Engro Powergen Prospectus

ADVICE FOR GENERAL PUBLIC

THE INVESTORS ARE STRONGLY ADVISED IN THEIR OWN INTEREST TO CAREFULLY READ THE CONTENTS OF THIS OFFER FOR SALE DOCUMENT, ESPECIALLY THE RISK FACTORS GIVEN AT PARAGRAPH 4.3, BEFORE MAKING ANY INVESTMENT

DECISION.

SUBMISSION OF FICTITIOUS AND MULTIPLE APPLICATIONS (MORE THAN ONE APPLICATION BY SAME PERSON) IS

PROHIBITED AND SUCH APPLICATIONS MONEY IS LIABLE TO CONFISCATION UNDER SECTION 18A OF THE SECURITIES

AND EXCHANGE ORDINANCE, 1969.

ENGRO POWERGEN QADIRPUR LIMITED

OFFER FOR SALE DOCUMENT

For Offer of 40,475,000 Ordinary Shares (12.5% of the Total Paid Up Capital) at an Offer Price of PKR 30.02/-

(including premium of PKR 20.02/- per share)

THIS IS NOT A PROSPECTUS BY ENGRO POWERGEN QADIRPUR LIMITED (THE COMPANY) BUT

AN OFFER FOR SALE DOCUMENT BY ENGRO CORPORATION LIMITED AND ENGRO POWERGEN

LIMITED, FOR OFFER FOR SALE OF SHARES OUT OF THEIR SHAREHOLDING IN THE COMPANY.

DATE OF PUBLIC SUBSCRIPTION: From September 22

th to 24

th, 2014 (BOTH DAYS INCLUSIVE)

DURING BANKING HOURS

FINANCIAL ADVISORS, LEAD MANAGERS AND ARRANGERS

Habib Bank Limited

Bank Alfalah Limited

BANKERS TO OFFER

Allied Bank Limited Habib Bank Limited NIB Bank Limited Askari Bank Limited Habib Metropolitan Bank Limited Samba Bank Limited

Bank Alfalah Limited JS Bank Limited Silk Bank Limited

Faysal Bank Limited MCB Bank Limited United Bank Limited*

*In order to facilitate investors, United Bank Limited (UBL) is offering electronic submission of application (e-IPO) to its account holders. UBL account holders can use UBL Net Banking facility to submit their application online via link www.ubldirect.com/corporate/ebank. Further, please note

that online application can be submitted 24 hours a day during the subscription period which will close at 12:00 midnight on 24th

September, 2014.

Underwritten by:

Date of Publication of this Offer for Sale Document: 14th

September 2014

For further queries you may contact: Engro Powergen Qadirpur Limited - Mr. Ali Athar; P: +92 (21) 35297501 Ext 4021; E: [email protected];

Habib Bank Limited - Mr. Imran Sherani; P: +92 (21) 3243 9400; E: [email protected]; Bank Alfalah Limited - Mr. M. Zeeshan; P: +92 (21) 111-777-786 Ext. 2126; E: [email protected]

http://www.ubldirect.com/corporate/ebankmailto:[email protected]:[email protected]:[email protected]

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STATEMENT ON OFFERORS ABSOLUTE RESPONSIBILITY

The Offerors, having made all reasonable inquiries, accept responsibility for the disclosures made in this

Offer for Sale Document and confirm that:

(i) this Offer for Sale Document contains all information with regards to the Offerors and the Offer, which is material in the context of the Offer and nothing has been concealed;

(ii) the information contained in the Offer for Sale Document is true and correct to the best of our knowledge and belief;

(iii) the opinions and intentions expressed herein are honestly held; and

(iv) there are no other facts and information, the omission of which makes this document as a whole or any part thereof misleading.

For and on behalf of Offerors,

Engro Corporation Limited

-sd-

________________________

Engro Powergen Limited

-sd-

________________________

Naz Khan Mohammed Saqib

Chief Financial Officer Chief Financial Officer

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GLOSSARY OF TECHNICAL TERMS

BAFL Bank Alfalah Limited

BTU British Thermal Unit

CDCPL The Central Depository Company of Pakistan Limited

CDS Central Depository System

CNIC Computerized National Identity Card

Commission / SECP Securities and Exchange Commission of Pakistan

Company / EPQL Engro Powergen Qadirpur Limited

COD Commercial Operations Date

CPI Consumer Price Index

ECL Engro Corporation Limited

EPC Engineering, Procurement and Construction

EPL Engro Powergen Limited

Exchange/KSE Karachi Stock Exchange Limited

FDI Foreign Direct Investment

FED Federal Excise Duty

FSA Fuel Supply Agreement

FX Foreign Exchange

GOP Government of Pakistan

GSA Gas Supply Agreement

HBL Habib Bank Limited

HSD High Speed Diesel

IFC International Finance Corporation

IPP Independent Power Producer

ISO International Organization for Standardization

ITO Income Tax Ordinance, 2001

KIBOR Karachi Interbank Offered Rate

LIBOR London Interbank Offered Rate

LM Lead Managers

MMSCFD Million Standard Cubic Feet per Day

MW Megawatt

MWH Megawatt Hour

NEPRA National Electric Power Regulatory Authority

NTDC National Transmission and Dispatch Company Limited

NOC No Objection Certificate

O&M Operations and Maintenance

OFSD Offer for Sale Document

Ordinance The Companies Ordinance, 1984

PKR Pakistan Rupee(s)

PPA Power Purchase Agreement entered into between the Company and the

NTDC (through its Central Power Purchasing Agency) on behalf of ex-

WAPDA Distribution Companies

Power Purchaser NTDC (through its Central Power Purchasing Agency) on behalf of ex-

WAPDA Distribution Companies

PPIB Private Power and Infrastructure Board

RCOD Required Commercial Operations Date

RFO Residual Fuel Oil

ROE Return on Equity

ROEDC Return on Equity during Construction

SCRA Special Convertible Rupee Account

TREC Trading Right Entitlement Certificate

US United States of America

USD US Dollars

WHT Withholding Tax

WPI Wholesale Price Index

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DEFINITIONS

Application Money The amount of money paid along with application for subscription of

shares which is equivalent to the product of the Offer Price and the

number of shares applied for plus CDC and Stamp duty charges.

Combined Cycle Power Plant Combined Cycle Power Plant or Combined Cycle Gas Turbine Plant

is a gas turbine generator that generates electricity and heat in the

exhaust that is used to make steam, which in turn drives a steam

turbine to generate additional electricity.

e-IPO Facility

e-IPO Facility is the facility through which investors can make

application for subscription of shares of the Company through

internet. In order to facilitate the investors, the Offerors have

arranged provision of this facility though United Bank Limited

that is among the Bankers to the Offer.

UBLs accountholders can use UBL net-banking to submit their

applications online via link

http://www.ubldirect.com/corporate/ebank.

Accountholders of UBL can submit their applications through the

link 24 hours a day during the subscription period which will close at

12:00 midnight on September 24th, 2014.

OFSD

A document containing all the information and disclosures as

required under the Companies Ordinance, 1984 together with

disclosure of the Offer Price, the date of publication of OFSD and,

the date(s) for subscription of shares.

Financial Advisors, Lead

Managers & Arrangers

Habib Bank Limited and Bank Alfalah Limited.

Offeror Engro Corporation Limited and Engro Powergen Limited.

Offer Offer for Sale of 40,475,000 Ordinary Shares of EPQL (12.5% of the

Total Paid Up Capital of the Company) at an Offer Price of PKR

30.02/- per share including premium of PKR 20.02/- per share.

Offer Price The price at which Ordinary Shares of the Company are being

offered. The Offer Price is PKR 30.02/- per share.

Ordinary Shares Ordinary Shares of Engro Powergen Qadirpur Limited having face

value PKR 10.00/- each unless otherwise specified in the context

thereof.

http://www.ubldirect.com/corporate/ebank

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TABLE OF CONTENTS

Part Content Page

1 APPROVALS AND LISTING ON THE STOCK EXCHANGE ........................................... 6

2 SHARE CAPITAL AND RELATED MATTERS ................................................................... 9

3 UNDERWRITING, COMMISSIONS, BROKERAGE AND OTHER EXPENSES .......... 20

4 HISTORY AND PROSPECTS ................................................................................................ 22

5 FINANCIAL INFORMATION ............................................................................................... 34

6 MANAGEMENT OF THE COMPANY ................................................................................ 46

7 MISCELLANEOUS INFORMATION .................................................................................. 55

8 APPLICATION AND ALLOTMENT INSTRUCTIONS .................................................... 60

9 SIGNATORIES TO THE OFFER FOR SALE DOCUMENT ............................................ 64

10 MEMORANDUM OF ASSOCIATION ................................................................................. 65

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PART 1

1 APPROVALS AND LISTING ON THE STOCK EXCHANGE

1.1. APPROVAL OF THE SECURITIES & EXCHANGE COMMISSION OF PAKISTAN

Approval of the Securities & Exchange Commission of Pakistan (SECP or the Commission)

as required under Section 62 read with Section 57(1) of the Companies Ordinance, 1984 (the

Ordinance) has been obtained by Engro Corporation Limited and Engro Powergen Limited (the

Offerors) for the issue, circulation and publication of this Offer For Sale Document.

DISCLAIMER:

IT MUST BE DISTINCTLY UNDERSTOOD THAT IN GIVING THIS APPROVAL, SECP

DOES NOT TAKE ANY RESPONSIBILITY FOR THE FINANCIAL SOUNDNESS OF

THE COMPANY AND ANY OF ITS SCHEMES STATED HEREIN OR FOR THE

CORRECTNESS OF ANY OF THE STATEMENTS MADE OR OPINIONS EXPRESSED

WITH REGARDS TO THEM BY THE OFFERORS AND/OR THE COMPANY IN THIS

OFFER FOR SALE DOCUMENT.

