During nine months ended September 30th, 2017, the management stated in its financial

statement that the Company achieved revenue of Rs27.1 billion compared to Rs33.9 billion
of Engro Foods is Pakistan's largest and fastest growing company with a vision to meet
domestic demands with products that meet worldwide standards. The company is highly
passionate about offering the ultimate brand experience to millions of people across the
country and beyond.

The product portfolio of Engro consists of some of the largest and best-selling brands in the
country such as Olper's, Olper's Lite, Omore, Dairy Omung, Olper's Lassi and Tarang. Since
its founding in 2005, the firm has come a long way since the management set out on an
audacious mission to transform Pakistan's dairy farming industry and meet the requirements
of its quickly expanding local market. Presently, merely 9 years later, Engro Foods is proud
to say that the management is leaders in the UHT segment in Pakistan and offering quality
products with a vision to elevate consumer delight universal.

Over the last few years the company has aggressively enlarged its operations in selected
markets and the company has cemented its position globally in these selected markets in
such a short span of time.

FINANCIAL HIGHLIGHTS (Rs. in million)

Details Nine months ended September, 30 Variation

2017 2016

Net Sales 27,136 33,947 (20%)

Operating Profit 983 4,175 (76%)

% of sales 3.6% 12.3%

Profit after tax 386 2,595 (85%)

% of sales 1.4% 7.6%

Earnings per share (Rs.) 0.50 3.38 (85%)

Source: Engro Foods

The management stated in its financial statement that the company achieved revenue of
Rs27.1 billion compared to Rs33.9 billion in the corresponding period last year during nine
months ended September 30, 2017. Engro Foods ' gross margin fell from 25.4% to 17.1%. As
a consequence, the overall profitability of the Company fell to Rs386 million from Rs2,595
million in the corresponding period previous year. Engro Foods recorded a profit of Rs200
million in the third quarter versus a loss of Rs145 million in the second quarter. Furthermore,
dairy and beverages segment of the company recorded revenue of Rs24 billion versus Rs31
billion in the same period previous year. Due to many difficulties encountered on various
fronts, the dairy industry itself saw a volume drop in 2017. The discord between federal and
provincial food laws and various food regulatory regimes has developed sector compliance
problems. Further, the undocumented and untaxed loose milk sector has created an uneven
playing field for the processed industry.

The company's economic executives also noted in the declaration that development was
also significantly affected by the tax legislative modifications proclaimed in the 2016 Federal
Budget, exempting dairy products and imposing extra duties on raw materials. Despite the
above-mentioned problems, current leadership efforts are aimed at driving loose milk
conversion to fuel category development, while using other tactical interventions to gain
market share. Competition, with the introduction of two main players, has heated up in the
latest past mainly in regards to the specialized tea creamer category. In contrast to the
Rs3.2 bill, ice cream and frozen desserts segment reported income of Rs3.1 billion In the
same period last year, compared to Rs3.2 billion. Focusing on providing fresh customer
experiences by providing innovation along with an effective mom brand-focused
communication strategy has driven the efficiency of the segment during the review period.
This section also recorded a profit of Rs156 million compared to a profit of Rs203 million in
the same period last year, which is smaller due to one-off fees without which the underlying
profit after tax has increased by 9 percent compared to last year's same era. The firm also
pointed out that the dairy farm segment had a profit of Rs38 million compared with a loss of
Rs66 million in the same era. last year. The company also mentioned that the dairy farm
segment posted a profit of Rs38 million as compared to a loss of Rs66 million in the same
period previous year on the back of being a high yielding, consistent and high-quality source
of raw material for the Company.

INFLATION IN PAKISTAN (Base 2007-08)

Index Averages July-November % Changes

2017-18 2016-17 2015-16

CPI 3.59 3.92 1.86

SPI 1.14 1.51 -0.26

WPI 1.69 3.05 -2.73

FOOD INFLATION
The Pakistan Bureau of Statistics (PBS) mentioned in its present report that CPI inflation
grew by 4.6 percent on yearly basis in December 2017 as against to a rise of 4.0 percent in
the last month and 3.7 percent in December 2016. On month-on-month basis, it declined by
0.1 percent in December 2017 as against to a rise of 0.4 percent in the last month and
decline of 0.7 percent in December 2016. PBS recorded few commodities which increased in
December 2017 from previous month are chicken (23.67%), betel leaves & nuts (4.67%), dry
fruits (1.76%), rice (1.18%) and wheat (1.09%). PBS also recorded few commodities which
decreased in December 2017 from previous month are tomatoes (30.16%), onion (21.91%),
pulse mash (3.83%), fresh vegetables (3.83%), pulse moong (3.24%), pulse masoor (2.75%),
eggs (2.73%) and pulse gram (1.66%). On yearly basis top few commodities which increased
from previous year i.e. December 2016 are onion (130.36%), tomatoes (49.35%), potatoes
(21.52%), chicken (21.21%), betel leaves & nuts (16.18%), rice (15.12%), fresh vegetables
(12.04%), meat (7.69%), tea (7.59%), honey (6.90%), fresh fruits (6.58%) and readymade
food (6.38%).furthermore, yearly decreased products are pulse gram (28.85%), pulse mash
(27.41%), pulse moong (21.19%), pulse masoor (20.68%), besan (20.25%), cigarettes
(18.47%) sugar (13.45%) and gram whole (7.64%).