Financial AnalysisSubmitted to: Sir Sohail SawaniPrepared by: Farhan AliMBA (EEM)-14008Founding daysThe construction of a urea plant started at Daharki in 1966 and production began in 1968. At US $43 million with an annual production capacity of 173,000 tons, it was the single largest foreign investment by a multinational corporation in Pakistan at the time. Esso to Exxon Limited

In 1978, it was decided to rename the company fromEsso Fertilizer Company LimitedtoExxon Chemical Pakistan Limited.

In 1991, Exxon decided to divest its fertilizer business on a global basis. The employees of Exxon Chemical Pakistan Limited, in partnership with leading international and local financial institutions, bought out Exxons 75% equity. This was at the time and perhaps still is the most successful employee buy-out in the corporate history of Pakistan. Renamed as Engro Chemical Pakistan Limited, the Company has gone from strength to strength, reflected in its consistent financial performance, growth of the core fertilizer business, and diversification into other businesses.IntroductionENGROS BUSINESSES

Engro Fertilizers Limited

Engro Foods Limited

Engro Eximp Private Limited

Engro Power Gen Limited

Engro Polymers and Chemicals Limited

Engro Vopak Limited

Elengy Terminal Pakistan LimitedENGRO FERTILIZERS LIMITED

Engro Fertilizers Limited is a secondary ofEngro Corporationand a well-known name in Pakistans fertilizer industry. It is traded on the stock market under the symbol EFERT. Engro holds a vast, nationwide production and marketing infrastructure and produces leading fertilizer brands optimized for local cultivation needs and demand. Engro is also a leading importer and seller of Phosphate products, which are marketed extensively across Pakistan as phospatic fertilizers.

Engro Fertilizers Limited was incorporated in June 2009, following a decision to demerge fertilizer concern from its parent company Engro Chemical Pakistan Limited. The continual expansions and diversifications in its enterprises necessitated a broad restructuring in Engro Chemical operations and management. To facilitate better oversight, Engro Chemical Pakistan was converted into a holding company named Engro Corporation, and its fertilizer business was subsequently demerged to a newly formed Engro subsidiary Engro Fertilizers Limited.

