annual report 2017 an ode to the farmers annual report 2017 111- 211- 211 engrofertilizers.com The vast lands of promise spread an ode to wide, the fields of dreams ploughed, the seeds of hope the farmers deeply sown; answered by prayers they turn bountiful. Peace, meal and sleep - sums up their living. Their sweat golden their fields as they continue to feed the nation. Engines of Pakistan - they are the farmers. contents Company Company Information 07 Notice of the meeting 08 Engro Fertilizers at a Glance 11 Our History 13 Our Milestones 15 Our Core Values 17 Corporate Governance Board of Directors 21 Directors’ Profiles 23 Board Committees 29 Functional Committees 30 Our Governance Framework 31 Statement of Compliance with the Code of Corporate Governance 32 Chairman’s Message & Directors’ Report Chairman’s Message 37 CEO’s Message 39 Key Numbers 41 Business Review 43 Horizontal and Vertical Analyses 49 Summary 55 Financial Ratios 56 Statement of Value Addition and Distribution 60 Key Shareholding and Shares Traded 61 Shareholder Information 64 Pattern of Shareholding 66 Category of Shareholding 67 Our Brands 73 Financial Statements Consolidated Financials 83 Standalone Financials 142 Proxy Form Request for Hard Copy of Annual Report Form © 2017, Engro All Rights Reserved. No part of this publication may be reproduced without the prior written permission of the publisher. Our Vision We are passionate about transforming the agricultural landscape, bringing change and helping the farmer grow. Company Information company information notice of meeting NOTICE IS HEREBY GIVEN that the Ninth Annual General Meeting of Board of Directors Auditors Engro Fertilizers Limited will be held at Karachi Marriott Hotel, Abdullah Mr. Ghias Khan (Chairman) A.F. Ferguson & Co. Haroon Road, Karachi on Monday, March 26, 2018 at 10 a.m. to transact Mr. Ruhail Mohammed (Chief Executive) Chartered Accountants the following business: Mr. Abdul Samad Dawood State Life Building No. 1-C Mr. Asad Said Jafar I.I. Chundrigar Road Mr. Asim Murtaza Khan Karachi-74000, Pakistan A) Ordinary Business Mr. Javed Akbar Tel: +92(21) 32426682-6 / 32426711-5 (1) To receive and consider the Audited Accounts Tax return 20%. In case of Joint account, each Mr. Nadir Salar Qureshi Fax: +92(21) 32415007 / 32427938 for the year ended December 31, 2017 and the holder is to be treated individually as either a filer or non-filer and tax will be deducted on the basis Ms. Sadia Khan Directors' and Auditors' Reports thereon. of shareholding of each joint holder as may be Cost Auditors (2) To declare a final dividend at the rate of PKR 3.00 notified by the shareholder, in writing as follows, Chief Financial Officer J.A.S.B & Associates (30%) for the year ended December 31, 2017. to our Share Registrars, or if no notification, each Mr. Atif Kaludi Chartered Accountants (3) To appoint Auditors and fix their remuneration. joint holder shall be assumed to have an equal 1104, Uni Tower number of shares. Company Secretary I.I. Chundrigar Road, N.B. Company Folio/CDS Total Principal Shareholder Joint Shareholder Ms. Sarah Farooq Karachi-74000, Pakistan Name Account No. Shares (1) The Share Transfer Books of the Company will Tel: +92(21) 32468154-5 / 32468158 Name & Shareholding Name & Shareholding be closed from Monday, March 19, 2018 to CNIC Proportion CNIC proportion Bankers Fax : +92(21) 32468157 Monday, March 26, 2018 (both days inclusive). No. No. of shares No. No. of shares Conventional Transfers received in order at the office of our Registrar, M/s. FAMCO ASSOCIATES (PVT.) Allied Bank Limited Registered Office The CNIC number/NTN details is now LTD, 8-F, near Hotel Faran, Nursery, Block 6, Askari Bank Limited 7th & 8th Floor, The Harbor Front Building, mandatory and is required for checking the tax PECHS, Shahra-e-Faisal, Karachi (PABX Nos. Bank Al Habib Limited HC # 3, Marine Drive, Block 4, Clifton, status as per the Active Taxpayers List (ATL) (92-21) 34380101-5) and email issued by Federal Board of Revenue (FBR) from Bank Alfalah Limited Karachi-75600, Pakistan [email protected] by the close of time to time. CIMB Bank Tel: +92(21) 35297501-10 business (5:00 p.m) on Friday, March 16, 2018 Citi Bank .N.A. Fax:+92(21) 35810669 will be treated to have been in time for the Individuals including all joint holders holding Faysal Bank Limited e-mail: [email protected] purposes of payment of final dividend to the physical share certificates are therefore Habib Bank Limited Website: www.engrofertilizers.com transferees and to attend and vote at the requested to submit a copy of their valid CNIC to meeting. the company or its Registrar if not already Habib Metropolitan Bank Limited www.engro.com provided. For shareholders other than (2) A member entitled to attend and vote at this JS Bank Limited individuals, the checking will