Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1)
- Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (i.e. as
prices) or indirectly (i.e. derived from prices) (level 2)
- Inputs for the asset or liability that are not based on observable market data (level 3)

38. Transactions with Related Parties 39. Donations

Related parties comprises of Parent Company, associated companies and other companies with common director, Donations include the following in which a director or his spouse is interested:
retirement benefits funds, directors and key management personnel.
Interest Name and
Details of transactions with related parties during the year, other than those which have been disclosed elsewhere in these
in Donee address
financial statements, are as follows:
of Donee 2015 2014
2015 2014 ---------------(Rupees)--------------
--------------------(Rupees)-------------------- Muhammad Aliuddin Ansari President
Parent Company Khalid Siraj Subhani President Engro Foundation 55,000 32,500
Dividend Paid 6,570,543 -
Ruhail Mohammed Trustee
Purchases and services 229,368 202,798
Services provided to Parent Company 25,400 19,790
Royalty 929,158 878,797 40. Production Capacity
Reimbursements 211,368 109,020 Designed capacity Actual production
Mark-up paid on Long term sub-ordinated loan - 240,238 Metric Tons Metric Tons
Use of assets 3,109 4,720 2015 2014 2015 2014
Payment in respect of settlement of IFC option - 1,495,080
Purchase of Subsidiary 4,383,000 - Urea plant I & II 2,275,000 2,275,000 1,967,552 1,818,937
Payment of sub-ordinated loan - 4,495,080 NPK plant 100,000 100,000 126,074 117,193
Receipt of sub-ordinated loan - 1,495,080
41. Number of Employees
Subsidiary companies Number of employees as at Average number of employees
Purchase of Product 6,714,473 -
2015 2014 2015 2014
Services provided 472 -
Reimbursements 49,821 -
Management employees 623 456 540 452
Sub-ordinated loan to Subsidiary 900,000 -
Funds collected against sales made on behalf of Subsidiary 518,408 - Non-management employees 527 680 604 673
Mark-up on Short term sub-ordinated loan 39,812 - 1,150 1,136 1,144 1,125
Associated companies
Purchases and services 129,637 307,288
Sale of assets (sales proceeds) - 748
Sale of product 1,459 4,288
Purchase of tax losses 956,791 1,210,522
Services provided 71,973 93,067
Reimbursements 213,731 165,469
Funds collected against sales made on behalf of an associate 2,035,579 27,812,967
Payment of mark-up on TFCs and repayment of principal amount 18,739 41,897
Commission - net - 164,156
Purchase of mutual fund units 490,000 -
Redemption of mutual fund units 491,210 -
Donation 55,000 32,500
Use of assets 3,672 8,912
Contribution to staff retirement benefits

Pension fund 19,519 16,977
Gratuity fund 83,485 104,393
Provident fund 101,175 86,498
Others
Remuneration of key management personnel 166,203 167,734

42. Provident Fund 45. Non-Adjusting Event After Balance Sheet Date
The employees of the Company participate in Provident Fund maintained by Engro Corporation (the Parent Company). The Board of Directors in its meeting held on February 08, 2016 has proposed a final cash dividend of Rs.3.00 (2014: Rs.
Monthly contribution are made both by the Company and employees to the fund maintained by the Parent Company at the 3.00) per share in addition to interim cash dividend already paid at Rs. 3.00 (2014: Rs. Nil) per share for the year ended
rate of 10% of basic salary. Accordingly, the following information is based upon the latest audited financial statements of December 31, 2015, for approval of the members at the Annual General Meeting to be held on March 28, 2016. The amount
the provident fund maintained by the Parent Company as at June 30, 2015 and the audited financial statements as at June of total dividend is calculated at the number of shares outstanding as at December 31, 2015.
30, 2014.
46. Corresponding Figures
2015 2014
--------------------(Rupees)------------------- Corresponding figures and balances have been rearranged and reclassified, wherever necessary, for the purpose of
comparison, the effects of which are not material.
Size of the fund - Total assets 3,161,499 2,091,284
47. Date of Authorisation For Issue
Cost of the investments made 2,333,996 1,679,824
These financial statements were authorised for issue on February 8th 2016 by the Board of Directors of the Company.
Percentage of investments made 87% 89%
Fair value of investments 2,736,879 1,861,191
The break-up of investments is as follows:

2015 2014
Rupees % Rupees %
National Savings Scheme 223,037 8 290,609 16

Government securities 1,045,090 38 901,642 48
Listed securities & unit trust 1,164,311 43 518,263 28
Balances with banks in savings
account 304,441 11 150,677 8
2,736,879 100 1,861,191 100
42.1 The investments out of the fund have been made in accordance with the provisions of section 227 of the Companies
Ordinance, 1984 and the rules formulated for the purpose.
43. Seasonality
The Company's fertilizer business is subject to seasonal fluctuations as a result of two different farming seasons viz, Rabi
(from October to March) and Kharif (from April to September). On an average fertilizer sales are more tilted towards Rabi
season. The Company manages seasonality in the business through appropriate inventory management.
44. Loss of Certain Accounting Records

During 2007, a fire broke out at PNSC Building, Karachi where the Parent Company's registered office was located.
Immediately following this event the Parent Company launched its Disaster Recovery Plan due to which operational
disruption and financial impact resulting from this incident remained minimal.
The fire destroyed a substantial portion of its hard copy records, including that of Fertilizer Undertaking (note 1.3), related to
the financial years 2005, 2006 and the period January 1, 2007 to August 19, 2007 although, electronic data remained
intact due to the aforementioned Disaster Recovery Plan. The Parent Company launched an initiative to recreate significant
lost records and was successful in gathering the same in respect of the financial year 2007. Hard copy records related to
the financial years 2005 and 2006 have not been recreated.


consolidated financials auditors’ report to the members
We have audited the annexed consolidated financial statements comprising consolidated balance sheet of Engro Fertilizers
Limited (the Holding Company) and its subsidiary companies as at December 31, 2015 and the related consolidated profit
and loss account, consolidated statement of comprehensive income, consolidated statement of changes in equity and
consolidated statement of cash flows together with the notes forming part thereof, for the year then ended. We have also
expressed separate opinions on the financial statements of the Holding Company and the subsidiary company, whereas,
financial statements of Engro Eximp FZE have been audited by PricewaterhouseCoopers – UAE, whose report has been
furnished to us and our opinion, in so far as it relates to the amounts included for Engro Eximp FZE, is based solely on the
report of such other auditor.
These consolidated financial statements are the responsibility of the Holding Company’s management. Our responsibility is to
express an opinion on these consolidated financial statements based on our audit.
Our audit was conducted in accordance with the International Standards on Auditing and accordingly included such tests of
accounting records and such other auditing procedures as we considered necessary in the circumstances.
In our opinion, the consolidated financial statements present fairly the financial position of Engro Fertilizers Limited (the Holding
Company) and its subsidiary companies as at December 31, 2015 and the results of their operations for the year then ended.
Chartered Accountants
Karachi
Date: 01 March 2016
Engagement Partner: Mohammad Zulfikar Akhtar

consolidated balance sheet
as at december 31, 2015
Note 2015 2014 2015 2014
--------------------- Rupees --------------------- Note -------------------- Rupees ---------------------
Assets Equity & Liabilities

Non-Current Assets Equity
Property, plant and equipment 4 72,198,393 74,962,817 Share capital 14 13,309,323 13,183,417
Intangible assets 5 4,461,716 118,336 Share premium 3,132,181 2,260,784
Deferred taxation 18 73,472 - Exchange revaluation reserve 13,805 -
Long term loans and advances 6 160,353 93,931 Hedging reserve 15 (4,536) (39,831)
76,893,934 75,175,084 Remeasurement of post employment benefits (40,310) (14,103)
Current Assets Unappropriated profit 25,921,266 19,087,828
29,022,406 21,294,678
Stores, spares and loose tools 7 4,639,142 4,713,746 Total Equity 42,331,729 34,478,095
Stock-in-trade 8 7,029,437 1,100,922
Trade debts 9 2,261,747 757,044 Liabilities
Taxes recoverable 705,129 - Non-Current Liabilities
Derivative financial instruments 17 29,207 -
Loans, advances, deposits and prepayments 10 594,608 432,943 Borrowings 16 25,289,658 36,090,622
Other receivables 11 1,358,578 18,991 Derivative financial instruments 17 - 6,689
Short term investments 12 11,650,389 25,084,367 Deferred liabilities 18 6,493,030 5,226,646
Cash and bank balances 13 923,555 4,443,086 Service benefits obligations 19 124,653 113,345
29,191,792 36,551,099 31,907,341 41,437,302
TOTAL ASSETS 106,085,726 111,726,183 Current Liabilities
Trade and other payables 20 17,701,544 24,726,721

Accrued interest / mark-up 851,684 1,362,300
Taxes payable 2,060,723 675,609
Current portion of:
- borrowings 16 10,736,586 7,912,729
- service benefits obligations 19 48,232 43,338
Unclaimed dividend 6,103 -
Short term borrowings 21 75,300 -
Derivative financial instruments 17 366,484 1,090,089
31,846,656 35,810,786
Total Liabilities 63,753,997 77,248,088
Contingencies and Commitments 22
TOTAL EQUITY & LIABILITIES 106,085,726 111,726,183
The annexed notes from 1 to 47 form an integral part of these consolidated financial statements.


consolidated profit and loss account consolidated statement of comprehensive
for the year ended december 31, 2015 income for the year ended december 31, 2015
(Amounts in thousand except for earnings per share) (Amounts in thousand)
2015 2014 2015 2014
Note -------------------- Rupees --------------------- -------------------- Rupees ---------------------
Net sales 23 88,032,621 61,424,934 Profit for the year 14,819,031 8,207,960
Cost of sales 24 (55,723,866) (38,822,423) Other comprehensive income
Gross profit 32,308,755 22,602,511 Items potentially re-classifiable to Profit and Loss Account
Selling and distribution expenses 25 (5,465,925) (4,441,379) Exchange differences on translation of foreign operations 13,805 -
Administrative expenses 26 (895,578) (772,161) Hedging reserve - cash flow hedges
25,947,252 17,388,971 Loss arising during the year (120,333) (1,633,625)

Less: Adjustment for amounts transferred to profit and loss account 172,238 1,797,878
Other income 27 1,781,129 2,449,156
Income tax (Deferred) relating to hedging reserve (16,610) (56,440)
Other operating expenses 28 (2,033,782) (1,317,743) 35,295 107,813
Finance costs 29 (4,626,907) (6,625,397) Items not potentially re-classifiable to Profit and Loss Account
(6,660,689) (7,943,140)
Profit before taxation 21,067,692 11,894,987 Remeasurement of post employment benefits obligation (39,132) 11,221
Taxation 30 (6,248,661) (3,687,027) Income tax (Deferred) relating to remeasurement of

post employment benefits obligation 12,925 (4,438)
Profit for the year 14,819,031 8,207,960 (26,207) 6,783
Other comprehensive income for the year, net of tax 22,893 114,596
Earnings per share - basic 31 11.14 6.29
Total comprehensive income for the year 14,841,924 8,322,556
Earnings per share - diluted 31 11.13 6.29


consolidated statement of changes in equity consolidated statement of cash flows
Reserve 2015 2014
Capital Revenue Note -------------------- Rupees ---------------------
Share Advance Share Exchange Hedging Re- Unappropriated Total
Cash flows from operating activities
capital against premium revaluation reserve measurement profit
issue of reserve of post Cash generated from operations 34 15,103,171 28,480,098
share capital employment benefits Retirement and other service benefits paid (42,344) (41,124)
------------------------------------------------------------------------- (Rupees) ---------------------------------------------------------------------------- Finance cost paid (4,464,334) (7,091,184)
Balance as at January 1, 2014 12,228,000 2,118,750 11,144 - (147,644) (20,886) 10,879,868 25,069,232
Taxes paid (2,535,906) (835,474)
Tax loss purchased from Engro Eximp Agriproducts (Private) Limited (956,791) (1,210,522)
Transactions with owners Long term loans and advances (56,256) 15,418
Shares issued during the year 750,000 (2,118,750) 1,368,750 - - - - -
Share issuance cost - - (97,920) - - - - (97,920)
Shares issued at exercise of conversion option 205,417 - 978,810 - - - - 1,184,227 Net cash generated from operating activities 7,047,540 19,317,212
955,417 (2,118,750) 2,249,640 - - - - 1,086,307
Total comprehensive income for
the year ended December 31, 2014
Cash flows from investing activities
Profit for the year - - - - - - 8,207,960 8,207,960 Purchases of property, plant and equipment and intangibles (1,985,144) (701,027)
Other comprehensive income:
- cash flow hedges, net of tax - - - - 107,813 - - 107,813
Acquisition of business (note 1.6) (3,949,751) -
- remeasurements, net of tax - - - - - 6,783 - 6,783 Proceeds from disposal of property, plant and equipment 36,855 45,989
- - - - 107,813 6,783 8,207,960 8,322,556 Proceeds from working capital loan 879,612 -
Divestments / (Investments) during the year - net 22,885,346 (23,739,109)
Balance as at December 31, 2014 13,183,417 - 2,260,784 - (39,831) (14,103) 19,087,828 34,478,095
Income on deposits / other financial assets 1,312,862 1,790,194
Transactions with owners Net cash generated from / (utilised in) investing activities 19,179,780 (22,603,953)
Shares issued at exercise of conversion option 125,906 - 871,397 - - - - 997,303
Dividends paid:
- Final 2014: Rs. 3.00 per share - - - - - - (3,992,797) (3,992,797) Cash flows from financing activities
- 1st interim 2015: Rs. 1.50 per share - - - - - - (1,996,398) (1,996,398)
- 2nd interim 2015: Rs. 1.50 per share - - - - - - (1,996,398) (1,996,398) Proceeds from borrowings 2,430,491 3,947,598
125,906 - 871,397 - - - (7,985,593) (6,988,290)
Total comprehensive income for
Repayments of borrowings (10,833,839) (13,090,255)
the year ended December 31, 2015 Repayments of short term borrowings (3,926,450) -
Settlement of IFC option (note 16.7) - (1,495,080)
Profit for the year - - - - - - 14,819,031 14,819,031
Other comprehensive income:
Proceeds from sub-ordinated loan - 1,495,080
- exchange revaluation - - - 13,805 - - - 13,805 Repayment of sub-ordinated loan - (4,495,080)
- cash flow hedges, net of tax - - - - 35,295 - - 35,295 Dividend paid during the year (7,979,490) -
- remeasurements, net of tax - - - - - (26,207) - (26,207)
- - - 13,805 35,295 (26,207) 14,819,031 14,841,924
Share issue costs paid - (53,989)
Net cash utilised in financing activities (20,309,288) (13,691,726)
Balance as at December 31, 2015 13,309,323 - 3,132,181 13,805 (4,536) (40,310) 25,921,266 42,331,729 Net increase / (decrease) in cash and cash equivalents 5,918,032 (16,978,467)
Exchange gain translation on foreign operations 13,805 -
The annexed notes from 1 to 47 form an integral part of these consolidated financial statements. Cash and cash equivalents at beginning of the year 5,537,978 22,516,445
Cash and cash equivalents at end of the year 35 11,469,815 5,537,978


