INTRODUCTION
ENGRO is a public ltd co. having eighth position from income point of view in Pakistan. Moved from one high level of achievement to other establishing records year after year and is now ranked as a top tier player in the fertilizer industry with highest production capacity and market participation. ENGRO now owns two mega plants worth over 2 billion dollars in of replacement value.
According to Pakistan’s economic environment, 2001 and 2002 were not good years and business conditions were difficult because of the economic fall out of the recent regional crisis. Uncertain economic and weather conditions, high natural gas prices, global product oversupply, falling international urea prices and weak domestic demand contributed to an extremely difficult operation environment during the year which created a downward pressure on prices and margins.
These adverse factors are continuing since past few years and have created intense competition for the industry players; however, once again our diversification has paid dividends and strategies implemented over the years allowed the company to maintain solid financial foundation throughout this prolonged downturn.
Business Environment and Future Prospects
ENGRO CHEMICAL In1957 Search for oil by Pak Stanvac, an Esso/Mobil joint venture, led to the discovery of Mari gas field situated near Daharki -- a small town in upper Sindh province. Esso was the first to study this development in detail and propose the establishment of a urea plant in that area.
1964 The proposal was approved by the government, which led to a fertilizer plant agreement signed in December.
1965 The Esso Pakistan Fertilizer Company Limited was incorporated, with 75% of the shares owned by Esso and 25% by the general public of Pakistan. Soon, a land area of 500 acres was selected for the plant site at Daharki.1966 The construction of a urea plant was started with the annual capacity of 173,000 tons.
1968 The construction of a urea plant was completed and commissioned at a cost of US$ 43 million.
A full-fledged marketing organization was established and given the important task of effective marketing and commencing agronomic programs to educate the farmers of Pakistan.
As a result of these efforts not only the consumption of fertilizers greatly increased in Pakistan but also the company launched its own branded urea called "Engro", an acronym of "Energy for Growth".
1978 As part of an international name change program, Esso became Exxon and the company was renamed Exxon Chemical Pakistan Limited. The company continued to prosper as it relentlessly pursued productivity gains and strived to attain professional excellence.
1990 The plant capacity was debottlenecked in low cost steps to 268,000 tons.
1991 Exxon decided to sell its 75% shares of the company's equity.
The Company underwent an employee led buy-out the first in the corporate history of Pakistan, and the present share holders are the employees, an employee’s trust, local and foreign institutions including mutual funds and the general public.
1993 The Pakven Project was launched, to increase its capacity to more than double i.e. 600,000 tons. This also helped to relocate urea/ammonia plants from UK/USA, with an investment of US$ 130 million. Prime Minister of Pakistan inaugurates the expansion Company celebrates silver jubilee of its operation
1995 The plant capacity was further increased to 750,000 tons per annum with an investment of US$ 23 million. Engro entered into first 50/50 joint venture with Royal Vopak of Netherlands to form and built a fully-integrated state-of-the-art jetty and bulk liquid chemical and LPG storage facility at a cost of US$ 65 million.
1996 The company successfully engineered and implemented an expansion program that gave a major boost to the urea production and its capacity increased to 850,000 ton per annum.
1997 On October 10th, entered into its second 50/50 joint venture called Engro Asahi Polymer & Chemical Limited (EAPCL) Company in collaboration with Asahi Glass Company and Mitsubishi Corporation of Japan to build the first world scale PVC resin manufacturing facility at a cost of US$ 80 million.
1998 Another innovative and modernization project called “Energy Conservation and Expansion Strep” (ECES-850) was successfully implemented. The project was constructed at a cost of US$ 72 million and had increased Engro’s annual urea production capacity from 750,000 to 850,000 tons. On May 2nd, the Prime Minister of Pakistan Mian Muhammad Nawaz Sharif formally inaugurates Engro Vopak Terminal Limited (EVTL).
1999 On March 9, the Prime Minister of Pakistan Mian Muhammad Nawaz Sharif formally inaugurates the 850KT expansion project at Daharki urea plant.
Workshops of Daharki urea plant receive ISO 9002 certification.
2000 On February 9th, General Parvez Musharaf, the Chief Executive of Pakistan inaugurates Engro Asahi Polymer & Chemicals PVC resin manufacturing plant at Port Qasim
2001July 26th - Engro mourns the death of its Chairman Mr. Shaukat Raza Mirza.
2002 On August 9th, Engro’s NPK fertilizer plant at Port Qasim inaugurated by two Federal Ministers. View the press release.
On October 9th, Engro signs an MoU with Oman Oil Company to build an ammonia urea fertilizer complex in Oman. View the press release.
2003 April 28, Engro acquired controlling interest in the Automation & control Division of Innovative Private Ltd. (INET) www.innovative-pk.com/automation, a Lahore based Technology Company. The new company will be called Innovative Automation & Engineering (Private) Limited headquartered in Lahore. View the press release.
