about the cover: As Pakistan’s premier fertilizer company, Engro Fertilizers is seen as an icon among farmers countrywide. Our scope of business has not only helped increase the yields and hopes of millions of growers, but has also helped to transform the lives of families who use our products to build their livelihood. We’re proud to bring you a report that features a wide array of unique visual icons from across the spectrum to highlight the significant contributions we make to yields and harvests. Today, as we stand taller, our commitment to improve lives — both on and off the field — continues to grow and benefit our collective ambitions. about this report contents Furthermore, at a group level Engro has been Company Information pushing ahead with a strategy to inform its Company Information 04 Notice of the Meeting 05 shareholders and readers of how the Company Vision Statement 06 creates value over time by showcasing both Engro Fertilizers at a Glance 08 Our History 10 financial and non-financial information. Guided by Our Milestones 12 this philosophy we launched our first integrated Core Values 14 report last year that incorporated elements of our sustainability and annual reports as per the newly Corporate Governance launched Integrated Reporting Framework. Directors’ Profiles 18 Board Committees 22 Functional Committees 23 To read more about our value creation process as Our Governance Framework 24 Statement of Compliance with the per the new framework you can visit our group Code of Corporate Governance 25 website www.engro.com and access the Integrated Report 2014 in the Downloads section. Alternatively you can also view a digital version of the report by Directors’ Report visiting www.engro.com/integratedreview2014. CEO’s Message 30 Key Numbers 32 Business Review 34 Horizontal and Vertical Analyses 38 Summary 44 Financial Ratios 45 Statement of Value Addition and Distribution 49 Key Shareholding and Shares Traded 50 Shareholder Information 55 Pattern of Shareholding 56 Category of Shareholding 59 Awards and Achievements 60 Our Brands 62 Financial Statements Financial Statements 66 Proxy Form 129 Electronic Transmission Consent Form 131 Video Conferencing Facility Form 133 COMPANY INFORMATION nourishing grassroots company information notice of the meeting Board of Directors Auditors NOTICE IS HEREBY GIVEN THAT the Sixth Annual General Meeting of the Muhammad Aliuddin Ansari - Chairman A.F. Ferguson & Company Company will be held at Pearl Continental Hotel, Club Road, Karachi on Ruhail Mohammed - Chief Executive Officer Chartered Accountants Javed Akbar State Life Building No. 1-C Wednesday, April 29th, 2015 at 10:30 a.m. to transact the following business: Abdul Samad Dawood I.I. Chundrigar Road The CNIC number/NTN details is now mandatory and is required Shabbir Hashmi Karachi-74000, Pakistan Ordinary Business: for checking the tax status as per the Active Taxpayers List (ATL) Naz Khan Tel: +92(21) 32426682-6 / 32426711-5 (1) To receive and consider the Audited Accounts for the year ended issued by Federal Board of Revenue (FBR) from time to time. Shahid Hamid Pracha Fax +92(21) 32415007 / 32427938 31st December 2014 and the Directors’ and Auditors’ Reports Khalid Siraj Subhani thereon; (2) To declare a final dividend at the rate of Rs. 3:00 per share for Individuals including all joint holders holding physical share Registered Office the year ended December 31, 2014; certificates are therefore requested to submit a copy of their valid Company Secretary (3) To appoint Auditors and fix their remuneration. CNIC to the Company or its Registrar if not already provided. For 7th Floor, The Harbor Front Building, shareholders other than individuals, the checking will be done by Faiz Chapra HC # 3, Marine Drive, Block 4, Clifton, N.B matching the NTN number, therefore the Corporate shareholders Karachi-75600, Pakistan having CDC accounts are requested in their own interest to provide (1) The share transfer books of the Company will be closed and no Tel: +92(21) 35297501 – 35297510 a copy of NTN certificate to check their names in the ATL before the Bankers transfers of shares will be accepted for registration from Fax:+92(21) 35810669 book closure date to their respective participants/CDC, whereas Wednesday, April 15, 2015 to Wednesday, April 29, 2015 (both Allied Bank Limited Website: www.engrofertilizers.com corporate shareholders holding physical share certificates should days inclusive). Transfers received in order at the office of our Askari Bank Limited send a copy of their NTN certificate to the Company or its Share Registrar, Messrs FAMCO ASSOCIATES (PVT.) LTD, 8-F, next to Bank Alfalah Limited Registrar. The Shareholders while sending CNIC or NTN certificates, as Hotel Faran, Nursery, Block 6, PECHS, Shahra-e-Faisal, Karachi Bank Al Habib Limited the case may be must quote their respective folio numbers. PABX Nos. (92-21) 34380101-5 and email