consolidated notes to the financial statements
for the year ended december 31, 2015
1. Legal Status and Operations Holding Company to form a single company, subsequent to which EEPL will cease to exist. This is subject to requisite
approvals by the Board of Directors and shareholders of EEPL and the Holding Company.
1.1 Engro Fertilizers Limited (‘the Holding Company’) is a public company incorporated on June 29, 2009 in Pakistan under
the Companies Ordinance, 1984 as a wholly owned subsidiary of Engro Corporation Limited (the Parent Company) which 1.5.2 Engro EXIMP FZE
is a subsidiary of Dawood Hercules Corporation Limited (the Ultimate Parent Company). The principal activity of the
Holding Company is manufacturing, purchasing and marketing of fertilizers. The Holding Company’s registered office is Engro Eximp FZE (EEF) was incorporated in the Jebel Ali Free Zone, Emirate of Dubai, on August 4, 2011 and is a wholly
situated at 7th & 8th floors, The Harbour Front Building, Plot Number HC-3, Block 4, Scheme Number 5, Clifton, Karachi. owned subsidiary of Engro Eximp (Private) Limited (EEPL).
1.2 As per the approval of shareholders of the Holding Company at the Extraordinary General Meeting on April 29, 2015, on 1.6 The acquisition of EEPL by the Holding Company has been accounted for as business combination under IFRS 3
April 30, 2015, the Holding Company acquired 100% shareholding of Engro Eximp (Private) Limited (EEPL), an associated 'Business Combinations'. Accordingly, fair values of all assets and liabilities have been determined as at the date of
company, from the Parent Company for a consideration of Rs. 4,383,000. EEPL has been engaged primarily in the trading acquisition. The recognised fair values of identifiable assets acquired and liabilities assumed are:
of different types of fertilizers and other related products. EEPL holds the license to distribute imported fertilizers under the
brand name and trademark of "Engro". April 30,
2015
1.3 The Holding Company is listed on Pakistan Stock Exchange Limited (formerly Karachi Stock Exchange in which Lahore Rupees
and Islamabad Stock Exchanges have merged). The Holding Company has also issued Term Finance Certificates (TFCs)
which are listed at the Pakistan Stock Exchange Limited. Property, plant and equipment 15,151
Right to use the brand 4,170,995
1.4 Effective January 1, 2010, the Parent Company through a Scheme of Arrangement, under Section 284 to 288 of the Other non-current assets 63,318
Companies Ordinance, 1984, separated its fertilizer undertaking for continuation thereof by the Holding Company, from Current assets 7,323,679
the rest of the undertaking which was retained in the Parent Company. Further, the Parent Company was renamed from Current liabilities (7,373,949)
Engro Chemical Pakistan Limited to Engro Corporation Limited, the principal activity of which now is to manage Fair value of net assets acquired 4,199,194
investments in subsidiary companies and joint ventures.
1.6.1 Right to use the brand is in respect of selling Phosphate fertilizers, acquired under an agreement with Engro Corporation
1.5 The 'Group' consists of: Limited (the Parent Company), that has been valued using Relief from Royalty Method and is considered to have an indefinite life.
Holding Company: Engro Fertilizers Limited The acquisition has resulted in the recognition of goodwill as follows:
Subsidiary Company is a Company in which the Holding Company owns over 50% of voting rights, or companies Rupees
controlled by the Holding Company: Consideration paid 4,383,000
%age of shareholding Less: share in fair value of net assets acquired 4,199,194
2015 2014 Goodwill 183,806
Engro Eximp (Private) Limited 100 -
Engro Eximp FZE (through Engro Eximp (Private) Limited) 100 - The goodwill arises from the factors including expected synergies through knowledge transfer, obtaining economies of
scale by cost reductions from purchasing efficiencies and leveraging the common distribution network.
Subsidiary Companies
2. Summary of Significant Accounting Policies
1.5.1 Engro Eximp (Private) Limited
The significant accounting policies applied in the preparation of these consolidated financial statements are set out below.
Engro Eximp (Private) Limited (EEPL) is a private limited company, incorporated in Pakistan on January 16, 2003 under the These policies have been consistently applied to all periods presented, unless otherwise stated.
Companies Ordinance, 1984 (the Ordinance). EEPL is a wholly owned subsidiary of Engro Fertilizers Limited (the Holding
Company). The registered office of EEPL is situated at 7th & 8th floors, The Harbor Front Building, Plot Number HC-3, 2.1 Basis of preparation
Block 4, Scheme Number 5, Clifton, Karachi.
2.1.1 These consolidated financial statements have been prepared under the historical cost convention, except for
As per the Corporate restructuring scheme approved by the Board of Directors of EEPL in their meeting held on February remeasurement of certain financial assets and liabilities at fair value through profit or loss, derivative hedging instrument at
9, 2015 (the restructuring), EEPL has discontinued its Coal and Agri commodities businesses. Further, the imported fair value and recognition of certain staff retirement benefits at present value.
fertilizer business of EEPL is also being phased out to the Holding Company as part of the proposed Corporate
Restructuring scheme of Engro Corporation Limited (the Parent Company) to further strengthen synergies between the 2.1.2 These consolidated financial statements have been prepared in accordance with the requirements of the Companies
Company business lines and allow the Group to create value and increase its footprint in agricultural inputs. Ordinance, 1984 (the Ordinance), directives issued by the Securities and Exchange Commission of Pakistan (SECP) and
approved financial reporting standards as applicable in Pakistan. Approved financial reporting standards comprise of
The Board of Directors of EEPL in its meeting held on April 23, 2015 and the Board of Directors of the Holding Company such International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) as
on August 10, 2015, approved the proposed Scheme of Amalgamation (Scheme) of EEPL with the Holding Company and are notified under the provisions of the Ordinance. Whenever the requirements of the Ordinance or directives issued by
after relevant approvals, formalities and the Scheme being sanctioned by the Court, EEPL will amalgamate into the the SECP differ with the requiremens of these standards, the requirements of the Ordinance and the said directives have
been followed.

2.1.3 The preparation of consolidated financial statements in conformity with the above requirements requires the use of - IFRS 10 (Amendment) ‘Consolidated financial statements’ and IAS 28 (Amendment) ‘Investment in associates and
certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the joint ventures’ (effective for annual periods beginning on or after January 1, 2016). These amendments address an
Group’s accounting policies. The areas involving higher degree of judgment or complexity, or areas where assumptions inconsistency between IFRS 10 and IAS 28 in the sale or contribution of assets between an investor and its associate
and estimates are significant to the consolidated financial statements are disclosed in note 3 and other relevant notes. or joint venture. A full gain or loss is recognized when a transaction involves a business. A partial gain or loss is
recognized when a transaction involves assets that do not constitute a business, even if those assets are in a subsidiary.
2.1.4 Initial application of a Standard, Amendment or an Interpretation to an existing Standard
Amendments to following standards as a result of annual improvements to International Financial Reporting Standards
a) Standards, amendments to published standards and interpretations effective in 2015 and relevant issued by IASB:
The following standards, amendments to published standards and interpretations are mandatory for the financial year - IFRS 7 'Financial instruments: Disclosures’ (effective for annual periods beginning on or after January 1, 2016). There
beginning January 1, 2015 and are relevant to the Group: are two amendments:
- IFRS 10 ‘Consolidated financial statements’. This standard builds on existing principles by identifying the concept of • Servicing contracts – If an entity transfers a financial assets to a third party under conditions which allow the transferor
control as the determining factor in whether an entity should be included within the consolidated financial statements of to derecognize the asset, IFRS 7 requires disclosure of all types of continuing involvement that the entity might still have
the Parent Company. The standard provides additional guidance to assist in determination of control where this is in the transferred assets. The standard provides guidance about what is meant by continuing involvement. The
difficult to assess. amendment is prospective with an option to apply retrospectively.
- IFRS 13 ‘Fair value measurement’. The standard aims to improve consistency and reduce complexity by providing a • Interim financial statements – the amendment clarifies that the additional disclosure required by the amendments to
precise definition of fair value and a single source of fair value measurement and disclosure requirements for use across IFRS 7, ‘Disclosure – Offsetting financial assets and financial liabilities’ is not specifically required for all interim periods
IFRSs. The requirements do not extend the use of fair value accounting but provide guidance on how it should be unless required by IAS 34. This amendment is retrospective.
applied where its use is already required or permitted by other standards within IFRSs. The standard only affects the
disclosures in the Group's consolidated financial statements. • It is unlikely that the standard will have any significant impact on the Group's consolidated financial statements.
- IAS 19 ‘Employee benefits’ (Amendment). The amendment applies to contributions from employees or third parties to - IAS 19, 'Employee benefits’ (effective for annual periods beginning on or after January 1, 2016). The amendment
defined benefit plans and clarifies the treatment of such contributions. The amendment distinguishes between clarifies that, when determining the discount rate for post-employment benefit obligations, it is the currency that the
contributions that are linked to service only in the period in which they arise and those linked to service in more than liabilities are denominated in that is important, not the country where they arise. The assessment of whether there is a
one period. The objective of the amendment is to simplify the accounting for contributions that are independent of the deep market in high-quality corporate bonds is based on corporate bonds in that currency, not corporate bonds in a
number of years of employee service, for example employee contributions that are calculated according to a fixed particular country. Similarly, where there is no deep market in high-quality corporate bonds in that currency, government
percentage of salary. Entities with plans that require contributions that vary with service will be required to recognise the bonds in the relevant currency should be used. The amendment is retrospective but limited to the beginning of the
benefit of those contributions over employee’s working lives. The amendment does not have any impact on the earliest period presented. It is unlikely that the standard will have any significant impact on the Group's consolidated
Group's consolidated financial statements. financial statements.
- IAS 24 ’Related party disclosures’ (Amendment). The standard has been amended to include, as a related party, an - IAS 34, 'Interim financial reporting’ (effective for annual periods beginning on or after July 1, 2016). This amendment
entity that provides key management personnel services to the reporting entity or to the parent of the reporting entity clarifies what is meant by the reference in the standard to ‘information disclosed elsewhere in the interim financial
(the ‘management entity’). Disclosure of the amounts charged to the reporting entity is required. The amendment does report’. The amendment also amends IAS 34 to require a cross-reference from the interim financial statements to the
not have any impact on the Group's consolidated financial statements. location of that information. The amendment is retrospective. It is unlikely that the standard will have any significant
impact on the Group's consolidated financial statements.
- IFRS 3 ‘Business combinations’ (Amendment). This amendment clarifies that an obligation to pay contingent
consideration which meets the definition of a financial instrument is classified as a financial liability or equity, on the basis There are number of other standards, amendments and interpretations to the published standards that are not yet
of the definitions in IAS 32, ‘Financial instruments: Presentation’. It also clarifies that all non-equity contingent effective and are also not relevant to the Group and therefore, have not been presented here.
consideration is measured at fair value at each reporting date, with changes in value recognised in profit and loss
account. The amendment does not have any impact on the Group's consolidated financial statements. 2.1.5 Basis of consolidation
b) Standards, amendments to published standards and interpretations that are effective in 2015 but not relevant i) Subsidiaries
The other new standards, amendments to published standards and interpretations that are mandatory for the financial Subsidiaries are all entities over which the Group has the power to govern the financial and operating policies generally
year beginning on January 1, 2015 are considered not to be relevant or to have any significant effect on the Group's accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights
financial reporting and operations. that are currently exercisable or convertible are considered when assessing whether the Group controls another entity.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-recognized
c) Standards, amendments to published standards and interpretations that are not yet effective and have not been from the date the control ceases. These consolidated financial statements include Engro Fertilizers Limited (the Holding
early adopted by the Group Company) and all companies in which it directly or indirectly controls, beneficially owns or holds more than 50% of the
voting securities or otherwise has power to elect and appoint more than 50% of its directors (the Subsidiaries).
The following new standards and amendments to published standards are not effective for the financial year beginning on
January 1, 2015 and have not been early adopted by the Group:

The Group uses the acquisition method of accounting to account for business combinations. The consideration when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item
transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred and the can be measured reliably. The carrying amount of the replaced part is derecognized. All other repairs and maintenance
equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting are charged to the consolidated profit and loss account during the financial period in which they are incurred.
from a contingent consideration arrangement. Acquisition-related costs are expensed as incurred. Identifiable assets
acquired and liabilities (including contingent liabilities) assumed in a business combination are measured initially at their fair Disposal of asset is recognized when significant risk and rewards incidental to ownership have been transferred to buyers.
values at the acquisition date. On an acquisition-by-acquisition basis, the Group recognizes any non-controlling interest in Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognized
the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s identifiable net within ‘Other operating expenses / income’ in the consolidated profit and loss account.
assets.
Depreciation is charged to the consolidated profit and loss account using the straight line method, except for catalyst
If the business combination is achieved in stages, the acquisition date carrying value of the acquirer's previously held whose depreciation is charged on the basis of number of production days, whereby the cost of an operating asset less
equity interest in the acquiree is re-measured to fair value at the acquisition date; any gains or losses arising from such its estimated residual value, if significant, is written off over its estimated useful life. Depreciation on addition is charged
re-measurement are recognized in consolidated profit and loss account. from the month following the month in which the asset is available for use and on disposals up to the preceding month
of disposal.
Goodwill is initially measured as the excess of the aggregate of the consideration transferred and the fair value of
non-controlling interest over the net identifiable assets acquired and liabilities assumed. If this is less than the fair value of Depreciation method, useful lives and residual values are reviewed annually.
the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognized in consolidated
profit and loss account. 2.2.2 Leased assets
Inter-company transactions, balances, income and expenses on transactions between group companies are eliminated. Leases in terms of which the Group assumes substantially all the risks and rewards of ownership, are classified as finance
Profits and losses (unrealized) are also eliminated. Accounting policies of subsidiaries have been changed where lease. Upon initial recognition, the leased asset is measured at an amount equal to the lower of its fair value and present
necessary to ensure consistency with the policies adopted by the Group. value of minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the
accounting policy applicable to similar owned asset. Outstanding obligations under the lease less finance cost allocated
ii) Transactions and non-controlling interests to future periods are shown as a liability.
The Group treats transactions with non-controlling interests that do not result in loss of control as transactions with equity Finance cost under lease agreements are allocated to the periods during the lease term so as to produce a constant
owners of the Group. The difference between fair value of any consideration paid and the relevant share acquired of the periodic rate of finance cost on the remaining balance of principal liability for each period.
carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests
are also recorded in equity. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that
the Group will obtain ownership by the end of the lease term.
iii) Disposal of subsidiaries
2.3 Intangible assets
When the Group ceases to have control or significant influence, any retained interest in the entity is remeasured to its fair
value, with the change in carrying amount recognized in profit and loss account. The fair value is the initial carrying amount a) Computer Software and licenses
for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In
addition, any amounts previously recognized in other comprehensive income in respect of that entity are accounted for as Costs associated with maintaining computer software programmes are recognized as an expense when incurred.
if the Group had directly disposed off the related assets or liabilities. This may mean that amounts previously recognized in However, costs that are directly attributable to identifiable software and have probable economic benefits exceeding
other comprehensive income are reclassified to consolidated profit and loss account. the cost beyond one year, are recognized as an intangible asset. Direct costs include the purchase cost of software
(license fee) and related overhead costs.
Expenditure which enhances or extends the performance of computer software beyond its original specification and
2.2.1 Owned assets useful life is recognized as a capital improvement and added to the original cost of the software.
These are stated at historical cost less accumulated depreciation and impairment losses, if any, except freehold land and Computer software and license cost treated as intangible assets are amortized from the date the software is put to use
capital work in progress which are stated at cost. Historical cost includes expenditure that is directly attributable to the on a straight-line basis over a period of 4 years.
acquisition of the items including borrowing costs (note 2.22). The cost of self constructed assets includes the cost of
materials and direct labour, any other costs directly attributable to bringing the asset to a working condition for its b) Rights for future gas utilization
intended use, and the costs of dismantling and removing the items and restoring the site on which they are located.
Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment. Rights for future gas utilization represent premium paid to the Government of Pakistan for allocation of 100 MMSCFD
natural gas for a period of 20 years for Enven plant. The rights are being amortized from the date of commercial
Where major components of an item of property, plant and equipment have different useful lives, they are accounted for production on a straight-line basis over the remaining allocation period.
as separate items of property, plant and equipment.
c) Goodwill
Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only
Goodwill represents the difference between the consideration paid for acquiring interests in a business and the fair value
of the Group's share of its net assets at the date of acquisition and is carried at cost less accumulated impairment, if any.

d) Right to use the brand c) Held to maturity financial assets
These are stated at cost less impairment, if any. Held to maturity financial assets are non-derivative financial assets with fixed or determinable payments and fixed
maturity with a positive intention and ability to hold to maturity.
The carrying values of intangible assets are reviewed for impairment when events or changes in circumstances indicate
that the carrying value may not be recoverable. If any such indication exists, assets or cash generating units are tested d) Available-for-sale financial assets
for impairment. Also, goodwill is impairment tested atleast once a year and other intangibles with indefinite life are
tested for impairment at reporting date. Where the carrying value exceeds the estimated recoverable amount, these are Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of
written down to their recoverable amount and the resulting impairment is charged to consolidated profit and loss account. the other categories. They are included in non-current assets unless the investment matures or management intends to
dispose it off within 12 months of the end of the reporting date. There were no available for sale financial assets at the
Impairment is reversed only if there has been a change in estimates used to determine recoverable amounts and only balance sheet date.
to the extent that the revised recoverable amount does not exceed the carrying values that would have existed, had no
impairments been recognised, except impairment of goodwill which is not reversed. 2.6.2 Recognition and measurement
The useful lives of intangible assets are reviewed at each balance sheet date to determine whether events and Regular purchases and sales of financial assets are recognized on the trade date - the date on which the Group commits
circumstances continue to support an indefinite useful life assessment for the asset. to purchase or sell the asset. Investments are initially recognized at fair value plus transaction costs for all financial assets
not carried at fair value through profit or loss. Financial assets carried at fair value through profit or loss are initially
2.4 Impairment of non-financial assets recognized at fair value, and transaction costs are expensed in the consolidated profit and loss account. Financial assets
are derecognized when the rights to receive cash flows from the investments have expired or have been transferred and
Assets that are subject to depreciation / amortization are reviewed at each balance sheet date to identify circumstances the Group has transferred substantially all risks and rewards of ownership. Available-for-sale financial assets and financial
indicating occurrence of impairment loss or reversal of previous impairment losses. An impairment loss is recognized for the assets at fair value through profit or loss are subsequently carried at fair value. Held to maturity and loans and receivables
amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an are subsequently carried at amortized cost using the effective interest method.
asset's fair value less cost to sale and value in use. Reversal of impairment loss is restricted to the original cost of the asset.
Gains or losses arising from changes in the fair value of the ‘financial assets at fair value through profit or loss’ category are
2.5 Non current assets (or disposal groups) held-for-sale presented in the consolidated profit and loss account within ‘other operating income / expenses’ in the period in which
they arise. Dividend income from financial assets at fair value through profit or loss is recognized in the profit and loss
Non-current assets (or disposal groups) are classified as assets held for sale when their carrying amount is to be account as part of other income when the Group’s right to receive payments is established.
recovered principally through a sale transaction and a sale is considered highly probable. They are stated at the lower of
carrying amount and fair value less costs to sell if their carrying amount is to be recovered principally through a sale Changes in fair value of monetary and non-monetary securities classified as available-for-sale are recognized in other
transaction rather than through continuing use. Impairment losses on initial classification as held for sale and subsequent comprehensive income. When securities classified as available-for-sale are sold or impaired, the accumulated fair value
gains or losses on remeasurement are recognized in the consolidated profit and loss account. adjustments recognized in consolidated statement of comprehensive income are included in the consolidated profit and
loss account.
2.6 Financial assets
Interest on available-for-sale securities calculated using the effective interest method is recognized in the consolidated
2.6.1 Classification profit and loss account as part of other income. Dividends on available for sale equity instruments are recognized in the
consolidated profit and loss account as part of other income when the Group’s right to receive payments is established.
The Group classifies its financial assets in the following categories: at fair value through profit or loss, held to maturity,
loans and receivables, and available-for-sale. The classification depends on the purpose for which the financial assets The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or a
were acquired. Management determines the classification of its financial assets at initial recognition. group of financial assets is impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss is
removed from equity and recognised in the consolidated profit and loss account. Impairment losses recognised in the
a) Financial assets at fair value through profit or loss consolidated profit and loss account on equity instruments are not reversed through the consolidated profit and loss
account. Impairment testing of trade debts and other receivables is described in (note 2.12).
Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in
this category if acquired principally for the purpose of selling in the short-term. Derivatives are also categorized as held 2.7 Financial liabilities
for trading unless they are designated as hedges. Assets in this category are classified as current assets.
All financial liabilities are recognized at the time when the Group becomes a party to the contractual provisions of an
b) Loans and receivables instrument. Financial liabilities are extinguished when these are discharged or cancelled or expire or when there is
substantial modification in the terms and conditions of the original financial liability or part of it. The terms are substantially
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an different if the discounted present value of the cash flows under the new terms, including any fees paid net of any fees
active market. They are included in current assets, except for maturities greater than 12 months after the end of the received and discounted using the original effective interest rate, is at least ten percent different from the discounted
reporting period; which are classified as non-current assets. present value of the remaining cash flows of the original financial liability. If modification of terms is accounted for as an
extinguishment, any costs or fees incurred are recognized as part of the gain or loss on the extinguishment. If the
exchange or modification is not accounted for as an extinguishment, any costs or fees incurred adjust the carrying
amount of the liability and are amortized over the remaining term of the modified liability.

