more than ever Annual Report 2020 +92-21-111-211-211 engro.com EngroCorp Engro.Corporation engrocorporation EngroCorp engro-corp more than ever contents For all times to come, 2020 shall go down in history as the year Company when life as we knew it came to a grinding halt. People were 05 Company Information isolated, families divided, entire countries in lockdown, and 06 Key Figures businesses on pause – all waiting for the world to heal from an 07 Our Vision unseen novel coronavirus that swept the world to become a 09 Group Structure pandemic. Dubbed COVID-19, the virus forced everyone to 11 Core Values adjust to rapidly-changing circumstances for which none was 12 2020 at a Glance prepared. But the new normal, as it were, also brought with it 13 2020 Snapshot new lessons and opportunities. 17 Board of Directors 19 Directors’ Profiles Pakistan is a resilient nation, always first in helping others and 25 Notice of the Meeting going the extra mile – especially in the face of a calamity when 29 Hussain Dawood Pledge immediate action is required. Through collective efforts, we 31 Sustainable Impact volunteered our time and resources to ensure that our fellow Pakistanis were safe and our communities were given some Corporate Governance respite in these difficult times. 37 Chairman’s & Vice Chairman’s Message 39 President’s Message Engro’s number one priority remains to play our modest part in 41 Awards and Recognitions 2020 helping to solve some of Pakistan’s most pressing issues – be it 45 Directors’ Report by contributing to ease the burden of national debt, providing 71 Governance Control Framework power to light up homes, fulfilling our role in food security, 72 Statement of Compliance with Listed Companies (Code of Corporate Governance) Regulations, 2019 keeping loved ones connected, or standing shoulder-to-shoulder 74 Independent Auditor’s Review Report to the Members of Engro Corporation Limited with our fellow Pakistanis in the face of a daunting pandemic. Other Information This year’s report is a tribute to the front-liners of Engro – to each one who went beyond the call of duty to succeed against 75 Key Shareholding and Shares Traded challenges posed by COVID-19. A true testament to Engro’s 79 Pattern of Shareholding values, our teams recognized their responsibility to serve Pakistan in this most testing and turbulent time. In the end – as Financial Review humanity, as a country, and as a business – we have understood well the importance of being compassionate, being wise, being 83 Quarterly Analysis strong, being united, being connected, and being resilient, now 85 Horizontal and Vertical Analysis more than ever! 93 Six Years Review 101 Statement of Value Addition and Distribution Financial Statements 118 Independent Auditor’s Report (Standalone) 111 Financial Statements (Standalone) 160 Independent Auditor’s Report (Consolidated) 167 Financial Statements (Consolidated) 272 Proxy Form 274 Standard Request Form Circulation of Annual Audited Accounts united more than ever Engro Vopak & Elengy Terminals When the pandemic led to lockdown all over Pakistan, Engro Vopak Terminal & Engro Elengy Terminal were identified as essential service providers. Acutely aware of the dependency of the country on their continuous functioning, within 36 hours of lockdown, the companies implemented an island mode at the Terminals, where the non-resident facility was converted into a live-in facility that accommodated 70 personnel. The facility operated under strict compliance of SOPs, ensuring zero cases of COVID-19 at the Terminals. Even under these circumstances, the teams exhibited incredible camaraderie and the businesses won several prestigious awards on Women Empowerment, Best Safety Practices, Community Impact and as Diversity & Inclusion Leader. Further, despite restricted manning, the front-liners set new records, like handling Pakistan’s highest marine LPG import of 246 KTs and executing the fastest 300 ship-to-ship transfers in the world. company information key figures Board of Directors Auditors Mr. Hussain Dawood (Chairman) A.F. Ferguson & Co Mr. Abdul Samad Dawood (Vice Chairman) Chartered Accountants 2020 2018 Mr. Muhammad Abdul Aleem (Chairperson, BAC) State Life Building No. 1-C Revenue 171,568 (Rs. in millions) Ms. Henna Inam (Chairperson, BPC) I.I. Chundrigar Road 248,818 2019 225,765 Mr. Shahzada Dawood Karachi-74000, Pakistan Ms. Sabrina Dawood Tel: +92(21) 32426682-6 / 32426711-5 Mr. Rizwan Diwan Fax +92(21) 32415007 / 32427938 2020 Mr. Khawaja Iqbal Hassan EBITDA 2018 49,379 Mr. Raihan Ali Merchant Share Registrar (Rs. in millions) 85,246 2019 71,263 Mr. Ghias Khan (Chief Executive Officer) FAMCO Associates (Private) Limited 8-F, Near Faran Hotel, Nursery, Block-6 Chief Executive Officer PECHS, Shahrah-e-Faisal, Karachi Mr. Ghias Khan Earnings Per Share 2020 2018 22.06 Registered Office (Rs.) 2019 Company Secretary 7th & 8th Floor, The Harbor Front Building, 43.57 28.69 Ms. Shomaila Loan HC # 3, Marine Drive, Block 4, Clifton, Karachi-75600, Pakistan Chief Financial Officer Tel: +92(21) 