25. Engro Annual Report Part-I
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impact 111-211-211 engro.com Annual & Sustainability Report 2012 about the cover As Pakistan’s premier conglomerate, Engro is committed The design of this report has been carefully selected to to creating sustainable impact at every level of business. showcase the technique of pixel dust to highlight the Our engagement with stakeholders, communities, momentum and impact of our efforts at various levels. employees and the nation at large is an embodiment of The unique treatment emphasizes the integration of this philosophy and continues to foster a culture of Enabling objects to create a lasting and meaningful impact that is Excellence – for all those lives we continue to touch through in sync with the theme laid out in this report. The concept our efforts. Our Annual & Sustainability Report 2012 has, therefore, been used as a visual metaphor for impact focuses on driving and highlighting the impact across our and essentially helps to harness our considerable business portfolio right down to stakeholders at the base contributions towards business, society and community - of the pyramid. Our vision for sustainable businesses in an innovative and inspirational way. in Pakistan remains at the heart of this impact and is a reiteration of our commitment to improve lives, empower livelihoods and inspire a meaningful change today and for generations to come. © 2013, Engro Corporation Limited All Rights Reserved. No part of this publication may be reproduced impact without the prior written permission of the publisher. contents Our Vision 03 Sustainability Report 97 Engro at a Glance 04 Approach and Framework 101 Key Figures and Highlights 05 Stakeholder Engagement 103 delivering impact Our Businesses at a Glance 07 Regular Engagement 108 Report Boundaries & Standards 09 Our Materiality Concerns 10 Economic Sustainability 109 Our Economic Investments Strategy 111 Company Information 11 Our Key Risks and Mitigating Actions 112 Notice of the Meeting 13 Strengthening Our Impact – SWOT Analysis 113 Chairman’s Message 19 Our Strategic Corporate Objectives 2013 116 Engro’s Growth – Fuelling Pakistan’s Growth 117 Governance and Executing Impact 120 Management 21 Our Organogram 23 Our People 125 Our Holding Structure 24 Our People Investments Strategy 127 Board of Directors 25 Our People-centric Performance 130 Directors’ Profile 27 Our People-centric Highlights 134 Core Values 33 Employee Engagement Survey 135 Our Governance Framework 35 Leadership Competency Model (LCM) 138 Our Approach to Governance 37 Championing Occupational Health & Safety 141 Our Governance Performance 39 Our People Focused Objectives for 2013 146 Our Audit Report Results 41 Speakout Policy 42 Benefitting Communities 147 Business Continuity Planning 43 Our Social Investments Strategy 149 Board Committees 44 Our Social Investments Performance 151 Functional Committees 45 Technical Training College 155 Our Governance Objectives for 2013 46 IMV – Impact Assessment 157 Directors’ Report 47 Our Environmental Stewardship 167 President’s Message 49 Our Approach to Eco-efficiency 170 Operational Highlights 51 Our Environmental Performance 171 External Environment 52 International Standards and Certifications 175 Organizational Overview 54 Product Stewardship 176 Business Review 55 Green Office Initiative 177 Future Outlook 71 Horizontal and Vertical Analyses 73 Financial Statements 183 Notes on Analysis 79 GRI Index 355 Summary 80 Commitment to the United Financial Ratios 81 Nations Global Compact 365 Statement of Value Addition 84 Assurance Statement 366 Key Shareholding and Shares Traded 85 Glossary 368 Pattern of Holding of Shares 89 Proxy Form 370 Category of Shareholding 92 Shareholder Information 93 Share Price Sensitivity Analysis 94 Awards and Recognition 95 our vision engro at a glance Business Revenues (Rs. in million) Wealth Generated (Rs. in million) 11,666 7,796 5,799 To be the premier 21,124 1,007 Pakistani enterprise 40,169 20,560 13,202 30,627 20,894 with a global reach 72 Consolidated Revenue Consolidated Wealth passionately pursuing (Rs. in million) Generated (Rs. in million) 125,151 47,763 Eximp Polymer Fertilizers Foods To Employees To Government To Society value creation for all Netherlands Powergen To Providers of Capital Retained for reinvestment and future growth stakeholders. Employees CSR (Rs. in million) 13% 13% 63 1,178 64 4% 382 16% 107 456 43% 1,544 8% 4% Total Social Spend Total Employees in 2012 (Rs. in million) * 3,794 186 * Engro and Donor spend inclusive but exclusive of fixed cost million * Pie Chart shows spend inclusive of fixed cost totaling Rs. 211 Fertilizers Foods Polymer Powergen Education Livelihoods CPI Fixed Cost Eximp Vopak Corp Health Relief & Rehabilitation Others Engro