SECP HAS NOT EVALUATED QUALITY OF THE OFFER AND ITS APPROVAL FOR

ISSUE, CIRCULATION AND PUBLICATION OF THIS OFFER FOR SALE DOCUMENT

SHOULD NOT BE CONSTRUED AS ANY COMMITMENT OF THE SAME. THE

PUBLIC SHOULD CONDUCT THEIR OWN INDEPENDENT DUE DILIGENCE AND

ANALYSIS REGARDING THE QUALITY OF THE OFFER BEFORE SUBSCRIBING.

1.2. CLEARANCE OF THE OFFER FOR SALE DOCUMENT BY THE KARACHI STOCK EXCHANGE LIMITED

The OFSD has been cleared by the Karachi Stock Exchange Limited (KSE) (referred to as the

Exchange), in accordance with the requirements of its Listing Regulations.

DISCLAIMER:

THE EXCHANGE HAS NOT EVALUATED THE QUALITY OF THE OFFER, AND ITS CLEARANCE SHOULD NOT BE CONSTRUED AS ANY COMMITMENT OF

THE SAME. THE PUBLIC SHOULD CONDUCT THEIR OWN INDEPENDENT

INVESTIGATION AND ANALYSIS REGARDING THE QUALITY OF THE OFFER

BEFORE SUBSCRIBING.

THE PUBLICATION OF THIS DOCUMENT DOES NOT REPRESENT SOLICITATION BY THE EXCHANGE.

THE CONTENTS OF THIS DOCUMENT DO NOT CONSTITUTE AN INVITATION BY THE EXCHANGE TO INVEST IN SHARES OR SUBSCRIBE FOR ANY

SECURITIES OR OTHER FINANCIAL INSTRUMENT, NOR SHOULD IT OR ANY

PART OF IT FORM THE BASIS OF, OR BE RELIED UPON IN ANY CONNECTION

WITH ANY CONTRACT OR COMMITMENT WHATSOEVER OF THE

EXCHANGE.

IT IS CLARIFIED THAT INFORMATION IN THIS OFFER FOR SALE DOCUMENT SHOULD NOT BE CONSTRUED AS ADVICE ON ANY PARTICULAR MATTER BY

THE EXCHANGE AND MUST NOT BE TREATED AS A SUBSTITUTE FOR

SPECIFIC ADVICE.

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THE EXCHANGE DISCLAIMS ANY LIABILITY WHATSOEVER FOR ANY LOSS HOWEVER ARISING FROM OR IN RELIANCE UPON THIS DOCUMENT TO ANY

ONE, ARISING FROM ANY REASON, INCLUDING, BUT NOT LIMITED TO,

INACCURACIES, INCOMPLETENESS AND/OR MISTAKES, FOR DECISIONS

AND/OR ACTIONS TAKEN, BASED ON THIS DOCUMENT.

THE EXCHANGE NEITHER TAKES RESPONSIBILITY FOR THE CORRECTNESS OF CONTENTS OF THIS DOCUMENT NOR THE ABILITY OF THE OFFEROR TO

FULFILL ITS OBLIGATIONS THEREUNDER.

ADVICE FROM A SUITABLY QUALIFIED PROFESSIONAL SHOULD ALWAYS BE SOUGHT BY INVESTORS IN RELATION TO ANY PARTICULAR INVESTMENT.

1.3. FILING OF OFFER FOR SALE DOCUMENT AND OTHER DOCUMENTS WITH THE REGISTRAR OF COMPANIES

The Company has filed with the Registrar of Companies, Companies Registration Office (CRO)

Securities and Exchange Commission of Pakistan, Karachi, as required under Sections 57(3) and

(4) of the Ordinance, a copy of this OFSD signed by the authorized signatories of the Offerors,

together with the following documents attached thereto:

a) Letter dated September 5th, 2014 from the Auditors of the Company, M/s. A.F. Ferguson & Co. Chartered Accountants consenting to the publication of their names in the OFSD, which

contains in Part 5 certain statements and reports issued by them as experts (which consent has

not been withdrawn), as required under Section 57(5) of the Companies Ordinance, 1984.

b) Copies of material contracts and agreements mentioned in Part 7 of this OFSD as required under Section 57(4) of the Ordinance.

c) Written confirmations of the Legal Advisor to this Offer and the Bankers to this Offer, mentioned in this OFSD consenting to act in their respective capacities, as required under

Section 57(5) of the Companies Ordinance, 1984.

d) Written consents of the Directors, the Chief Executive and the Company Secretary of the Company who have consented to their respective appointments being made and their having

been named or described as such Directors, Chief Executive and Company Secretary in this

OFSD, as required under Section 57(3) of the Ordinance, read with sub-clause (1) of clause (4)

of Section 1 of Part 1 of the Second Schedule to the Ordinance.

1.4. LISTING ON THE EXCHANGE

Application has been submitted to the Exchange for permission to deal in and for quotation of the

shares of the Company.

In accordance with the Rule Book of KSE, Chapter 11 pertaining to the Future Trading in

Provisionally Listed Companies, the Company shall stand listed provisionally for trading and for

the quotation of its shares on the Karachi Stock Exchange from the date of publication of the OFSD

or a date as may be specified by the Exchange.

If for any reason the application for formal listing is not accepted by the Exchange, during and up

to the period as specified under section 72 (1) of the Companies Ordinance, 1984, the Offerors

undertake that a notice to that effect will immediately be published in the press and refund

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Application Money to the applicants without surcharge within eight (8) days from the date they

become liable to pay it.

In the event the Offerors are unable to repay the amount within the aforementioned period of eight

(8) days, the directors of the Offerors shall be jointly and severally be liable to repay the money

from the expiry of eighth day together with a surcharge of one and a half percent (1.5%) for every

month or part thereof from the expiry of the eighth day.

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PART 2

2 SHARE CAPITAL AND RELATED MATTERS

2.1. SHARE CAPITAL

No. of

shares

Face value Premium Total (including

premium)

(PKR) (PKR) (PKR)

AUTHORIZED CAPITAL

330,000,000 Ordinary Shares of PKR 10/- each 3,300,000,000 - 3,300,000,000

ISSUED, SUBSCRIBED AND PAID UP SHARE CAPITAL

323,800,000 Issued against Cash 3,238,000,000 80,777,000 3,318,777,000

323,800,000 Total 3,238,000,000 80,777,000 3,318,777,000

The existing issued, subscribed & paid up capital of the Company is held as follows:

SPONSORS

32,000,000 Engro Corporation Limited 320,000,000 - 320,000,000

271,999,992 Engro Powergen Limited 2,719,999,920 - 2,719,999,920

OTHER SHAREHOLDERS

16,000,000 International Finance Corporation(1)

160,000,000 56,511,500 216,511,500

DIRECTORS

1 Mr. Ruhail Mohammed 10 - 10

1 Mr. Muhammad Ali 10 - 10

1 Mr. Shabbir Hashmi 10 - 10

1 Mr. Javed Akbar 10 - 10

1 Ms. Aliya Yusuf 10 - 10

1 Mr. Vaqar Zakaria 10 - 10

1 Mr. Muhammad Aliuddin Ansari 10 - 10

1 Mr. Shahid Hamid Pracha 10 - 10

3,800,000 Employees under the Employee Share

Option Scheme(2)

38,000,000 24,265,500 62,265,500

323,800,000 Total Paid up Capital 3,238,000,000 80,777,000 3,318,777,000

(1)

In October 2008, IFC entered into an agreement with Engro Corporation Limited to subscribe for

16,000,000 shares of Company at the Rupees equivalent of USD 0.17424 per share, which was PKR

13.77/- per share (including a cash premium of PKR 3.77 per share).The aforementioned transaction

resulting in a total premium of PKR 60,377,962/- out of which PKR 3,866,463/- was deducted on

account of share issuance cost, thus a net amount of PKR 56,511,500/- was recorded in the financial

statements.

(2)

Approval for the Employee Share Option Scheme (Scheme) was granted by SECP vide letter

dated September 25th, 2008. Under the Scheme, senior employees of the Company were granted

options to purchase newly issued ordinary shares of the Company at an exercise price of PKR 15/-

per ordinary share (if exercised in 2011) and PKR 17/- per ordinary share (if exercised in 2012)

respectively. The number of options granted had been calculated in accordance with the ability and

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criticality of an employee to the business, subject to the approval of the Boards Compensation

Committee constituted for the Scheme.

Vesting period commenced from the grant date and ended on December 31st, 2010, where after the

options could be exercised within a period of two years i.e. up to December 31st 2012. Fair values

per share determined at the time of exercise of options were PKR 16.29/- per share in the year 2011

and PKR 18.29/- per share in the year 2012. Cost of the balance amount of fair value per share at

the time of exercise of the options was borne by the Company and charged to the income statement.

2.2. THE OFFERORS

The following two shareholders are jointly offering 12.5% shares out of their respective

shareholdings in the Company:

Name of the Offeror Number of shares

being Offered

Percentage to the paid up

capital of the Company

Engro Corporation Limited (divesting its 100%

shareholding in the Company) 32,000,000 9.88%

Engro Powergen Limited 8,475,000 2.62%

Total 40,475,000 12.5%

2.3. PRE-IPO PLACEMENT

40,475,000 ordinary shares (divested by Engro Powergen Limited) of the face value of PKR 10/-

each have been subscribed through the private placement by the following investors at the price of

PKR 30.02/- per share (including a premium of PKR 20.02/- per share) as per the agreements

mentioned in part 7.

