Reaching Greater Heights · Director & Vice President Paints Mr Muhammad Zahir is Vice President Paints Business, and a Director on the Board of Directors of ICI Pakistan Limited

Nature is a constant source of inspiration to all, and

we at ICI Pakistan are no exception. The elements of

nature are a reflection of the strengths of ICI Pakistan,

signifying our progressive approach, constant

innovation, and unending drive to reach greater

heights.

Reaching Greater Heights

ICI Pakistan Limited

Our MissionTo be the partner of first choice for customers

and suppliers, ensuring sustained leadership

position in the markets where we compete,

delivering long-term business value through a

high performance culture, innovation, ethics

and responsible care.

Annual Report 2007 ICI Pakistan Limited

Contents

Company Information 62007 Highlights 7Board Members’ Profiles 8Board & Management Committees with Terms of Reference 10Our Code of Conduct 11Our Values 12Safety, Health and Environment 13Human Resource 14Highlights of Corporate Social Responsibility (CSR) 15Major CSR Initiative 17Akzo Nobel - The New Company at a glance 18ICI Pakistan Businesses 20Delivering Value to Customers 21Awards and Achievements 22ICI Pakistan Value Addition and its Distribution 23Report of the Directors 24Statement of Compliance with the Code of Corporate Governance 42Review Report to the Members on Statement of Compliance with Best Practices of Code of Corporate Governance 44Auditors’ Report to the Members 47Balance Sheet 48Profit and Loss Account 50Cash Flow Statement 51Statement of Changes in Equity 53Notes to the Financial Statements 54Pattern of Shareholding 81Comparison of Results for 6 Years 84Notice of Meeting 86

Consolidated Financial StatementsReport of the Directors of ICI Pakistan Group 90Auditors’ Report to the Members 91Consolidated Balance Sheet 92Consolidated Profit and Loss Account 94Consolidated Cash Flow Statement 95Consolidated Statement of Changes in Equity 97Consolidated Notes to the Financial Statements 98Admission SlipForm of Proxy


To achieve our mission we will:

■ Give highest priority to Safety, Health, Environment and Ethical matters.

■ Ensure our product offer delivers maximum value to customers by maintainingdependable supply, consistent quality, and reliability.

■ Uphold excellent service levels to foster long-term relationships with customersand suppliers.

■ Achieve the highest possible operating efficiencies and costs, and expandthe business through selective capacity increase and new product launches.

■ Develop and retain a team of highly capable people dedicated to deliveringthe mission.

Strategic Thrust


76

Company Information

Board of Directors

M J Jaffer Chairman Non-Executive Pervaiz A Khan ExecutiveWaqar A Malik Chief Executive Tariq Iqbal Khan Non-ExecutiveMueen Afzal * Non-Executive Feroz Rizvi ExecutiveDavid R Carter Non-Executive M Nawaz Tiwana Non-ExecutivePhilip Gillett Non-Executive Muhammad Zahir Executive

Audit & Remuneration Sub Committees of the Board

Audit Sub Committee Remuneration Sub Committee

M J Jaffer Chairman Non-Executive M Nawaz Tiwana Chairman Non-ExecutiveMueen Afzal Non-Executive David R Carter Non-ExecutiveDavid R Carter Non-ExecutivePhilip Gillett Non-Executive

Chief Financial Officer

Feroz Rizvi

Company Secretary

Nasir Jamal

Executive Management Team

Waqar A Malik Chief Executive Pervaiz A Khan Senior Vice President Polyester Business,Ali A Aga * Vice President Soda Ash Business ** Corp. Technical & SSHE**Dr Amir Jafri General Manager Life Sciences Business Suhail Aslam Khan General Manager Human Resource & CCPA***Jehanzeb Khan General Manager Chemicals Business Feroz Rizvi Chief Financial Officer