CORE BUSINESS
Engro is an agri based company. Our core business is manufacturing and marketing of chemical fertilizers. We are Pakistan’s one of the largest producers of urea fertilizer which is manufactured at Daharki and marketed under brand name Engro. We also produce crop specific NPK fertilizers at our plant at Port Qasim Karachi. Engro also markets imported MAP fertilizer under the brand name of Zorawar and imported DAP fertilizer.
Recognizing the importance of seeds as an essential agricultural input, Engro has also launched seed business and is marketing imported hybrid and open pollinated seeds of various crops and vegetables under brand name of Bemisal.
Urea Fertilizer is produced at the Manufacturing Division of Engro, located at Daharki about halfway between Karachi and Lahore. The national railway line and the highway run adjacent to the plant. The facilities occupy over 500 acres and are linked via pipelines to the neighboring Mari field for supply of natural gas.
The site prior to construction was a barren stretch with sand dunes and small shrubs. With the passage of years the place has been transformed into an oasis that is humming with activity.
The Company's original plant was commissioned on December 4, 1968, and since then, except for short maintenance shutdowns, the plant has been in continuous operation. As a result of relentless efforts of the operating staff,
technology support from Exxon, and local innovation, the initial capacity of the plant was de bottlenecked from 173,000 to 268,000 tons per annum.
In 1993, Engro relocated ammonia and a urea plant from USA and UK respectively and increased its capacity to 600,000 tons per year. In 1995, the capacity was further expanded to 750,000 tons per year. In 1998 another innovative and modernization project called the Energy Conservation and
Expansion Step (ECES-850) was successfully implemented. The project was constructed at a cost of US $72million and has increased Engro's annual urea
Production capacity from 750,000 to 850,000 tons. The project, upon implementation, delivered an efficiency improvement of 7% subsequent to which another project by the name of Energy Conservation (ENCON) was initiated in January 2001 to further improve the gas efficiency index by another 5%. Both the projects are the milestones of in-house engineering and innovation of Engro’s own team of valuable engineering resources.
RATIO ANALYSIS
For the analysis of the financial statements of the Engro chemicals limited. Company private limited we use the ratio analysis in order to get a clear vision about the financial position with simple interpretation. For this purpose, we can analysis the financial statements through the followings ratios:
1. LIQUIDITY RATIOS
2. DEBT RATIOS
3. ACTIVITY RATIOS
4. MARKETABILITY RATIONS
5. PROFITABILITY RATIOS
ANALYZING LIQUIDITY
The liquidity of a business firm is measured by its ability to satisfy its short-term obligations as they came due. Liquidity refers to the solvency of the firm’s overall financial position__ the ease with which it can pay its bills. Basic measures of liquidity are:
1. Net working capital
2. current ratio
3. quick ratio
4. Cash ratio
5. CFO ratio
6. working capital turnover
7. Operating cash flow per share.
Net Working Capital
Net working capital, although not actually a ratio, is commonly used to measure a firm’s overall liquidity. This requirement is intended to force the firm to maintain sufficient operating liquidity and helps to protect the creditor. Engro chemicals show a sufficient amount of working capital in all the years of its performance. It has increased from 751668 in the year 2001 to 823210 in the year 2002 and in the year 1998 it was 468595. That is a good sign but more positive net working capital shows the more investment in current assets of the company, which are less productive ones.
Current Ratio
A current ratio of 2.0 is occasionally cited as acceptable, but a value’s acceptability depends on the industry in which the firm operates. A current ratio of 1.0 would be considered acceptable for a utility but might be unacceptable for a manufacturing firm. The more predictable a firm’s cash flows, the lower the acceptable current ratio. Current ratio of the company has been successfully stable and it is 1.18 times in the year 2002 and is almost the same in previous year
Quick Ratio
The quick ratio is similar to the current ratio except that it excludes inventory, which is generally the least liquid current asset. Quick ratio is an extended version of current ratio in which only very quick assets (which can be quickly liquidated)
are considered. A rule of thumb is that figure of 1.00 or more is good and indicates a good financial position of the company. The company has its quick ratio 0.88
times in the year 2002 and it is almost the same in 2001 because it was .92 times and that shows a good result.
CASH RATIO
Cash ration of the company has increased great to 15.10% in the year 2002 from 7.55% in the year 2001.This shows that excessive cash amount has been kept in hand and it is not being utilized in some productive purposes. Therefore, the profit of the company has decreased. Though it shows liquidity of the firm as good sign but this ration should not be too much.
CF RATIO
Cash flow ratio compares the cash generated from the operations with the current maturities of long term debt. Cash flow ratio of the company is very good and it is 6.89 times in the year 2002 against 6.70 times in the year 2001. This shows that our cash flow from operations is 6.70 times greater than our current maturities of long term debt.