Bank Islami Pakistan Limited [email protected], by the close of business (5:00 p.m.) on The Bank Of Punjab In case of non-receipt of the copy of a valid CNIC or NTN, the Company Tuesday, April 14, 2015 will be treated to have been in time for the Barclays Bank PLC would be unable to comply with SRO 831(1)/2012 dated July 05 2012 purpose of the entitlements, attending and to vote at the meeting. Burj Bank Limited of SECP and therefore will be constrained under Section 251(2) (a) of Citi Bank N.A. the Companies Ordinance, 1984 to withhold dispatch of dividend (2) A member entitled to attend and vote at this Meeting shall be entitled Dubai Islamic Bank (Pakistan) Limited warrants of such shareholders. Further, all shareholders are advised to to appoint another person, as his/ her proxy to attend, speak and vote immediately check their status on ATL and may, if required take Faysal Bank Limited instead of him/ her, and a proxy so appointed shall have such rights, as necessary action for inclusion of their name in the ATL. The Company Habib Bank Limited respects attending, speaking and voting at the Meeting as are as per the new Law, shall apply 15% rate of withholding tax if the Habib Metropolitan Bank Limited available to a member. Proxies, in order to be effective, must be shareholder’s name, with relevant details, does not appear on the ATL, JS Bank Limited received by the Company not less than 48 hours before the Meeting. A available on the FBR website on the first day of book closure and KASB Bank Limited proxy need not be a member of the Company. MCB Bank Limited deposit the same in the Government Treasury as this has to be done within the prescribed time. Meezan Bank Limited (3) Submission of Copy of CNIC/NTN Details (Mandatory) National Bank of Pakistan Pursuant to the directives of the Securities and Exchange Samba Bank Limited Commission of Pakistan CNIC number of individuals is mandatorily Zakat Declarations (CZ-50) The Zakat will be deducted from the dividends at source at the rate of Silk Bank Limited required to be mentioned on dividend warrants and pursuant to 2.5% of the paid-up value of the shares (Rs.10/- each) under the Zakat Soneri Bank Limited the provisions of Finance Act 2014, the rate of deduction of income and Ushr Laws and will be deposited within the prescribed period with Standard Chartered Bank (Pakistan) Limited tax under section 150 of the Income Tax Ordinance 2001 from the relevant authority. Please submit your Zakat Declarations under dividend payment have been revised as: for filers of Income Tax Summit Bank Limited Zakat and Ushr Ordinance, 1980 & Rule 4 of Zakat (Deduction & return 10% and Non filer of Income Tax return 15%. In case of Joint United Bank Limited Refund) Rules, 1981 CZ-50 Form, in case you want to claim exemption, account, each holder is to be treated individually as either a filer or Zarai Taraqiati Bank Limited with your brokers or the Central Depository Company Ltd. (in case the non-filer and tax will be deducted on the basis of shareholding of each shares are held in Investor Account Services on the CDC) or to our joint holder as may be notified by the shareholder, in writing as follows, Registrars, FAMCO Associates (Pvt) Ltd., at their address mentioned to our Share Registrars, or if no notification, each joint holder shall be above (in case the shares are held in paper certificate form). The assumed to have an equal numbers of shares. shareholders while sending the Zakat Declarations, as the case may be must quote company name and their respective folio numbers. Company Folio/CDS Total PrincipalShareholder Joint Shareholder Name Account No. Shares By Order of the Board Name & Shareholding Name & Shareholding CNIC No. Proportion CNIC No. Proportion Karachi, FAIZ CHAPRA No. of Shares No. of Shares Dated: February 09, 2015 Company Secretary 04 | engro fertilizers Annual Report 2014 | 05 vision statement To be a leader in the fertilizer industry with a global presence, exceeding stakeholder expectations in the communities we serve engro fertilizers at a glance A+ Long Term 1,136Employee PACRA Rating Strength PKR PKR bn bn 32% Con34tribution to 103 Urea National Exchequer Market Capitalization Market Share 73% PKR Employee 56.6bn Engagement Index Wealth Generated our history To boost sales, a full-fledged marketing organization By 2009, Engro was fast growing and had already As the nation’s first branded fertilizer manufacturer, the was established which undertook agronomic programs diversified its business portfolio in as many as seven to educate farmers of Pakistan. As the nation’s first different industries. The continuous expansions and Company helped modernize traditional farming practices branded fertilizer manufacturer, the Company helped diversifications in Company’s enterprises necessitated a modernize traditional farming practices and boost farm broad restructuring in Engro Chemicals Pakistan Ltd.