be done by Meeting shall be entitled to appoint another Mashreq Bank Share Registrar matching the NTN number, therefore the person, as his/her proxy to attend, speak and MCB Bank Limited FAMCO Associates (Pvt) Limited Corporate shareholders having CDC accounts vote instead of him/her, and a proxy so are requested in their own interest to provide a National Bank of Pakistan 8-F, Near Hotel Faran, Block-6, PECHS, appointed shall have such rights, as respects copy of NTN certificate to check their names in Samba Bank Limited Shahrah-e-Faisal attending, speaking and voting at the Meeting as the ATL before the book closure date to their Silk Bank Limited Karachi – Pakistan are available to a member. Proxies, in order to respective participants/CDC, whereas corporate be effective, must be received by the Company Soneri Bank Limited Tel: +92(21) 3438 0104-5, 3438 4621-3 shareholders holding physical share certificates not less than 48 hours before the Meeting. A Standard Chartered Bank (Pakistan) Limited Fax +92(21) 3438 0106 should send a copy of their NTN certificate to the proxy need not be a member of the Company. Summit Bank Limited Company or its Share Registrar. The The Bank of Punjab Shareholders while sending CNIC or NTN (3) SUBMISSION OF COPY OF CNIC/NTN DETAILS United Bank Limited certificates, as the case may be must quote their (MANDATORY) FOR SHAREHOLDERS/ JOINT respective folio numbers. HOLDERS Shariah Compliant (4) In case of non-receipt of the copy of a valid Pursuant to the directives of the Securities and Al Baraka Islamic Bank (Pakistan) Limited CNIC, the Company would be unable to comply Exchange Commission of Pakistan CNIC number with SRO 831(1)/2012 dated July 05 2012 of Bank Islami Pakistan Limited of individuals is mandatorily required to be SECP and therefore will be constrained under Dubai Islamic Bank (Pakistan) Limited mentioned on dividend warrants and pursuant to SECP Order dated July 06, 2015 under section Meezan Bank Limited the provisions of Finance Act 2017, the rate of 243 (3) of the Companies Act, 2017 to withhold Noor Bank deduction of income tax under section 150 of the dispatch of dividend warrants of such the Income Tax Ordinance 2001 from dividend shareholders. Further, all the shareholders are payment have been revised as: for filers of advised to immediately check their status on ATL Income Tax return 15% and Non filer of Income and may, if required take necessary action 07 engro fertilizers Annual Report 2017 08 for inclusion of their name in the ATL. The arrange video conference facility in that city Company as per the new Law, shall apply 20% subject to availability of such facility in that city. rate of withholding tax if the shareholder’s name, To avail this facility please provide the following with relevant details, does not appear on the information to the Share Registrar Office of the ATL, available on the FBR website on the first Company i.e. Messrs. FAMCO ASSOCIATES day of book closure and deposit the same in the (PRIVATE) LIMITED, 8-F, near Hotel Faran, Government Treasury as this has to be done Nursery, Block 6, PECHS, Shahrah-e-Faisal, within the prescribed time. Karachi PABX Nos (+9221) 34380101-5 and email [email protected]. Withholding Tax exemption from the dividend income, shall only be allowed if copy of valid tax I/We, of being a member of Engro Fertilizers exemption certificate is made available to Limited holder of Ordinary Share(s) as per FAMCO Associates (Pvt.) Ltd., by the first day of Register Folio No. _____________ hereby opt for Book Closure. video conference facility at (Please insert name of the City) (5) In accordance with the provisions of Section 242 of the Companies Act, 2017 and Circular No. 18/2017, a listed company, is required to pay cash dividend to the shareholders ONLY through electronic mode directly into the bank account designated by the entitled shareholders. In compliance with the said law, in order to receive __________________ your future dividends directly in your Bank Signature of member account, you are required to provide the information mentioned on the Form placed on UPDATE UNDER RULE 4 OF S.R.O. 27/1/2012 the Company’s website www.engrofertilizers.com and send the same to your brokers/the Central Note relating to Engro Corporation Limited: Depository Company Ltd. if the shares are held Engro Corporation Limited, is the majority shareholder in the electronic form or to the Company’s of Engro Fertilizers Limited. In 2016 the shareholders Shares Registrar if the shares are held in paper approved a short term loan/ financing facility of upto certificate form. PKR. 6 billion, which was initially for a period of one (6) Pursuant to SECP Circular No 10 of 2014 dated year and renewal of the same for four further periods May 21, 2014, if the Company receives consent of one year each.