Engro Chemical Pakistan Limited...Engro Foods UHT market share now at 38%, equal to that of Nestle’. Distribution network now stretches to over 212 towns Farm has over 500 milking

Engro Chemical Pakistan Limited

YTD September 2009 Business Results

Security Analyst BriefingOctober 29th, 2009

Urea Market Environment

Market demand for Urea stood at 4.6 million tons for the first nine months of 2009, up from 4 million tons in the same period last year (15%)

The increased demand was met primarily through higher imports (1,036 kt vs 211 kt) as domestic production at 3.74 million tons remained level compared to last year (3.74 million tons)

Another 600Kt imported urea is expected to arrive for Rabi season

The increase in demand is attributable to:

• Improved crop economics, particularly for wheat, with support price maintained at Rs. 950/maund

• Increase in area under cultivation of BT Cotton

YTD Sep 2009 Business Results

Security Analyst Briefing

Urea Market Environment, continued…

Local urea prices increased by Rs. 30/bag to Rs.730/bag at the start of September

International Urea prices remained stable during the third quarter. Spot landed price of imported Urea is Rs. 1,323/bag ($ 290/ton)

The domestic fertilizer industry continues to play its role in welfare of the farmer and economic growth of the country by maintaining domestic prices well below international levels. The industry thus contributed Rs.31 billion benefit to the farmer in first the nine months of 2009



Urea Industry Supply and Demand

Volume kT YTD Sep 2009 YTD Sep 2008

Opening Inventory 62 148

Production 3,738 3,741

Imports 1,036 211

Sales 4,636 4,024

Closing Inventory (Net) 186 62



Phosphates Market Environment

Industry wide sales volume of phosphatic fertilizers increased to 1,130 kt from 300 KT

in the same period last year

Industry demand in 2009 has increased due to

Decline in local DAP prices to Rs. 1,910/bag at the end of September, from

Rs.3,050/bag last year

Improved farmer liquidity primarily due to a healthy wheat crop and favorable

economics, in turn driving increase in fertilizer application on subsequent

(cotton) crops as well

Speculative buying by dealers (particularly in 3Q 2009) to build up inventories

ahead of the Rabi sowing season as international prices reached USD 400 from

levels of USD 350 earlier during the year

Spot international DAP price is USD 350/ton (C&F)

Government has not given any subsidy on phosphatic fertilizer during the year



Wheat Crop Economics



Year 2005-6 2006-07 2007-8 2008-09 2009-10*

Yield - maund/acre 30 30 30 30 30

Rate - Rs/maund 390 425 625 900 925

Fertilizer cost (Rs/acre)** 1,969 1,837 2,440 4,450 3,500

Other Expenses (Rs/acre) 5,855 6,735 8,730 12,090 14,700

Net Income (Rs/acre) 5,376 7,478 10,580 13,460 13,290

* Estimated for Rabi 2009-10 season

** Based on 1 DAP, 2 Urea bags per acre

Wheat crop economics trend has been positive over the last 5-years, resulting in adequate Urea and Phosphate fertilizer application on the crop, while improving farmer liquidity for subsequent crops as well

Engro YTD Sep 2009 Highlights

Urea• Engro Urea production during YTD September 2009: 689 kT vs. 740 kT in 2008. Production was lower in 2009 because of a 14-day plant turnaround and a couple of plant outages in the first half

• Effective July 01, 2009, feed gas price was increased to Rs. 102.01/mbtu from Rs. 94.78/mbtu and fuel gas price was lowered to Rs. 324.30/mbtu

• Engro Urea weighted average NSR of Rs. 690/bag for YTD Sep 2009 was 23% higher vs. 2008

• Due to the improved crop economics it is expected that urea demand will remain strong



Zarkhez Zarkhez production for the first 9 months was 34 kT. Sales volume was 38kT compared to

54kT in 2008, lower by 30%

The principal factor was the increase in International prices of potassium fertilizers. MOP/SOP prices were at US$ 750/ton level for part of the year

Other factors include the decline in sugar cane acreage in Punjab by 30% over last year as well as the delay in potato season due the hot weather conditions

Engro NP Sales of Nitrophos were 35kT vs. 17kT last year due to lower price in comparison to DAP.

The Nitrophos industry grew by 197% as compared to 2008 for the same reason

Phosphates

Sales volume was 235kT for YTD Sep 2009 compared to 47kT for the same period last year

Engro achieved a 16% market share in YTD Sep 2009

Zingro (Zinc Sulphate)• Micronutrient under brand name Zingro saw its highest ever sales volume, through effective

branding and marketing strategy, targeting primarily the rice crop

Engro YTD Sep 2009 Highlights cont’d…



Volume kT YTD Sep 2009 YTD Sep 2008

Production

Urea 689 740

Zarkhez 69 78

Sales

Engro Urea 673 787**

Zarkhez 73* 71

Phosphates 235 47

Urea market share 15% 20%

*including NP.