WORKING CAPITALRATIO
Working capital Turnover shows adequacy of the working capital as compared to sales .Working capital turnover ratio of the company has been very high though it shows profitable use of working capital but this ratio
Must not be too high because it shows excessive stock of working capital which reduces profits in response.
OPERATING CASH FLOW PER SHARE
Operating cash flow per share measure the amount of cash received from the operations against each share. Firm is receiving cash flow from operations against
per share 13 in the year 2002 This is more than the previous years cash flow This shows good liquidity position of the firm.
DECISION
The short-term liquidity position of the firm is very healthy because of the following points:
1. Current ratio of the firm is 1.18 times which shows that the firm has more current assets as compared to the current liabilities.
2. Net Working capital of the firm is positive
3. Quick ratio of the company is .88 times which is also good.
4. Cash ratio of the company is also very good which 15.10% of total assets are.
5. CFO Ratio is also 6.89 times which is very good.
ANALYZING ACTIVITY
Activity ratios are used to measure the speed with which various accounts are converted into sales or cash. With regard to current accounts, measures of liquidity are generally inadequate Basic measures of activity are:
1. Inventory turnovers
2. Fixed assets turnover
3. Total asset turnover
4. Average age of inventory
5. Average collection period
6. Accounts receivable turnover
7. Operating cycle
8. Account payable turnover
9. Average payment period.
Inventory Turnover
Inventory turnover commonly measure the activity, or liquidity, of a firm’s inventory. An inventory turnover of 20.0 would not be unusual for a grocery store, whereas a common inventory turnover for a manufacturer would be 4.0. Inventory turnover of the company is 5.36 times in the year 2002 and almost the same in year 2001 of 5.40 times this shows good inventory turnover and efficient management of inventory.
Total Assets Turnover
Total assets turnover indicates the efficiency with which the firm uses all its assets to generate sales. Generally, the higher a firm’s total asset turnover, the more efficiently its assets have been used. This measure is probably of greatest interest to management, because it indicates whether the firm’s operations have been financially efficient. Engro chemical turns its asset over in 2002 by .76 times and it was .66 times in the year 2001 This shows that t he total assets turnover has been very low. Thus it shows inefficiency of the management of the firm to use assets to generate revenues.
NET FIXED ASSETS TURNOVER
Net fixed assets turnover of the company is 1.51 times in the year 2002 which has increased as compared to the last year’ s turnover of 1.2 times. This is a good sign for the company
GROSS FIXED ASSETS TURNOVER
A gross fixed asset turnover of the company is 1.08 times has improved in year 2002, which is a good sign for the company.
RETURN ON TOTAL ASSETS
Return on Total asset of the company has decreased to 7.93% in the year 2002 from 8.56% in the year 2001 and 13.67% in the year 1998. It is low and shows inefficiency of the company management to generate profit on the total assets.
AVERAGE AGE OF INVENTORY
Average age of inventory tells that for how many days on average the inventory is held .The greater the number of days, the inefficient will be the management. Average age of inventory of the company has reduced to 67 days in the year 2002 against 73 days in the year 1998. This shows inventory is kept for less number of days as compared to the last year.
AVERAGE COLLECTION PERIOD
Average collection period indicates that how many days are required to collect amount from the trade debts. The earlier the cash is received from the
Debtors; the better will be for the company. Average collection period of the company has increased to 17 days in the year 2002 from the year 1998 figure of 9 days this shows inefficiency in the collection of Accounts receivable.
ACCOUNTS RECEIVABLE TURNOVER
Account receivable turnover indicates that how many times accounts receivable is converted into cash a high turnover indicates the efficiency of the management. Accounts receivable turnover has decreased to 20.70 times in 2002 from 41.05times in the year 1998.This is not a good sign fro the company.
OPERATION CYCLE
Operating cycle of any company shows the number of days lapsed from the acquisition of raw material till the receipt of cash from the sale of finished goods. Operating cycle of the company is 84 days and is almost the same in
all the years of the company except in the year 2000 in which it was 74 days. This is a good sign for the company.
ACCUOUTS PAYABLE TURNOVER
Accounts payable turnover indicates that how many times accounts payable converted into cash payments. It should be maximum one. Accounts payable has Decreased to 19 times in 2002 from 36 times in 2001 that is a good sign for the company.
AVERAGE PAYMENT PERIOD
Average payment period indicates that after how many days the payment to creditors is made. This time period should be maximum one. Average payment period of the company has increased to 20 days from 10 days in 2001. This is good sign for the company.
