Engro Chemical Pakistan Limited

Economic Review, April, 1993

"Engro Urea production capacity at Daharki will more than double from 268,000 metric tons to 598,000 metric tons per year when the expansion project is commissioned in July 1993". This was stated by Mr. Shaukat Raza Mirza, President and Chairman of the Board of Directors. Engro Chemical Pakistan Ltd., while addressing the Annual General Meeting of the Company shareholders held at Karachion April 14, 1993. "The expansion project involving an expenditure of over Rs. 3 billion is based on relocation of used plants from overseas. These plants have been refurbished and new facilities added to ensure safe and reliable long term operation at Daharki", explained Mr. Mirza.

Mr. Mirza informed the shareholders that "the performance of the Company in 1992 continued to be excellent for the second consecutive year. The Company earned a net profit of Rs. 239.6 million in 1992 as compared to Rs. 226.7 million in 1991. The Board has recommended a final dividend of Rupees 1.00 per share bringing the total dividends during the year to Rupees 2.00 per share amounting to Rupees 75 million. Out of the profits earned, Rupees 165 Million are recommended to be transferred to general reserves to help finance the expansion project."

Mr. Mirza added that "the shareholder's equity has more than doubled from Rupees 416 million at year end 1991 to Rupees 1030 million at year end 1992. This includes Rupees 449 million raised from the rights issue earlier in the year, and earnings of Rupees 429 million transferred from the existing operations. Since 1990, total equity of the company has quadrupled to help finance the urea expansion project, while tangible fixed assets increased about ten times to Rs. 2707 million".

He further said that "the Capital expenditure of Rs. 1,264 million in 1992 was an all time high. By year end 1992 total expenditure incurred on the expansion project amounted to Rs. 2,388 million."

Commenting on the operating performance of the Company, Mr. Mirza said "Engro Urea production in 1992 was 266,200 metric tons as compared to 272,400 metric tons in 1991. Lower production was mainly due to the planned 10 day maintenance shutdown in April 1992 during which tie-in connections were installed between the existing plant and the expansion facilities."

Mr. Mirza continued that "In 1992 the company sold 45,800 metric tons of fertilizer establishing a new record for the fourth year in succession. Engro urea sales of 271,100 metric tons during 1992 were the highest ever. To meet its customer requirements, the company marketed a record 87,100 metric tons of imported urea compared to 46,100 metric tons in 1991. Phosphatic and Potassic fertilizer sales were 87,600 metric tons surpassing the previous best of 74,100 metric tons in 1991. As a result of this performance, total fertilizer sales volume increased by 14% over 1991."

Speaking on the corporate performance, Mr. Mirza said that "the Company won the Exxon Chemical Safety Award for its excellent safety record. The Company also won the Corporate Excellence Award given by the Management Association of Pakistan. ECPL won this award for the fourth year in succession and for the fifth time in eight years by out performing all listed companies in the non-financial sector on the criteria of financial performance and good management practices. ECPL won the National Energy Management Award from Enercon (Ministry of Planning and Development Government of Pakistan) for energy conversation achieved through successful implementation of a major project to recover waste heat from gas turbine exhausts at the Daharki plant site."

The Company has continued to make significant contributions towards community welfare:

* Upgrading the boys and girls schools in Daharki.

* Scholarships to dealer' children.

* A free eye camp at Daharki in which 268 cataract operations were performed and 2500 patients were given treatment. IOL (Intra Ocular Lens) were implanted for the first time in this Camp.

* Free snake bite treatment was provided to over 1400 patients at the Company's clinic in Daharki.

* Contributions to several voluntary organizations such as Marie Adelaide Leprosy Centre, Anjuman-e-Behbood-e-Samaat-e-Atfal, Association for Retarded Children, Darul Sakoon, IDA Rieu Poor Welfare Association, Behbood Association, Al-Shifa Clinic, Layton Rehmatullah Benevolent Trust and Ma Ayesha Centre.

FINANCIAL HIGHLIGTHS
                                         1992     1991
Sales Revenue (Rs. million)             1,875    1,544
Earnings Before Taxes (Rs. million)       415      393
Income Taxes (Rs.million                  175      166
Earnings After Taxes (Rs. million         240      227
Earnings per share (Rs./Share)           6.40    15.15
Dividend per share (Rs./Share)           2.00     4.50
Number of shares outstanding (000's)   37,440   14,976
Capital Expenditure (Rs. million)       1,264    1,223

Speaking on challenges ahead, Mr. Mirza said that "the Government approved eligibility of trucks under the Prime Minister's transport scheme. We hope this would encourage investment in additional trucks to facilitate movement of fertilizers. As an incentive to the farmers, the cabinet also approved an increase in the procurement price of wheat. Both these developments are very welcome and will help promote urea consumption."