2.8 Offsetting financial instruments 2.12 Trade debts and other receivables
Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally These are recognized initially at fair value plus directly attributable transaction costs, if any and subsequently measured at
enforceable right to offset the recognized amounts and there is an intention to settle either on a net basis, or realize the amortized cost using effective interest rate method less provision for impairment, if any. A provision for impairment is
asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must established if there is objective evidence that the Group will not be able to collect all amounts due according to the original
be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Group or the terms of receivables. The amount of provision is charged to consolidated profit and loss account. Trade debts and other
counterparty. receivables considered irrecoverable are written-off.
2.9 Derivative financial instruments and hedging activities 2.13 Cash and cash equivalents
Derivatives are recognized initially at fair value; attributable transaction cost are recognized in consolidated profit and loss Cash and cash equivalents in the consolidated statement of cash flows includes cash in hand, balance with banks, other
account when incurred. Subsequent to initial recognition, derivatives are measured at fair values, and changes therein are short-term highly liquid investments with original maturities of three months or less, and bank overdrafts / short term
accounted for as described below: borrowings. Bank overdrafts are shown within short term borrowings in current liabilities on the consolidated balance sheet.
a) Cash flow hedges 2.14 Share capital
Changes in fair value of derivative hedging instruments designated as a cash flow hedge are recognized in Ordinary shares are classified as equity and recognized at their face value. Incremental costs directly attributable to the
consolidated statement of comprehensive income to the extent that the hedge is effective. To the extent the hedge is issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.
ineffective, changes in fair value are recognized in consolidated profit and loss account.
2.15 Borrowings
If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated or exercised,
the hedge accounting is discontinued prospectively. The cumulative gain or loss previously deferred in equity remains Borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at
there until the forecast transaction occurs. When the hedged item is a non-financial asset, the amount previously amortized cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognized in
deferred in equity is transferred to carrying amount of the asset when it is recognized. In other cases the amount the consolidated profit and loss account over the period of the borrowings using the effective interest method.
deferred in equity is transferred to consolidated profit and loss account in the same period that the hedge item affects
consolidated profit and loss account. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability
for at least 12 months after the balance sheet date.
b) Other non-trading derivatives
2.16 Trade and other payables
When a derivative financial instrument is not held for trading, and is not designated in a qualifying hedge relationship, all
changes in its fair value are recognized immediately in consolidated profit and loss account. Trade and other payables are recognized initially at fair value and subsequently measured at amortized cost using the
effective interest method.
The Group holds derivative financial instruments to hedge its foreign currency and interest rate risk exposure. Further, the
Holding Company has issued options to convert International Finance Corporation (IFC) loan on its shares as These are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the
disclosed in note 16.7. The fair values of various derivative instruments used for hedging and the conversion options are business if longer). If not, they are presented as non-current liabilities.
disclosed in note 17.
2.17 Current and deferred income tax
2.10 Stores, spares and loose tools
The tax expense for the period comprises current and deferred tax. Tax is recognized in the consolidated profit and loss
These are valued at weighted average cost except for items in transit which are stated at invoice value plus other charges account, except to the extent that it relates to items recognized in the consolidated statement of comprehensive income
paid thereon till the balance sheet date. For items which are slow moving and / or identified as surplus to the Group's or directly in equity. In this case the tax is also recognized in the consolidated statement of comprehensive income or
requirements, adequate provision is made for any excess book value over estimated realizable value. The Group reviews directly in equity, respectively.
the carrying amount of stores and spares on a regular basis and provision is made for obsolescence.
Current
2.11 Stock-in-trade
The current income tax charge is based on the taxable income for the year calculated on the basis of the tax laws enacted
These are valued at the lower of cost and net realizable value. Cost is determined using weighted average method except or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.
for raw materials in transit which are stated at cost (invoice value) plus other charges incurred thereon till the balance sheet
date. Cost in relation to finished goods includes applicable purchase cost and manufacturing expenses. The cost of work Deferred
in process includes material and proportionate conversion costs.
Deferred tax is recognized using the balance sheet method, providing for all temporary differences between the carrying
Net realizable value signifies the estimated selling price in the ordinary course of business less all estimated costs of amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax
completion and costs necessary to be incurred in order to make the sales. 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 to the extent that is probable that future taxable profits will be available against which (the Fund), a defined contribution plan. The present value, as at June 30, 2011, of the defined benefit obligation of those
temporary difference can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the employees, who accepted this offer, were transferred to the Fund. Furthermore, from July 2011 onwards, the monthly
extent that it is no longer probable that the related tax benefit will be realized. contributions to Defined Contribution Pension Fund of such employees were discontinued.
2.18 Employee benefits 2.18.4 Service incentive plan
2.18.1 Defined contribution plans The Group recognizes provision and an expense under a service incentive plan for certain category of experienced
employees to continue in the Group’s employment.
A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contribution into a
separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to 2.18.5 Employees' compensated absences
defined contribution plans are recognized as an employee benefit expense in consolidated profit and loss account when
they are due. Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in future The Group accounts for compensated absences on the basis of unavailed leave balance of each employee at the end of
payments is available. the period.
The Group contributes to: 2.19 Provisions
- defined contribution provident fund for its permanent employees. Monthly contributions are made both by the Group Provisions are recognized when the Group has a legal or constructive obligation as a result of past events and it is
and employees to the fund at the rate of 10% of basic salary. probable that an outflow of resources will be required to settle the obligation and a reliable estimate can be made of the
amount of the obligation. Provisions are reviewed at each balance sheet date and adjusted to reflect current best estimate.
- defined contribution pension fund for the benefit of those management employees who have not opted for defined
contribution gratuity fund as more fully explained in note 2.18.3. Monthly contributions are made by the Group to the 2.20 Foreign currency transactions and translation
fund at rates ranging from 12.5% to 13.75% of basic salary.
2.20.1 These consolidated financial statements are presented in Pakistan Rupees, which is the Group’s functional and
- defined contribution gratuity fund for the benefit of those management employees who have selected to opt out of presentation currency. Foreign currency transactions are translated into the functional currency using the exchange rates
defined benefit gratuity fund and defined contribution pension plans as more fully explained in note 2.18.3. Monthly prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such
contributions are made by the Group to the fund at the rate of 8.33% of basic salary. transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign
currencies are recognized in the consolidated profit and loss account.
2.18.2 Defined benefit plans
2.20.2 The results and financial position of all the group entities (none of which has the currency of a hyper-inflationary economy)
A defined benefit plan is a post-employment benefit plan other than the defined contribution plan. The Group's net that have a functional currency different from the presentation currency are translated into the presentation currency as
obligation in respect of defined benefit plans is calculated by estimating the amount of future benefit that employees have follows:
earned in return for their service in current and prior periods; that benefit is discounted to determine its present value. The
calculation is performed annually by a qualified actuary using the Projected Unit Credit method, related details of which - assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;
are given in note 33 to the financial statements.
- income and expenses for each consolidated profit and loss account item are translated at average exchange rates
Remeasurements (actuarial gains / losses) in respect of defined benefit plan are recognized directly in equity through (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction
other comprehensive income; consequent to amendment in International Accounting Standard (IAS) 19 "Employee dates, in which case income and expenses are translated at the rate on the dates of the transactions); and
benefits".
- all resulting exchange differences are recognized as a separate component of equity.
Contributions require assumptions to be made of future outcomes which mainly include increase in remuneration,
expected long-term return on plan assets and the discount rate used to convert future cash flows to current values. 2.21 Revenue recognition
Calculations are sensitive to changes in the underlying assumptions.
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Group and the amount of
The Group also contributes to: revenue can be measured reliably. Revenue is measured at the fair value of the consideration received or receivable and is
reduced for marketing allowances. Revenue is recognized on the following basis:
- defined benefit funded pension scheme for its management employees.
- Sales revenue is recognized when product is dispatched to customers;
- defined benefit funded gratuity schemes for its management and non-management employees.
- Income on deposits and other financial assets is recognized on accrual basis;
The pension scheme provides life time pension to retired employees or to their spouses. Contributions are made annually
to these funds on the basis of actuarial recommendations. The pension scheme has been curtailed and effective from July - Commission income is recognized on an accrual basis in accordance with the substance of the relevant agreement; and
1, 2005, no new members are inducted in this scheme.
- Service revenue is recognised on the basis of delivery of service.
2.18.3 In June 2011, the Group gave a one time irrevocable offer to selected members of MPT Employees' Defined Benefit
Gratuity Fund and Defined Contribution Pension Fund to join a new MPT Employee's Defined Contribution Gratuity Fund

2.22 Borrowing costs 3.3 Provision for retirement and other service benefits obligations
Borrowing costs are recognized as an expense in the period in which they are incurred except where such costs are The present value of these obligations depend on a number of factors that are determined on actuarial basis using various
directly attributable to the acquisition, construction or production of a qualifying asset in which case such costs are assumptions. Any changes in these assumptions will impact the carrying amount of these obligations. The present value
capitalized as part of the cost of that asset. Borrowing costs includes exchange differences arising on foreign currency of these obligations and the underlying assumptions are disclosed in note 33.2.3 and 33.2.8 respectively.
borrowings to the extent these are regarded as an adjustment to borrowing costs and net gain / loss on the settlement of
derivatives hedging instruments. 4. Property, Plant and Equipment
2015 2014
2.23 Research and development costs -------------------- Rupees ---------------------
Research and development costs are charged to consolidated profit and loss account as and when incurred. Operating assets at net book value (note 4.1) 69,759,180 73,674,133
Capital work in progress (note 4.4) 1,946,598 863,917
2.24 Government grant Major spare parts and stand-by equipment 492,615 424,767
72,198,393 74,962,817
Government grant that compensates the Group for expenses incurred is recognized in the consolidated profit and loss
account on a systematic basis in the same period in which the expenses are recognized. Government grants are
deducted from related expense.
2.25 Earnings per share
The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by
dividing the profit or loss attributable to ordinary shareholders of the Holding Company by the weighted average number
of ordinary shares outstanding during the year. Diluted EPS is determined by adjusting the profit or loss attributable to
ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive
potential ordinary shares.
2.26 Transactions with related parties
Sales, purchases and other transactions with related parties are carried out on agreed terms and conditions.
2.27 Dividend and appropriation to reserves
Dividend and appropriation to reserves are recognized in the consolidated financial statements in the period in which
these are approved.
3. Critical Accounting Estimates and Judgements
Estimates and judgments are continually evaluated and are based on historical experience and other factors, including
expectations of future events that are believed to be reasonable under the circumstances.
The Group reviews appropriateness of the rate of depreciation, useful life, residual value used in the calculation of
depreciation. Further where applicable, an estimate of recoverable amount of assets is made for possible impairment on
an annual basis.
3.2 Income taxes
In making the estimates for income taxes, the management considers the applicable laws and the decisions / judgments
of appellate authorities on certain issues in the past. Accordingly, the recognition of deferred taxes is made taking into
account these judgments and the best estimates of future results of operations of the Group.

4.1 Operating Assets

Land Building on Plant and Gas Catalyst Office Vehicles Total 4.3 The details of operating assets disposed / written off during the year are as follows:
Freehold Leasehold Freehold Leasehold machinery Pipeline equipments
-----------------------------------------------------------------------------------------------------------(Rupees)----------------------------------------------------------------------------------------------
Description and Sold to Cost Accumulated Net book Sales
method of disposal depreciation value proceeds
-----------------------------(Rupees)---------------------------
Cost 149,575 187,320 2,573,248 367,922 90,120,695 1,706,826 1,783,177 669,566 408,718 97,967,047
Accumulated depreciation - (52,247) (749,037) (101,622) (17,540,344) (224,711) (1,245,351) (518,507) (263,863) (20,695,682)
Vehicles
Net book value 149,575 135,073 1,824,211 266,300 72,580,351 1,482,115 537,826 151,059 144,855 77,271,365
By Company policy to existing /
Year ended December 31, 2014 separating executives Asghar Ali Khan 2,058 1,061 997 2,058
Net book value - January 1, 2014 149,575 135,073 1,824,211 266,300 72,580,351 1,482,115 537,826 151,059 144,855 77,271,365 Asim Rasheed Qureshi 1,560 829 731 731
Transfers from CWIP - - 19,608 65,615 363,864 708,137 176,997 82,973 28,164 1,445,358 Azhar Ali Malik 1,965 1,474 491 491
Bilal Ali Shah 1,461 1,096 365 365
Disposals / write offs (note 4.3) Dr. Zaheer Ahmad 1,490 955 535 570
Cost - - - - (347,810) - - (13,253) (79,656) (440,719) Farooq Nazim Shah 1,960 1,470 490 490
Accumulated depreciation - - - - 52,053 - - 13,154 58,075 123,282 Kashif Rahim 1,510 1,133 377 378
- - - - (295,757) - - (99) (21,581) (317,437) M. Asif Sultan Tajik 7,600 5,700 1,900 1,900
Depreciation charge (note 4.2) - (4,393) (135,267) (10,428) (4,190,358) (66,646) (218,414) (53,154) (46,493) (4,725,153) Majid Latif 1,965 1,474 491 491
Net book value 149,575 130,680 1,708,552 321,487 68,458,100 2,123,606 496,409 180,779 104,945 73,674,133 Muhammad Ismail 1,510 1,133 377 378
Muhammad Mushfiq Hussain 1,461 1,096 365 365
As at January 1, 2015 Nasir Iqbal 2,176 1,338 838 838
Cost 149,575 187,320 2,592,856 433,537 90,136,749 2,414,963 1,960,174 739,286 357,226 98,971,686 Nazir Jamali 1,490 1,118 372 373
Accumulated depreciation - (56,640) (884,304) (112,050) (21,678,649) (291,357) (1,463,765) (558,507) (252,281) (25,297,553) S. Attaullah Shah Bokhari 1,510 1,133 377 378
Net book value 149,575 130,680 1,708,552 321,487 68,458,100 2,123,606 496,409 180,779 104,945 73,674,133 Tassawar Ali 1,500 1,057 443 443
31,216 22,067 9,149 10,249
Year ended December 31, 2015 Sale through bid
Net book value - January 1, 2015 149,575 130,680 1,708,552 321,487 68,458,100 2,123,606 496,409 180,779 104,945 73,674,133 Abdul Moeed Asif 666 599 67 538
Assets of subsidiary acquired at Amir Jan 879 791 88 721
business combination (note 1.6) - - - - - - - 2,280 6,985 9,265 Hassan Ali Warsi 900 675 225 723
Transfers from CWIP - - 31,404 1,174 661,310 - - 93,235 37,512 824,635 Khalid Anwar 530 477 53 381
Disposals / write offs (note 4.3) M/S U & H Textile 1,439 1,079 360 1,085
Cost - - - - - - - (2,398) (65,757) (68,155) M/S U & H Textile 588 529 59 495
Accumulated depreciation - - - - - - - 2,386 50,737 53,123 Mohammad Jawed 555 500 56 368
- - - - - - - (12) (15,020) (15,032) Muhammad Akbar Awan 900 675 225 563
Depreciation charge (note 4.2) - (4,393) (135,353) (10,838) (4,200,022) (71,584) (216,820) (56,369) (38,442) (4,733,821) Muhammad Imran 530 477 53 412
Net book value 149,575 126,287 1,604,603 311,823 64,919,388 2,052,022 279,589 219,913 95,980 69,759,180 Nusrat Iqbal 1,319 1,187 132 794
Rana Abdus Samad 530 477 53 427
As at December 31, 2015 Said Faqeer 605 545 61 476
Cost 149,575 187,320 2,624,260 434,711 90,798,059 2,414,963 1,960,174 832,403 335,966 99,737,431 Salman 605 545 61 356
Accumulated depreciation - (61,033) (1,019,657) (122,888) (25,878,671) (362,941) (1,680,585) (612,490) (239,986) (29,978,251) Syed Zafar Akhtar Naqvi 666 599 67 479
Net book value 149,575 126,287 1,604,603 311,823 64,919,388 2,052,022 279,589 219,913 95,980 69,759,180 Iqra University 10,833 7,312 3,521 7,500
Zeeshan Abdullah 915 839 76 916
Annual rate of depreciation (%) - 2 to 5 2.5 to 8 2.5 5 to 10 5 No. of 10 to 25 12 to 25 22,460 17,306 5,157 16,234
production Furniture and fixtures
days Insurance claim EFU Insurance 130 36 94 94
53,806 39,409 14,400 26,577
Items having net book value upto Rs. 50 each
4.2 Depreciation charge for the year has been allocated as follows: 2015 2014 Vehicles 11,951 11,328 623 10,019
-------------------- Rupees --------------------- Office equipment 2,398 2,386 12 259
Cost of sales (note 24) 4,694,369 4,682,132 Year ended December 31, 2015 68,155 53,123 15,035 36,855
Selling and distribution expenses (note 25) 17,721 23,588
Administrative expenses (note 26) 21,731 19,433 Year ended December 31, 2014 440,719 123,282 317,437 45,989
4,733,821 4,725,153