DECISION
Activity ratio shows that the management of the firm is quite active in utilizing its assets to generate sales for the business. Thus, we can say that
Operating efficiency of the business is very good due to the following reasons:
1. Inventory turnover of the company is good
2. Average age of inventory of the company is also acceptable
3. Average collection period of the company has decreased
4. Accounts receivable turnover of the company has been excellent
5. Average payment of the company is has increased
ANALYZING DEBT
The debt position of a firm indicates the amount of other people’s money being used in attempting to generate profits. In general, the financial analyst is most concerned with long-term benefits, because these commit the firm to paying interest over the long rum as well as eventually repaying the principally borrowed. Because the creditors claims must be satisfied before, the distribution of earnings to share holders. Basic measures of debt are:
1. Debt ratio
2. Debt-equity ratio
3. Long term to SHE
4. Interest coverage ratio
5. Fixed assets to long term debts
6. Operating cash flow/total debts
Debt Ratio
The debt ratio measures the proportion of total assets financed by the firm’s creditors. The higher this ratio, the greater the amount of other people’s money being used in an attempt to generate profits. Engro’s debt ratio has Increased to 62.68% in the year 2002 from 57.82% in the year 2001 this shows that the company has increased its dependence on the outsider’s
sources of finances. This ratio is slightly high than the acceptable limit of 60%.
Debt Equity Ratio
The debt-equity ratio indicates the relationship between the long-term funds provided by creditors and those provided by the firm’s owners. It is commonly used to measure the degree of financial leverage of the firm. Engro’s debt
equity ratio is 167.97% in the year 2002 and has increased significantly from 137% in the year 2001. This shows that debts are more as compared to shareholders equity. Therefore, this shows risk for the investors.
LONG TERM DEBT/SHARE HOLDER’S EQUITY
Long term debt to share holders equity of the firm is 82% in the year 2002 and has increased from 75% in the year 2001.This shows that firm has increased its long term debt . Consequentially the risk of the investor has increased
INTEREST COVERAGE RATIO
Interest coverage ration tells that how many times the firm is able to pay its financial charges out of its profit .A high ratio is desirable. This ratio for the company is 4.17 times in the year 2002 and has increased from 2.84 times in the year 2001. This shows good sign for the company.
FIXED ASSETS TO LONG TERM DEBT
Fixed assets of the firm is almost 2 times its long term debts in the year 2002 .This is a good indicator for the firm and it is almost the same as it was previous year
OPERATING CASH FLOW/TOTAL DEBTS
Operating cash floe of the company is 20% of the amount of total debts of the company. This shows good sign for the firm. This ratio has increased as compared to the ration of 15.52% in the year 1998.
DECISION
Long-term solvency of the company is also very good because their profitability ratios are very high and the firm is using debts. Interest coverage of the company is also very good .and fixed assets to net worth is 1.67 times.
ANALYZING PROFITABILITY
There are many measures of profitability. Each related the return of the firm to its sales, assets, equity, or share value. As a group, these measures allow the analyst to evaluate the firm’s earnings with respect to a given level of sales a certain level of assets, the owners’ investment, or share value. With out profit, a firm could not attract outside capital. Basic measures of profitability are:
1. Gross profit margin
2. Operating profit margin
3. Net profit margin
4. Return on shareholders investment
5. Return on total assets
6. Earning per share
Gross Profit Margin
The gross profit margin measures the percentage of each sales dollar remaining after the firm has paid for its goods. The higher the gross profit margin, the better and the lower the relative cost of merchandise sold. Gross profit margin of the company has almost remained the same in all the five years at a constant t level due to the overall crisis of the industry in terms of profit It is 32.58% in the year2002 which is good This decrease is due to increased cost of goods sold.
Operating Profit Margin
The operating profit margin measures the percentage of each sales dollar remaining after all costs and expenses other than interest and taxes are deducted. It represents the pure profits earned on each sales dollar. A high
operating profit margin is preferred. Operating profit margin of the company has been stable rather decreased to some extent as compared to the year 1998. It is 22.04%, which is a good sign for the company. This has increased due to increased selling and administrative expenses.
Net Profit Margin
The net profit margin measures the percentage of each sales dollar remaining after all costs and expenses, including interest and taxes, have been deducted. The higher the firm’s net profit margin, the better. The net profit margin is commonly cited measure of the firm’s success with respect to earnings. Net profit margin of the company has decreased to 10.40% in the year 2002 against 12.94% in the year 2001 and 17.79% in year 1998. Though it has decreased, yet it is acceptable and equal to industry average. This has just reduced due to the industry crisis.
Return On shareholders Investment
Return on shareholders investment (ROI) measures the overall effectiveness of management in generating profits with its available assets. The higher the firm’s return on investment, the better. ROI has been excellent and stable. For the year 2002, it is 21.26%, which is exceptionally ill. Therefore, it is a
good sign for the company. In addition, 2000 is respectively 10.6% and 15.70%.
Earning Per Share
The firm’s earnings per share (EPS) are generally of interest to present or prospective stockholders and management. The earnings per share represent the number of dollars earned on behalf of each outstanding share of common stock. They are closely watched by the investing public and considered am important indicator of corporate success. Earning per share of the company has increased to 8.15 per share in the year 2002 against 7.65 per share in the year 2001 but due industry crisis it has decreased significantly from 14.77 per share in 1998 yet it is acceptable.