No. of

Shares Investors

Face Value

(PKR)

Premium

(PKR)

Total

[including

premium]

(PKR)

375,000 Almurtaza Machinery (Pvt.) Limited 3,750,000 7,507,500 11,257,500

2,025,000 Bank Alfalah Limited 20,250,000 40,540,500 60,790,500

3,634,400 Bulk Management (Pvt.) Ltd. 36,344,000 72,760,688 109,104,688

1,650,000 Elahi Electronics 16,500,000 33,033,000 49,533,000

4,000,000 Habib Bank AG Zurich 40,000,000 80,080,000 120,080,000

2,502,000 Habib Bank AG Zurich, UAE 25,020,000 50,090,040 75,110,040

2,000,000 Jubilee Life Insurance Company Limited 20,000,000 40,040,000 60,040,000

798,950 Liberty Mills Limited 7,989,500 15,994,979 23,984,479

798,950 Liberty Power Tech Limited 7,989,500 15,994,979 23,984,479

7,575,000 Metro Securities (Pvt.) Limited 75,750,000 151,651,500 227,401,500

525,000 Moosani Securities (Pvt.) Limited 5,250,000 10,510,500 15,760,500

1,369,100 Shakoo (Pvt.) Limited 13,691,000 27,409,382 41,100,382

7,575,000 Swift Textile Mills (Pvt.) Limited 75,750,000 151,651,500 227,401,500

1,599,100 Westbury (Pvt.) Limited 15,991,000 32,013,982 48,004,982

4,047,500 Employees of the Company and Engro

Group 40,475,000 81,030,950 121,505,950

40,475,000 Total 404,750,000 810,309,500 1,215,059,500

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2.4. PRESENT OFFER - OFFER FOR SALE OF SHARES TO GENERAL PUBLIC

No. of

Shares

Face Value

(PKR)

Premium

(PKR)

Total

[including

premium]

(PKR)

40,475,000

The Present Offer of 40,475,000

ordinary shares (12.5% of the

total paid-up share capital of the

Company) of PKR 10/- each,

being offered at an Offer Price of

PKR 30.02/- per share (inclusive

of a premium of PKR 20.02/- per

share).

404,750,000 810,309,500 1,215,059,500

Notes:

a. As per rule 3 (I) (iv) of the Companies (Issue of Capital) Rules, 1996, the sponsors shall at all times retain at least 25% of the capital of the Company.

b. As per regulation No. 5.4.5 (a) of KSEs Rule Book (Chapter 5 - Listing of Companies and Securities Regulations), sponsors shareholding in excess of 25% shall not be

saleable for a period of six months from the last date of public subscription.

c. As per regulation No. 5.4.5 (b) of KSEs Rule Book (Chapter 5 - Listing of Companies and Securities Regulations), allocation of shares, under Pre-IPO placement (as specified

in section 2.3) including employees of company / group companies etc., shall not be

saleable for a period of six months from the last date of public subscription.

2.5. OPENING AND CLOSING OF THE SUBSCRIPTION LIST

The subscription list will open for three (3) days at the commencement of banking hours on

September 22nd

2014 and will close on September 24th

2014 at the close of banking hours.

Please note that online applications can be submitted 24 hours a day during the subscription

period which will close at 12:00 midnight on September 24th

2014.

In order to facilitate investors, United Bank Limited UBL is offering electronic submission

of application (e-IPO) to its accountholders. UBL account holders can use UBL Net Banking

to submit their application via link http://www.ubldirect.com/corporate/ebank.

2.6. INVESTOR ELIGIBILITY FOR PUBLIC OFFER

Eligible investors include

a) Pakistani citizens residing in or outside Pakistan or persons holding two nationalities including

Pakistani Nationality;

b) Foreign nationals whether living in or outside Pakistan;

c) Companies, bodies corporate or other legal entities incorporated or established in or outside

Pakistan (to the extent permitted by their respective constitutive documents and existing

regulations as the case may be);

d) Mutual funds, provident/pension/gratuity funds/trusts (subject to the terms of their respective

Trust Deeds and existing regulations); and

http://www.ubldirect.com/corporate/ebank

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e) Branches in Pakistan of companies and bodies corporate incorporated outside Pakistan.

2.7. FACILITIES AVAILABLE TO NON-RESIDENT PAKISTAN AND FOREIGN INVESTORS

Non-resident Pakistani investors and foreign investors may subscribe for the shares being offered

through this OFSD by using their Special Convertible Rupee Account (SCRA). For detail please

see Chapter XX of the Foreign Exchange Manual (2002) of the State Bank of Pakistan.

Foreign investors do not require any regulatory approvals to invest in the shares being offered

through this OFSD. Payment in respect of investment in the shares of the Company has to be made

in foreign currency through an inward remittance or through surplus balances in SCRA. Local

currency cash account(s) opened for the purpose of Foreign Portfolio Investment (FPI) is classified

as SCRA. There is no restriction on repatriation of sale proceeds and dividend payouts on shares.

Underlying client names/beneficial owners are required to be disclosed at depository level.

Key Documents required for individual(s):

1. Account opening request

2. Passport / ID

General documentation required for opening of SCRA account by institutional investors is:

1. Account opening request

2. Board Resolution & Signatories list

3. Passport / ID of Board of Directors

4. Passport / ID of all authorized signatories

5. Certificate of Incorporation (COI) or equivalent document like Trade Registry

Certificate, Business Registration Certificate, and Certificate of Commencement of

Business

6. Memorandum & Articles of Association

7. Withholding tax registration certificate / Certificate of country of domicile of client

8. Latest Annual Report

9. List of Board of Directors

10. List of Shareholders (greater than 10% holdings) and key officers

It is however pertinent to note that the procedure and requirements of each financial institution with

respect to opening of SCRA differs, hence it is advised to request the procedure from respective

financial institution.

Payments made by foreign investors shall be supported by proof of receipt of foreign currency

through normal banking channels. Such proof shall be submitted along with the Application by the

foreign investors.

2.8. MINIMUM AMOUNT OF APPLICATION AND BASIS FOR ALLOTMENT OF SHARES

The basis and conditions of allotment to the general public shall be as follows:

(a) Application for shares below the total value of PKR 15,039/- (Offer Price plus PKR 0.01 per share (Stamp duty on transfer of shares) plus 0.048032 per share (CDC charges of 0.16% of the

Offer Price) x 500 shares) shall not be entertained in case of transfer of shares to CDC account.

In case physical shares are desired application for shares below the total value of PKR 15,085/-

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(Offer Price plus PKR 0.15 per share (Stamp duty on transfer of shares) x 500 shares) shall not

be entertained.

(b) The minimum amount of application for subscription of 500 shares is PKR 15,039/- (Offer Price plus PKR 0.01 per share (Stamp duty on transfer of shares) plus 0.048032 per share

(CDC charges of 0.16% of the Offer Price) x 500 shares) in case shares are desired to be

transferred to a CDC account. In case physical shares are desired, minimum amount of

application for subscription of 500 shares is PKR 15,085/- (Offer Price plus PKR 0.15 per

share (Stamp duty on transfer of shares) x 500 shares) for both in physical form and shares

under the book entry system.

(c) Application for shares must be made for 500 shares or in multiple of 500 shares only. Applications which are neither for 500 shares nor for multiples of 500 shares shall be rejected.

(d) SUBMISSION OF FICTITIOUS AND MULTIPLE APPLICATIONS (MORE THAN ONE APPLICATION BY SAME PERSON) IS PROHIBITED AND SUCH

APPLICATIONS MONEY IS LIABLE TO CONFISCATION UNDER SECTION 18A

OF THE SECURITIES AND EXCHANGE ORDINANCE, 1969.

(e) If the shares offered to the general public are sufficient to accommodate all applications, all applications shall be accommodated.

(f) If the shares applied for are in excess of the shares offered, the distribution shall be made by computer balloting, in the presence of the representative(s) of the Stock Exchange in the

following manner:

(i) If all the applications for 500 shares can be accommodated, then all such applications shall be accommodated first. If all applications for 500 shares cannot be accommodated,

then balloting will be conducted among applications for 500 shares only.

(ii) If all the applications for 500 shares have been accommodated and shares are still available for allotment, then all applications for 1,000 shares shall be accommodated. If

all applications for 1,000 shares cannot be accommodated, then balloting will be

conducted among applications for 1,000 shares only.

(iii) If all applications for 500 shares and 1,000 shares have been accommodated and shares are still available for allotment, then all applications for 1,500 shares shall be

accommodated. If all applications for 1,500 shares cannot be accommodated, then

balloting will be conducted among applications for 1,500 shares only.

(iv) If all applications for 500 shares, 1,000 shares and 1,500 shares have been accommodated and shares are still available for allotment, then all applications for 2,000

shares shall be accommodated. If all applications for 2,000 shares cannot be

accommodated, then balloting will be conducted among applications for 2,000 shares

only.

(v) After the allotment in the above mentioned manner, the balance shares, if any, shall be allotted in the following manner:

If the remaining shares are sufficient to accommodate each application for over 2,000 shares, then 2,000 shares shall be allotted to each applicant and remaining

shares shall be allotted on pro-rata basis.

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If the remaining shares are not sufficient to accommodate all the remaining applications for over 2,000 shares, then balloting shall be conducted for allocation of

2,000 shares each to the successful applicants.

(g) If the Offer is over-subscribed in terms of amount only, then allotment of shares shall be made in the following manner:

(i) First preference will be given to the applicants who applied for 500 shares;

(ii) Next preference will be given to the applicants who applied for 1,000 shares;

(iii) Next preference will be given to the applicants who applied for 1,500 shares;

(iv) Next preference will be given to the applicants who applied for 2,000 shares; and then

(v) After allotment of the above, the balance shares, if any, shall be allotted on pro rata basis to the applicants who applied for more than 2,000 shares.

(h) Allotment of shares will be subject to scrutiny of applications for subscription of shares.

(i) Applications, which do not meet the above requirements, or applications which are incomplete, will be rejected.

2.9. REFUND OF SUBSCRIPTION MONEY TO UNSUCCESSFUL APPLICANTS

On behalf of the Offerors, the Company shall take a decision within ten (10) days of the closure of

subscription list as to which applications have been accepted or are successful and refund the

money in cases of unaccepted or unsuccessful applications within ten (10) days of the date of such

decision, as required under Section 71 of the Ordinance.