Muhammad Zahir Vice President Paints Business

Bankers

ABN AMRO Bank (Pakistan) Limited Meezan Bank LimitedAskari Bank Limited MCB Bank LimitedBank Alfalah Limited National Bank of PakistanCitibank NA Oman International BankDeutsche Bank AG Standard Chartered Bank (Pakistan) LimitedFaysal Bank Limited The HongKong & Shanghai Banking Corporation LimitedHabib Bank Limited United Bank Limited

Auditors

Internal Auditors External AuditorsFord Rhodes Sidat Hyder & Co., Chartered Accountants KPMG Taseer Hadi & Co., Chartered Accountants

Registered Office Shares Registrar

ICI House, 5 West Wharf, Karachi-74000 M/s. Ferguson Associates (Pvt) LtdTel # 111-100-200, (021) 2313717-22 4th Floor, State Life Building 2-AFax # 2311739 Wallace Road, I. I. Chundrigar Road, Karachi-74000Website: www.icipakistan.com Tel : (021) 2427012, 2426597, 2475606,E-mail: [email protected] : 2475266 & 2425467

Fax: : (021) 2428310

* names in alphabetical order** with effect from 1 February 2008*** with effect from 15 January 2008

2007 Highlights

The Company completed the year without any injuryto the Company employees, supervised or othercontractors.

Net sales income and gross profit up by 18%each.

Operating result up by 20%.

Profit before and after tax at Rs 2,768.5 million and

Rs 1,784.8 million up by 31% and 23%respectively.

Earnings per share increased by 23%.

The 50ktpa Soda Ash Expansion Project wassuccessfully completed on time without any safetyrelated incident and the commercial productioncommenced as per plan.

Investment of over Rs 2 billion on major projects -expansion of Soda Ash plant by an additional65ktpa, investment in ICI Pakistan PowerGen Limited(wholly owned subsidiary of ICI Pakistan Limited)to finance a Waste Heat Recovery & Power PlantProject generally known as Co-Gen.

The Company declared a total dividend (interimand final) of 60% i.e. Rs 6 per share for the yearended 2007 compared to Rs 5.5 per share for2006. *Excluding profit on sale of PPTA shares

**Earning includes deferred tax creditrecognised in 2005

Operating Profit

1,0881,347

1,842

2,479

2,971Rs m

2003 2004 2005 2006 2007

Profit Before Taxation

8071,110*

2,769

2,118

1,612

Rs m

2003 2004 2005 2006 2007

*Excluding profit on sale of PPTA shares

Earnings Per Share

5.52

10.49

12.86

16.23**

7.62*

Rs

2003 2004 2005 2006 2007

Turnover

22,15621,303

21,05421,948

Rs m

2003* 2004* 2005 2006 2007

25,973

*Includes, Rs 4,884 m & Rs 1,154 m for years 2003& 2004 in respect of furnace oil & coal business.


98

Board Members’ Profiles

Mr M J JafferChairman (Non-Executive)

Mr M J Jaffer became Director of ICIin 1974 and is the longest servingmember of the Board. He is alsoChairman of ICI Pakistan’s AuditCommittee and recently retired as asenior partner of M/s Orr Dignam &Company, a leading corporate lawfirm of Pakistan. He specializes inarbitration law, and has representedPakistan as an alternate member inthe International Court of Arbitrationof the International Chamber ofCommerce Paris since 1997. He isthe President of the Aga KhanHospital and Medical Foundationand also a Director of the PakistanCentre for Philanthrophy and TourismPromotion Services (Pakistan) Ltd.

Mr Waqar A MalikChief Executive

Mr Waqar A Malik was appointed asthe Chief Executive of ICI PakistanLimited on 1st October ‘2005. Hewas formerly the Chief Executive ofPakistan PTA and currently the Non-Executive Chairman of the Board.Mr Malik has 22 years of extensiveexperience with the Company insenior commercial, finance andstrategy roles including a 2-yearoverseas assignment at ICI GroupHeadquarters.