DECISION
Profitability position of the firm is very good though it has decreased yet it is very good due to the following points:
Gross profit of the company is very good which is 32.59%
Operating profit of the company is also good which is 22.04%
Net profit, Return on investment, Return on total assets, all are very good and are 10.40%, 21.26%,7.93% respectively .
EQUITY INVESTOR ANALYSIS
Equity investor is more interested in the dividends of the company. It is also concerned about the profitability positing of the firm. For the purpose of equity investor, we calculated the following ratios:
1. Dividend per share
2. Dividend payout ratio
3. Dividend yield ratio
4. Book value per share
5. Price earning ratio
6. Cash flow from operations/cash dividend
7. %age of earnings retained
8. Degree of financial leverage
DIVIDEND PER SHARE
Dividend per share of the campy of the company is 7.5 per share in the year 2002 and it was same in the year 2001 .Company has reduced its dividend to a little bit extent because it was 8 per share in 1998. Dividend per share of 7.5 is ideally good.
DIVIDEND PAYOUT RATIO
Company is giving maximum dividend to its shareholders. This ratio has increased to 92.02% in the year 1998 So first the company policy was to retain the earnings for ploughing back purpose but now it is giving dividend that is a good thing for the equity y investor because he is interested in dividend.
DIVIDEND YIELD RATIO
Dividend yield ratio the company is 9.15% in the year 2002.For those investors who want to earn current profit, for them this ratio is good but for those investors who want to earn capital gain low dividend yield ratio is acceptable.
PERCENTAGE OF EARNING RETAINED
Company‘s %age of earnings retained are just 2% and 7.98 % in both the current years of 2001 and 2002 respectively. This shows more attractiveness for the equity investor.
OPERATING CASH FLOW/CASH DIVIDEND
Operating cash flow to cash dividend compares operations cash flow to cash dividend paid by the firm. A high ratio is desirable .The company is generating sufficient cash from its operations to declare cash divided This ratio has improved to 1.79 times in the year 2002 against the last year figure of 1.45 times.
PRICE EARNING RATIO
The stocks of the company are being traded 10.06 times its earnings. This shows investor’s confidence on the firm’s ability to generate earnings and growth opportunities for the firm. Price earning ratio of 10.06 times shows
that to earn one rupee the investor is willing to invest 10.06 rupees in business.
DEGREE OF FINANCIAL LEVERAGE
Degree of financial leverage is defined as the percentage change in EBIT over percentage change in EBT .This leverage results from the presence of fixed cost within the expenses of the firm .Degree of financial leverage of the firm is 1.31 times and it has decreased from 1.54 times in year 2001.This shows that if EBIT increase by 100% EBT will increased by 131%.
BOOK VALUE PER SHARE
Book value per share is good one if it is below the market price of its shares. Book value per share of the company is 38, which show investor’s confidence on the firm’s ability to generate profits.
DECISION
From the point of view of equity investor, the firm is very much attractive because of the following points:
Dividend per share of the company is 7.5 per share which is very much attractive for the investorDividend payout ratio of the company is also very high i.e. 92.02% of the earning per share
Earring per share of the company is also very high whichsi8.15 per share.
Operating cash flow /cash dividend of the firm is 1.79 times of the cash
Dividend.
CONCLUSION
From our analysis we might conclude that the liquidity positions of the firm is good, operating performance is also well as compared to the past years, the firm is being operated in a good manner, But from the last year the firm has obtained loans from the outside sources. As the firm is a levered firm, so this debt will increase the profits of the firm very much.