4.4 Capital work in progress 2015 2014 5.1 Goodwill and Right to use the brand
-------------------- Rupees ---------------------
The recoverable amount of cash generating unit is the higher of value in use or fair value less cost to sell. Value in use is
Plant and machinery 1,678,493 759,687 calculated as the net present value of the projected cash flows of the cash generating unit to which the asset belongs,
Building and civil works including Gas pipeline 156,557 66,849 discounted at risk-adjusted discount rate.
Furniture, fixture and equipment 16,999 4,003
Advances to suppliers 36,962 13,074 Details relating to the discounted cash flow model used in the impairment test are as follows:
Other ancillary costs 57,587 20,304
1,946,598 863,917 Valuation basis Value in use
4.4.1 Balance as at January 1 863,917 1,640,564 Key assumptions Sales growth rates
Additions during the year 1,917,296 679,549 Discount rate
Assets of subsidiary acquired at business combination (note 1.6) 5,886 -
Transferred to: Determination of assumptions Growth rates are internal forecasts based on both internal and external
- operating assets (note 4.1) (824,635) (1,445,358) market information and past performance. Cost reflects past experience,
- intangible assets (note 5) (15,866) (10,838) adjusted for inflation and expected changes. Discount rate is primarily
Balance as at December 31 1,946,598 863,917 based on weighted average cost of capital.
Terminal growth rate 2.5%

5. Intangible Assets Period of specific projected cash flows 5 years
Right to Software and Rights for Discount rate 17.60%
Goodwill use the licenses future gas Total
brand utilization
(note 5.1) The valuation indicates sufficient headroom such that a reasonably possible change to key assumption is unlikely to
-------------------------------------------- (Rupees) ---------------------------------------- result is an impairment of the related goodwill.
Cost - - 239,493 102,312 341,805 2015 2014
Accumulated amortization - - (190,464) (12,877) (203,341) -------------------- Rupees ---------------------
Net book value - - 49,029 89,435 138,464 5.2 Amortization for the year has been allocated as follows:
Year ended December 31, 2014 Cost of sales (note 24) 23,257 28,290
Net book value - January 1, 2014 - - 49,029 89,435 138,464 Selling and distribution expenses (note 25) 960 160
Transfers from CWIP (note 4.4.1) - - 10,838 - 10,838 Administrative expenses (note 26) 3,639 2,516
Amortization (note 5.2) - - (25,855) (5,111) (30,966) 27,856 30,966
Net book value - - 34,012 84,324 118,336

Cost - - 250,331 102,312 352,643
Accumulated amortization - - (216,319) (17,988) (234,307)
Net book value - - 34,012 84,324 118,336
Year ended December 31, 2015

Net book value - January 1, 2015 - - 34,012 84,324 118,336
Assets of Subsidiary
acquired - net book value - - 569 - 569
Recognition on account
of acquisition (note 1.6) 183,806 4,170,995 - - 4,354,801
Transfers from CWIP (note 4.4.1) - - 15,866 - 15,866
Amortization (note 5.2) - - (22,746) (5,110) (27,856)
Net book value 183,806 4,170,995 27,701 79,214 4,461,716

Cost 183,806 4,170,995 266,766 102,312 4,723,879
Accumulated amortization - - (239,065) (23,098) (262,163)
Net book value 183,806 4,170,995 27,701 79,214 4,461,716

2015 2014 2015 2014

-------------------- Rupees --------------------- -------------------- Rupees -------------------
6. Long Term Loans and Advances - Considered good 7. Stores, Spares and Loose Tools
Executives (notes 6.1 and 6.2) 230,775 183,374 Consumable stores 503,731 545,483
Other employees (note 6.3) 47,733 9,174 Spares 4,346,982 4,257,635
278,508 192,548 Tools 5,248 5,019
Less: Current portion shown under 4,855,961 4,808,137
current assets (note 10)
- Considered good 114,646 95,108 Less: Provision for surplus and slow moving items 216,819 94,391
- Considered doubtful 3,509 3,509 4,639,142 4,713,746
118,155 98,617 8. Stock-in-trade
160,353 93,931
Raw materials - note 8.1 1,238,476 714,857
6.1 Reconciliation of the carrying amount of loans Packing materials 65,304 90,475
and advances to executives Work in process 20,688 89,780
1,324,468 895,112
Balance at beginning of the year 183,374 187,302 Finished goods
Assets of subsidiary acquired 10,166 - - manufactured product 2,028,795 205,810
Disbursements 200,724 144,339 - purchased and packaged product 4,078,825 -
Repayments / amortization (163,489) (148,267) 6,107,620 205,810
Balance at end of the year 230,775 183,374 Less: Provision for NRV on finished goods (402,651) -
7,029,437 1,100,922
6.2 Includes service incentive loans to executives of Rs. 112,785 (2014: Rs. 97,496). It also includes advances of Rs. 28,215 (2014:
Rs. 31,309), Rs. 5,313 (2014: Rs. 24,994), Rs. 14,094 (2014: Rs. 16,383), Rs. 49,358 (2014: Rs. 13,192) and Rs. 21,010 (2014: 8.1 Includes seeds purchased by the Subsidiary Company under licence issued by the Government of Punjab.
Nil) to executives for car earn out assistance, long term incentive, house rent advance, retention loan and Tier IV & V loan
respectively. The maximum amount outstanding at the end of any month during the year ended December 31, 2015 from 2015 2014
executives aggregated to Rs. 274,441 (2014: Rs. 229,956). -------------------- Rupees -------------------
9. Trade Debts
6.3 Represents interest free loans given to workers pursuant to Collective Labour Agreement.
- Secured (note 9.1) 2,180,408 615,797
- Unsecured 81,339 141,247
2,261,747 757,044
Considered doubtful 24,400 24,400
2,286,147 781,444
Provision for impairment (note 9.2) (24,400) (24,400)
2,261,747 757,044
9.1 These debts are secured by way of bank guarantee and inland letter of credit.
9.2 As at December 31, 2015, trade debts aggregating to Rs. 24,400 (2014: Rs. 24,400) were past due and provided for.
These receivables have been outstanding for more than 1 year from the balance sheet date.

2015 2014 11.1 During the year, the Government of Pakistan notified the payment of subsidy at the rate of Rs. 500 per 50 kg bag of Di
-------------------- Rupees --------------------- Ammonia Phosphate (DAP), Rs.217 per 50 kg bag of Nitrophos (N) and Nitrogen, Phosphorous and Potassium (NPK)
10. Loans, Advances, Deposits and Prepayments fertilizers (based on phosphorous content) sold. The mode of payment of subsidy to the Company shall either be adjustment
against the sales tax liability or payment by the State Bank of Pakistan upon verification by the Federal Board of Revenue.
Considered good
Current portion of long term loans and advances to 11.2 During the previous year, the Subsidiary Company undertook mandi project on behalf of Engro Corporation Limited (the
executives and other employees - (note 6) 114,646 95,108 Parent Company) based on the understanding that any gains / losses arising from the said project belongs to the Parent
Advances and deposits 209,406 72,482 Company. Accordingly, the entire losses amounting to Rs. 9,130 on the said project have been recorded as receivable
Prepayments from the Parent Company.
- Insurance 253,456 239,702
- Others 17,100 25,651 Under this project, the Subsidiary Company has made sales amounting to Rs. 20,660 (2014: Nil) and the related cost of
594,608 432,943 goods sold amounting to Rs. 29,790 (2014: Nil).
Considered doubtful -
Advances and deposits 3,509 3,509 11.3 Includes provision for impairment in sales tax refundable amounting to Rs. 180,000 recognized during the year by the
Receivable from suppliers 35,718 - Subsidiary Company being amount not recoverable through sales of the Subsidiary Company’s existing stocks taking
39,227 3,509 cognizance of the discontinuance of coal and agri commodities businesses during the year and the proposed Scheme of
Provision for doubtful receivables (note 10.1) (39,227) (3,509) Amalgamation of the Subsidiary Company with the Holding Company as more fully explained in note 1.5.1.
594,608 432,943
11.4 The maximum amount due from the Parent Company / associated companies at the end of any month during the year
aggregated as follows:
10.1 As at December 31, 2015, advances and prepayments aggregating to Rs. 39,227 (2014: Rs. 3,509) were impaired and 2015 2014
provided for. These have been outstanding for more than 1 year from the balance sheet date. -------------------- Rupees ------------------
2015 2014 Parent Company

-------------------- Rupees --------------------- - Engro Corporation Limited 20,678 812
11. Other Receivables Associated Companies
- Engro Eximp (Private) Limited - 68,036
Considered good - Engro Foods Limited 5,913 3,027
Receivable from Government of Pakistan ( note 11.1) 1,128,957 544 - Engro Polymer & Chemicals Limited 10,945 6,012
Deffered freight 1,243 - - Engro Powergen Qadirpur Limited 15,061 16,457
Sales tax refundable 195,135 - - Engro PowerGen Limited 2,972 1,433
Due from associated companies: - Sindh Engro Coal Mining Company Limited 7,813 6,168
- Engro Corporation Limited (note 11.2) 3,593 - - Engro Eximp Agriproducts (Private) Limited 82,477 2,252
- Engro Foods Limited 301 24 - Engro Foundation 3,809 282
- Engro Eximp Agriproducts (Private) Limited 6,590 - - Engro Elengy Terminal (Private) Limited 2,840 2,830
- Engro Polymer & Chemicals Limited 650 - - Engro Vopak Terminal Limited 3,517 3,088
- Engro Powergen Qadirpur Limited 4,330 100
- Engro Foundation 9 -
- Sindh Engro Coal Mining Company Limited 67 21 11.5 As at December 31, 2015, receivables aggregating to Rs. 16,181 (2014: Rs. 15,117) were past due but not impaired. The
- Engro Elengy Terminal (Private) Limited 298 2,830 ageing analysis of these receivables is as follows:
- Engro Vopak Terminal Limited 1,224 899 2015 2014
Claims on foreign suppliers 10,278 13,215 -------------------- Rupees ---------------------
Others 5,903 1,902
1,358,578 19,535 Upto 3 months 12,049 6,166
Considered doubtful 3 to 6 months 1,251 217
Sales tax refundable 180,000 - More than 6 months 2,881 8,734
Less: Provision for impairment (180,000) (544) 16,181 15,117
1,358,578 18,991

2015 2014 14. Share Capital

-------------------- Rupees --------------------- 2015 2014
12. Short Term Investments -------------------- Rupees ---------------------
Authorized Capital
Financial assets at fair value through profit or loss
Treasury bills and other fixed income placements (note 12.1) 11,034,555 24,085,079 1,400,000,000 (2014: 1,400,000,000)
Ordinary shares of Rs. 10 each 14,000,000 14,000,000
Held to maturity
Euro Bonds (note 12.2) 615,834 - Issued, subscribed and paid-up capital
Loans and receivables 258,132,299 (2014: 245,541,674) Ordinary shares of

Reverse repurchase of treasury bills (note 12.1) - 999,288 Rs. 10 each, fully paid in cash 2,581,323 2,455,417
11,650,389 25,084,367
9,999,993 (2014: 9,999,993) Ordinary shares of
Rs. 10 each issued as at January 1, 2010
12.1 These represent treasury bills at the interest rate ranging from 6.23% to 6.42% per annum (2014: 7.02% to 10.07% per on transfer of fertilizer undertaking 100,000 100,000
annum); and local and foreign currency deposits with various banks, at interest rates ranging from 4.25% to 6.18% per
annum (2014: 7.25% to 9.15% per annum) and at 1.50% per annum (2014: 1.50% per annum) respectively. 1,062,800,000 (2014: 1,062,800,000) Ordinary shares of
Rs. 10 each, issued as fully paid bonus shares 10,628,000 10,628,000
12.2 These represent investment in Eurobonds having face value of USD 5,700 (2014: Nil) with effective interest rates ranging
from 1% to 2.3% per annum. These mature on March 31, 2016. 13,309,323 13,183,417
2015 2014 14.1 Movement In Issued, Subscribed and Paid Up Capital

-------------------- Rupees ---------------------
13. Cash and Bank Balances 2015 2014 2015 2014
-------------Number of shares---------------- ----------------------(Rupees)--------------------
Cash at banks on:
- deposit accounts (note 13.1) 838,925 4,432,738 1,318,341,667 1,222,800,000 At January 1 13,183,417 12,228,000
- saving accounts (note 13.1) 1,243 -
- current accounts (note 13.2) 76,137 3,098 Ordinary shares of Rs. 10 each issued during
916,305 4,435,836 - 75,000,000 the year as fully paid in cash - note 14.2 - 750,000
Cash in hand - imprest funds 7,250 7,250
923,555 4,443,086 Ordinary shares of Rs. 10 each issued
upon exercise of conversion option by
International Finance Corporation
13.1 These accounts carries return at rates ranging from 4.00% to 6.00% per annum (2014: 6.5% to 8.98% per annum). 12,590,625 20,541,667 (IFC) - note 14.3 125,906 205,437
1,330,932,292 1,318,341,667 13,309,323 13,183,437
13.2 Includes Rs. 67,410 (2014: Rs.12,225) held in foreign currency bank accounts.
14.2 In 2013, the Holding Company made Initial Public Offer through issue of 75 million ordinary shares of Rs. 10 each
against which shares have been issued last year.
14.3 These represent shares issued to IFC, pursuant to exercise of conversion option (note 16.7).
14.4 As at balance sheet date, the Parent Company held 78.8% of the share capital of the Holding Company.
2015 2014
-------------------- Rupees ---------------------
15. Hedging Reserve
Hedging reserve on interest rate swaps (7,545) (59,450)
Deferred tax thereon 3,009 19,619
(4,536) (39,831)
15.1 Hedging reserve represents the effective portion of changes in fair values of designated cash flow hedges, net off associated
gains / losses recognized in initial cost of the hedged item and profit and loss account where applicable.