Mr Malik is Vice President of theOverseas Chamber of Commerceand Industry (OICCI) and will takeover as President effective 28thMarch ‘08. He is Director of EngroPolymer & Chemicals Limited andhas been invited to join as a Directoron the Board of IGI Insurance. MrMalik is a Trustee of the Duke ofEdinburgh’s Award Foundation anda member of the Board of Governorsof the National ManagementFoundation, Lahore University ofManagement Sciences, (LUMS).

Mr Feroz RizviDirector & CFO

Mr Feroz Rizvi is the Chief FinancialOfficer of ICI Pakistan Limited. Hejoined the Board in October 2006,and has been with ICI for over 24years during which he has heldvarious senior positions. Mr Rizvi isalso a Director of ICI PakistanPowerGen Limited and remained aDirector of Pakistan PTA Limited from2005 to 2006. Mr Rizvi is also aDirector in Faisal Asset ManagementLimited.

Mr M Nawaz TiwanaDirector (Non-Executive)

Mr M Nawaz Tiwana was appointedDirector of ICI Pakistan Limited inApril 1997. He is also Chairman ofICI Pakistan’s RemunerationCommittee. Mr Tiwana has held thepositions of Managing Director,Pakistan International AirlinesCorporation and Chairman, PortQasim Authority as well as Chairman,State Cement Corporation ofPakistan.

Mr Pervaiz A KhanDirector & Senior Vice PresidentPolyester Business, Corporate,Technical & SSHE

Mr Pervaiz A Khan is Senior VicePresident Polyester Business,Corporate, Technical & SSHE. Hehas been with ICI Pakistan for 25years and has served in variousmanufacturing, technical andbusiness management positions. MrKhan is also the Chief Executive ofICI Pakistan PowerGen Limited, anda Non-Executive Director on theBoard of Haleeb Foods Limited.

Mr Tariq Iqbal KhanDirector (Non-Executive)

Mr. Tariq Iqbal Khan is the Chairmanand Managing Director, NationalInvestment Trust Ltd. He has beenon the Board of ICI Pakistan Limitedsince 2001. He has served asChairman and M.D. of ICP and is aFounder Director of the IslamabadStock Exchange. He served as aMember, Tax Policy and Co-ordination in the Federal Board ofRevenue, and later joined theSecurities and ExchangeCommission of Pakistan as aCommissioner.

Mr Mueen AfzalDirector (Non-Executive)

Mr Mueen Afzal was appointed as aNon-Executive Director ofICI Pakistan Limited in May 2003.He joined the Civil Service of Pakistanin 1964 and held important positions,including Finance Secretary for theGovernment of Pakistan; HealthSecretary, and Secretary General,Finance and Economic Affairs from1999 to 2002.

Mr Afzal also serves on the Board ofDirectors of PTC Limited, MurreeBrewery Co. Limited, Azgard NineLimited and Pakistan InternationalAirlines Corporation.

Mr Muhammad ZahirDirector & Vice President Paints

Mr Muhammad Zahir is VicePresident Paints Business, and aDirector on the Board of Directors ofICI Pakistan Limited. He joined theCompany in 1980 and has heldvarious senior positions during histenure. Mr Zahir is also a Non-Executive Director on the Board ofCIC Paints (Pvt) Limited, Sri Lanka.

Mr Philip GillettDirector (Non-Executive)

Mr Philip Gillett was appointed to theBoard of ICI Pakistan Limited in April2002. He is Group Vice PresidentTax and Treasury at ICI Limited UK.He represents ICI Ltd on the Boardof Directors of a number ofcompanies including Pakistan PTALimited. He is also on the AuditCommittee of ICI Pakistan Ltd &Pakistan PTA Limited.

Mr David R CarterDirector (Non-Executive)

Mr David R Carter is Group VicePresident, Mergers & Acquisitions,at ICI Limited UK. He joined ICI in1979 and became a Director on theBoard of ICI Pakistan Limited in June2007. He is also a member of ICIPakistan’s Audit Committee andRemuneration Committee and is aDirector of Pakistan PTA Limited aswell.