Engros fertilizer manufacturing facility at Daharki has been experiencing ongoing expansion. This, coupled with distinct dynamics of highly nuanced fertilizer industry warranted an independent and dedicated business entity and approach. The demerger of fertilizer concern was approved by High Court of Sind on December 9th, 2009, making it effective as of January 1st2010.20132013 COMMON SIZE2012 COMMON SIZE2011 COMMON SIZE2010 COMMON SIZEASSETNON CURRENT ASSETPROPERTY,PLANT AND EQUIPMENT79,315,21872.1515%82,877,70184.9962%86,322,16285.5802%84,370,22186.0451%INTANGIBLE ASSETS138,4640.1260%161,5550.1657%134,7690.1336%149,2380.1522%LONG TERM INVESTMENTS109,3490.0995%83,7630.0859%72,6510.0720%DEFERRED EMPLOYEE COMPENSATION EXPENSEDERIVATIVE FINANCIAL INSTRUMENTSLONG TERM LONAS AND ADVANCES625,8320.5693%395,1500.4053%1,410,5131.3984%111,5150.1137%CURRENT ASSETSSTORES,SPARES AND LOOSE TOOLS4,368,8633.9743%4,107,2914.2123%4,209,5934.1734%3,392,0803.4594%STOCK-IN-TRADE1,381,6651.2569%1,687,0721.7302%1,834,3931.8186%895,4570.9132%TRADE DEBTS758,2530.6898%1,046,0911.0728%143,3790.1421%352,9440.3600%DEFERRED EMPLOYEE COMPENSATION EXPENSE3,7020.0038%LOANS,ADVANCES,DEPOSIT AND REPAYMENTS2,609,3272.6611%OTHER RECEIVABLES28,1770.0256%63,6360.0653%192,1710.1905%107,6470.1098%DERIVATIVES FINANCIAL INVESTMENTS130,2070.1184%5450.0006%183,7130.1821%2,6380.0027%TAXES RECOVERABLE556,3140.5061%2,000,2492.0514%1,869,0581.8530%1,770,4761.8056%SHORT TERM INVESTMENTS18,058,05416.4270%2,635,3392.7027%3,901,7193.8682%2,452,2852.5010%CASH AND BANK BALANCES4,458,3914.0557%2,449,1682.5118%592,8730.5878%1,835,9511.8724%29,739,92427.0538%13,989,39114.3470%12,926,89912.8158%13,422,50713.6890%TOTAL109,928,787100.0000%97,507,560100.0000%100,866,994100.0000%98,053,481100.0000%BALANCE SHEET 2013201220112010COMMON SIZE COMMON SIZE COMMON SIZE COMMON SIZE ASSET PROPERTY,PLANT AND EQUIPMENT 72.15%85.00%85.58%86.05%INTANGIBLE ASSETS 0.13%0.17%0.13%0.15%LONG TERM INVESTMENTS 0.10%0.09%0.07% LONG TERM LONAS AND ADVANCES 0.57%0.41%1.40%0.11%STORES,SPARES AND LOOSE TOOLS 3.97%4.21%4.17%3.46%STOCK-IN-TRADE 1.26%1.73%1.82%0.91%TRADE DEBTS 0.69%1.07%0.14%0.36%OTHER RECEIVABLES 0.03%0.07%0.19%0.11%DERIVATIVES FINANCIAL INVESTMENTS 0.12%0.00%0.18%0.00%TAXES RECOVERABLE 0.51%2.05%1.85%1.81%SHORT TERM INVESTMENTS 16.43%2.70%3.87%2.50%CASH AND BANK BALANCES 4.06%2.51%0.59%1.87%TOTAL 100.00%100.00%100.00%100.00%FIXED ASSETS201379315218201282877701201186322162201084370221Notes: In 2013 ., Engro did not purchase any significant fixed asset ., decrease in value account for depreciation, The sane pattern has been witnessed in 2012 ., However Engro started New commercial Enven Plant in 2011 which resulted increased Fixed Assets in 2011

Engro Intangible Assets consist of Software & License , Rights for Future Gas Utilization

As mention in Annual Report The Company does not have any internally generated intangible assets.

Notes: Both intangible Assets have Amortized with regular methods , In 2012 Software & License value increased due to which Intangible Assets showed a upward movement in Figure A Notes: It is evident FROM Figure B That Engro heavily invest In Housing subsidy scheme in 2010 / More over Interest free loan were given to executive to some high value in 2013 therefore the total long term investment climb up in 20132013 : The firm did not acquire any In transit & Custody by Associated firm Raw material in 2013 ., thereby decrease the value of Raw material which eventually decrease the total value of Stock in Trade, The same behavior was noticed in 2010 Notes: In 2013 in the section of other receivables., the amount of insurance claims stand Nil as compared to 30455 in 2012 . It speaks the lower direction of curve in Figure A .Similarly the major factor of high value in 2011 as compared to other years is insurance claim .Notes : Trade debts consists of Secured and unsecured debts .2013 Engro Secured debts was reduced by 34 % as compared to 2012 which resulted in lower value in 2013

In 2012 Engro obtained Secured debts against bank guarantees with the extent of 1006181 as compared to 131759 in 2012 which thereby climb to higher level as compared to 2011 and 2010 In 2013 ,Engro buy reverse purchase of treasury bill @ 8.45 % ., It amounts to 16479103 ., which results in unusually large value of short term investment . In 2011 Engro in the same manner invest in short term investment @ 11.70 % and also the money market investment was also increased in 2011RECOMMENDATION:

After incorporating the Financial data analysis of Engro fertilizer, it is advisable for them to increased liquidity through reduced cost of capital rather indebting more which resulted in lower returns and profits

The repayment of liabilities is also not very attractive .The finance department has to made some arrangements and plans and contingency plans to repay even in worst market conditions

The proportion of unclaimed dividend is also stood very high which explained the non paying dividend policy of the firm , the same should be reduced to appropriate level

Overall Engro Fertilizer progresses in 2013 and the same might be experienced in future if the firm learned from the previous worst experiences and by adopting suitable policies,