As per Sub-section (2) of Section 71 of the Ordinance, if refund as required under Sub-section (1)

of Section 71 of the Ordinance is not made within the time specified therein, the Offerors shall be

liable to repay the money with surcharge at the rate of 1.5%, for every month or part thereof from

the expiration of the 15th day and, in addition, to a fine not exceeding PKR 5,000/- and in case of

continuing offense to a further fine not exceeding PKR 100/- per day after the said 15th day of

which the default continues. Provided that the Offerors shall not be liable if it proves that the

default in making the refund was not due to any misconduct or negligence on its part.

2.10. CREDIT AND DISPATCH OF SHARE CERTIFICATES

On behalf of the Offerors, the Company will dispatch share certificates to successful applicants

through their Banker to the Offer or by crediting the respective Central Depository System

(CDS) accounts of the successful applicants within thirty (30) days of the close of public

subscription, as per Listing Regulations of the Stock Exchange.

Shares will be issued either in scrip-less form in the CDS of CDCPL or in the shape of physical

scripts on the basis of option exercised by the successful applicants. Shares in the physical scripts

shall be dispatched to the Bankers to the Offer within thirty (30) days from the date of close of

subscription list, whereas scrip-less shares shall be directly credited through book entries in the

respective accounts maintained with the CDCPL. Please note that Transfer charges and Stamp

Duty, as the case may be, will not be borne by the Offerors.

The applicants who opt for receipt of shares in scrip-less form in CDS should fill in the relevant

columns of the Application Form. In order to exercise the scrip-less option, the applicant(s) should

have CDS account at the time of subscription.

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If the Offerors make a default in complying with the above requirements, they shall pay to the

Stock Exchange a penalty of PKR 5,000/- per day for every day during which the default

continues. The Stock Exchange may also notify the fact of such default and the name of the

Company by notice and also by publication in its Ready-Board Quotation of the Stock Exchange.

The name of the Company will also be notified to the members of the Exchange and placed on the

website of the Exchange.

2.11. TRANSFER OF SHARES

a) Physical Scripts

Under the provisions of Section 77 of the Ordinance, the Directors of the Company shall not

refuse to transfer any fully paid share unless the transfer deed is, for any reason, defective or

invalid or is not accompanied by the relevant share certificate. Provided that the Company shall

within thirty (30) days from the date on which the instrument of transfer was lodged with it,

notify the defect or invalidity to the transferee who shall, after the removal of such defect or

invalidity, be entitled to re-lodge the transfer deed with the Company.

b) Transfer under book entry system

The shares maintained with the CDS in the book entry form shall be transferred in accordance

with the provisions of the Central Depositories Act, 1997 and the CDCPL Regulations.

2.12. SHARES ISSUED IN PRECEDING YEARS

Date of Allotment Number of

shares

Par

Value

Amount (Par Value)

Share

Premium (per share)

Amount

(Share

Premium)

Amount

(Total) Consideration

February 28, 2006 2 10 20 - - 20 Cash

August 22, 2006 1,499,998 10 14,999,980 - - 14,999,980 Cash

January 31, 2007 11,000,000 10 110,000,000 - - 110,000,000 Cash

December 7, 2007 152,800,000 10 1,528,000,000 - - 1,528,000,000 Cash

September 9, 2008 138,700,000 10 1,387,000,000 - - 1,387,000,000 Cash

October 11, 2008 16,000,000 10 160,000,000 3.77 60,377,962 220,377,962 Cash

November 4, 2011* 900,000 10 9,000,000 5 4,500,000 13,500,000 Cash

November 24, 2011* 150,000 10 1,500,000 5 750,000 2,250,000 Cash

December 8, 2011* 2,425,000 10 24,250,000 5 12,125,000 36,375,000 Cash

December 29, 2011* 125,000 10 1,250,000 5 625,000 1,875,000 Cash

June 28, 2012* 150,000 10 1,500,000 7 1,050,000 2,550,000 Cash

December 27, 2012* 50,000 10 500,000 7 350,000 850,000 Cash

TOTAL 323,800,000 3,238,000,000 79,777,692 3,317,777,962

* Shares issued under Employee Shares Option Scheme

2.13. PRINCIPAL PURPOSE OF THE OFFER FOR SALE OF SHARES

The purpose of this Offer for Sale of Shares by ECL and EPL is to expand and diversify the capital

base, improve governance structure of the Company, raise liquidity and consequently access

alternate capital resources. Proceeds from the Offer will be utilized to:

(i) pay-off conventional liabilities, and

(ii) finance new projects such as the LNG terminal

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2.14. INTEREST OF SHAREHOLDERS

None of the holders of the issued shares of the Company, except IFC who is also senior lender,

have any special or other interest in the property or profits of the Company other than as holders of

the ordinary shares in the capital of the Company.

2.15. DIVIDEND POLICY

The rights in respect of capital and dividends attached to each share are and will be the same. The

Company in its general meeting may declare final dividends but no dividends shall exceed the

amount recommended by the Directors. Dividend, if declared, in the general meeting, shall be paid

according to the terms of the provisions of the Ordinance.

The Directors may from time to time pay to the members such interim dividends as appear to the

Directors to be justified by the profits of the Company. No dividends shall be paid otherwise than

out of the profits of the Company for the year or any other undistributed profits.

No unpaid dividends shall bear interest or mark-up against the Company. The dividends

shall be paid within the period prescribed under the Ordinance.

Those investors who intend that their cash dividend, if any, is directly credited in their Bank

Account, must fill-in the relevant part of the shares subscription Form under the heading,

Dividend Mandate Option.

2.16. ELIGIBILITY FOR DIVIDEND

The shares being offered shall rank pari-passu with the existing shares in all matters, including the

right to such bonus or right issue and dividend as may be declared by the Company subsequent to

the offer of such shares.

The Company has already declared and paid an interim dividend of PKR 1.54/- per share (as

of 30th

June 2014), out of the profit for the financial year ending 31st December 2014 to the

existing shareholders, that excludes Pre-IPO Placement Investors and the General Public.

2.17. DEDUCTION OF ZAKAT

Income distribution will be subject to deduction of Zakat at source, pursuant to the provisions of

Zakat and Ushr Ordinance, 1980 (XVIII of 1980) as may be applicable from time to time (except

where the Ordinance does not apply to any shareholder or where such shareholder is otherwise

exempt or has claimed exemption from payment/deduction of Zakat in terms of and as provided in

that Ordinance).

2.18. CAPITAL GAINS (SECTION 37-A)

Capital gains derived from the sale of listed securities are taxable in the following manner under

Section 37A of the Income Tax Ordinance, 2001.

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Tax Rate

Holding period of securities

S. No. Tax Year less than one year more than one year and less

than two years

more than two

years

1 2015 12.5% 10% 0%

2.19. WITHHOLDING TAX ON DIVIDENDS

Dividend distribution to shareholders will be subject to withholding tax at the reduced rate of 7.5%

as specified in Clause 20 of Part 2 of the Second Schedule to the Income Tax Ordinance, 2001.

2.20. EXEMPTION FROM INCOME TAX

Income of the Company derived from the electric power generation project is exempted from

income tax under clause 132 of Part-1 of the Second Schedule to the Income Tax Ordinance, 2001.

2.21. DEFERRED TAXATION

The profits and gains of the Company derived from electric power generation are exempt from tax

under terms of clause 132 of Part-I of the Second Schedule to the Income Tax Ordinance, 2001

therefore no provision for deferred taxation is required to be made by the Company.

2.22. SALES TAX ON SALE/PURCHASE OF SHARES

Under the Constitution of Pakistan and Article 49 of the 7th NFC Award the Government of Sindh

and the Government of Punjab have promulgated the Sindh Sales Tax on Services Act, 2011 and

the Punjab Sales Tax on Services Act, 2012 respectively. The Sindh Revenue Board and the

Punjab Revenue Authority administer and regulate the levy and collection of the Sindh Sales Tax

(SST) and Punjab Sales Tax (PST) respectively on the taxable services provided or rendered in

Sindh or Punjab.

The value of taxable services for the purpose of levy of sales tax is the gross commission charged

from clients in respect of purchase or sale of shares in a Stock Exchange. As per Sindh Finance Act

2014-15, as mentioned in Part B of the Second Schedule (Taxable Services) read with Section 3 of

the Sindh Sales Tax on Services Act, 2011, the sales tax on Brokerage is 15%.

2.23. CAPITAL VALUE TAX (CVT) ON PURCHASE OF SHARES

Pursuant to amendments made in the Finance Act, 1989 through Finance (Amendments)

Ordinance, 2012 promulgated on April 24, 2012, 0.01% Capital Value Tax will be applicable on

the purchase value of shares.

2.24. JUSTIFICATION FOR PREMIUM Professional Management Team with Proven Track Record

The Company has a strong emphasis on recruiting and retaining best professionals who are

central to its business model. The management team boasts strong professional backgrounds

from top tier institutions.

A testament to this is the fact that the Project was constructed at a cost of US$ 0.89 million /

MW which is amongst the lowest in thermal IPPs that have come online under the Power

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Policy 2002 thus benefiting the end users in the form of lower tariff. Furthermore, the Project

was completed 3 months prior to RCOD, highlighting the managements ability to timely

execute key deliverables.

In addition to the above, the Company has operated the Project at par with other IPPs over the

course of its life through its in-house O&M team further highlighting its operational excellence

and commitment to quality.

Among the Low Cost Power Producers

The Company operates a new and state-of-the-art technology to produce low cost power from

permeate gas. It is a well-known fact that amongst thermal power projects, gas based projects

are one the cheapest source of power due to their substantially lower fuel cost. The Company

thus ranks higher in NEPRAs dispatch merit order list, benefiting from higher dispatch factor.