Committees of the Board

Audit CommitteeThe Audit Committee reviews the systemof internal controls, risk managementand the audit process besides assistingthe Board in reviewing financialstatements and announcements toshareholders. In carrying out its dutiesthe Audit Committee has the authorityto discuss directly with management,internal or external auditors and mayobtain outside legal advice on any issueswithin its remit.

The Committee comprises Non-Executive Directors including theChairman. The Audit Committee meetsat least four times in a year besidesprivately meeting the external auditorsand the Head of Internal Audit. TheCompany Secretary acts as Secretaryto the Audit Committee

Remuneration CommitteeThe Remuneration Committee is a Sub-Committee of the Board and isresponsible for reviewing theremuneration and benefits of the ChiefExecutive, Executive Directors and othersenior managers. Its also reviews theoverall remuneration budget of theCompany.

The Committee consists of two Non-Executive Directors. The GeneralManager Human Resource acts as theSecretary and the Committee meets atleast once a year.

Banking CommitteeThis Committee comprising twoExecutive and one Non-ExecutiveDirector has been constituted to approvematters relating to opening, closing, andday to day operations of bank accounts.The resolutions passed by the BankingCommittee are subsequently ratified bythe Board.

Share Transfer CommitteeThe Share Transfer Committee consistsof two Executive Directors and one Non-Executive Director. This Committeeapproves registrations, transfers andtransmission of shares. Resolutionspassed by the Share Transfer Committeeare subsequently placed at Boardmeetings for ratification.

Management Committees

The Executive Management Committeecomprises Chief Executive, ChiefFinancial Officer, one senior VicePresident, two Vice Presidents and threeGeneral Managers. The Committeemeets once a month under thechairmanship of the Chief Executive tocoordinate the activities and operationsof the Company.

SSHE Management CommitteeThe Safety, Security, Health &Environment (SSHE) Committee reviewsand monitors company wide SSHEpractices. It overseas the security, safety,health & environment functions of theCompany and is also responsible forensuring that all operations of theCompany are environment-friendly.

Career Working GroupICI Pakistan has a robust system ofsuccession planning and individualcareer development. Formed by theChief Executive, this Group regularlymeets to discuss performances andsuccessions in respect to themanagement staff, excluding themembers of the Executive ManagementTeam. The Group comprises thefollowing:

• Commercial Capability Group• Technical Capability Group• Finance & IT Capability Group• HR & Others Capability Group

All Capability Groups, supported by theGM Personnel & CCPA aim to drivefunctional excellence in their respectiveareas.

Board & Management Committees withTerms of Reference

A summary of the Code is as follows:

Respect for the individualDiscrimination on the basis of anindividual’s race, colour, religion, gender,age, marital status, sex, or disability isfundamentally unacceptable.

Conflict of interestEmployees must act at all times in theCompany’s best interests and avoidputting themselves in a position wheretheir personal interests conflict with theCompany’s.

Confidential informationThe use of Company information forpersonal gain is strictly prohibited. Allconfidential information must only beused for the purpose intended.

BriberyPayment or receipt of all kinds of bribes,

kickbacks or facilitation payments incash or kind are strictly prohibited.

Gifts or entertainmentOffering or acceptance of gifts orentertainment of a value that might bethought by others to influence therecipient’s business judgement is notacceptable.

Community and international relationsICI Pakistan's aim is to operate as aresponsible corporate citizen within boththe local and international communities.

Safety, Security, Health andEnvironment (SSHE)The Company allows for no compromiseon Safety, Health and responsible carefor the Environment. All employees areexpected to follow at all times theCompany’s SSHE regulations andprocedures.

Competition lawFree enterprise and a competitive marketsystem are fully supported. Strictadherence to the competition laws is anintegral part of ICI Pakistan’s code ofconduct.