35297501 – 35297510 2020 2018 Mr. Mazhar Abbas Hasnani Fax:+92(21) 35810669 Total Assets 393,155 (Rs. in millions) e-mail: [email protected] 580,487 2019 550,245 Bankers Website: www.engro.com Allied Bank Ltd Bank Al-Falah Ltd 2020 Bank Al-Habib Ltd Total Equity 2018 185,587 Citi Bank N.A (Rs. in millions) 219,595 2019 195,249 Faysal Bank Ltd Habib Bank Ltd Habib Metropolitan Bank Ltd JS Bank Ltd Capital Expenditure 2020 2018 36,580 MCB Bank Ltd (Rs. in millions) 2019 Meezan Bank Ltd 18,610 46,227 National Bank of Pakistan Ltd Soneri Bank Ltd Standard Chartered Bank (Pakistan) Ltd 2020 2018 United Bank Ltd Cash Flow From Operation 28,940 (Rs. in millions) 63,392 2019 38,866 Dividends 2020 2018 18,843 (Rs. in millions) 22,821 2019 23,615 Market Capitalization 2020 2018 152,463 (Rs. in millions) 177,090 2019 198,920 05 | engro corp Annual Report 2020 | 06 our vision to be the premier Pakistani enterprise with a global reach, passionately pursuing value creation for all stakeholders group structure Dawood Hercules Corporation Limited Engro Corporation Limited Engro Fertilizers Elengy Terminal Engro Polymer & Engro Infiniti (Pvt) Engro Energy Engro Eximp Engro Eximp FrieslandCampina Engro Vopak Limited Pakistan Limited Chemicals Limited Limited Agriproducts (Pvt) FZE Engro Pakistan Terminal Limited Limited Limited Limited EFert Agritrade Engro Elengy Engro Enfrashare Engro Powergen (Pvt) Limited Terminal (Pvt) Limited (Pvt) Limited Thar (Pvt) Limited Parent and Engro Digital Engro Powergen Holding Limited Qadirpur Limited Subsidiaries Sindh Engro Coal Associates / JV Mining Company core values 2020 at a glance Operating in diverse industries and spread over geographical landscapes, the Engro employees are knit into one big 5,937 family, united by a drive for success, passion for Pakistan, and the same core values. Our values form the basis of 13,151 everything we do – from open communication to fostering an environment of trust and guaranteeing the well-being 105,846 and safety of our people. At Engro, we never forget what we stand for, and each Engro employee - Fertilizer Polymer Revenue Energy 248,818 88,553 Consolidated Revenue Terminals (Rs. in millions) Others 35,331 cares deeply about environmental impact and safety of people 29,640 To Government 43,294 To Society Health, Safety Wealth 972 To Employees & Environment Distributed 119,861Wealth Distributed Retained for reinvestment and future growth 10,517 (Rs. in millions) To Providers of Capital 35,438 110 has impeccable character and lives by highest standards of 100 284 36 Corporation integrity and accountability 232 Fertilizers Ethics Employees 1,362 Polymer & Integrity Under Energy 2,687 Management Terminals Total Employees 563 Telecom Eximp Agriproducts 43 nurtures passion to serve country, community, and company, 96 with strong belief in the dignity and value of people 258 Livelihoods Education Social Health Investment 972 Community 7 Infrastructure Total Social Spend 13 Areas & Society Environment (Rs. in millions) 556 Others 11 | engro corp Annual Report 2020 | 12 2020 snapshot saved Engro FrieslandCampina Engro benefited Helped provide sustainable Saved Pakistan USD 1 billion livelihoods to 116,000 farmers $1bn through import substitution & milk suppliers through more 116,000 for Pakistan across all Engro businesses than 1,450 milk collection centers farmers & milk suppliers contributed Engro Fertilizers Engro Vopak Terminal served Contributed 33% to Pakistan's food security and provided customized Contributed towards the agri-solutions that helped farmers energy security of Pakistan 33% increase yields by up to 11% in through LPG imports serving 2.5mn to national food security wheat & 27% in rice paddy 2.5 million households households Engro Energy Engro Elengy Terminal illuminated fulfilled Illuminated lives of more than 7 million Pakistanis by Fulfilled more than 12% of 7mn+ dispatching ~4,600 GWH of Pakistan’s domestic daily 12%+ Pakistani lives electricity to the national grid natural gas requirements natural gas requirements operationalized Engro Enfrashare Engro Eximp Agriproducts contributed Enabled connectivity by Generated more than 1200+ operationalizing more than 1,200 USD 20 million for Pakistan's $20mn+ telecom towers telecom towers across Pakistan forex reserves through rice exports to Pakistan’s forex reserves 13 | engro corp Annual Report 2020 | 14 wise more than ever Engro Fertilizers With the responsibility of over one-third of Pakistan’s agri-productivity, Engro Fertilizers was classified as an essential service in 2020 and stepped up to fulfilling its role in ensuring food security for our nation. Realizing that, especially in the pandemic environment, we are only safe if our communities are safe as well, measures were taken in Daharki and surrounding areas, including regular disinfection, free COVID-19 testing, rations to more than 2,000 families, and conversion of the Technical Training College into a 176-bed quarantine facility. New anti-rabies and artificial limbs replacement facilities were also established.