Guaranteed Returns

The Project was established under the Power Policy 2002 whereby, the Company is guaranteed

a US$ IRR of ~ 15% irrespective of off take or dispatch. Under the aforementioned policy and

the PPA, tariff is determined using a cost plus fixed return of equity approach and individual

tariff components are indexed for variation in exchange rate(s) and inflation, thus hedging the

Company against exchange rate and inflation risk.

Additionally, certain variations in fuel price are also passed on to the Power Purchaser. IPPs

enjoy exemption from income tax (including turnover tax) and withholding tax on import

during project construction. Also GoP is required to reimburse the Company for certain

adverse changes in duties and taxes, and against specified political risks.

Unique Source of Fuel Supply

The Company utilizes permeate gas from the Qadirpur gas field as fuel to run its operations.

The permeate gas has a low BTU value and was previously flared / wasted due to its limited

use. Due to the unique nature of its fuel source the present gas supply shortage in the country

and the resultant curtailment faced by industries across the board, the Company faces a

significantly lower risk of gas curtailment.

Capital Appreciation Potential

Return on equity is likely to increase over the life of the Project due to the gradual depreciation

parity resulting in higher dividend stream. Furthermore in the current scenario of a stable to

declining interest rate environment, high yielding shares also offer capital appreciation

potential.

Engro, a Leading Corporate Entity

Engro is a leading brand name in Pakistan, and has an excellent reputation amongst its

customers, suppliers, lenders and other stake holders due to its professional corporate structure,

experienced management, quality products, innovation, diversification and continued growth

strategy.

Over the last decade, Engro Corporation Limited has grown from PKR 10 billion to PKR 155

billion in terms of revenue and is one of the largest industrial corporations in Pakistan

operating in various sectors including Fertilizer, Foods, Energy and Chemicals. Engro

Corporation has differentiated itself in Pakistans business landscape by its proven ability to

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grow the business through its superior management expertise and its commitment to Pakistan,

where it has invested over USD 1.9 billion in projects from 2007 to 2011. In terms of market

capitalization, Engro Corporation is also one of the largest private sector companies listed on

the Karachi Stock Exchange.

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PART 3

3 UNDERWRITING, COMMISSIONS, BROKERAGE AND OTHER EXPENSES

3.1. UNDERWRITING

The Offer of 40,475,000 ordinary shares at an Offer Price of PKR 30.02/- per share has been

fully underwritten as under:

Name of Underwriter Number of Shares Amount (PKR)

Habib Bank Limited 20,237,500 607,529,750 Bank Alfalah Limited 20,237,500 607,529,750

Total 40,475,000 1,215,059,500

If, and to the extent, the Ordinary Shares underwritten are not subscribed and paid for in full

by the closing date for the public subscription, the Underwriters in terms of the underwriting

agreements will, within two (2) days of being called upon to do so by the Offerors, (i)

subscribe and take up against full payment in cash or (ii) procure subscribers to subscribe and

take up against full payment in cash, the shares remained unsubscribed subject to the

maximum number of the shares underwritten by each of them.

In opinion of the Directors, the resources of the Underwriters are sufficient to discharge their

underwriting commitments.

3.2. UNDERWRITING COMMISSION

The underwriters have been paid an underwriting commission at the rate of 0.75% of the

amount of Offer underwritten by them. In addition, a take up commission at the rate of 0.25%

shall be paid to the underwriters on the value of shares required to be subscribed by them by

virtue of their respective underwriting commitments.

3.3. BUY BACK/REPURCHASE AGREEMENT

THE UNDERWRITERS HAVE NOT ENTERED INTO ANY BUY BACK/RE-PURCHASE

AGREEMENT WITH THE OFFERORS OR ANY OTHER PERSON IN RESPECT OF THIS

PUBLIC OFFER.

ALSO, NEITHER THE OFFERORS NOR ANY OF THEIR ASSOCIATES HAVE ENTERED

INTO ANY BUY BACK/REPURCHASE AGREEMENT WITH THE UNDERWRITERS OR

THEIR ASSOCIATES. THE OFFERORS AND THEIR ASSOCIATES SHALL NOT BUYBACK

/ REPURCHASE SHARES FROM THE UNDERWRITERS AND THEIR ASSOCIATES.

3.4. COMMISSION TO THE BANKERS TO THE OFFER

A commission at the rate of 0.25% of the amount collected on allotment in respect of successful

applicants will be paid by the Offerors to the Bankers to the Offer for services to be rendered by

them in connection with this Offer for Sale of Shares.

3.5. BROKERAGE

For the public offering, the Offerors will pay brokerage to the TREC holders of the Exchange at the

rate of 1% of the value of shares (including premium) actually sold through them. No brokerage

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shall be paid to the TREC in respect of shares taken up by the underwriters by virtue of their

underwriting commitments.

3.6. ESTIMATED EXPENSES TO THE OFFER FOR SALE

The expenses of this Offer are estimated not to exceed PKR 69.73 million. All such expenses are

to be borne by the Offerors. Details of the expenses are mentioned below:

Expenses Rate Amount (PKR)

Financial Advisor & Lead Arrangers Fee 0.92% 22,357,095

Underwriting Commission General Public 0.75% 9,112,946

Take up Commission General Public 0.25% 3,037,649

Brokerage to Members of the Stock Exchange 1.00% 12,150,595

Bankers to the Offer Commission 0.25% 3,037,649

Printing, Publication and Notice Costs 3,000,000

KSE Initial Listing Fee, Annual Listing Fee,

Service Charges 3,118,012

SECP Application and Processing Fee 200,000

Balloting Agent 2,220,000

Marketing Cost 5,000,000

Legal & Professional Fee 1,500,000

Miscellaneous Cost 5,000,000

Total 69,733,946

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PART 4

4 HISTORY AND PROSPECTS

4.1. BRIEF HISTORY

4.1.1. The Offerors

Engro Corporation Limited

Engro Corporation Limited (formerly known as Engro Chemical Pakistan Limited) is one

of the largest industrial corporations in Pakistan operating in various sectors including

Fertilizer, Foods, Energy and Chemicals. It is a public limited company and is listed on the

Karachi, Lahore and Islamabad Stock Exchanges.

An Esso/Mobil joint venture started operations in 1957 which discovered the Mari Gas field

near Daharki. In 1965 Esso set up EssoPakistan Fertilizer Company Limited which started

manufacturing and marketing fertilizers and established a full-fledged marketing organization

which undertook agronomic programs to educate the farmers of Pakistan. As the nations first

fertilizer brand, Engro (then Esso) helped modernize traditional farming practices. In 1971,

Esso Pakistan Fertilizer Company Limited became Exxon Chemical Pakistan Limited and

then later Engro Chemical Pakistan Limited as a result of the most successful employee buy-

out in Pakistans corporate history.

On January 1st, 2010, after a demerger of the fertilizer business, Engro Chemical Pakistan

Limited was renamed Engro Corporation Limited and established as a holding company. The

principal activity of the the Holding Company is to manage investments in subsidiary

companies and joint ventures.

Engro Corporation has differentiated itself in Pakistans business landscape by its proven

ability to grow the business through its superior management expertise and its commitment to

Pakistan, where it has invested over USD 1.9 bn in projects from 2007 to 2011. In terms of

market capitalization, Engro Corporation is also one of the largest private sector companies

listed on the Karachi Stock Exchange.

Engro Powergen Limited

Engro Powergen Limited, a wholly owned subsidiary of Engro Corporation Limited, was

incorporated in 2008 to develop power projects in Pakistan with a view to addressing the

perennial power shortage in the country while still earning a competitive return for its

shareholders.

Engro Powergen Limited is the parent company of Engro Powergen Qadirpur Limited which

operates a 217.298 (net) MW Combined Cycle Power Plant and in 2009 also entered into a

joint venture with the Sindh government, to establish the Sindh Engro Coal Mining Company

Limited whose principal purpose is to mine coal from Thar Block-II and is also developing

660 MW coal based power project.

4.1.2. The Company

Engro Powergen Qadirpur Limited (EPQL or the Company) was incorporated in Pakistan

on February 28th, 2006 as a private limited company. Effective March 24, 2008, the

Company was converted to an unlisted public company.

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Engro Powergen Qadirpur Limited was established to undertake the business of power

generation and sale. The Company completed construction and testing of its 217.298 (net)

MW combined cycle power plant and commenced commercial operations on March 27, 2010.

The electricity generated is transmitted to the National Transmission and Dispatch Company

(NTDC) under the Power Purchase Agreement (PPA) dated October 26, 2007 which is

valid for a period of 25 years from the Commercial Operations Date.

4.1.3. Plant Details

The Company has set up a 217.298 (net) MW gas based thermal power project near Qadirpur,

District Ghotki, Sindh. The Company operates a plant of Chinese origin which was acquired

brand new in the years 2007-2009.

The project is unique as it converts low-BTU, high sulphur content permeate gas, which was

earlier being wasted and flared, into much needed electric power. The plant is a Combine

Cycle Plant, with 1+1+1 configuration; i.e. one gas turbine, one Heat Recovery Steam

Generator (HRSG), and one steam turbine. The plant uses permeate gas as its primary fuel

source and HSD as the startup and backup fuel. The unique fuel usage, which was previously

being flared, makes Engro Powergen Qadirpur Limited one of the lowest tariff power plant as

compared to other thermal based power plant in the economic merit order and also results in a

net saving of national energy. The low cost of fuel does not have an impact on net

profitability of the Company since it is a pass through item.

The plant operates on highly efficient technology resulting in a lower cost of power

generation. China Tianchen Chemical Engineering Corporation (TCC) was chosen as

Engineering and Procurement Contractor for the project and China National Construction and

Engineering Company (CNCEC) was chosen as construction contractor after a competitive

bidding process.

A tariff based on a net output of 217.3MW (while operating on permeate gas) and 212.9MW

(while operating on HSD) was approved by the NEPRA.