Regulatory compliance and corporategovernanceICI Pakistan cooperates fully with allgovernmental and regulatory bodies andis committed to the highest standardsof corporate governance.

Financial and operational integrityCompliance with accepted accountingrules and procedures is required at alltimes. All information supplied toauditors and shareholders must becomplete and not misleading.

Code of Conduct

ICI Pakistan has been and continuesto be a strong advocate of corporatepropriety. It ensures that itsemployees maintain the highestethical standards while conductingcompany business. The Board ofDirectors of the Company, in itsmeeting held on 23 February 2001,adopted a Statement of Ethics andBusiness Practices applicable to allits employees which is regularlycirculated within the Company. TheCode of Conduct guides thedecisions, procedures and systemsof the Company in a way thatcontributes to the welfare of allstakeholders and respects the rightsof all constituents affected by theCompany’s operations.


1312

Our ValuesIn 2006, ICI Pakistan

embarked on a process

of articulating its seven

core values, which are a

set of beliefs and

principles that we work

and live by

SSH&E

‘Nothing we do is worthgetting hurt for.’Safety, Health and Security ofEmployees and Contractors isparamount to any other consideration.We shall act responsibly to protect theenvironment and participate in thewell-being of the communities weoperate in. We shall demonstraterespect and care while dealing withour customers, our suppliers and thegeneral public.

Valuing People

‘Our competitive edge.’We shall value our people – ‘ourcompetitive edge’, respect theindividual, value teamwork and,without discrimination, recognise andreward performance.

Innovation

‘Creativity for improvement.’We shall seek new and better ways toimprove products, services andprocesses.

BusinessExcellence

‘Better, faster and bestvalue.’We shall lead in quality, speed, andcost competitiveness. We shallmaximize returns for shareholders anddeliver sustainable growth.

CustomerObsession

‘They pay our bills.’We shall understand customer needsand deliver on our commitments andshow adaptability and agility inresponse to change.

Transparency

‘Beyond reproach.’All our systems are transparent andcan stand the test of scrutiny.

Ethics

‘Uncompromising integrity.’We shall demonstrateuncompromising integrity in ourbusiness dealings; be fair and honest;be free of bias; and auditable in allaspects of our business, ensuringconformity with our code of conductand regulatory standards.

Safety, Health and Environment

ICI Leadership Award for Sustained SHE Excellence presented to the Chemicals Business.

The Company continues todemonstrate its very strongcommitment to all aspects of Safety,Health and Environment linked to itsBusiness’s operations. In 2007 therewas no Recordable Case (Lost TimeCase, Restricted Work Case, MedicalCase) by any Manufacturing Site,Trading Business or CorporateFunction.

All employees are dedicated in theirefforts to maintain and improve uponthe stringent standards demandedby the ICI Group SSHEResponsible Care ManagementSystem (RCMS) in achieving thechallenging performanceobjectives arising out of itscomprehensiveimplementation.

The Safetyperformance of ourBusinessescontinues to improve,

with Soda Ash achieving 13.5 millionman-hours, Polyester achieving 8million man-hours without Lost TimeCase (LTC) to supervised contractors,Paints 7 millions man-hours withoutLTC to employees & supervisedcontractors, Chemicals over 11 yearsand Life Sciences over 10 yearswithout LTC to an employee.

Full compliance with the HealthAssessment and Work Environmentmonitoring programs resulted in the

year being completed without areportable Occupational Illness.

All Effluent Treatment Plantswere operated and maintainedto the best technical standards

and the liquid effluents from allSites were in compliance with

the applicable NationalEnvironmental Quality

Standards (NEQS).