** excludes sale of 17kT imported urea

Engro Operating Highlights



+

Higher Phosphates Sales

• Higher urea margins

• Decrease in financial charges (offset by higher investment in subsidiaries)

-

• Lower urea production/sales in subsidiaries

• Lower phosphates margins

Rs MillionYTD Sep

2009YTD Sep

2008

Sales 20,850 14,682

COGS (15,952) (9,527)

Gross Profit 4,898 5,155

Selling and distribution expenses (1,314) (1,062)

Financial/other charges (net) (1,247) (1,295)

Other Income 1,159 1,612

Profit before Tax 3,496 4,410

Tax (897) (1,051)

PAT 2,599 3,359



Engro Financial Highlights

en en 1.3en en 1.3 Overall EPC progress by the end of September was 86%

Engineering and procurement is substantially completed

Construction completion stands at 80%

All heavy lift items (Absorber, Flash Vessel, Waste Heat Boiler) rigged

safely

Most of the owner scope systems (EDG, Effluent, Water Treatment,

Fire Water, Offsite, etc.) have been successfully commissioned

Hiring of Operations and Start-up team has been completed

Start-up expected by early 3rd Quarter 2010

Project Cost Outlook remains at US$ 1,050 million

Fertilizer Expansion Project



April 2007

Sep 2009

Aerial View of Ammonia-3

Ammonia-3 Back End

Primary Reformer (F-201)

Insulation works in progress at CO2 Stripping Column

Aerial View of Urea-3

Stacks installed on Cooling Tower

Construction works in progress at Utility Tanks

Erection of Roof Rafters & Beams in progress at Ammonia Storage Tank

Engro Vopak

Vopak boasted a revenue of Rs. 1.5 billion; an increase of 83% over the same period last year

Profit after tax of Rs. 635 million was double that of period last year due to commissioning of

ethylene handling facility, higher LPG & VCM volumes and exchange rate gains

Engro Chemical’s share of dividend paid out by Engro Vopak amounted to Rs. 225 million

Engro Polymer & Chemicals Ltd (Formerly Engro Asahi)

Revenue during the year was Rs 8.2 billion as against Rs 6.5 billion last year

Engro Polymer posted a loss of 19 million vs. Rs. 589 million profit YTD Sep. period last year

3Q-2009 domestic sales volume at 93 kT versus 78 kT in 3Q 2008

EDC exports (18kt), caustic soda sales (15 kt), sale of power to KESC and Hypo sales (~3kt)

have begun

Commercial production of EDC and Chlor Alkali plant was declared on 1st Aug 2009

VCM production expected by end 2009

EPCL market share 3Q-2009 at 84%

Joint Venture & Subsidiary Highlights



AVANCEON (Formerly Engro Innovative)

Demand for the services remained low due to the global economic slowdown, however,

an upturn is expected in 4th quarter

Revenue decreased to Rs 943 million during 3Q 2009 vs Rs. 1,248 million in 2008.

Posted net loss of Rs 119 million as against loss of Rs 128 million loss for the same period

last year.

Engro Energy & PowerGen

Qadirpur Power Project is on track to start commercial production by end of Dec ‘09/

beginning of Jan ‘10.

Slight Delay due to construction activities and transmission issues.

Overall EPC progress of 92% achieved.

Total manpower at Site has reached 2430 out of which 1198 are Chinese workers

Sindh Engro Coal Mining Company Limited has been formed as a JV with the Government

of Sind.

Joint Venture & Subsidiary Highlights cont’d…



Engro Foods Ltd.

Engro Foods turnover was Rs 10.6 billion versus Rs 5.6 billion last year.

Engro Foods posted a loss of Rs. 391 million for the nine months ended, which was

better than expected. Of this, dairy business loss was Rs. 28 million.

Engro Foods UHT market share now at 38%, equal to that of Nestle’.

Distribution network now stretches to over 212 towns

Farm has over 500 milking animals at September 30th, with the remainder expected to

start milking by November (total of 1,925 animals).

Ice Cream now has 36 SKUs launched and reaches 12 towns

Omore’ ice cream is in the number 2 position behind Walls

Joint Venture & Subsidiary Highlights cont’d…



New Ventures



North Africa

Engro continues to pursue growth opportunities both domestically and abroad in

order to create value for its shareholders.

Currently exploring opportunities in North Africa to setup phosphatic fertilizer

manufacturing plants in partnership with local companies.

Rice

• BoD has approved entering into rice processing and exports business

• A rice processing plant of 20Kt capacity will be setup in Central Punjab at a cost of

Rs.3.2 Billion

• The plant will come online by 4Q 2010

• Processed rice will be exported to the Middle East and European Union

THANK YOU

Documents

Engro Chemical Pakistan Limited...Engro Foods UHT market share now at 38%, equal to that of Nestle’. Distribution network now stretches to over 212 towns Farm has over 500 milking