SHORT TERM ANALYSIS RATIOS
2002 | 2001 | 2000 | 1999 | 1998 | |
| NET WORKING CAPITAL | 823210 | 751668 | 659375 | 255705 | 468595 |
| CURRENT RATIO | 1.1795 | 1.2307 | 1.2695 | 1.1005 | 1.2013 |
| QUICK RATIO | 0.8810 | 0.9192 | 0.8734 | 0.7125 | 0.7529 |
| CASH RATIO | 20.34% | 13.15% | 4.39% | 5.10% | 6.50% |
| CFO RATIO | 6.8918 | 6.7048 | 4.1927 | 5.4257 | 2.6155 |
| INVENTORY TURNOVER | 5.3644 | 5.3975 | 5.6341 | 5.3321 | 4.9245 |
| AVG. AGE OF INVENTORY | 67.1090 | 66.6975 | 63.8969 | 67.5156 | 73.1042 |
| AVG. COLLECTION PERIOD | 17.3872 | 18.5710 | 10.0078 | 9.8307 | 8.7704 |
| ACCOUNT REC. TURNOVER | 20.7049 | 19.3851 | 35.9720 | 36.6200 | 41.0473 |
| OPERATING CYCLE | 84.4962 | 85.2684 | 73.9047 | 77.3463 | 81.8746 |
| WORKING CAPITAL TURNOVER | 13.2327 | 10.9359 | 12.7301 | 33.7434 | 17.8524 |
PROFITABILITY RATIOS
2002 | 2001 | 2000 | 1999 | 1998 | |
| GROSS PROFIT MARGIN | 32.590% | 33.357% | 34.953% | 38.992% | 38.565% |
| OPERATING PROFIT MARGIN | 22.043% | 22.348% | 23.391% | 23.368% | 26.438% |
| NET PROFIT MARGIN | 10.402% | 12.945% | 13.418% | 12.141% | 17.790% |
| CAPITAL TURNOVER RATIO | |||||
| RETURN ON TOTAL ASSETS | 7.93% | 8.56% | 9.74% | 9.45% | 13.67% |
| RETURN ON SH INVESTMENT | 21.26% | 20.31% | 21.58% | 21.21% | 32.24% |
| OPER. CASH FLOW/ SHARE | 12.6346 | 9.5190 | 13.5165 | 17.0151 | 9.6561 |
EQUITY INVESTER ANALYSIS RATIOS
2002 | 2001 | 2000 | 1999 | 1998 | |
| DIVIDENT PAYOUT RATIO | 92.02% | 98.00% | 75.14% | 66.67% | 54.16% |
| %of EARNING RETAINED 45.84 % | 7.98% | 2.00% | 24.86% | 33.33% | |
| DIVIDEND PER SHARE | 7.5000 | 7.5000 | 7.0000 | 5.7767 | 8.0000 |
| DIVIDEND YIELD RATIO (MAX.) | 9.15% | 9.15% | 8.54% | 7.04% | 9.76% |
| DIVIDEND YIELD RATIO(MIN.) | 9.62% | 9.62% | 8.97% | 7.41% | 10.26% |
| DIVIDEND YIELD RATIO(AVG.) | 9.38% | 9.38% | 8.75% | 7.22% | 10.00% |
| BOOK VALUE PER SHARE | 38.3373 | 37.6872 | 43.1642 | 40.8480 | 45.8199 |
| EARNING PER SHARE | 8.1501 | 7.6531 | 9.3161 | 8.6648 | 14.7711 |
| DEGREE OF FIN. LEVERAGE | 1.3081 | 1.5421 | 1.4545 | 1.5027 | 1.2239 |
| OPER. CASH FLOW/CASH DIV | 1.7868 | 1.4544 | 2.1779 | 2.0611 | 1.6022 |
| PRICE/EARNING RATIO(MAX.) | $10.0612 | $10.7146 | $8.8020 | $9.4636 | $5.5514 |
| PRICE/EARNING RATIO(MIN.) | $9.5704 | $10.1919 | $8.3726 | $9.0020 | $5.2806 |
| PRICE/EARNING RATIO(AVG.) | 9.8158 | 10.4533 | 8.5873 | 9.2328 | 5.4160 |
LONG TERM ANALYSIS RATIOS
2002 | 2001 | 2000 | 1999 | 1998 | |
| DEBT RATIO | 62.6828% | 57.8235% | 54.8670% | 55.4538% | 57.5831% |
| DEBT EQUITY RATIO | 167.973% | 137.099% | 121.567% | 124.486% | 135.755% |
| LONG TERM DEBT TO SHE | 81.953% | 74.907% | 74.687% | 72.973% | 85.337% |
| INTEREST COVERAGE RATIO 5.4663 | 4.1724 | 2.8446 | 2.8724 | 2.9894 | |
| FIXED ASSETS TO NG | 1.3498 | 1.3095 | 1.3220 | 1.3707 | 1.4872 |
| FIXED ASSETS TO LTD | 1.6470 | 1.7482 | 1.7701 | 1.8783 | 1.7427 |
| OCF/TOTAL DEBT | 19.62% | 18.42% | 25.76% | 33.46% | 15.52% |
| KEY FIGURES AND HIGHLIGHTS | |||
2002 | 2001 | ||
| Sales Revenue | Rs. Million | 10,893 | 8,220 |
| Earnings after Tax | Rs. Million | 1,133 | 1,064 |
| No. of Shares Outstanding | (000 s) | 139,036 | 139,036 |
| Earnings per share-Basic and diluted | Rs. | 8.15 | 7.65 |
| Dividend | Rs./share | 7.50 | 7.50 |
| Return on Capital Employed | (%) | 18 | 19 |
| Current Ratio | 1.18 | 1.23 | |
| Debt: Equity Ratio | 38:62 | 36:64 | |
| Capital Expenditure | Rs. Million | 823 | 435 |