16. Borrowings - Secured (Non-participatory) 16.1 During the year, a number of loans including from Askari Bank Limited, Citibank N.A., Standard Chartered (Pakistan)
Installments Limited, Bank Islami Pakistan Limited and Term Finance Certificates (3rd Issue) was refinanced through a loan from United
Note Mark - up Number Commenced / 2015 2014 Bank Limited. The pricing of the new loan is 6 month KIBOR + 0.65%, while the repayment schedule matches exactly with
rate p.a. Commencing from -------------------Rupees------------------- the refinanced loans. The loan was made a part of the Inter Creditor Agreement (ICA) and thus has the same charge with
Long term finance utilized the other Senior Lenders. The new loan does not have a Corporate Guarantee from the Parent Company unlike the other
under mark-up arrangements: Senior Lenders.
Holding Company
Senior Lenders
16.2 These loans were fully pre-paid during the year.
Habib Bank Limited 6 months KIBOR + 1.1% 8 half yearly March 31, 2013 199,714 257,290
Allied Bank Limited 6 months KIBOR + 1.1% 8 half yearly June 26, 2013 399,160 514,066
Askari Bank Limited 16.1 6 months KIBOR + 1.1% 8 half yearly June 30, 2013 - 64,599 16.3 During the year, the Holding Company negotiated re-pricing for the following borrowings:
Citibank N.A. 16.1 6 months KIBOR + 1.1% 8 half yearly July 22, 2013 - 25,840
Standard Chartered Bank Bank Mark-up rate per annum Effective
(Pakistan) Limited 16.1 6 months KIBOR + 1.1% 8 half yearly June 30, 2013 - 128,644 Original Repriced Date of
Bank Islami Pakistan Limited 16.1 6 months KIBOR + 2.4% 14 half yearly May 26, 2010 - 181,709 Repricing
United Bank Limited 16.1 6 months KIBOR + 0.65% 8 Payments December 17, 2015 1,460,855 -
Senior Lenders
Silk Bank Limited 16.2 6 months KIBOR + 2.35% 10 half yearly January 21, 2013 - 180,000
Dubai Islamic Bank Pakistan
Faysal Bank Limited 6 month Kibor + 2.35% 6 month Kibor + 1.20% 26-Nov-15
Limited 16.2 6 months KIBOR + 2.11% 9 half yearly June 30, 2013 - 294,409 Standard Chartered Bank
Faysal Bank Limited 16.3 6 months KIBOR + 1.2% 13 half yearly May 26, 2013 859,503 857,785 (Pakistan) Limited 6 month Kibor + 2.40% 6 month Kibor + 0.90% 17-Jun-15
Standard Chartered Bank Samba Bank Limited 6 month Kibor + 2.40% 6 month Kibor + 0.90% 1-Jul-15
(Pakistan) Limited 16.3 6 months KIBOR + 0.9% 14 half yearly June 14, 2013 593,090 591,118 National Bank of Pakistan 6 month Kibor + 2.40% 6 month Kibor + 1.20% 28-Sep-15
National Bank of Pakistan 16.3 6 months KIBOR + 1.1% 10 half yearly March 5, 2013 790,364 788,842 Habib Metropolitan Bank Limited 6 month Kibor + 2.40% 6 month Kibor + 0.90% 21-Dec-15
Samba Bank Limited 16.3 6 months KIBOR + 0.9% 14 half yearly April 1, 2013 296,813 295,954
Pak Kuwait Investment
National Bank of Pakistan 16.3 6 months KIBOR + 1.2% 10 half yearly September 28, 2013 545,050 543,165
Habib Metropolitan Bank Limited 16.3 6 months KIBOR + 0.9% 10 half yearly June 21, 2013 80,000 120,000
Company (Private) Limited 6 month Kibor + 2.35% 6 month Kibor + 1.0% 1-Nov-15
Pak Kuwait Investment Company
(Private) Limited 16.3 6 months KIBOR + 1.0% 10 half yearly April 30, 2012 99,803 199,297 16.4 This represents the balance amount of a syndicated finance agreement with Habib Bank Limited, National Bank of
Syndicated finance 16.4 6 months KIBOR + 1.8% 14 half yearly February 28, 2013 9,880,750 9,853,119 Pakistan, United Bank Limited, MCB Bank Limited, Standard Chartered Bank (Pakistan) Limited, Bank Alfalah Limited,
Islamic offshore finance 16.5 6 months LIBOR + 2.57% 9 half yearly March 28, 2013 3,525,468 5,312,289 Allied Bank Limited, Askari Bank Limited, Habib Metropolitan Bank Limited, SUMMIT Bank Limited, SONERI Bank
DFI Consortium finance 16.6 6 months LIBOR + 2.6% 7 half yearly July 29, 2013 2,789,150 3,589,561 Limited and PAK-LIBYA Holding Company (Private) Limited.
Subordinated Lenders
International Finance Corporation 16.7 6 months LIBOR + 6% 3 half yearly September 15, 2015 2,415,784 3,365,332
16.5 This represents the balance amount of an offshore Islamic Finance Facility Agreement of USD 36,000 with Habib Bank
International Finance Corporation 16.7 6 months LIBOR + 6% 3 half yearly September 15, 2016 2,284,468 2,458,031 Limited, National Bank of Pakistan and SAMBA Financial Group and Rs. 3,618,000 with Faysal Bank (previously share
Dubai Islamic Bank Pakistan belonged to Citi Bank N.A.), Dubai Islamic Bank Pakistan Limited and Standard Chartered Bank (Pakistan) Limited.
Limited 16.8 6 months KIBOR + 1.75% 4 half yearly November 28, 2018 800,000 800,000
On March 31, 2015, Faysal Bank Limited acquired Citi Bank N.A.'s share in the PKR portion of the Islamic Finance Facility.
Certificates
Term Finance Certificates
16.6 This represents the balance amount of a facility agreement amounting to USD 85,000 with a consortium of Development
3rd Issue 16.1 6 months KIBOR + 2.4% 14 half yearly June 17, 2010 - 1,432,006
Sukuk Certificates 16.9 6 months KIBOR + 1.5% 2 half yearly March 6, 2015 - 2,998,472
Finance Institutions comprising of DEG, FMO and OFID.
Privately Placed Subordinated
Term Finance Certificates 16.10 6,000,000 6,000,000 16.7 The Parent Company entered into a C Loan Agreement (Original Agreement) dated September 29, 2009 with
Privately Placed Subordinated International Finance Corporation (IFC) for USD 50,000, divided into Tranche A (USD 15,000) and Tranche B (USD
Sukuk Certificates 16.11 6 months KIBOR + 1.75% 10 half yearly January 9, 2015 3,006,272 3,151,823 35,000). Both Tranche A and B were fully disbursed as at December 31, 2009 and transferred to the Holding Company
36,026,244 44,003,351 under the scheme of demerger effective January 1, 2010. However, the option given to convert the Tranche A loan
Less: Current portion shown
amount of USD 15,000 remained upon the Parent Company’s ordinary shares at Rs. 205 per ordinary share (reduced to
under current liabilities 10,736,586 7,912,729
Rs. 155.30 and Rs. 119.46 as at December 31, 2011 and December 31, 2012 respectively consequent to bonus issues)
25,289,658 36,090,622 calculated at the dollar rupee exchange rate prevailing on the business day prior to the date of the notices issued by IFC to
exercise the conversion option. Such option was to be exercised within a period of no more than five years from the date
of disbursement of the loan (December 28, 2009). Tranche B, however, is not convertible. The Parent Company, upon
shareholders’ approval in the Annual General Meeting of February 27, 2010, has entered into an agreement with the
Holding Company that in the event IFC exercises the aforementioned conversion option (Tranche A), the loan amount
then outstanding against the Holding Company would stand reduced by the conversion option amount and the Holding
Company would pay the rupee equivalent of the corresponding conversion amount to the Parent Company which would
simultaneously be given to the Holding Company as a subordinated loan, carrying mark-up payable by the Parent
Company for rupee finances of like maturities plus a margin of 1%. The effect of IFC conversion resulted in a loan from the
Parent Company having the same repayment terms / dates as that of Tranche A.

In 2014, IFC exercised its entire conversion option for an outstanding amount of USD 15,000 of Tranche A and 2015 2014
accordingly 12,515,319 ordinary shares of the Parent Company were issued to the IFC. Assets Liabilities Assets Liabilities
--------------------------------(Rupees)--------------------------------
On December 22, 2010, the Holding Company and IFC entered into an amended agreement for further disbursement of 17. Derivative Financial Instruments
USD 30,000 over and above the aforementioned disbursed amount of USD 50,000. The amount was fully disbursed as at
June 30, 2011. The salient features of the Original Loan essentially remained the same and some of the terms of the loan Conversion options on IFC loan (note 16.7) - 298,749 - 965,326
were further amended through an agreement dated January 29, 2014. The additional loan of USD 30,000 is divided into (i) Cash flow hedges:
Tranche A2 30% convertible loan on the shares of the Holding Company at Rs. 24.00 per ordinary share calculated at the - Foreign exchange forward
dollar rupee exchange rate prevailing on the business day prior to the date of the notices issued by IFC to exercise the contracts - net (note 17.1) 29,207 54,569 - 54,800
conversion option and (ii) Tranche B2 70% non-convertible loan. The additional loan is repayable by September 15, 2017 - Interest rate swaps (note 17.2) - 13,166 - 76,652
in three equal installments and carries interest at 6 months LIBOR plus a spread of 6%. 29,207 366,484 - 1,096,778
Less: Current portion shown under
On June 25, 2014, the Holding Company received a notice from the IFC for exercise of option on USD 5,000 loan which, current assets / liabilities
along with the fair value of related options on that date has been classified as equity; accordingly 20,541,667 ordinary Conversion options on IFC loan - 298,749 - 965,326
shares of the Holding Company were allotted to the IFC. During the year, the Holding Company received a notice from IFC Cash flow hedges:
for exercise of further USD 3,000 loan on January 9, 2015 out of the remaining USD 4,000 of Tranche A2, accordingly - Foreign exchange forward contracts 29,207 54,569 - 54,800
12,590,625 ordinary shares of the Holding Company have been allotted to the IFC on January 26, 2015. The fair value of - Interest rate swaps - 13,166 - 69,963
the remaining conversion option, included in derivative financial instruments, amounts to Rs. 298,749 (note 17). 29,207 366,484 - 1,090,089
- - - 6,689
16.8 The Holding Company arranged a loan facility of Rs. 800,000 from Dubai Islamic Bank Pakistan Limited on December 1,
2014. This loan was used to repay the sub-ordinated loan received from the Parent Company on account of exercise of 17.1 Foreign exchange forward contracts
IFC conversion option as more fully explained in aforementioned note. During the year, effecitve May 28, 2015, the facility
price was changed to 1.75% from 1% in accordance with the agreed terms and conditions. The Holding Company entered into various USD : PKR forward contracts to hedge its foreign currency exposure. As at
December 31, 2015, the Holding Company has forward contracts to purchase USD 96,133 (2014: USD 94,680) at various
16.9 This represents Sukuk Certificates of Rs. 3,000,000. Dubai Islamic Bank Pakistan Limited is the trustee for these maturity dates to hedge its foreign currency exposure, primarily loan obligations. The net fair value of these contracts as at
certificates. During the year, the amount has been fully repaid. December 31, 2015 is negative and amounted to Rs. 25,362 (2014: Rs. 54,800 negative).
16.10 This represents Privately Placed Subordinated TFCs amounting to Rs. 4,000,000 (PPTFC Issue I) and Rs. 2,000,000 17.2 Interest rate swap
(PPTFC Issue II) respectively. The PPTFCs are perpetual in nature with a five year call and a ten year put option. The
PPTFC I issue has mark-up of six months KIBOR plus 2.1% whereas the PPTFC II issue has mark-up of six months KIBOR The Holding Company entered into interest rate swap agreement to hedge its interest rate exposure on floating rate committed
plus 1.65%. IGI Investment Bank Limited is the trustee for these TFCs. In 2011, the aforementioned TFCs have been listed borrowing from a consortium of Development Finance Institutions for a notional amount of USD 7,727 (2014: USD 23,182)
on the Over-The-Counter (OTC) market of the Pakistan Stock Exchange Limited. amortizing upto April 2016. Under the swap agreement, the Holding Company would receive USD-LIBOR from Standard
Chartered Bank (Pakistan) Limited on notional amount and pay fixed 3.73% which will be settled semi-annually. The fair value
16.11 This represents Privately Placed Subordinated Sukuk (PPSS) amounting to Rs. 3,200,000. Pak Brunei Investment of the interest rate swap as at December 31, 2015 is negative and amounted to Rs. 13,166 (2014: Rs. 76,652 negative).
Company Limited is the Trustee while Meezan Bank Limited acts as the Investment Agent for this Sukuk. The Holding
Company used PPSS to refinance the subordinated loan from the Parent Company.
16.12 All senior debts are secured by an equitable mortgage upon immovable property of the Holding Company and equitable
charge over current and future fixed assets excluding immovable property of the Holding Company.
Loans from the IFC are secured by a sub-ordinated mortgage upon immovable property of the Holding Company and
sub-ordinated charge over all present and future fixed assets excluding immovable property of the Holding Company.
Further, Privately Placed Term Finance Certificates (PPTFCs) are secured by a subordinated floating charge over all
present and future fixed assets excluding land and buildings. Subordinated Dubai Islamic Bank Pakistan Limited (DIBPL)
loan and Privately Placed Subordinated Sukuk (PPSS) has a subordinate mortgage upon immovable property of the
Holding Company and a subordinate charge over current and future fixed assets excluding immovable property of the
Holding Company.
The Parent Company has issued corporate guarantees in respect of all debts excluding a bilateral loan from UBL, a
Subordinated DIBPL loan and PPSS. For PPTFCs and loans from IFC, the Holding Company has issued a subordinated
corporate guarantee.
16.13 In view of the substance of the transactions, the sale and repurchase of assets under long term finance have not been
recorded in these consolidated financial statements.

2015 2014 18.4 Deferred income

----------------- Rupees -----------------------
18. Deferred Liabilities This represents an amount of Rs. 96,627 received from Engro Powergen Qadirpur Limited, an associated company for the
right to use the Holding Company's infrastructure facilities at Daharki Plant by the employees of Engro Powergen Qadirpur
Deferred taxation (note 18.2) 6,419,916 5,149,666 Limited for a period of twenty five years. The amount is being amortized over such period.
Deferred income (note 18.4) 73,114 76,980
6,493,030 5,226,646 2015 2014
-------------------- Rupees ---------------------
19. Service Benefits Obligations
2015 2014
Assets Liabilities Assets Liabilities Service benefit obligation 172,885 156,683
--------------------------------(Rupees)-------------------------------- Less: Current portion shown under
18.1 current liabilities 48,232 43,338
Engro Fertilizers Limited - 6,419,916 - 5,149,666 124,653 113,345
Engro Eximp (Private) Limited 73,472 - - -
73,472 6,419,916 - 5,149,666 20. Trade and Other Payables
18.2 Deferred taxation Creditors (note 20.1) 12,013,790 14,616,341

2015 2014 Accrued liabilities (note 20.2) 2,679,577 1,177,824
-------------------- Rupees --------------------- Advances from customers 1,361,727 6,475,033
Credit / (Debit) balances arising on account of: Sales tax payable - 983,406
Engro Fertilizers Limited Payable to:
- Accelerated depreciation allowance 13,959,978 15,485,581 - Engro Corporation Limited 83,273 103,602
- Carried forward tax losses substantially - Engro Eximp (Private) Limited - 448,680
pertaining to unabsorbed tax depreciation (976,498) (7,630,091) - Engro Polymer & Chemicals Limited - 8,774
- Recoupable minimum turnover tax (note 18.3) (2,491,715) (1,276,725) - Engro Eximp Agriproducts (Private) Limited 475 -
- Fair values of hedging instruments (3,009) (19,619) - Engro Powergen Limited 2,532 -
- Alternative Corporate Tax (3,962,572) (1,362,800) - Elengy Terminal Pakistan Limited 275 -
- Provision for: Deposits from dealers refundable on
- staff retirement benefits (18,819) (6,321) termination of dealership 16,297 15,623
- slow moving stores and spares and Contractors' deposits and retentions 58,076 44,214
doubtful receivables (87,449) (40,359) Workers' profits participation fund 11,892 38,828
6,419,916 5,149,666 Workers' welfare fund 1,146,666 614,661
Engro Eximp (Private) Limited Withholding tax payable 139 -
- Accelerated depreciation allowance (4,683) - Others 326,825 199,735
- Carried forward tax losses substantially 17,701,544 24,726,721
pertaining to unabsorbed tax depreciation (32,286) -
- Recoupable minimum turnover tax (note 18.3) (25,430) -
- Provision for staff retirement benefits (11,073) - 20.1 This includes arrears amounting to Rs. 789,775 (2014: Rs. 12,580,333) on account of the levy of Gas Infrastructure
(73,472) - Development Cess (GIDC).
6,346,444 5,149,666
During the year, the Parliament passed the GIDC Act 2015 in May 2015 which seeks to impose GIDC levy since 2011.
The Holding Company has challenged the validity and promulgation of GIDC Act, 2015 before the Honorable High
18.3 In 2013, the High Court of Sindh, in respect of another company, has overturned the interpretation of the Appellate Court of Sindh, wherein the Court passed interim orders, thereby restraining Mari Gas, Oil and Gas Development
Tribunal on Section 113 (2)(c) of the Income Tax Ordinance, 2001 and has decided that the minimum turnover tax Company Limited, Spud Energy Pty Limited, Government Holdings (Private) Limited and IPR TransOil Corporation from
cannot be carried forward where there is no tax paid on account of loss for the year. The Holding Company's recovering GIDC arrears till the pendency of the matter. Further, the Court has also passed interim orders restraining Sui
management is however of the view, duly supported by legal advisor, that the above order is not correct and would not Northern Gas Pipeline Limited from charging or recovering GIDC on concessionary gas. However, at the request of the
be maintained by Supreme Court. Therefore, the Holding Company has continued to carry forward minimum tax as Government, and without compromising our legal stance on the same, the fertilizer industry agreed to pay GIDC arrears
reflected above. except on concessionary gas/fixed price contracts to the Government.
20.2 Include amounts payable against salaries, wages & other benefits, legal and restructuring related cost, provision for
infrastructure cess and others.