Brief synopsis of the Engro Powergen Qadirpur Limited power plant is provided in the table

below:

Location 2.5 KM approx from OGDCLs Qadirpur gas treatment plant

Plot Size 40 Acres

Total Gross Capacity 224.8 MW

Auxiliary Consumption 7.5 MW

Net Capacity (with correction) 217.3 MW

Gas Turbine Specifications Combined Cycle Gas Turbine GE PG9171E supplied by

Nanjing Turbine Company

Steam Turbine Specifications Harbin Steam Turbine Factory Co. Ltd., China

Commerical Operations Date March 27, 2010

Total Project Cost (actual) USD 194 Million

Fuel - 75MMSCFD Permeate Gas from Qadirpur Gas Field - High Speed Diesel (HSD) as startup and backup fuel

Gas Supply Contract Sui Nothern Gas Pipelines Limited (SNGPL)

Project Life 25 Years (~21 years remaining)

EPC Contractor China Tianchen Chemical Engineering Corporation (TCC)

Construction Contractor China National Construction and Engineering Company

(CNCEC)

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4.1.4. Location

Land for the project site was purchased near OGDCLs Qadirpur gas plant in February 2007

in Qadirpur, District Ghotki, Sindh. Raw water to meet normal plant needs is drawn from the

Ghotki feeder canal located approximately 7 km south of the project site under a permit from

the Sindh Irrigation and Drainage Authority.

4.1.5. Project Construction and Implementation Status

The Engro Powergen Qadirpur Limited project was initiated with the submission of a

proposal to PPIB for approval in January 2005 and it commenced commercial operations on

March 27, 2010, in the shortest time as compared to other IPPs. Provided below are key

milestones in the projects development:

Milestones Date Proposal submitted to PPIB Jan 2005

PPIB Approved 75 MMSCFD Permeate Gas Sep 2005

Feasibility Approved by PPIB Sep 2006

Tariff Petition Submitted to NEPRA Feb 2007

NEPRA Public Hearing Held Mar 2007

NEPRA Tariff Determination July 2007

EPC Contract Signed Oct 2007

PPA / IA Signed Oct 2007

GSA Signing after OGRA Approval Apr 2008

GSA Amendment & Financial Close Oct 2008

IFC Equity Injection Oct 2008

First Fire of Gas Turbine Dec 2009

Synchronization of Plant with WAPDA Dec 2009

Mechanical Completion Mar 2010

Commercial Operations Date March 27, 2010

Physical and Financial Project Completion Date July 19, 2011

4.1.6. Production Since Achieving Commercial Operations Date(COD):

The Project achieved COD on March 27, 2010, representing one of the shortest construction

periods for comparable IPPs in recent history. Over 3 years of operations the plant has

operated at a healthy average billable availability factor of 95%:

Billable Availability

Factor

Load Factor

2nd

Quarter(Apr- Jun) 2010 99.2% 85.3%

3rd

Quarter (Jul-Sep) 2010 88.6% 71.3%

4th Quarter (Oct-Dec) 2010 98.1% 89.9%

Full year 2010 95.0% 82.5%

1st Quarter (Jan-Mar) 2011 99.7% 83.0%

2nd

Quarter(Apr- Jun) 2011 100.2% 85.8%

3rd

Quarter (Jul-Sep) 2011 100.1% 87.9%


Full year 2011 100.1% 88.1%

1stQuarter(Jan- Mar) 2012 100.4% 88.9%

2nd

Quarter(Apr- Jun) 2012 100.0% 96.5%

3rd

Quarter (Jul-Sep) 2012 100.6% 95.2%


Full year 2012 100.5% 93.9%


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*Note: The plant went into a complete shutdown on Oct 12, 2013 due to fault in gas turbine generator rotor.

This was a unique failure of GT - Gen Rotor and there was no experience / expertise available in Pakistan,

but team managed to reach out & found an expert vendor Korean Power Services, and the repair was done

at site which was the first of its kind in Pakistan. The plant was brought back online on December 27, 2013

and is functioning smoothly after repair.

4.1.7. Key Contractors / Technology Partners

Key contractor and technology partners of Engro Powergen Qadirpur Limited and their brief

profiles are given in the table below:

Contractor / Technology Partner Role Profile

China Tianchen Chemical

Engineering Corporation

(TCC)

Engineering and

Procurement Contractor

TCC was founded in 1953

and is one of the leading

international engineering

corporations in the world.

On the international front,

TCC is ranked as a top

225 Global International

Contractor in the

American "Engineering

News Records" (ENR).

TCC is ISO 9001 quality

system certified. In 2002,

TCC also passed the

certification for ISO

14001, GB/T28001

Occupational Safety &

Health and Environmental

Management system.

China National Construction

and Engineering Company

(CNCEC)

Construction Contractor

CNCEC, a large

corporation directly

administrated by the State

Council of China, acted as

Construction Contractor

for the project.

The company has

diversified exposure in

the fields of Power,

Fertilizer, Petrochemical,

Oil Refinery and

Infrastructure

CNCEC has successfully

executed more than 1,000

Billable Availability

Factor

Load Factor

2nd

Quarter(Apr- Jun) 2013 100.8% 74.0%

3rd

Quarter (Jul-Sep) 2013 100.6% 99.7%

4th Quarter (Oct-Dec) 2013* 30.5% 15.5%

Full year 2013 83.1% 71.7%


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Contractor / Technology Partner Role Profile

contracts with a

cumulative value

exceeding USD 4,000

million in over 40

countries

Masaood John Brown

International (MJBI)/Harbin

Hanghao Power Station

Equipment Science and

Technology Co. Ltd

Long-Term Service

Agreement-Maintenance

Support

EPQL has entered into

maintenance support

contract with Masaood

John Brown International

(MJBI) and Harbin

Hanghao Power Station

Equipment Science and

Technology Co. Ltd.

MJBI is a world

renowned service

provider for Frame 9E gas

turbine. Harbin Hanghao

is the maintenance

support arm of Harbin

Turbine Company, OEM

of steam turbine. Both the

contractors have

mobilized during the first

maintenance outage in

March 2011.

4.1.8. Key Operational Contracts

Detail of Key Operational Contracts is provided at paragraph 7.8.4.

4.1.9. Project Funding

The total project cost was initially estimated at USD 205 million as against the actual cost of

USD 194 million at COD which had been financed in a Debt-Equity ratio of 75/25. The entire

senior debt was arranged through international financing in the following manner;

Institutions Agreement Date

USD million

Amount

Committed

Amount

Utilized

International Finance Corporation (IFC) 19/12/2007 57 53.1

DEG of Germany (DFI) 19/12/2007 20 18.7

FMO of Netherland (DFI) 19/12/2007 28 26.0

Proparco of France (DFI) 19/12/2007 23 21.9

Swedfund of Sweden (DFI) 19/12/2007 13 12.2

OPEC Fund for International

Development (OFID) 19/12/2007 13 12.1

Total Debt 154 144.0

Ultimately only USD 144 million of debt financing was utilized and these international

lenders are scheduled to be completely repaid by the year 2020. As of December 31, 2013 the

current outstanding amount is USD 105 million.

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4.1.10. Tariff

The power purchaser ensures guaranteed returns through a tariff structure covering all fixed

and variable costs. Summarized tariff structure is presented below:

Tariff structure is classified into two components; (a) cash outflows linked with capacity utilization of the plant such as fuel price, variable O&M, etc. (referred as Energy

Purchase Price) and (b) cash outflows independent of capacity utilization of the plant

such as debt servicing, return on equity, fixed O&M costs etc. (referred as Capacity

Purchase Price). Hence, equity returns are assured regardless of capacity utilization of

the plant provided the plant is made available for dispatch.

The equity investors are guaranteed a US dollar based equity IRR of 15% provided that the company is making dependable power capacity available. The table below illustrates

the tariff structure applicable to all thermal IPPs.

Engro Powergen Qadirpur Limited has one of the lowest tariffs amongst other thermal IPPs

bringing it on higher priority in the merit order of dispatch.

Engro Powergen Qadirpur Limiteds tariff (excluding fuel cost component) has been trued-up

by NEPRA and is shown below:

Tariff Component Indexation

Year 1 (2010

2011 ) to 10 (2020-

2021)

Year 11 (2021-

2022) to 25

(2034-2035)

Capacity charge for Operation on Gas (PKR/kW/Hr)

Fixed O&M Foreign US$/PKR& US CPI 0.0096 0.0096

Fixed O&M Local* CPI (General) - Local 0.1796 0.1796

Insurance Actual on yearly basis 0.0630 0.0630

Cost of Working Capital KIBOR Variation 0.0537 0.0537

ROE US$/PKR 0.3438 0.3438

ROEDC US$/PKR 0.1265 0.1265

Debt Servicing Libor & Exchange rate

Variation 0.7121 -

Total Capacity Charge 1.4883 0.7762

Energy charge for Operation on Gas (PKR/kWH)

Variable O&M Foreign US$/PKR& US CPI 0.1917 0.1917

Variable O&M Local* CPI (General) - Local 0.0501 0.0501

Total Variable O&M

(PKR/ KWh)

0.2418 0.2418

*Reference values revised by NEPRA for April 2011 onwards

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Tariff for Q2, 2014 as approved by NEPRA is as follows:

Tariff Components Revised April-June

2014 Quarter Gas

Capacity Charge (PKR/kW/Hour)

Fixed O&M Foreign 0.0121

Fixed O&M Local 0.2194

Insurance 0.0687

Cost of Working Capital 0.0455

ROE 0.3997

ROEDC 0.1471

Debt Servicing 0.8252

Total Capacity Charge (PKR/kW/Hour) 1.7177

Variable O&M (PKR/kWh)

Variable O&M Foreign 0.2414

Variable O&M Local 0.0612

Total Variable O&M (PKR/kW/Hour) 0.3026

The aforementioned tariff is subject to quarterly revision. For future reference, latest tariff of

the Company can be found at http://www.nepra.org.pk/tariff_ipps.htm. The tariff applicable in

Q2 including fuel cost was of PKR 7.0666 per kW/Hour.