| Market Capitalization (yr. end) | Rs. Million | 12,798 | 7,195 |
| Market Capitalization (yr. end) | US$ Million | 219 | 119 |
| Price to Earnings Ratio | 8.14 | 7.47 | |
| Net Assets Per Share | Rs. | 38.30 | 37.7 |
PERFORMANCE
Record Urea sale of 847,000 tons surpassing the previous best of 807,000 tons achieved in 1999
Record all fertilizer sale of 1,221,000 tons surpassing the previous best of 1,070,000 tons achieved in 1999
Best ever gas efficiency per unit of Urea production improving the previous best utilization by 4%
Improvement in the physical characteristics of Engro Urea which has been appreciated by customers
Signed an MOU to develop a world scale Urea Plant in Oman
Smooth operations of both joint ventures. Engro Vopak paid 40% dividend and Engro Asahi became profitable
Maintained distinction of being the most frequent winner of the TOP 25 companies award of the Karachi Stock Exchange
Winner of the Best Presented Accounts amongst all listed Companies of Pakistan
ENGRO CHEMICALS
BALANCE SHEET
AS ON DEC 31ST 1998 TO 2002
HORIZONTAL ANALYSIS
2002 | 2001 | 2000 | 1999 | 1998 | |
| OPERATING FIXED ASSETS | 101.15% | 99.02% | 95.76% | 100.61% | 100.00% |
| CAPITAL WORK IN PROCESS | 217.17% | 128.52% | 246.66% | 36.58% | 100.00% |
| TOTAL TANGIBLE FIXED ASSETS | 104.79% | 99.94% | 100.49% | 98.60% | 100.00% |
| GOODWILL | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% |
| LONG TERM INVESTMENT | 114.19% | 114.19% | 114.31% | 114.31% | 100.00% |
| L T Dep.PREPAY. &DEF. COST | 264.83% | 197.93% | 216.79% | 31.92% | 100.00% |
| L T ADVANCES & LOANS | 592.34% | 838.97% | 832.10% | 918.50% | 100.00% |
| TOTAL FIXED ASSETS | 109.74% | 104.03% | 104.57% | 102.47% | 100.00% |
| CURRENT ASSETS | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% |
| STORES AND SPARES | 99.39% | 98.10% | 99.81% | 106.92% | 100.00% |
| STOCK IN TRADE | 174.39% | 96.09% | 83.40% | 77.83% | 100.00% |
| TRADE DEBTS | 258.15% | 208.07% | 114.50% | 115.61% | 100.00% |
| LOAN & ADV. , DEP. PREPA. & REC. | 64.73% | 46.70% | 37.07% | 33.94% | |
| OTHER REC. | 87.66% | 257.20% | 181.96% | 102.82% | 100.00% |
| C PORTION OF F EX. RISK(IC) | 304.98% | 132.57% | 71.85% | 80.04% | 100.00% |
| TAXATION | 193.42% | 143.43% | 111.08% | 100.13% | 100.00% |
| SHORT TERM INVT. | 131.24% | 114.15% | 106.24% | 101.87% | 100.00% |
| CASH AND BANK BALANCES | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% |
| TOTAL CURRENT ASSETS | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% |
| TOTAL ASSETS | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% |
2002 | 2001 | 2000 | 1999 | 1998 | |
| AUTHORISED CAPITAL | |||||
| ISS. SUB. & PAID UP CAPITAL | 9.73% | 11.19% | 10.46% | 10.91% | |
| CAPITAL RESERVES | 0.97% | 0.00% | 1.57% | 0.00% | 33.13% |
| REVENUE RESERVE | 26.56% | 30.94% | 33.07% | 33.59% | 0.00% |
| TOTAL STOCK HOLDER EQUITY | 37.32% | 42.18% | 45.13% | 44.55% | |
| LONG TERM LIABILITIES | |||||
| REDEEMABLE CAPITAL | 19.72% | 19.83% | 20.11% | 15.88% | 17.78% |
| LONG TERM LOANS | 3.54% | 4.26% | 6.45% | 10.35% | 14.10% |
| DEFERRED TAXATION | 6.03% | 6.25% | 6.08% | 5.41% | 3.70% |
| TOTAL LONG TERM LIABILITIES | 30.58% | 31.59% | 33.71% | 32.51% | 36.20% |
| CURRENT LIABILITIES | |||||
| CURRENT MATURITIES OF REDEEMABLE CAPITAL | 4.38% | 2.75% | 1.82% | 3.67% | |
| CURRENT MATURITIES OF LONG TERM LOANS | 1.78% | 1.59% | 3.37% | 3.42% | 3.42% |