21. Short Term Borrowings supply of gas to the Holding Company’s plant despite the judgment of High Court in the Holding Company’s favor. A
show cause notice has also been issued against MPNR and SNGPL dated December 31, 2011 by the High Court. The
Holding Company application is pending for hearing and no orders have yet been passed in this regard.
21.1 The Holding Company has funded facilities for short term finances available from various banks and institutional 22.6 All Pakistan Textile Processing Mills Association (APTMA), Agritech Limited (Agritech), Shan Dying & Printing Industries
investors amounting to Rs. 7,050,000 (2014: Rs. 4,350,000) along with non-funded facilities of Rs. 1,600,000 (2014: Rs. (Private) Limited and 27 others have each contended, through separate proceedings filed before the Lahore High Court
1,300,000) for Bank Guarantees. The rates of markup on funded bank overdraft facilities ranged from 7% to 12.13% per that the supply to the Holding Company’s expansion plant is premised on the output from Qadirpur gas field exceeding
annum and all the facilities are secured by floating charge upon all present and future stocks including raw and 500 mmscfd by 100 mmscfd and the Gas Sale and Purchase Agreement (GSA) dated April 11, 2007 with Sui Northern
packaging materials, finished goods, stores and spares and other merchandise and on all present and future book Gas Pipeline Company Limited (SNGPL) be declared void ab initio because the output of Qadirpur has infact decreased.
debts, outstanding monies, receivable claims and bills of the Holding Company. The Holding Company has not utilised Agritech has additionally alleged discrimination in that it is receiving less gas than the other fertilizer companies on the
any amount from these facilities as at the balance sheet date. SNGPL system. The Holding Company has out rightly rejected these contentions, and is of the view that it has a strong
case for the reasons that (1) 100 mmscfd gas has been allocated to the Holding Company through a transparent international
21.2 Subsidiary Company competitive bidding process held by the Government of Pakistan, and upon payment of valuable license fee, (2) GSA
guarantees uninterrupted supply of gas to the expansion plant, with right to first 100 mmscfd gas production from the
Facilities for short term finances available from various banks, representing the aggregate sale price of mark-up Qadirpur gas field, and (3) both the Holding Company and the Qadirpur gas field, that is to initially supply gas to the Holding
arrangements, amounts to Rs. 300,000 (2014: Nil). The rate of mark-up on these finances ranged from 7.5% to 10.9% Company are located in Sindh. Also neither the gas allocation by the Government of Pakistan nor the GSA predicates the
per annum (2014: Nil). The facilities are secured by floating charge on all present and future stocks including raw and gas supply from Qadirpur field producing 100 mmscfd over 500 mmscfd. No orders have been passed in this regard and
packaging materials, finished goods, spares and other merchandise and on all present and future book debts of the the petition has also been adjourned sine die. However, the Holding Company’s management, as confirmed by the legal
Subsidiary Company. advisor, considers chances of petitions being allowed to be remote.
22. Contingencies And Commitments 22.7 The Holding Company along with other fertilizer companies, received a show cause notice from the Competition Commission
of Pakistan (CCP) for initiating action under the Competition Act, 2010 in relation to unreasonable increase in fertilizer prices.
Contingencies The Holding Company has responded in detail that factors resulting in such increase were mainly the imposition of
infrastructure cess and sales tax and partially the gas curtailment. The CCP has issued an order in March 2013, whereby
22.1 Bank guarantees of Rs.1,402,223 (2014: Rs. 1,075,119) have been issued in favor of third parties. it has held that the Holding Company enjoys a dominant position in the urea market and that it has abused this position
by unreasonable increases of urea prices in the period from December 2010 to December 2011. The CCP has also held
22.2 Claims, including pending lawsuits, against the Holding Company not acknowledged as debts amounted to Rs. another fertilizer company to be responsible for abusing its dominant position. In addition, the CCP has imposed a penalty
109,685 (2014: Rs. 55,038). of Rs. 3,140,000 and Rs. 5,500,000 on the Holding Company and that other fertilizer company respectively. An appeal
has been filed in the Competition Appellate Tribunal (at present non-functional) and a writ has been filed in the Sindh High
22.3 The Holding Company is contesting a penalty of Rs. 115,631 paid and expensed in 1997, imposed by the State Bank of Court and stay has been granted against the recovery of the imposed fine. The Holding Company's management believes
Pakistan (SBP) for alleged late payment of foreign exchange risk cover fee on long term loans and has filed a suit in the that the chances of ultimate success are very good, as confirmed by legal advisor. Hence, no provision has been made in
High Court of Sindh. A partial Rs. 62,618 however, recovered in 1999 from SBP and the recovery of the balance amount these consolidated financial statements.
is dependent on the Court's decision.
22.8 During the last year, the Subsidiary Company received various notices from Deputy Commissioner Inland Revenue (DCIR)
22.4 The Parent Company had commenced two separate arbitration proceedings against the Government of Pakistan for in respect of recovery of sales tax amounting to Rs. 213,012 under section 8B of the Sales Tax Act, 1990. The Subsidiary
non-payment of marketing incidentals relating to the years 1983-84 and 1985-86 respectively. The sole arbitrator in the Company responded to these notices through its tax consultant and pleaded not to recover any amount under the above
second case has awarded the Parent Company Rs. 47,800 whereas the award for the earlier years is awaited. The mentioned section as the Subsidiary Company was in a net refundable position. However, DCIR rejected the Subsidiary
award for the second arbitration was challenged in High Court of Sindh. In December 2013, the High Court of Sindh has Company's contention for adjustment of refund against 8B payments and has demanded payments amounting to Rs.
upheld the award. However, as this can be challenged by way of further appeals, it will be recognized as income on 49,907. An appeal to this effect has been filed with Commissioner Inland Revenue (Appeals) for which no hearing has taken
realization thereof. place to date.
22.5 The Holding Company had filed a constitutional petition in the High Court of Sindh, Karachi against the Ministry of Further, the Subsidiary Company has filed a writ petition in Honourable High Court of Sindh challenging the existence of
Petroleum and Natural Resources (MPNR), Ministry of Industries and Production (MIP) and Sui Northern Gas Pipeline section 8B on the grounds that such a section is confiscatory in its operation and thus unconstitutional. A stay order against
Company Limited (SNGPL) for continuous supply of 100 mmscfd gas per day to the Enven Plant and to prohibit from the recovery of the aforementioned demand under section 8B has been granted to the Subsidiary Company by Honourable
suspending, discontinuing or curtailing the aforementioned supply. The High Court of Sindh in its order dated October High Court of Sindh. The management, based on advice of their legal counsel is confident that the matter will ultimately
18, 2011, has ordered that SNGPL should supply 100 mmscfd of gas per day to the Holding Company’s new plant. be decided in favor of the Subsidiary Company.
However, five petitions have been filed in the Supreme Court of Pakistan against the aforementioned order of the High
Court of Sindh by SNGPL, MPNR, Agritech Limited, Pak Arab Fertilizers and Kohinoor Mills Limited along with 21 other
companies (mainly engaged in textile business). The aforementioned petitions are pending for further hearing. The
Holding Company’s management, as confirmed by the legal advisor consider the chances of petitions being allowed to
be remote.
Further, the Holding Company upon continual curtailment of gas after the aforementioned decision of the High Court
has filed an application in respect of Contempt of Court under Article 199 & 204 of the Constitution of Pakistan. The
Holding Company, in the aforementioned application has submitted that SNGPL and MPNR has failed to restore full

2015 2014 24. Cost of Sales 2015 2014

-------------------- Rupees --------------------- -------------------- Rupees ---------------------
22.9 Commitments Cost of sales - manufactured product
Raw materials consumed 18,589,567 23,208,543
Commitments in respect of : Salaries, wages and staff welfare (note 24.1) 2,178,564 1,949,037
- capital expenditure and other operational items 995,392 917,592 Fuel and power 7,499,418 6,597,224
- bank guarantees against infrastructure cess 627,000 - Repairs and maintenance 910,283 706,385
1,622,392 917,592 Depreciation (note 4.2) 4,694,369 4,682,132
Amortization (note 5.2) 23,257 28,290
Consumable stores 1,715,645 384,971
22.10 The facility for opening letters of credit as at December 31, 2015 amounts to Rs. 4,282,823. The amount utilised Staff recruitment, training, safety and other expenses 142,557 172,497
thereagainst is Rs. 3,226,879. Purchased services 406,887 367,700
Travel 50,938 55,739
2015 2014 Communication, stationery and other office expenses 21,874 33,517
-------------------- Rupees --------------------- Insurance 354,351 408,919
23. Net Sales Rent, rates and taxes 11,747 7,073
Other expenses 2,891 565
Fertilizer Manufacturing cost 36,602,348 38,602,592
Gross sales - Local
- manufactured product 72,899,472 72,048,248 Add: Opening stock of work in process 89,780 71,880
- purchased and packaged product 28,191,402 - Less: Closing stock of work in process (note 8) 20,688 89,780
- subsidy from Government of Pakistan (note 11.1) 2,611,879 - Cost of goods manufactured 36,671,440 38,584,692
103,702,753 72,048,248 Add: Opening stock of finished goods manufactured 205,810 443,541
Less: Sales tax 15,785,454 10,623,314 Less: Closing stock of finished goods manufactured (note 8) 1,915,094 205,810
87,917,299 61,424,934 Cost of sales 34,962,156 38,822,423
Seeds - Local 115,322 -
88,032,621 61,424,934 Cost of goods sold - purchased and packaged product
Purchase of product 24,058,338 -
23.1 This includes trade discount amounting to Rs. 847,715 (2014: Rs. 4,648). Add: Processing and packaging cost 391,764 -
Less: Closing stock - purchased and packaged product 3,688,392 -
20,761,710 -
55,723,866 38,822,423
2015 2014
-------------------- Rupees --------------------
25. Selling and Distribution Expenses
Staff recruitment, training, safety and other expenses 61,856 62,874
Product transportation and handling 3,502,639 2,810,382
Royalty expense 929,158 878,797
Repairs and maintenance 4,404 5,713
Advertising and sales promotion 54,687 42,276
Rent, rates and taxes 206,317 67,178
Communication, stationery and other office expenses 23,011 20,806
Travel 52,355 45,814
Depreciation (note 4.2) 17,721 23,588
Amortization (note 5.2) 960 160
Purchased services 19,866 4,631
Insurance 24,754 22,860
Other expenses 14,489 8,692
5,465,925 4,441,379

2015 2014 2015 2014

-------------------- Rupees --------------------- -------------------- Rupees ---------------------
26. Administrative Expenses 28. Other Operating Expenses
Salaries, wages and staff welfare (note 26.1) 397,586 332,528 Workers' profits participation fund 1,136,892 638,828
Staff recruitment, training, safety and other expenses 48,065 46,687 Workers' welfare fund 432,019 242,755
Repairs and maintenance 13,934 13,349 Research and development (including salaries and wages) 98,959 54,339
Rent, rates and taxes 69,855 50,083 Auditors' remuneration (note 28.1) 10,783 8,710
Communication, stationery and other office expenses 38,946 47,265 Legal and professional charges 128,156 101,504
Travel 36,889 17,920 Loss on disposal of property, plant and equipment (note 4.3) - 271,448
Depreciation (note 4.2) 21,731 19,433 Provision for trade debts and loans & advances - (4,934)
Amortization (note 5.2) 3,639 2,516 Provision against refundable sales tax 180,000 -
Purchased services 167,364 179,645 Provision against receivable from suppliers 35,718 -
Donations (note 39) 69,340 40,259 Others 11,255 5,093
Insurance 1,650 1,398 2,033,782 1,317,743
Other expenses 26,579 20,534 28.1 Auditors' remuneration
895,578 772,161
Fee for:
- audit of annual financial statements 4,032 1,875
26.1 Salaries, wages and staff welfare includes Rs. 37,447 (2014: Rs. 29,051) in respect of staff retirement benefits. - special audit / review of half yearly financial information 741 225
- certifications and audit of retirement benefit funds 2,436 3,810
2015 2014 - tax services 3,036 2,000
-------------------- Rupees --------------------- - reimbursement of expenses 538 800
27. Other Income 10,783 8,710
On financial assets 29 Finance Cost

Income on deposits, treasury bills and term deposit certificates 1,288,646 1,941,365
Income on Pakistan Investment Bond 16,107 73,835 Interest / mark-up / return on:
Income on mutual funds 8,109 11,580 - long term borrowings 3,830,677 5,663,982
Income on futures 1,271 - - short term borrowings 101,167 28,738
Loss on fair value of IFC conversion option 28,551 210,587
On non-financial assets Foreign exchange loss - net 681,945 722,090
Commission income - 192,921 Bank charges 296 -
Gain on disposal of property, plant and equipment (note 4.3) 21,820 - Financial charges on usance letters of credit 26,027 -
Rental income 4,569 4,321 Less:
Reversal of provision for infrastructure cess (note 27.1) 148,583 - Interest charged to Engro Eximp Agriproducts (Private) Limited (41,624) -
Gain on disposal of spares / scrap 13,895 16,277 Interest income from unwinding of discount on trade debts (132) -
Others (note 27.2) 278,129 208,857 4,626,907 6,625,397
466,996 422,376 30. Taxation
1,781,129 2,449,156
Current
- for the year (note 30.3) 3,701,866 2,011,924
27.1 As per the interim arrangement with the excise and customs authorities, the bank guarantees furnished by the Group - for prior years (note 30.4) 344,753 (50,529)
(Appellants before the Supreme Court) upto December 27, 2006 were discharged and returned. As agreed, 50% in 4,046,619 1,961,395
value of the Bank Guarantees furnished for consignments released after the aforesaid date were permitted to be Deferred 2,202,042 1,725,632
enchased; the remaining 50% were to be retained until a judicial resolution. It was specifically agreed, as per the joint 6,248,661 3,687,027
statement, that after May 31, 2011 all imports would be released on payment of 50% cash and 50% bank guarantee.
The management of the Group being confident that no demand will be raised for any amount pertaining to the period
prior to December 27, 2006, has reversed the provision relating to that period.
27.2 This includes Nill (2014:Rs. 98,226) received against insurance claim of KS Coil which was written off last year.

The Holding Company (Appeals) which has decided the matters in favor of the Holding Company. The department has now challenged the
decision of the CIR(A) with the Appellate Tribunal Inland Revenue, which is pending to be heard.
30.1 During the year, the income tax department amended the assessment filed by the Holding Company for tax year 2014.
The Holding Company filed the appeal before Commissioner Inland Revenue (Appeals) against disallowances made Subsidiary Company
through the assessment, which mainly pertained to exchange gain and loss, loss on derivative and losses purchased
from Engro Eximp Agriproducts under section 59B of the Income Tax Ordinance, 2001. In addition the tax department 30.8 Uptill 2011, the Subsidiary Company's major operating activities were taxable under the Final Tax Regime (FTR) except
raised demand for the Alternative Corporate Tax through the same order, for which the Holding Company specifically for profit on bank accounts, capital gain on investments and gain on local commodity trading were taxable under the
obtained a stay order. The case is pending to be heard with the CIR(A) and the Holding Company is confident of a Normal Tax Regime (NTR). However, through Finance Act, 2012, certain amendments were introduced, whereby the
favourable outcome. Subsidiary Company had the option to be taxed under NTR in respect of activities previously taxable under FTR, with
the condition that minimum tax liability with respect to such income as specified therein.
30.2 Last year, the income tax department amended the assessment filed by the Holding Company for tax years 2010 and
2011. The Holding Company filed the appeals before Appellant Tribunal Inland Revenue (ATIR) against the said The Subsidiary Company intended to opt for NTR and accordingly has made provision and filed return for tax year 2013
disallowances, which through its decision during last year, provided relief in respect of certain items and confirmed on that basis.
certain disallowances in favor of the tax department. The said disallowances included the charge in respect of exchange
gain and loss incurred for tax year 2010 and tax year 2011 and loss on derivative for tax year 2011. During the year, the 30.9 Relationship between tax expense and accounting profit
Holding Company has challenged the said decision before High Court of Sindh, which is pending to be heard and is
confident of a favourable outcome. The tax on the Group’s profit before tax differs from the theoretical amount that would arise using the Group’s
applicable tax rate as follows:
30.3 Includes alternative corporate tax under section 113C of the Income Tax Ordinance, 2001 (introduced vide Finance Act
2014) amounting to Rs. 2,599,772 for the year (2014: Rs. 1,362,800) and minimum turnover tax amounting to Rs.
876,153 (2014: Rs. 614,249). 2015 2014
-------------------- Rupees ---------------------
The Holding Company had filed suit in the High Court of Sindh, against the Federal Board of Revenue contesting both
the retrospective and prospective application of the above section 113C and was granted stay for prior year 2013 & Profit before taxation 21,067,692 11,894,987
2014 during 2014 and was granted the same during the year for the current year end.
Tax calculated at the rate of 32% (2014: 33%) 6,741,661 3,925,346
30.4 This includes an amount of Rs. 468,809 on account of provision in accordance with section 4B 'Super Tax for Depreciation on exempt assets not deductible for tax purposes 3,043 3,140
rehabilitation of temporarily displaced persons' introduced in the Income Tax Ordinance, 2001 through Finance Act, Tax effect of:
2015, whereby tax at three per cent is payable on specified income exceeding Rs. 500,000 for the year ended - Expenses not allowed for tax 94,711 24,041
December 31, 2014 (tax year 2015). Further, the Holding Company's management has adjusted the prior charge by Rs. - Final Tax Regime / separate block of income 10,191 (42,887)
118,395 in respect of BMR credit under section 65B of the ordinance. Effect of:
- Tax credits (159,784) (66,895)
30.5 During the year, the Holding Company has purchased losses surrendered by Engro Eximp Agriproducts (Private) - Change in tax rates (1,076,250) (103,825)
Limited (associated Holding Company) to avail the benefit of Group Relief under section 59B of the Income Tax - Prior year current and deferred tax charge 671,455 (95,893)
Ordinance, 2001, amounting to Rs. 2,899,368 representing business losses for financial year ended December 31, 2014. Others (36,366) 44,000
These losses have been duly adjusted by the Holding Company against taxable profit for the financial year ended Tax charge for the year 6,248,661 3,687,027
December 31, 2014 (Tax Year 2015) whilst filing its tax return for the said tax year.
30.6 As a result of demerger, all pending tax issues of the Parent Company had been transferred to the Holding Company.
Major issues pending before the tax authorities is described below:
In previous years, the department had filed reference applications in High Court against the below-mentioned ATIR’s
decisions in Holding Company’s favor. No hearing has been conducted to-date. The reference application includes the
following matters:
• Group Relief (Financial year 2006 to 2008): Rs. 1,500,847