Reduction(Over Baseline 2000: 0.015 Tj/Te)

Energy Usage

20

-2-4-6-8

-10-12-14-16

2001 2002 2003 2004 2005 2006 2007

0% 0%

-7% -7% -7%

-12%-13%

Greenhouse GasesEmissions

Reduction(Over Baseline 2000: 1.453 Te/Te)

50

-5-10-15-20-25-30-35-40-45

2001 2002 2003 2004 2005 2006 2007

-3% -2%

-9%

-17%

-33%-37% -39%

Solid Waste(Non-Hazardous)

Reduction

(Over Baseline 2000: 1.377 Te/Te)

20

-2-4-6-8

-10-12-14-16-18

2001 2002 2003 2004 2005 2006 2007

-3%

-9%

-13% -14%

-11%-13%

-15%


1514

ICI Pakistan’s Human ResourceDepartment strives to ensure that thecompany operates as a High PerformanceOrganisation (HPO). The HR departmenthas a clear mission to capitalize on theorganisation’s intellectual energy andleverage it to achieve extraordinarybusiness growth. To achieve this, the HRteam works very closely with the ICIPakistan businesses to design efficientorganisational solutions capable ofeffectively delivering business goals.

Personnel Capability development andthe goal of an HPO remained the top HRpriority throughout the year. To helpachieve this, four Corporate CapabilityGroups, in the areas of Commercial,Technical, Finance/IT, and HR workedon developing functional excellence andstrategic capabilities in their selectedareas. The ICI Pakistan Core Valuesinclude respect for the individual, equalopportunity, meritocracy, effectivecommunication and the development ofa high performance culture. We continueto place high emphasis on continuousimprovement at all levels and strive toensure that opportunity for growth, andchallenging and varied careerexperiences are provided to allemployees.

The company’s training and developmentefforts continued during the year delivering17,280 man-hours of training spread over2,160 training man-days in 2007. Thiscontinued focus on improvement wasindicated by the healthy increase in theproportion of management employees whounderwent planned training which increasedfrom 41% in 2006 to 73% in 2007.

Manpower numbers (permanent employees)at 31 December 2007 at 1267 remained atthe same level as last year.

In an effort to improve the service level ofthe HR department to the Businesses, theCompany undertook the implementation

of the SAP HR Module in January 2007.The project was completed in two phases.Phase 1 consisting of Recruitment, Trainingand Performance modules and Phase 2consisting of modules related to Rewardsand Compensation. This project integratesall HR related processes through acompany-wide database under the SAPumbrella allowing for seamless integrationwith other functions and has an impact onthe speed, quality and thereby cost, of HRprocesses by automating transactions,making reporting more accurate andincreasing data integrity.

ICI Pakistan continued to encouragehealthy trade union activity. The Companyaims to maintain a meaningful andproductive relationship with its employeesand unions in order to create anatmosphere of teamwork and cooperation.The biennial negotiations with unions at alllocations commenced in Jan 2007 andwere successfully concluded during theyear.

Feedback sessions were conductedacross the Company in 2007 on the Values& Behaviours campaign “We Live OurValues” launched in 2006. The feedbackreceived from the employees wasconverted into action plans which wereimplemented to ensure clarity andstrengthen employee commitment to theValues & Behaviours of the Company.

ICI has a very strong commitment todiversity and inclusion. The Company isan equal opportunities employer and thisis practiced in all aspects of the company’sbusiness activities, including recruitmentand employment. As part of thiscommitment, ICI Pakistan along with threeother leading multinationals joined “DIA”as a founding member. Dia’s key objectiveis to promote and enhance the influenceof professional women. The diversityinitiative is also targeted at increasing thenumber of disabled employees byproviding appropriate jobs to deserving

Human ResourceICI Pakistan remains committed to providingchallenging, growth oriented and varied careerexperiences to all its employees

ICI Pakistan allocates apercentage of its profit eachyear to support CSR activities.In 1991 the ICI PakistanFoundation was set up as atrust to provide financialsupport to deservingeducation, healthcare andsocial welfare organizations.