| SHORT TERM RUNNING FINANCE | 7.85% | 4.69% | 0.76% | 4.05% | 3.93% |
| CREDITORS, ACCRUED AND OTHER LIABILITIES | 14.67% | 13.29% | 12.08% | 9.63% | |
| TAXTION | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% |
| DIVIDEND PAYABLE | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% |
| PROPOSED DIVIDEND | 3.41% | 3.92% | 3.14% | 2.18% | 2.78% |
| TOTAL CURRENT LIABILITIES | 32.10% | 26.23% | 21.16% | 22.95% | 21.39% |
| CONTINGENCIES & COMMITMENTS | 0.00% | 0.00% | 0.00% | 0.00% | |
| TOTAL LIABILITIES & STOCKHOLDERS EQUITY | 100.00% | 100.00% | 100.00% | 100.00% | |
ENGRO CHEMICALS
PROFIT & LOSS ACCOUNT
AS ON DEC. 31 ST 1998 TO 2002
2002 | 2001 | 2000 | 1999 | 1998 | |
| SALES | 10893319 | 10893319 | 8220158 | 8393880 | 8628367 |
| COST OF GOODS SOLD | 7343132 | 7343132 | 5478193 | 5460001 | 5264029 |
| GROSS PROFIT/LOSS | 3550187 | 3550187 | 2741965 | 2933879 | 3364338 |
| SELLING & DIST. EXP. | 1233089 | 1233089 | 1005997 | 1090150 | 1384220 |
| OPERATING PROFIT/LOSS | 2317098 | 2317098 | 1735968 | 1843729 | 1980118 |
| OTHER INCOME / LOSS | 231398 | 231398 | 198588 | 218886 | 142115 |
| OTHER CHARGES | 147261 | 147261 | 97500 | 99233 | 105922 |
| EBIT | 2401235 | 2401235 | 1837056 | 1963382 | 2016311 |
| FINANCIAL CHARGES | 575510 | 575510 | 645795 | 683525 | 674490 |
| EBT | 1825725 | 1835725 | 1191261 | 1349857 | 1341821 |
| PROVISION FOR TAXATION | 702562 | 702562 | 127201 | 223528 | 294239 |
| EAT | 1123163 | 1133163 | 1064060 | 1126329 | 1047582 |
| EARNING /LOSS PER SHARE | 8.15 | 8.15 | 7.65 | 9.32 | 8.66 |
HORIZONTAL ANALYSIS
PROFIT & LOSS A/C 1998 TO 2002
| ENGRO CHEMICALS --- P/A/C HORIZONTAL ANALYSIS FOR (2002-1998) (BASE 1998) | |||||
2002 | 2001 | 2000 | 1999 | 1998 | |
| SALES | 126.25% | 126.25% | 95.27% | 97.28% | 100.00% |
| COST OF GOODS SOLD | 139.50% | 139.50% | 104.07% | 103.72% | 100.00% |
| GROSS PROFIT/LOSS | 105.52% | 105.52% | 81.50% | 87.21% | 100.00% |
| SELLING & DIST. EXP. | 89.08% | 89.08% | 72.68% | 78.76% | 100.00% |
| OPERATING PROFIT/LOSS | 117.02% | 117.02% | 87.67% | 93.11% | 100.00% |
| OTHER INCOME / LOSS | 162.82% | 162.82% | 139.74% | 154.02% | 100.00% |
| OTHER CHARGES | 139.03% | 139.03% | 92.05% | 93.68% | 100.00% |
| EBIT | 119.09% | 119.09% | 91.11% | 97.37% | 100.00% |
| FINANCIAL CHARGES | 85.33% | 85.33% | 95.75% | 101.34% | 100.00% |
| EBT | 136.06% | 136.81% | 88.78% | 100.60% | 100.00% |
| PROVISION FOR TAXATION | 238.77% | 238.77% | 43.23% | 75.97% | 100.00% |
| EAT | 107.21% | 108.17% | 101.57% | 107.52% | 100.00% |
VERTICLA ANALYSIS
(PROFIT & LOSS A/C)
| ENGRO CHEMICALS --- B/S (L & SHE) INDEX ANALYSIS FOR (2002-1998) (BASE 1998) | |||||
2002 | 2001 | 2000 | 1999 | 1998 | |
| SALES | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% |
| COST OF GOODS SOLD | 67.41% | 67.41% | 66.64% | 65.05% | 61.01% |
| GROSS PROFIT/LOSS | 32.59% | 32.59% | 33.36% | 34.95% | 38.99% |
| SELLING & DIST. EXP. | 11.32% | 11.32% | 12.24% | 12.99% | 16.04% |
| OPERATING PROFIT/LOSS | 21.27% | 21.27% | 21.12% | 21.97% | 22.95% |
| OTHER INCOME / LOSS | 2.12% | 2.12% | 2.42% | 2.61% | 1.65% |
| OTHER CHARGES | 1.35% | 1.35% | 1.19% | 1.18% | 1.23% |
| EBIT | 22.04% | 22.04% | 22.35% | 23.39% | 23.37% |
| FINANCIAL CHARGES | 5.28% | 5.28% | 7.86% | 8.14% | 7.82% |
| EBT | 16.76% | 16.85% | 14.49% | 16.08% | 15.55% |
| PROVISION FOR TAXATION | 6.45% | 6.45% | 1.55% | 2.66% | 3.41% |
| EAT | 10.31% | 10.40% | 12.94% | 13.42% | 12.14% |