• Inter-Corporate Dividend (Financial year 2007 to 2008): Rs. 336,500
• G.P. Apportionment (Financial year 1995 to 2002): Rs. 653,000
The Holding Company is confident that all pending issues will eventually be decided in its favor.
30.7 During the year, the Holding Company received a sales tax order from the tax department for the year ended December
31, 2013 pertaining to discharge of output tax liability, on assumed production of urea amounting to Rs. 402,875 and on
presumption that output tax liability is not being discharged by the Holding Company on advances received from
dealers amounting to Rs. 1,844,075. The Holding Company filed appeal with the Commissioner Inland Revenue

31. Earnings Per Share 32.1 The Group also makes contributions based on actuarial calculations to pension and gratuity funds and provides certain
household items for use of some employees. Cars are also provided for use of some employees and directors.
Basic earnings per share has been calculated by dividing the profit attributable to equity holders of the Group by
weighted average number of ordinary shares in issue during the year. 32.2 Premium charged in the consolidated financial statements in respect of directors' indemnity insurance policy, purchased
by the Group during the year, amounted to Rs. 488 (2014: Rs. 590).
Diluted earnings per share has been calculated by adjusting the weighted average number of ordinary shares
outstanding for assumed conversion of equity option on IFC loan throughout the year. 33. Retirement and Other Service Benefits
The information necessary to calculate basic and diluted earnings per share is as follows: 33.1 Salient Features
2015 2014 The Group offers a defined post-employment gratuity benefit to permanent management and non-management
-------------------- Rupees --------------------- employees. In addition, until June 30, 2005, the Holding Company offered a defined post-employment pension benefit
to management employees in service which has been discontinued and the plan now only covers a handful of retired
Profit for the year 14,819,031 8,207,960 pensioners.
Add:
- Interest on IFC loan - net of tax 4,765 27,309 The gratuity and pension funds are governed under the Trusts Act, 1882, Trust Deed and Rules of Fund, Companies
- Loss on revaluation of conversion options on IFC loan - net of tax 18,074 131,358 Ordinance, 1984, the Income Tax Ordinance, 2001 and the Income Tax Rules, 2002.
Profit used for the determination of Diluted EPS 14,841,870 8,366,627
Responsibility for governance of plan, including investment decisions and contribution schedule lie with Board of
---------Numbers (in thousands)------------ Trustees of the Fund. During the year such responsibility was transferred to Board of Trustees of the Fund of its Parent
Weighted average number of ordinary shares at the Company.
beginning of year 1,318,342 1,222,800
Add : Weighted average adjustments for: The Group faces the following risks on account of gratuity and pension funds:
Shares issued during the year (including conversion of option) 11,728 82,404
Weighted average number of shares for determination of basic EPS 1,330,070 1,305,204 Final Salary Risks - The risk that the final salary at the time of cessation of service is greater than what we assumed.
Assumed conversion of USD 4,000 IFC loan - 9,836 Since the benefit is calculated on the final salary, the benefit amount would also increase proportionately.
Assumed conversion of USD 5,000 IFC loan - 5,794
Assumed conversion of USD 1,000 IFC loan 3,160 - Asset Volatility - Most assets are invested in risk free investments of 3, 5 or 10 year SSC’s, RIC’s, DSC’s or Government
Bonds. However, investments in equity instruments is subject to adverse fluctuations as a result of change in the market price.
Exercise of conversion option on USD 3,000 IFC loan 601 -
Discount Rate Fluctuation - The plan liabilities are calculated using a discount rate set with reference to corporate bond
Weighted average number of shares for determination of diluted EPS 1,333,831 1,320,834 yields. A decrease in corporate bond yields will increase plan liabilities, although this will be partially offset by an increase
in the value of the current plans’ bond holdings.
32. Remuneration of Chief Executive, Directors and Executives Investment Risks - The risk of the investment underperforming and not being sufficient to meet the liabilities. This risk is
mitigated by closely monitoring the performance of investment.
The aggregate amounts charged in these consolidated financial statements for remuneration, including all benefits, to
chief executive, directors and executives of the Group are given below: Risk of insufficiency of assets - This is managed by making regular contribution to the Fund as advised by the actuary.
2015 2014 In addition to above, the pension fund exposes the Holding Company to Longevity Risk i.e. the pensioners survive
Directors Executives Directors Executives longer than expected.
Chief Others Chief Others
Executive Executive
--------------------(Rupees)------------------- -------------------(Rupees)------------------
Managerial remuneration 65,967 - 1,702,527 56,874 - 1,490,608

Retirement benefits funds 5,806 - 175,402 4,768 - 143,926
Other benefits 5 - 80,358 21 - 58,659
Fees - 1,850 - - 1,550 -
Total 71,778 1,850 1,958,287 61,663 1,550 1,693,193
Number of persons
including those who
worked part of the year 1 7 494 1 7 447

33.2 Valuation Results Defined Benefit Gratuity Defined Benefit

The latest actuarial valuation of the defined benefit plans was carried out as at December 31, 2015, using the Projected Funded (Curtailed)
Unit Credit Method. Details of the defined benefit plans are as follows: NMPT MPT
2015 2014 2015 2014 2015 2014
Defined Benefit Gratuity Defined Benefit ---------------------------------------------------------(Rupees)---------------------------------------------------------
Plans - Funded Pension Plan 33.2.4 Movement in fair value of plan assets
Funded (Curtailed)
NMPT MPT At beginning of the year 178,713 98,340 141,082 177,549 38,824 38,535
2015 2014 2015 2014 2015 2014 Expected return on plan assets 18,223 13,060 14,645 23,463 3,864 4,770
-----------------------------------------------------(Rupees)-------------------------------------------------- Contributions by the Company - 63,844 - - - -
33.2.1 Balance sheet reconciliation Benefits paid during the year (19,623) (10,942) (21,213) (31,133) (4,054) (3,847)
Remeasurments charged
Present value of obligation 228,376 166,212 149,709 135,336 33,367 34,406 to OCI (note 33.2.7) (7,675) 14,411 14,161 (5,475) 2,201 (634)
Fair value of plan assets (169,638) (178,713) (167,607) (140,235) (40,835) (38,824) Assets transferred in respect
(Surplus) / deficit of funded plans 58,738 (12,501) (17,898) (4,899) (7,468) (4,418) of inter group transfers - - - - - -
Payable to DC Gratuity Fund - - 9,736 9,736 - - Assets transferred to DC
Payable in respect of inter-group transfers - - 448 41 - - Gratuity Fund - - (23,528) - - -
Unrecognized asset - - - - 7,468 4,418 Assets transferred in respect
Net (asset) / liability at end of the year 58,738 (12,501) (7,714) 4,878 - - of inter fund transfers - - 42,460 (24,169) - -

33.2.2 Movement in net (asset) / liability recognized
33.2.5 Charge / (Reversal) for the year
Net liability / (asset) at beginning
of the year (12,501) 63,844 5,253 (15,536) - -
(Income) / charge for the year 14,598 17,022 5,006 2,933 (464) (821)
Contributions made during the
Net interest cost (1,249) 7,808 (1,501) (4,005) (464) (821)
year to the fund - (63,844) - - - -
14,598 17,022 5,006 2,933 (464) (821)
Remeasurements charged
to OCI (note 33.2.7) 56,641 (29,186) (17,973) 17,144 464 821
Inter-fund transfers - (337) - 337 - -
33.2.6 Actual return on plan assets 16,194 21,829 20,995 30,012 3,823 3,782
Net (asset) / liability at end of the year 58,738 (12,501) (7,714) 4,878 - -
33.2.3 Movement in defined benefit obligation
As at beginning of the year 166,212 162,184 136,153 153,367 34,406 32,218

Interest cost 16,974 20,868 13,144 19,458 3,400 3,949
Benefits paid during the year (19,623) (10,942) (21,213) (31,133) (4,054) (3,847)
Remeasurments charged
to OCI (note 33.2.7) 48,966 (14,775) (3,812) 10,895 (385) 2,086
Inter-fund transfers - (337) (2) 337 - -
Liability transferred in respect of
inter group transfers - - 42,460 (24,169) - -
Liability transferred to DC Gratuity Fund - - (23,528) (357) - -

Defined Benefit Gratuity Defined Benefit 33.2.10 Sensitivity Analysis

Funded (Curtailed) The impact of 1% change in following variables on defined benefit obligation is as follows:
NMPT MPT
2015 2014 2015 2014 2015 2014 Increase in assumption Decrease in assumption
--------------------------------------------------(Rupees)--------------------------------------------------- Gratuity Fund Pension Gratuity Fund Pension
33.2.7 Remeasurement recognized in Other Comprehensive Income NMPT MPT Fund NMPT MPT Fund
(Gain) / loss from change in --------------------------------------------------------(Rupees)--------------------------------------------------------
demographic assumption - - - - - 740
(Gain) / loss from change in Discount Rate 208,002 144,181 31,390 252,118 155,652 35,592
experience assumptions 47,178 (14,430) (3,523) 10,895 (138) 1,769 Long Term Salary Increases 250,959 154,887 - 208,617 144,798 -
Long Term Pension Increases - - 35,754 - - 31,223
(Gain) / loss from change in financial
Withdrawal Rates: Light 31,390 - - - - -
assumptions 1,788 (345) (289) - (247) (423)
Withdrawal Rates: Heavy / Moderate 35,592 - - - - -
Remeasurement of Obligation 48,966 (14,775) (3,812) 10,895 (385) 2,086
Expected Return on plan assets 18,223 13,060 14,645 23,463 3,864 4,770
Actual Return on plan assets (16,194) (21,829) (20,995) (30,012) (3,823) (3,782) 33.2.11 Maturity Profile
Gratuity Fund Pension
Difference in fair value opening 5,646 (5,642) (7,811) 12,024 (2,242) (354)
Remeasurement of Plan Assets 7,675 (14,411) (14,161) 5,475 (2,201) 634
Time in Years NMPT MPT Fund
Effect of Asset Ceiling - - - - 3,050 (1,899) -------------------------------(Rupees)-------------------------------
Adjustment for DC transfers 1 20,811 37,503 4,095
pertaining to earlier periods - - - 774 - - 2 23,249 8,478 4,135
56,641 (29,186) (17,973) 17,144 464 821 3 8,781 45,756 4,177
4 24,775 54,551 4,219
5-10 89,076 63,595 21,734
33.2.8 Principal actuarial assumptions used in the actuarial valuation 11-15 180,020 45,915 22,843
16-20 447,985 5,056 24,008
Discount rate 9.0% 10.5% 9.0% 10.5% 9.0% 10.5% 20+ 848,691 28,686 108,920
Expected per annum rate of return
on plan assets 9.0% 10.5% 9.0% 10.5% 9.0% 10.5% Weighted average duration (years) 9.66 3.83 6.30
Expected per annum rate of increase
in pension - - - - 1.0% 2.5%
Expected per annum rate of increase in
salaries-long term 8.0% 9.5% 9.0% 10.5% 8.0% 12.0%
33.2.9 Demographic Assumptions
Mortality rate SLIC SLIC SLIC PMA-PFA

(2001-05) - I (2001-05) (01-05) - I (80) - 2
Rate of employee turnover Light Heavy - -

33.2.12 Plan assets comprise of the following 33.3 Defined contribution plans
Defined Benefit Gratuity Defined Benefit
Plans Funded Pension Plan An amount of Rs. 149,516 has been charged during the year in respect of defined contribution plans maintained by the
Funded (Curtailed) Holding Company.
NMPT MPT*
2015 2015 2015 34. Cash Used In Operations
Rupees (%) Rupees (%) Rupees (%) 2015 2014
-------------------- Rupees ---------------------
Fixed income instruments 140,659 83 125,580 75 38,999 96
Investment in equity instruments 20,526 12 35,731 21 - - Profit before taxation 21,067,692 11,894,987
Cash 8,453 5 6,296 4 1,836 4 Adjustment for non-cash charges and other items:
169,638 100 167,607 100 40,835 100 Depreciation 4,733,821 4,725,153
Amortization - net 23,990 27,101
Profit on disposal of property, plant and equipment (21,820) -
Loss on disposal of property, plant and equipment - 271,448
Provision for retirement and other service benefits 58,543 49,862
The employees of the Holding Company in respect of gratuity are members of Defined Benefit Gratuity Fund maintained
Income on deposits / other financial assets (1,312,862) (2,026,780)
and funded by Engro Corporation Limited (the Parent Company). Accordingly, the above information is based upon the
Finance cost 4,626,907 6,625,397
plan assets of Engro Corporation Limited Gratuity Fund.
Provision for surplus and slow moving stores and spares 122,428 1,444
33.2.13 The expected return on plan assets was determined by considering the expected returns available on the assets
Provision for NRV on finished goods 402,651 -
underlying the current investment policy. Expected yields on fixed interest investments are based on gross redemption
Provision against sales tax refundable 180,000 -
yields as at the balance sheet date.
(Reversal) / provision against trade receivables - (2,673)
33.2.14 Expected future cost / (reversal) for the year ending December 31, 2016 is as follows: Provision / (reversal) against loans and advances 35,718 (2,261)
Rupees Working capital changes (note 34.1) (14,813,897) 6,915,876
15,103,171 28,480,098
- MPT Pension Fund (672)
- MPT Gratuity Fund 3,515
34.1 Working capital changes
- Non-MPT Gratuity Fund 18,318
(Increase) / decrease in current assets
33.2.15 Historical information of staff retirement benefits: - Stores, spares and loose tools (47,824) (346,327)
2015 2014 2013 2012 2011 - Stock-in-trade (6,058,232) 280,743
--------------------------------------------------(Rupees)-------------------------------------------------- - Trade debts (1,498,503) 3,882
Pension Plan Funded - Loans, advances, deposits and prepayments 303,665 97,230
Present value of defined benefit obligation 33,367 34,406 32,218 31,289 32,023 - Other receivables (net) 2,880,413 (5,138)
Fair value of plan assets (40,835) (38,824) (38,535) (38,313) (37,023) (4,420,481) 30,390
Surplus (7,468) (4,418) (6,317) (7,024) (5,000) (Decrease) / increase in trade and other payables (10,393,416) 6,885,486
(14,813,897) 6,915,876
Gratuity Plans Funded - NMPT 35. Cash And Cash Equivalents

Present value of defined benefit obligation 228,376 166,212 162,184 122,832 121,311
Fair value of plan assets (169,638) (178,713) (98,340) (87,352) (87,019) Cash and bank balances (note 13) 923,555 4,443,086
(Surplus) / Deficit 58,738 (12,501) 63,844 35,480 34,292 Short term investments (note 12) 10,546,260 1,094,892
11,469,815 5,537,978
Gratuity Plans Funded - MPT

Present value of defined benefit obligation 149,709 135,336 153,367 116,545 156,334
Surplus (17,898) (4,899) (24,182) (33,384) (13,623)

2015 2014 37. Financial Risk Management

-------------------- Rupees ---------------------
36. Financial Instruments By Category 37.1 Financial risk factors
Financial assets as per balance sheet The Group's activities expose it to a variety of financial risks: market risk (including currency risk, interest rate risk and other
- Loans and receivables price risk), credit risk and liquidity risk. The Group's overall risk management program focuses on having cost efficient
Loans, advances, deposits and other receivable 201,320 170,041 funding as well as to manage financial risk to minimize earnings volatility and provide maximum return to shareholders.
Trade debts 2,286,147 757,044
Cash and bank balances 923,555 4,443,086 Risk management is carried out by the Group's Finance and Planning department under policies approved by the
Short term Investment - 999,288 Management Committee.
3,411,022 6,369,459
- Fair value through profit and loss a) Market risk
Short term investments 11,034,555 24,085,079
Derivative financial instruments 29,207 - i) Currency risk
11,063,762 24,085,079
- Held to maturity financial assets Currency risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in
Short term investments 615,834 - foreign exchange rates.
Financial liabilities as per balance sheet This exists due to the Group's exposure resulting from outstanding import payments, foreign currency loan liabilities and
- Financial liabilities measured at amortized cost related interest payments. A foreign exchange risk management policy has been developed and approved by the
Borrowings 36,300,327 44,003,351 management. The policy allows the Group to take currency exposure for limited periods within predefined limits while
Trade and other payable 17,560,304 16,138,450 open exposures are rigorously monitored. The Group ensures to the extent possible that it has options available to
Accrued interest / mark-up 851,684 1,362,300 manage exposure, either through forward contracts, options or prepayments, etc. subject to the prevailing foreign
54,712,315 61,504,101 exchange regulations.
- Fair value through profit and loss
Conversion option on IFC loan 298,749 965,326 On foreign currency borrowing of USD 89,247 as on December 31, 2015, the Group has Rupee / USD hedge of USD 61,977.
Derivative financial instruments 67,735 131,452
366,484 1,096,778 At December 31, 2015, if the currency had weakened / strengthened by 1% against the US dollar with all other variables
held constant, post-tax consolidated profit for the year would have been lower / higher by Rs. 24,778 mainly as a result of
foreign exchange loss / gain on translation of US dollar denominated loans and foreign exchange loss / gain on translation
of liabilities against outstanding import payments.
ii) Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes
in market interest rates. The Group's interest rate risk arises from short and long-term borrowings. These are
benchmarked to variable rates which expose the Group to cash flow interest rate risk.
The Group analyses its interest rate exposure on a regular basis by monitoring interest rate trends to determine whether
they should enter into hedging alternatives.
The Group has entered into Interest Rate Swaps for USD 7,727 out of its non-current foreign currency borrowings of USD
89,247 as on December 31, 2015 (note 17.2). Rates on short term loans vary as per market movement.
As at December 31, 2015, if interest rates had been 1% higher / lower with all other variables held constant, post tax profit
for the year would have been lower / higher by Rs. 361,015.
iii) Other price risk
Other price risk represents the risk that the fair value or future cash flows of financial instruments will fluctuate because of
changes in market prices (other than those arising from currency risk or interest rate risk), whether those changes are caused
by factors specific to the individual financial instrument or its issuer, or factors affecting all similar financial instruments traded
in the market.