In addition to initiativesundertaken by the Foundation,ICI Pakistan’s Businesses runtheir own CSR initiatives aswell, mostly serving their localcommunities in education,health and environment relatedcauses.

Education

■ ICI Pakistan continued to fulfill itscommitment to post-quakerehabilitation work in the Northernareas. Besides donation to thePresident’s Relief Fund,construction of a girls’ primaryschool at Bararkot was completedat a cost of over Rs 15 million,and inaugurated in a ceremonyheld on 20th November 2007.

■ ICI Pakistan continues to supportthe Institute of BehavioralPsychology (IBP) throughdonations. IBP established aSchool of special education inKarachi in 1987 that caters to over350 special children.

■ ICI Pakistan donated funds toABSA School for the deaf, whichcaters to over 400 students,providing the hearing-impairedwith opportunities to live full andindependent lives.

■ ICI Pakistan launched a newinitiative in 2006 supporting theKarachi Vocational TrainingCentre (KVTC) through anInternship Programme for youngpersons with learning difficulties,

that was held in collaboration withthe British Council.

■ ICI Pakistan extended its supportto Pani Pakistan by sponsoring acapacity building workshop forPani Pakistan NationalConsortium for the Conservation& Management of Water, atKarachi in June 2007. This eventprovided chosen students withthe tools necessary to becomefuture leaders in the field of waterconservation.

■ The Polyester Business continuedits support of the MC PrimarySchool in the village of TibbiHarriya by providing facilities forthe school including furniture andmaintenance of the building. Inaddition the Business also fundedthe summer session at the school.This annual event provides ahealthy environment for childrenand promotes hands-on learning

through various activities andprojects.

Health

■ ICI Pakistan’s Soda Ash Businesshas been actively involved withthe Layton RehmatullahBenevolent Trust monthly eyeclinics, which have rununinterrupted with great successsince 1991. To date nearly 10,000surgeries have been completedand over 95,000 outpatients havebeen treated.

■ ICI Pakistan continues to extendsupport through donation of fundsto the Shaukat Khanum MemorialTrust, which provides state of theart cancer care to patients all overthe country regardless of theirfinancial status, beside engagingin cancer research.

Highlights of Corporate SocialResponsibility (CSR)

Beach Cleaning activity held in conjunction with the WWF Save the Turtle Project


1716

■ Starting from a small dialysis unitin 1985, The Kidney Centre hasnow become an ISO 9002certified institute with facilities toprovide emergency anddiagnostic care to hundreds ofpeople annually. ICI Pakistan hasbeen a longstanding contributorto the Kidney Centre’s funding.

■ The ICI Paints Business donated1295 litres of paint for therenovation of the 45 year oldMarie Adelaide Leprosy Centerhospital building in Saddar,Karachi. The renovationconsiderably uplifted the building,which facilitates an average of20,000 consultations and 800hospital admissions a year.

■ As part of a Medical OutreachProgramme, ICI PakistanWinnington Hospital arranged amedical camp in Jutana villageabout 40 km from Khewra, duringwhich 400 patients were examinedand provided with free laboratoryinvestigations and medicines.

■ The Life Sciences Business held aweek long nationwide campaignduring September 2007 to createawareness in the medicalcommunity about the incidenceand prevention of needle stickinjury. The initiative was run atmajor hospitals in all large cities,and was attended by medicalpractitioners, government healthofficials and opinion leaders.

■ As part of the Chemicals BusinessCommunity Relations Program, ahealth-screening programme wasconducted at the ChildDevelopment Center, Sher Shahon 5 December 2007. During theprogramme, doctors examinedand treated almost 250 children,as well as gave lectures ongeneral health and handed outhygiene kits to each child.

Environment

■ As part of an effort to support thenature conservation programme,

ICI Pakistan partnered with theWorld Wildlife Fund (WWF) for theeighth consecutive year toorganize the WWF Nature Carnivalat PAF museum, Karachi. Thecarnival educated and entertainedover 10,000 visitors throughactivities, games and exhibitions.

