ENGRO FERTILIZER LIMITED

OFFER FOR SALE OF SHARES

56,250,000 Shares agreed to be privately placed (Through Book Building) @Rs.28.25 /share.
18,750,000 Ordinary Shares to GENERAL PUBLIC @ Rs.28.25/share
(Date of Public subscription from

16th December to 17th December 2013)

COMPANY OVERVIEW Engro Fertilizer Limited is a wholly owned subsidiary of Engro Corporation and a renowned name in Pakistans fertilizer industry. Engro Fertilizer was incorporated in Jun 2009, following a decision to demerge fertilizer concern from its parent company Engro Chemical Pakistan Ltd. Engro Fertilizer is poised to become the leading urea manufacturer in the country following major upgrading of its manufacturing capabilities. ENVEN tremendous expansion in Engros urea manufacturing facility went into production in November 2010 and looks set to end Pakistans urea imports, leading to benefits of an expanded local urea base and savings in national exchequer. Engro fertilizer Limited is a leading name in the countrys urea producers. It is primarily in business of manufacturing & marketing of urea and NPK (compound) fertilizers. With the establishment of 1.3MT (million tone) state of the art fertilizer complex in 2011, the companys annual urea production capacity stands at 2.3MT representing 33% of that of entire Pakistan. Engro Fertilizer product line comprises of Engro Urea & NPK-compound fertilizer- as Zarkhez

Plant 1(Base Plant) Plant 2( Enven) Total Urea Production Zarkhez

Location Daharki Daharki Port Qasim

Product Urea Urea NPK

Annual Capacity (MT) 975,000 1,300,000 2,275,000 150,000

The company has two plants BASE (Old Plant) & Enven Plant with a capcity of producing 2.27mn tons of urea. Both of the plants are located in Sindh. About The Sponsors Engro Fertilizer is a 100% owned subsidiary of ENGRO. The principal activity of the holding company is to manage investments in subsidiary companies and joint venture, engaged in fertilizers, PVC resin manufacturing and marketing, foods, energy, LNG and chemical terminal & storage business.
T.O

PURPOSE OF LISTING Funds rising through the IPO will the partially utilized to fund development CAPEX on securing additional gas along with restructuring of the balance sheet to optimize the capital structure of the company. DEBT RESTRUCTURING APPROVED Engro Fertilizer total debt of Rs.64bn in Sep2013 is better than Rs.72bn in Dec2011. In recent debt restructuring, senior loans tenor has been extended by another 2.5 years with a new covenant restricting to pay dividend until 33%(Rs17bn) of outstanding loans as at Jun 30,2012 have been paid off. Natural Gas Supply Outlook Natural gas is the primary raw material involved in fertilizer (urea) manufacturing and it has remained the number one challenge for domestic sector, specifically for SNGPL based plants in the recent past. So Engros plant not gets enough natural gas from SNGPL. Fertilizer manufacturers operating on MARI network are immune to the gas shortage because their fields are fertilizer specific. Since the commencement of New Plant (Enven) in 2011, the company faced severe gas shortage being on SNGPL network. The situation has eased significantly in CY13 for Engro. Conversion of natural gas usage from base plant (Old Plant) to Enven (New Plant) resulted in efficient production and in a decisive move by the government; 60mmcfd was allocated to Engro from Guddu power Plant in late July 2013 with the additional supply, Gas from Mari was diverted to Engro in April 2013 .This has allowed Engro to operate both plants at close to 80% capacity depicted in improvement production and sales figures. COMPANY FFC ENGRO (OLD) ENGRO (ENVEN) FFBL FATIMA PAK-ARAB AGRITECH DAWH Location
Goth Macchi,Punjab & Ghotki, Sindh Ghotki, Sindh Ghotki, Sindh Bin Qasim, Sindh Rahimyar Khan,Punjab Multan, Punjab Mianwali & Haripur Sheikhupura,Punjab Urea Capacity/Production Gas Supplier MARI Guddu(Mari) Mari (Diversion) SSGC Mari SNGP SNGP SNGP

(mntons),CY12)
2.05 /2.46 0.98/0.91 1.30/0.12 0.50/0.28 0.50/0.34 0.09/0.47/0.09 0.45/0.07

Total Urea Capacity CY12 (mn tons)

6.34/4.28(68%)

Fight For The Right-Gas AT &0.7/mmbtu Engros management is continuously under discussion with GOP regarding the concessionary feed stock price of $0.7/mmbtu(current@$3.2/mmbtu) for its new plant. While the chances of the concessionary feed price are quite slim but if GOP honors the initial contract for EnVen, it would major trigger for the company. Key Risks Risks that may hurt Company profitability >Gas Unavailability >Price Reduction >Imported Urea >Political Risk /GOP Priority

FINANCIAL STATISTICS Financial Ratios ROE ROA Book value per share Earnings per share

Dec 2010

Dec 2011

Dec 2012

Jun2013 (HY)

27.35% 3.80% 12.71 3.48

24.64% 4.61% 17.35 4.28

14.73 (2.74)

7.57% 1.47%

15.40 1.25

Income Statement (PKR Million) Dec 2010 Dec 2011 Dec 2012 Jun2013(HY) Net Sales 19,018 31,353 30,627 20,519 Net Profit After Tax 3,730 4,588 (2,935) 1,425
BALANCE SHEET (MILLION) TOTAL EQUITY CURRENT ASSETS NON-CURRENT ASSETS TOTAL ASSETS TOTAL LIABILITIES DEC 2011 18,617 14,337 86,540 100,877 82,260 DEC 2012 15,798 14,382 83,123 97,505 81,707 JUN13 (HY) 18,827 15,517 80,941 96,458 77,631