FM Term Report

FrieslandCampina Engro Pakistan Limited

Course Instructor: Sharique Ayubi

Made by:
Syed Samad Iqbal (20211-30765)
Syed Hani Abbas (20211-30479)
Abdul Wasay Mir (20211-30069)

Introduction:
FrieslandCampina Engro Pakistan Limited is a Pakistani dairy company and a subsidiary of the Dutch
multinational corporative Royal FrieslandCampina. The Company launched as Engro Foods in 2006 with
its first production facility in Sukkur, Pakistan and the introduction of its flagship UHT milk brand:
Olper’s. Following successful entries in the tea-whitening category with Tarang in 2007, and the ice-
cream market with Omore in 2009, it entered a strategic partnership with Royal FrieslandCampina of
Netherlands in 2016.

Board of Directors:
Abdul Samad Dawood (Chairman)
Ali Ahmed Khan (CEO)
Abrar Hasan
Edward Holtzer
Petra Attje Zinkweg
Roeland Francois Van Neerbos
Zouhair Abdul Khaliq

CFO:
Imran Hussain

Members of the Audit Committee:

Abrar Hasan (Chairman)
Edward Holtzer
Zouhair Abdul Khaliq
Secretary of the Committee is Saleem Lallany, GM Internal Audit Department
Auditors:
A.F. Ferguson & Company
Chartered Accountants

Internal Control Framework:

Responsibility: The Board is ultimately responsible for the Company’s system of internal control and for
reviewing its effectiveness. However, such a system is designed to manage, rather than eliminate the
risk of failure to achieve business objectives and can only provide reasonable but not absolute assurance
against material misstatement or loss. The Board, whilst maintaining its overall responsibility for
managing risk within the Company, has delegated the detailed design and operation of the system of
internal controls to the Chief Executive.

Framework: The Company maintains an established control framework comprising clear structures,
authority limits and accountabilities, well-understood policies and procedures for review processes. The
Board establishes corporate strategy and the Company's business objectives. Divisional management
integrates these objectives into divisional business strategies with supporting financial objectives.

Review: The Board meets quarterly to consider the Company’s financial performance, financial and
operating budgets and forecasts, business growth and development plans, capital expenditure proposals
and other key performance indicators. The Board Audit Committee receives reports on the system of
internal controls from the external and internal auditors and reviews the process for monitoring the
effectiveness of internal controls.

Board Committees:
Board Composition & Governance: As at December 31, 2022, the Board comprises of seven Directors (6
males, 1 female) including one Executive Director, two Independent Directors and four Non-Executive
Directors. The Board has the collective responsibility for ensuring that the affairs of FCEPL are managed
competently and with integrity. Mr. Abdul Samad Dawood, a non-executive Director, is the Chairman of
the Board, and Mr. Ali Ahmed Khan is the Chief Executive Officer. Biographical details of the Directors
are included in this report. A Board of Directors’ meeting calendar is issued annually that schedules the
matters reserved for discussion and approval.

Board Compensation Committee: The Committee meets to review and recommend all elements of the
compensation, organization and employee development policies relating to the senior executives’
remuneration and to approve all matters relating to the remuneration of the Executive Directors and
members of the management committee. The Head of HR of the Company is the secretary of the Board
Compensation Committee. The committee comprises of the following members: Zouhair Abdul Khaliq
Chairman Petra Attje Zinkweg Member Ali Ahmed Khan Member

Board Audit Committee: The Board Audit Committee assists the Board in fulfilling its oversight
responsibilities, primarily in reviewing and reporting financial and non-financial information to
shareholders, systems of internal control and risk management and the audit process. It has the
autonomy to call for information from management and to consult directly with the external auditors or
advisors as considered appropriate. The Chief Financial Officer regularly attends the Board Audit
Committee meetings by invitation to present the accounts. After each meeting, the Chairman of the
Committee reports to the Board. The committee met 4 times during 2022.

The committee comprises of the following members:

Abrar Hasan (Chairman)
Edward Holtzer (Member)
Zouhair Abdul Khaliq Member (Member)

The secretary of the committee is Saleem Lallany, GM Internal Audit.

Risk Management: The Company has a formal risk management framework to assess the risks faced in
the context of the broader political and macroeconomic environment. The risk management system
identifies strategic, regulatory, financial, operational, reputational, and sustainability risks related to
Company’s business activities. The risks are reviewed by the Pakistan Leadership Team along with
departmental objectives, targets, and performance. Appropriate strategies are developed and
implemented to minimize the impact of the identified risks. The Company has formulated its risk
management structure based on the global practice followed by FrieslandCampina, with the aim of
driving the Company growth with managing risk associated with business adequately.

Top Management Remuneration Structure:

The role and importance of top management remuneration structure in an annual report are significant
for several reasons. The remuneration structure, which includes the salaries, bonuses, benefits, and
other forms of compensation for top executives, is a critical aspect of corporate governance and
transparency. Here are some key aspects to consider;
 Performance Measurement
 Shareholder Accountability
 Retention and Recruitment
 Disclosure and Transparency
 Regulatory Compliance
 Ratios 2022 2023 (After 2nd Pass)
Current Ratio 1.04 1.18
Debt to Asset Ratio 0.63 0.58
ROE 0.19 0.18