4.2. Power Industry Overview

The Power Sector of Pakistan is primarily operated through the Water and Power Development

Authority (WAPDA) which distributes electricity across Pakistan except for the metropolitan

city of Karachi (and its surrounding areas) which are distributed electricity via K-Electric.

However, given the dearth of electricity and due to the Government of Pakistans initiative to boost

investment in this sector, private sector participation in power generation has increased in recent

years with establishment of 35 Independent Power Projects (IPPs) contributing a total of ~43% to

the total electricity generation in Pakistan.

As of 2013, the total electricity generation capacity of Pakistan was 23,663 MW, of which thermal

contributed 16,000 MW (67.62%), hydroelectric contributed 6,826 MW (28.85%), nuclear

contributed 787 MW (3.33%) and 50 MW (0.2%) was contributed by wind power. Domestic users

are the largest consumers of electricity consuming ~46%; followed by the industrial sector ~30%,

agriculture ~11% and the commercial sector ~8% respectively.

Pakistan finds itself very short in terms of power supply, with supply unable to keep pace with

demand which is expected to increase in a range of 5-7% per annum, with the domestic power

industry unable to generate enough electricity to meet the countrys needs resulting in a supply

deficit of more than 5,000 MW at peak demand levels. This situation is expected to persist in the

short to medium term. The spike in shortfall is primarily due to following reason:

- Capacity is underutilized from existing power plants

- No major expansion neither from private nor from public sector

- Significant Transmission and Distribution Losses

- Creation of circular debt

http://www.nepra.org.pk/tariff_ipps.htm

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Units in MW

Source: NEPRA, BAFL & HBL Research

Chronic power deficit in the country has been regarded as one of the most significant challenges

facing the country, particularly in the manufacturing sector. With limited addition to the power grid

during FY08-FY13, the deficit is currently estimated to be over 5, 000MW while circular debt leads

to further under-utilization of resources. The gross amount of circular debt, at present, is estimated

to be at the levels PKR300bn (May14).

Source: NEPRA

4.3. RISK FACTORS

4.3.1. Off-take Risk

Low dispatch / off-take from the Project may result in lower revenue for the Company and

resultantly lower profits. This may have an adverse effect on investor returns.

Mitigating Factor:

Under the PPA, tariff payments are bifurcated into capacity payments and energy payments.

Capacity payments require reimbursement of certain fixed costs, financing costs and returns on

equity to the Company irrespective of Off-take, whereas energy payments are based on certain

variable costs.

Subject to the terms of the PPA, the Power Purchaser is obligated to make capacity payments

to the Company provided the Company is able to keep available the committed capacity.

-

2,000

4,000

6,000

8,000

-

5,000

10,000

15,000

20,000

25,000

FY09 FY10 FY11 FY12 FY13

Generation Capability Peak Demand Deficit

36%

27%

30%

4% 2%

Electricity Generation by Source

(FY13)

Oil Gas Hydel Nuclear Others

16%

52%

31%

1%

Electricity Generation By Source

(FY05)

Oil Gas Hydel Nuclear Coal

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4.3.2. Operational Risk

Unlike other IPPs, the Company operates the plant through internal O&M service providers. In

the event, the Company is unable to make available the committed capacity it will lead to a

reduction in capacity payments and consequently, return on equity which cannot be passed on

to the O&M contractor in the form of liquidated damages.

Mitigating Factor:

The Company has put into place a highly professional and experienced O&M team which

ensures continuity of operations, compliance with the terms of the relevant contracts

(including the PPA) and maintains and operates the plant as per requisite schedules.

Furthermore, being cognizant of the criticality of its O&M team, the Company has developed

a system of succession planning to ensure smooth operations in the event of turnover.

4.3.3. Gas Supply Risk

Given the shortage of gas supply, several industries including the Power Sector faces gas load

shedding which results in lower dispatch.

The existing source of gas supply may deplete over the life of the Project which may render

the Company unable to continue operations.

Mitigating Factor:

The Company utilizes a unique source of gas i.e. permeate gas to generate power. Permeate

gas is supplied from the Qadirpur Gas field which was previously being flared. EPQL is

isolated from effects of gas curtailment due to overall gas shortage in the country.

In the event of depletion in gas reserves, the Company is allowed to comingle fuel i.e. run on

both gas and HSD and get an appropriate tariff. Further comfort can be taken from the fact that

under the terms of the Implementation Agreement (the terms of which are summarised in

paragraph 7.8) the GoP is obligated to allow the Company certain costs for alternate fuel

sources.

4.3.4. Gas Price Risk

An increase of gas price i.e. the primary business driver will result in lower profitability of the

Company and hence lower investor returns.

Mitigating Factor:

Subject with compliance with the efficiency provided in the tarrif, the tariff structure as

approved under the PPA, allows for certain increases in fuel prices to be passed-on to the

Power Purchaser.

4.3.5. Technology Risk

The power plant may face technological obsolescence and may be replaced with plants

operating on more efficient technology.

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Mitigating Factor:

Subject to the terms of the PPA, the Power Purchaser is obligated to purchase power from the

Company for a term of 25 years with predefined return on equity. The PPA also stipulates a

regressive efficiency structure which accounts for loss of efficiency due to usage.

4.3.6. Interest Rate Risk

Fluctuation in interest rate may have an adverse effect on the Companys profitability.

Mitigating Factor:

Cost of financing constitutes part of capacity payments in the PPA. Interest payment

components are indexed to variations in the respective benchmark interest rates i.e. KIBOR or

LIBOR.

4.3.7. Inflation Risk

Inflationary pressure will increase the operating costs for the Company thus reducing its

profitability.

Mitigating Factor:

Under the PPA, certain effects of inflation are adjusted for when determining the amount of

payments to be made to the Company by the Power Purchaser.

4.3.8. Liquidity Risk

Build-up of circular debt and the resultant liquidity constraint may render the Company unable

to honor its financial commitments.

Mitigating Factor:

The Company keeps a close watch on its liquidity through stringent internal controls. Financial

obligations are projected to determine the level of liquidity required which is arranged through

either internal cash generation or available credit lines.

4.3.9. Exchange Rate Risk

Risk of PKR depreciating against USD may result in variability of the Companys

profitability.

Mitigating Factor:

The tariff is adjusted by NEPRA to take into account fluctuations of USD/PKR exchange rate during construction.

Foreign currency component of O&M costs, return on equity, interest payment and principal repayment component are indexed to variations in the USD/PKR exchange rate.

GOP provides guarantee on availability of foreign currency, free transfer and repatriation of funds under the Implementation Agreement.

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Under Power Policy 2002, the company is guaranteed a US dollar equity Internal Rate of

Return (IRR) of approximately 15%. Pakistans IPPs have a unique return structure

in which they are insulated from fluctuations in fuel prices, interest rates and foreign

exchange rates. The tariff structure outlined in the Power Purchase Agreement (PPA)

ensures the IPPs of US dollar-denominated revenue streams, with equity returns pegged to

the US dollar, insulating cash flows from exchange rate movements.

4.3.10. Credit Risk

The Power Purchaser may be unable to clear its dues under the circular debt resulting in a loss

to the Company.

Mitigating Factor:

Receivables of Company under sale of electricity are secured against a GoP guarantee through

the Implementation Agreement. Additionally, being an IPP operating on gas, the Company

contributes one of the cheapest forms of power to the national grid. Hence, continued

operations of the Company are a matter of direct interest to the Power purchaser.

4.3.11. Litigation Risk

The litigations mentioned in section 7.10 may have an adverse impact on the Company.

Mitigating Factor:

Litigations against levy of Gas Infrastructure Development Cess (GIDC) and Worker Welfare

Fund (WWF) have no adverse impact on the Company since both are recoverable from Power

Purchaser as a pass through item.

For remaining litigation, the Company is confident, based on the advice from its legal counsel,

that chances of judgment against the Company are remote hence no provisions have been taken

into the financial statements of the Company.

4.3.12. Capital Markets Risk

The risk relates to the price performance of the share after the Company is listed.

Mitigating Factor:

The rise or fall in market prices is mainly governed by market forces. However, investor

sentiment is based on the fundamental value of the Company which is primarily dependent on

financial performance. Further, past performance is no guarantee of future returns but the

Company is likely to perform in future due to experienced management and strong group

profile.

4.3.13. Flood Risk

Floods may cause interruption in the operations of plant and damage the plant and machinery.

Mitigating Factor:

The Project facility is protected through plant walls and gates which are designed and built to

stop water ingress. Furthermore, all roads leading to the Project facility are surrounded by

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drain channels which collect the flood water at a common water pit built at the lowest

elevation of the plant.

4.3.14. Recovery of Insurance Claims

Timing and amount of insurance claim recovery may affect projected cash flows.

Mitigating Factor:

The insurance company was brought onboard from the onset of the problem to minimize their

turnaround time and all steps were taken after their concurrence of the malfunction of rotor in

2013. Accordingly, the Company is confident that the insurance claim will be recovered

during 2014.

4.3.15. Political Risk

Uncertain political conditions / political force majeure events may pose a threat to the

Companys profitability.

Mitigating Factor:

Pursuant to the Implementation Agreement, the Company is not liable for failure or delay in

performing certain obligations in case of certain political force majeure events.

Note: IT IS STATED THAT ALL MATERIAL RISK FACTORS HAVE BEEN DISCLOSED

AND THAT NOTHING HAS BEEN CONCEALED IN THIS RESPECT.