Corp. | Impact | Annual & Sustainability Report 2012 04 key figures Sales Revenue (Rs. in million) Weighted Average Total Assets (Rs. in million) Total Equity (Rs. in million) number of ordinary shares (in thousands) 2012 2012 2012 2012 125,151 511,269 189,587 43,247 2011 114,612 2011 393,284 2011 184,064 2011 41,890 Profit After Tax (Rs. in million) Earnings Per Share (In Rs.) Market Capitalization (Rs. in million) EBITDA (Rs. in million) 2012 2012 2012 2012 1,333 2.61 47,057 26,330 2011 8,060 2011 15.77 (Restated) 2011 36,457 2011 28,179 Dividends Paid (Rs. in million) Capital Expenditure (Rs. in million) 2012 796 2012 6,025 2011 2011 2,383 12,256 Engro Corp. | Impact | Annual & Sustainability Report 2012 06 our businesses at a glance Engro’s investments in agriculture, foods, energy and chemicals (fruit juice) amongst others. The business has also acquired and operates Al Safa Halal, a meat processing company based in Canada. were designed to take advantage of Pakistan’s economic needs. Engro Powergen Limited Engro Powergen Limited owns and operates Engro Powergen Qadirpur Limited, Corporate Performance (Rs. in million) a 220 megawatt power plant and the group's first initiative in the power sector of Pakistan, which is 10% directly owned by the holding company and 84% owned Revenue Net income Taxes paid Dividends Sales No. of by Engro Powergen. The remainder is owned by the International Finance declared growth shareholders Corporation (IFC), a subsidiary of the World Bank, and employees. 2008 40,973 4,126 1,026 1,278 20% 13,163 In 2010, Engro Powergen entered into a joint venture with the Sindh government, 2009 58,152 3,807 1,956 1,788 42% 13,980 to establish the Sindh Engro Coal Mining Company Limited, to mine coal 2010 79,976 6,790 2,378 1,965 38% 13,939 from Thar Block-II. 2011 114,612 8,060 3,214 2,361 43% 16,419 Engro Polymer & Chemicals Limited is a 56% owned subsidiary of the group and 2012 125,151 1,333 2,015 - 9% 18,768 Engro Polymer & Chemicals Limited the only manufacturer of polyvinyl chloride (PVC) in the country, in addition to manufacturing and marketing caustic soda. The Company’s vinyl chloride monomer (VCM) plant began production in the first quarter of 2010 successfully making the Engro Corporation Limited Engro Corporation Limited is a holding company, created following the demerger plant the only fully integrated Chemical Complex in Pakistan. The firm markets its of Engro Chemical Pakistan Limited on January 1, 2010. products under the name of “SABZ”. Engro Corp is one of Pakistan's largest conglomerates with the company's business portfolio spanning across sectors including chemical fertilizers, Engro Eximp Engro Eximp (Private) Limited is the group's commodity trading business that PVC resin, a bulk liquid chemical terminal, foods, power generation and deals primarily in the import and trading of phosphate-based fertilizers for Engro commodity trade. (Private) Limited Fertilizers Limited such as DAP, MAP, MOP and SOP, and also imports micro- nutrients like Zinc Sulphate, which it supplies as raw materials to Engro Fertilizer's Engro Fertilizers Limited Engro Fertilizers Limited, an Engro Corporation subsidiary, is one of the leading Zarkhez plant for manufacturing blended fertilizers. fertilizer manufacturing and marketing companies in the country. It is primarily engaged in the manufacturing and marketing of urea and NPK fertilizers. As an In addition, Eximp also manages the procurement, processing and export of example of the synergies between Engro's business lines, Engro Eximp imports rice to markets in the Middle East and the European Union. Over the past five phosphate based fertilizers, which are distributed and marketed through Engro years, Engro Eximp has become the single largest importer of phosphates and Fertilizer’s network as an extension of Engro's overall fertilizer portfolio. potash fertilizers in Pakistan. The business offers a wide variety of fertilizer brands besides urea, which include some of the most trusted brand names by Pakistani farmers. These include Engro Vopak Engro Vopak Terminal Limited is a joint venture with Royal Vopak of the Netherlands, Engro Zorawar, a high-phosphate fertilizer developed for alkaline soils. Engro Terminal Limited Engro owns 50% of Engro Vopak Terminal Limited, a business engaged in the Zarkhez is a high-end blended fertilizer product that offers a unique balance of handling, regasification and storage of chemicals and liquefied petroleum gas (LPG). nutrients for a wide variety of crops. Zingro is an imported zinc micro nutrient, meant to overcome zinc deficiency in a diverse range of crops. The business launched Pakistan's first cryogenic import facility for ethylene, in line with the group's overall motto of pursuing and enabling excellence. Engro Foods Limited Engro Foods