b) Credit risk The credit quality of receivables can be assessed with reference to their historical performance with no or negligible defaults
in recent history. The credit quality of Group's bank balances and short term investments can be assessed with reference to
Credit risk represents the risk of financial loss being caused if counter party fails to discharge an obligation. recent external credit ratings as follows:
Credit risk arises from deposits with banks and financial institutions, trade debts, loans, advances, deposits, bank guarantees Rating Rating
and other receivables. The credit risk on liquid funds is limited because the counter parties are banks with a reasonably high agency Short term Long term
credit rating or mutual funds which in turn are deposited in banks and government securities. The Group maintains an internal
policy to place funds with commercial banks and mutual funds of asset management companies having a minimum short Allied Bank Limited PACRA A1+ AA+
term credit rating of A1 and AM3 respectively. However, the Group maintains operational balances with certain banks of Askari Bank Limited JCR-VIS A-1+ AA
lower rating for the purpose of effective collection of bank guarantees and to cater to loan disbursements. Bank Alfalah Limited PACRA A1+ AA
Bank AL Habib Limited PACRA A1+ AA+
The Group is exposed to a concentration of credit risk on its trade debts by virtue of all its customers being agri-based Bank Islami Pakistan Limited PACRA A1 A+
businesses in Pakistan. However, this risk is mitigated by applying individual credit limits and by securing the majority of trade The Bank of Punjab PACRA A1+ AA-
debts against bank guarantees and inland letter of credit. Burj Bank Limited JCR-VIS A-2 A-
Citi Bank N.A. MOODY'S P-1 A2
The credit risk arising on account of acceptance of these bank guarantees is managed by ensuring that the bank guarantees Dubai Islamic Bank (Pakistan) Limited JCR-VIS A-1 A+
are issued by banks of reasonably high credit ratings as approved by the management. Faysal Bank Limited PACRA A1+ AA
Habib Bank Limited JCR-VIS A-1+ AAA
The Group monitors the credit quality of its financial assets with reference to historical performance of such assets and Habib Metropolitan Bank Limited PACRA A1+ AA+
available external credit ratings. The carrying values of financial assets which are neither past due nor impaired are as under: JS Bank Limited PACRA A1+ A+
MCB Bank Limited PACRA A1+ AAA
2015 2014 Meezan Bank Limited JCR-VIS A-1+ AA
-------------------- Rupees ------------------- National Bank of Pakistan JCR-VIS A-1+ AAA
Samba Bank Limited JCR-VIS A-1 AA
Loans and receivables 575 - Soneri Bank Limited PACRA A1+ AA-
Loans, advances, deposits and other receivable 197,236 170,041 Standard Chartered Bank (Pakistan) Limited PACRA A1+ AAA
Trade debts 2,261,747 757,044 Summit Bank Limited JCR-VIS A-1 A
Short term investments 11,650,389 25,084,367 United Bank Limited JCR-VIS A-1+ AA+
Cash and bank balances 923,555 4,443,086 NIB Bank Limited PACRA A1+ AA-
Derivative financial instruments 29,207 - HSBC Bank Middle East MOODY'S P-1 A2
15,062,709 30,454,538 CIMB Bank Berhud MOODY'S P-2 A3
Mashreq Bank MOODY'S P-2 Baa2
United Bank Limited MOODY'S NP Caa2
Habib Bank Limited MOODY'S NP Caa1
c) Liquidity risk
Liquidity risk represents the risk that the Group will encounter difficulties in meeting obligations associated with financial
liabilities.
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding
through an adequate amount of committed credit facilities. Due to dynamic nature of the business, the Group maintains
flexibility in funding by maintaining committed credit lines available.
The Group's liquidity management involves projecting cash flows and considering the level of liquid assets necessary to
meet these, monitoring balance sheet liquidity ratios against internal and external regulatory requirements and maintaining
debt financing plans.

The table below analyses the Group's financial liabilities into relevant maturity groupings based on the remaining period at 37.3 Fair value estimation
the balance sheet date to contractual maturity dates. The amounts disclosed in the table are the contractual undiscounted
cash flows. The table below analyzes financial instruments carried at fair value by valuation method. The different levels have been
2015 2014 defined as follows:
Maturity Maturity Maturity Maturity
upto after Total upto after Total - Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1)
one year one year one year one year
---------------------(Rupees)--------------------- ---------------------(Rupees)--------------------- - Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (i.e. as
prices) or indirectly (i.e. derived from prices) (level 2)
Financial liabilities
Derivatives 366,484 - 366,484 1,090,089 6,689 1,096,778 - Inputs for the asset or liability that are not based on observable market data (level 3)
Trade and other payables 17,560,304 - 17,560,304 16,138,450 - 16,138,450
Accrued interest / mark-up 851,684 - 851,684 1,362,300 - 1,362,300 Level 1 Level 2 Level 3 Total
Borrowings 10,736,586 25,289,658 36,026,244 7,912,729 36,090,622 44,003,351 ----------------------------------------(Rupees)--------------------------------------
29,515,058 25,289,658 54,804,716 26,503,568 36,097,311 62,600,879 Assets
Financial assets at fair value through profit and loss
37.2 Capital risk management - Short term investments - 10,984,555 - 10,984,555
The Group's objective when managing capital are to safeguard the Group's ability to continue as a going concern in order to Liabilities
provide returns for shareholders and benefit for other stakeholders and to maintain an optimal capital structure to reduce the Derivatives
cost of capital. - Derivative financial instruments - 67,735 - 67,735
- Conversion option on IFC loans - 298,749 - 298,749
The Group manages its capital structure and makes adjustments to it in the light of changes in economic conditions. To - 366,484 - 366,484
maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders or issue new shares.
The total long term borrowings to equity ratio as at December 31, 2015 based on total long term borrowings of Rs. 36,026,244 37.4 Valuation techniques used to derive Level 2 fair values
and total equity of Rs. 42,331,729 was 46%:54%.(2014: 56%:44%)
Level 2 fair valued instruments comprise short term investments and hedging derivatives which include forward exchange
The Group finances its operations through equity, borrowings and management of working capital with a view to maintaining contracts, interest rate swaps and conversion option on IFC loans. These forward foreign exchange contracts have been fair
an appropriate mix between various sources of finance to minimize risk. valued using forward exchange rates that are received from the contracting banks and financial institutions. Interest rate
swaps are fair valued using mark to market rates received from the banks and financial institutions. The fair value of conversion
options on IFC loan is determined using the option pricing model where its determinants are derived from observable market inputs.
Short term investments comprise treasury bills and fixed income placements which are valued using discounted cash flow model.
There were no transfers amongst the levels during the year.
37.5 Fair value of financial assets and liabilities
The carrying value of all financial assets and liabilities reflected in the financial statements approximate their fair values.

38. Transactions with Related Parties 39. Donations
Related parties comprises of the Parent Company, subsidiary companies, associated companies and other companies Donations include the following in which a director or his spouse is interested:
with common director, retirement benefits funds, directors and key management personnel.
Details of transactions with related parties during the year, other than those which have been disclosed elsewhere in these Interest Name and
consolidated financial statements, are as follows: in Donee address
2015 2014 of Donee 2015 2014
-------------------- Rupees --------------------- ---------------(Rupees)--------------
Parent Company
Dividend Paid 6,570,543 - Muhammad Aliuddin Ansari President Engro Foundation 55,000 32,500
Purchases and services 229,368 202,798 Khalid Siraj Subhani President
Receipt against disposal of investment 4,400,000 - Ruhail Mohammed Trustee
Purchase of Subsidiary 4,383,000 -
Services provided to Parent Company 25,400 19,790 40. Production Capacity
Royalty 929,158 878,797 Designed capacity Actual production
Reimbursements 214,557 109,020 Metric Tons Metric Tons
Mark-up paid on Long term sub-ordinated loan - 240,238 2015 2014 2015 2014
Payment in respect of settlement of IFC option - 1,495,080 Urea plant I & II 2,275,000 2,275,000 1,967,552 1,818,937
Payment of sub-ordinated loan - 4,495,080 NPK plant 100,000 100,000 126,074 117,193
Receipt of sub-ordinated loan - 1,495,080
41. Number of Employees
Associated companies Number of employees as at Average number of employees
Purchases and services 130,109 307,288 2015 2014 2015 2014
Sale of assets (sales proceeds) - 748
Sale of product 1,459 4,288 Management employees 625 456 548 452
Purchase of tax losses 956,791 1,210,522 Non-management employees 527 680 604 673
Purchase of product 41,662 - 1,152 1,136 1,152 1,125
Services provided 71,973 93,067
Reimbursements 225,874 165,469
Funds collected against sales made on behalf of an associate 2,035,579 27,812,967
Payment of mark-up on TFCs and repayment of principal amount 18,739 41,897
Commission on sales collection - net - 164,156
Purchase of mutual fund units 490,000 -
Redemption of mutual fund units 491,210 -
Donation 55,000 32,500
Markup on loans 20,299 -
Loans issued 57,484 -
Loans returned 1,005,301 -
Contribution to staff retirement benefits

Pension fund 19,519 16,977
Gratuity fund 83,844 104,393
Provident fund 101,606 86,498
Others
Remuneration of key management personnel 174,508 167,734

42. Provident Fund 45. Non-Adjusting Event After Balance Sheet Date
The employees of the Group participate in Provident Fund maintained by Engro Corporation Limited (the Parent Company). The Board of Directors in its meeting held on February 08, 2016 has proposed a final cash dividend of Rs.3.00 (2014: Rs. 3.00)
Monthly contribution are made both by the Holding Company and employees to the fund maintained by the Parent Company per share in addition to interim cash dividend already paid at Rs. 3.00 (2014: Rs. Nil) per share for the year ended December
at the rate of 10% of basic salary. Accordingly, the following information is based upon the latest unaudited financial statements 31, 2015, for approval of the members at the Annual General Meeting to be held on March 28, 2016. The amount of total
of the provident fund maintained by the Parent Company as at June 30, 2015 and the audited financial statements as at June dividend is calculated at the number of shares outstanding as at December 31, 2015.
30, 2014.
2015 2014 46. Corresponding Figures
------------------- Rupees --------------------
Corresponding figures and balances have been rearranged and reclassified, wherever necessary, for the purpose of
Size of the fund - Total assets 3,161,499 2,091,284 comparison, the effects of which are not material.
Cost of the investments made 2,333,996 1,679,824 47. Date of Authorisation for Issue
Percentage of investments made 87% 89% These consolidated financial statements were authorised for issue on February 08, 2016 by the Board of Directors of the
Holding Company.
Fair value of investments 2,736,879 1,861,191
42.1 The break-up of investments is as follows:

2015 2014
Rupees % Rupees %
National Savings Scheme 223,037 8 290,609 16

Government securities 1,045,090 38 901,642 48
Listed securities and unit trust 1,164,311 43 518,263 28
Balances with banks in savings account 304,441 11 150,677 8
2,736,879 100 1,861,191 100
42.2 The investments out of the fund have been made in accordance with the provisions of section 227 of the Companies Ordinance,
1984 and the rules formulated for the purpose.
43. Seasonality
The Holding Company's fertilizer business is subject to seasonal fluctuations as a result of two different farming seasons viz,
Rabi (from October to March) and Kharif (from April to September). On an average fertilizer sales are more tilted towards Rabi
season. The Holding Company manages seasonality in the business through appropriate inventory management.
44. Loss of Certain Accounting Records
During 2007, a fire broke out at PNSC Building, Karachi where the Holding Company's registered office was located. Immediately
following this event the Holding Company launched its Disaster Recovery Plan due to which operational disruption and financial
impact resulting from this incident remained minimal.
The fire destroyed a substantial portion of its hard copy records related to the financial years 2005, 2006 and the period
January 1, 2007 to August 19, 2007 although, electronic data remained intact due to the aforementioned Disaster Recovery
Plan. The Holding Company launched an initiative to recreate significant lost records and was successful in gathering the
same in respect of the financial year 2007. Hard copy records related to the financial years 2005 and 2006 have not been
recreated.


proxy form
I/We
of being a member of ENGRO FERTILIZERS LIMITED
and holder of
(Number of Shares)
Ordinary shares as per share Register Folio No. and/or CDC

Participant I.D. No. and Sub Account No. , hereby appoint
of or failing him
of
as my/our proxy to vote for me and on my/our behalf at the annual general meeting of the Company to be held on the 28th day of March,
2016 and at any adjournment thereof.
Signed this day of 2016.
WITNESSES:
1) Signature :
Name :
Address :
CNIC or :
Passport No.:
Signature
Signature should agree with the specimen
2) Signature : registered with the Company
Name :
Address :
CNIC or :
Passport No.:
Note:
Proxies in order to be effective, must be received by the Company not less than 48 hours before the meeting. A Proxy need not be a
member of the Company.
CDC Shareholders and their proxies are each requested to attach an attested photocopy of their Computerized National Identity Card or
Passport with this proxy form before submission to the Company.
electronic transmission consent form
The Securities & Exchange Commission of Pakistan through SRO 787(I)/2014 of September 8, 2014 allowed the Company to circulate
its annual balance sheet and profit & loss accounts, auditor’s report and directors’ report etc. (Audited Financial Statements) along with
the Company’s Notice of Annual General Meeting to its shareholders through email. Those shareholders who wish to receive the
Company’s Annual Report through email are requested to complete the requisite form below.
CDC shareholders are requested to submit their Electronic Transmission Consent Form along with their CNIC directly to their broker
(participant)/CDC; while shareholders having physical shares are to send the forms and a copy of their CNIC to the Company’s
Registrar, FAMCO Associates (Pvt) Limited, 8-F, Block 6, P.E.C.H.S, next to Hotel Faran, Nursery, Shahrah-e-Faisal, Karachi.
Electronic Transmission Consent Form

Pursuant to the directions given by the Securities & Exchange Commission of Pakistan through its SRO 787(I)/2014 of September 8,
2014, I, Mr. /Ms. __________________________________________ S/o, D/o, W/o ______________________________________
hereby consent to have the Engro Fertilizers Limited’s Audited Financial Statements and Notice of Annual General Meeting delivered to
me via email on my email address provided below:
Name of Member/Shareholder
Folio/CDC Account Number
CNIC
Email Address
It is stated that the above mentioned information is true and correct and that I shall notify the Company and its Share Registrar in writing
of any change in my email address or withdrawal of my consent to email delivery of the Company’s Audited Financial Statements and
Notice of the Meeting.
_________________________________ Date: ______________________

Signature of Member/Shareholder
request for video
conferencing facility form
Members can also avail video conference facility in Lahore and Islamabad. If the Company receives consent at least 10 days prior to date
of meeting, from members holding in aggregate 10% or more shareholding and residing at either Lahore and/or Islamabad to participate
in the meeting through video conference, the company may arrange video conference facility in that city.
In this regard please fill up the following form and submit it to registered address of the Company 10 days before holding of the
annual general meeting.
I/We, ______________________________ of ______________________________ being a member of Engro Fertilizers Ltd.,
holder of ___________________________ Ordinary Share(s) as per Register Folio No/CDC A/c No.___________________________
hereby opt for video conference facility at ______________________.
_________________________________ Date: ______________________

Signature of Member/Shareholder

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06 | engro fertilizers Annual Report 2015 | 07

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(xv) Any other important details necessary for the

By Order of the Board

Karachi, Faiz Chapra

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Ethics & Integrity Our People

Health, Safety & Environment Community & Society

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He is a member of the Pakistan Engineering Council, Business

He graduated from NED University of Engineering and

24 | engro fertilizers Annual Report 2015 | 25

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30 | engro fertilizers Annual Report 2015 | 31

Khalid Siraj Subhani Ruhail Mohammed

32 | engro fertilizers Annual Report 2015 | 33

I have reiterated time and again that in order to prosper we

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* Mr. Muhammad Aliuddin Ansari resigned on May 11, 2015

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2015 2014 2013 2012 2011

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Summary of Balance Sheet Profitability Ratios

52 | engro fertilizers Annual Report 2015 | 53

(10,000) 66,152 56,566

14,000 2015 12% 2014

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Shareholding No. of No. of Total Shares Held

Javed Akbar Ruhail Mohammed

66 | engro fertilizers Annual Report 2015 | 67

68 | engro fertilizers Annual Report 2015 | 69

70 | engro fertilizers Annual Report 2015 | 71

Engro Urea Engro DAP Engro Zarkhez Engro SSP

° Zarkhez Blue (NPK 17-17-17) available in 50 kg bag is consumed on

° Zarkhez Tobacco (NPK 15-15-15) available in 50 kg bag used for

74 | engro fertilizers Annual Report 2015 | 75

Chartered Accountants Chartered Accountants

76 | engro fertilizers Annual Report 2015 | 77

Stores, spares and loose tools 8 4,639,142 4,713,746

TOTAL ASSETS 105,381,862 111,726,183 Current Liabilities

Trade and other payables 22 16,886,856 24,726,721

Total Liabilities 62,855,842 77,248,088

TOTAL EQUITY & LIABILITIES 105,381,862 111,726,183

Ruhail Mohammed Javed Akbar

78 | engro fertilizers Annual Report 2015 | 79