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PART 5

5 FINANCIAL INFORMATION

5.1. AUDITORS REPORT UNDER SECTION 53(I) READ WITH CLAUSE 28 OF SECTION 2 OF PART I OF THE SECOND SCHEDULE TO THE COMPANIES

ORDINANCE, 1984, FOR THE PURPOSE OF INCLUSION IN THE OFFER FOR

SALE DOCUMENT

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5.2. SHARE BREAK-UP VALUE CERTIFICATE

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5.3. AUDITORS CERTIFICATE ON ISSUED, SUBSCRIBED, AND PAID UP CAPITAL OF THE COMPANY

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5.4. HALF YEAR AUDITED ACCOUNTS FOR THE PERIOD ENDED 30TH JUNE 2014

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5.5. SUMMARY FINANCIAL HIGHLIGHTS

INCOME STATEMENT

PKR in Million Jun14 (HY) Dec13 Dec12 Dec11 Dec10

Revenue 6,516 8,665 11,666 8,338 5,727

Cost of Sales 5,068 7,014 9,033 6,050 4,120

Gross Profit 1,448 1,652 2,633 2,288 1,607

Profit from Operations 1,421 1,934 2,510 2,216 1,544

Financial Charges 333 476 404 429 432

Profit after Tax 1,088 1,458 2,101 1,786 1,111

BALANCE SHEET


Equity 6,075 5,523 6,758 5,110 4,193

Non-Current Assets 14,416 15,337 14,969 14,564 14,393

Current Assets 6,281 3,696 9,396 6,048 4,228

Total Assets 20,697 19,033 24,365 20,611 18,621

Current Liabilities 6,324 3,923 7,474 5,038 3,464

Non-Current Liabilities 8,298 9,586 10,133 10,464 10,964

Total Liabilities 14,622 13,510 17,607 15,502 14,427

FINANCIAL RATIOS


Gross Margin 22% 19% 23% 27% 28%

Operating Margin 22% 22% 22% 27% 27%

Net Margin 17% 17% 18% 21% 19%

EPS 3.36 4.5 6.49 5.58 3.47

Current Ratio 1.0 0.9 1.3 1.2 1.2

Long Term Debt to Equity Ratio 1.59 1.99 1.68 2.25 2.83

Total Debt to Equity Ratio 2.02 2.15 2.03 2.83 3.27

Return on Assets 5% 8% 9% 9% 6%

Return on Equity 18% 26% 31% 35% 26%

Break Value per share 18.76 17.06 20.87 15.79 13.10

Break Value per share - Adjusted* 18.76 17.06 20.87 15.78 12.96 *adjusted for increase in number of shares in the following year

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PART 6

6 MANAGEMENT OF THE COMPANY

6.1. POLICY MATTERS

All policy-related matters are managed by the Board of Directors, headed by the Chairman of the

Board. At present, the Board comprises of 8 Directors including the CEO. The Directors are

elected by the shareholders in accordance with the relevant provisions of the Ordinance.

BOARD OF DIRECTORS & COMPANY SECRETARY OF THE COMPANY

S. No. Name Address Designation Directorship in other Companies (as on

June 30, 2014)

1

Mr.

Muhammad

Aliuddin

Ansari

8th Floor, The

Harbour Front

Building

HC # 3,

Marine Drive

Block 4,

Clifton,

Karachi

Director

Engro Corporation Limited Engro Fertilizers Limited Engro Eximp (Private) Limited Engro Eximp AgriProducts (Private) Ltd. Sindh Engro Coal Mining Company Dewan Drilling Limited Dewan Petroleum (Private) Limited Pakistan Chemical & Energy Sector Skill

Development Company

Pakistan Business Council Engro Vopak Terminal Limited Engro Polymer & Chemicals Limited Engro Foods Limited Engro Powergen Limited Elengy Terminal Pakistan Limited Thar Power Company Limited Engro Foundation (Trustee) Engro Elengy Terminal (Private) Limited Gel Utility Limited, Nigeria

2

Mr. Syed

Muhammad

Ali

4th Floor, The

Harbour Front

Building

HC # 3,

Marine Drive

Block 4,

Clifton,

Karachi

CEO/Director

Engro Powergen Limited The Hub Power Company Limited Laraib Energy Limited GEL Utility Limited, Nigeria Engro Power International Holding B.V.,

Netherlands

3 Mr. Ruhail

Mohammed

7th Floor, The

Harbour Front

Building

HC # 3,

Marine Drive

Block 4,

Clifton,

Karachi

Director

Engro Corporation Limited Engro Vopak Terminal Limited Engro Eximp (Private) Limited Engro Fertilizers Limited Engro Foods Limited Engro Foundation (Trustee) Pakistan Institute of Corporate

Governance

The Hub Power Company Limited

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S. No. Name Address Designation Directorship in other Companies

(as on June 30, 2014)

4 Ms. Aliya

Yusuf

Orr. Dignam

& Co. Bldg

No. 1-B, State

life Sq. I.I

Chundrigar

Road,

Karachi

Director

Engro Powergen Limited First Micro Finance Bank Limited APWA Endowment Trust Colgate Palmolive (Pakistan) Limited

5 Mr. Vaqar

Zakaria

Hagler Bailly

Pakistan (Pvt)

Ltd, 39, Street

3, E7,

Islamabad

Director

Hagler Bailly Pakistan Himalayan Wildlife Foundation Engro Powergen Limited Pakistan Foundation Fighting Blindness,

Member Board of Trustees

National Transmission and Dispatch Company Ltd

6 Mr. Shabbir

Hashmi

House No.

90/1

Street No. 11

Kh-e- Sehar,

DHA, Phase 6

Karachi

Director

Engro Corporation Limited Engro Fertilizers Limited Engro Powergen Limited LMKR Holdings (Private) Limited Sindh Engro Coal Mining Company

Limited

UBL Fund Managers Thar Power Company Limited The Helpcare Society The Hub Power Company Limited

7

Mr. Shahid

Hamid

Pracha

16-B, 3rd

Central Lane,

Phase II,

DHA,

Karachi

Director

Engro Corporation Limited Engro Powergen Limited Engro Fertilizers limited DH Fertilizers Limited Tenaga Generasi Limited Dawood Lawrencepur Limited Dawood Hercules Corporation Limited The Hub Power Company Limited e2e Business Enterprises (Private)

Limited

8 Mr. Javed

Akbar

75/1/1 Street

15,

Kh-e-Sehar,

Phase 6, DHA

Karachi.

Director

Engro Vopak Terminal Limited Dawood Hercules Chemical Limited Javed Akbar Associates (Private) Limited DH Fertilizers Limited Pakistan Petroleum Limited Engro Fertilizers Limited Engro Powergen Limited

9

Ms. Faryal

Mazhar

Habib

8th Floor, The

Harbour Front

Building

HC # 3,

Marine Drive

Block 4,

Clifton,

Karachi

Company

Secretary

Engro Powergen Limited Engro Vopak Terminal Limited Elengy Terminal Pakistan Limited. Engro Elengy Terminal (Pvt) Limited.

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6.2. OVER DUE LOANS

There are no overdue loans (local or foreign currency) on the Company or its Directors.

6.3. DIVIDEND PAYOUT

Dividend payout of the Company since the last four (4) years from 2010 is as below:

Jun14 (HY) Dec13 Dec12 Dec11 Dec10*

Cash Dividend 15.4% 61.7% 35.5% 28.6% -

Bonus - - - - -

Payout Ratio 46% 137% 55% 51% -

* 2010 was the first year of commercial operations.

6.4. DIVIDEND PAYOUT OF ASSOCIATED COMPANIES

2013 2012 2011 2010 2009

Engro Corporation Limited (December Year-end) Dividend per share Note 1 - 6.0 6.0 6.0

Bonus 0% 0% 30% 20% 10%

Engro Fertilizers Limited (December Year-end)

Dividend per share not applicable

Bonus

Engro Foods Limited (December Year-end) Dividend per share - - -

not applicable Bonus 0% 0% 0%

Engro Polymer & Chemicals Limited (December Year-end)

Dividend per share - - - - -

Bonus 0% 0% 0% 0% 0%

Dawood Hercules Limited (December Year-end) Dividend per share 1.0 1.0 1.0 5.0 4.0

Bonus 0% 0% 0% 300% 10%

Dawood Lawrencepur Limited (December Year-end)

Dividend per share 1.0 5.0 1.0 0.5 -

Bonus 0% 0% 0% 15% 0%

The Hub Power Company Limited (June Year-end)

Dividend per share 8.0 6.0 5.5 5.0 3.35

Bonus 0% 0% 0% 0% 0%

Lotte Chemicals Pakistan Limited (December Year-end)

Dividend per share - - 0.5 0.5 0.5

Bonus 0% 0% 0% 0% 0%

Pakistan Petroleum Limited (June Year-end)


Bonus 20% 25% 10% 20% 20%

Colgate Palmolive (Pakistan) Limited (June Year-end)


Bonus 10% 20% 15% 15% 15%

Cyan Limited (December Year-end)


Bonus 0% 50% 0% 50% 25% Note 1: specie dividend of 1 share of Engro Fertilizers Limited for every 10 shares of Engro Corporation Limited

Note 2: the above table shows only post-listing payouts

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6.5. PROFILE OF DIRECTORS

Mr. Muhammad Aliuddin Ansari - Chairman

Muhammad Aliuddin Ansari is the President & Chief Executive Officer of Engro Corporation

Limited since May 2012. He is a graduate of Business Administration with a specialization in

Finance & Investments. Ali started his career as an Investment Manager at Bank of America in

London which later became World Invest after a management buyout. He has also worked as CEO

Pakistan and later as COO Emerging Europe for Credit Lyonnais Securities Asia. He has also

worked as CEO AKD Securities and was instrumental in launching Online Trading, Venture

Capital and Private Equity investments in Pakistan. In 2006 he partnered with an Oil & Gas

company to form Dewan Drilling, Pakistans first independent drilling company which he led as its

CEO before joining Engro.

Ali is a member of the Board of Directors of various companies details of which are given in

par