■ ICI also continued its ongoingcollaboration with the WWF Savethe Turtle Project, and its supportof the Kakapir Village Schoolthrough funding.

■ Started in February 1992, ProjectGreen is the successful andongoing effort to turn 13 barrenlime beds near the Soda Ashplant in Khewra into flourishingman-made forests. Every year,new plant species are added tothe area which covers 152 acres,bringing the present total ofspecies to 289,076.

■ ICI Pakistan began theconstruction of a park namedJinnah Park in the locality of PindDadan Khan. Expected to becompleted by March 2008, thepark will not only provide arecreational outlet but will alsohave a positive impact onsanitation, as the site chosen forconstruction had previously beenflooded with stagnant drain-waterand was subsequently a breedingground for mosquitoes.

Among others, ICI Pakistanalso provided financialsupport to the Teacher’sResource Center, LadyDufferin Foundation Trust,Marie Adelaide LeprosyCentre, Nayab MemorialEducational Society andGovernment Girls’ HighSchool (Khewra).

Children at the WWF Nature Carnival held at PAF Museum Karachi

Major CSR Initiative

ICI funds girl’s primaryschool in Bararkot

ICI Pakistan has remained committedto the rehabilitation of the 2005earthquake affected areas of thecountry. Towards this end, ICIPakistan along with the ICI Foundationfunded and constructed a girls’primary school at Bararkot near GarhiHabibullah. The school was formallyinaugurated on November 20th 2007in a ceremony by Mr Waqar A. Malik,Chief Executive ICI Pakistan andChairman Pakistan PTA, and handedover to Mr Altaf M Saleem, ChairmanEarthquake Reconstruction andRehabilitation Authority (ERRA). Lt.General Nadeem Ahmed, DeputyChairman ERRA, was also present atthe ceremony.

This modern and well-equipped facilitywas designed by renowned architect

Shahab Ghani Khan while Mirza IsmetBeg was the structural engineer. Builtto the highest standards, the fullyfurnished school accommodates over200 students. The structure of thebuilding also incorporates earthquakeresistant properties to minimize thepossibility of future tragedies.

A major goal of the rehabilitationprocess has been to bring an elementof normalcy back into lives disruptedby the earth quake and the completionof this school will go a long way insupporting this cause.

ICI Pakistan has supported the reliefand rehabilitation efforts throughoutthe affected areas by contributing overRs. 32 million of which Rs 4.2 millionwas donated by employees ofICI Group in Pakistan comprisingICI Pakistan Limited and Pakistan PTALimited.

The completion of the Bararkot

School has been a major goal

in the earthquake rehabilitation

process and will go a long way

towards restoring normalcy to

the lives of affected residents.

Goverment Girl’s Primary School at Bararkot.

1918

When one of the worlds leading industrial manufacturers

merges with a company known for its scientific

innovation, they form a new company of unprecedented

strength and potential, ready to take on the future with

renewed focus. Akzo Nobel and ICI Plc have come

together to form the world’s leading company in coatings

and chemicals, combining expertise, global experience,

world-renowned brands and cutting-edge products

offering its customers wider choices.

The New Company at a Glance

On 2nd January 2008 theacquisition of ICI Plc by AkzoNobel was officially completed

and the two companiesbecame one. The combination

of Akzo Nobel and ICI Plccreates a leading industrial

company in coatings andchemicals.

Akzo Nobel has the distinction ofbeing a Fortune 500 company and listedon the Euronext Amsterdam stockexchange. Complementing its longhistory dating back to 1777 is the endlessapplication of Akzo Nobel’s productsacross many downstream industries.Akzo Nobel is the Chemicals industryleader on the Dow Jones SustainabilityIndexes as well as being included onthe FTSE4Good Index.

The new Company has a presence inover 80 countries in the world, and isthe largest single industrial company indecorative coatings. It stands on a solidplatform of combined global presence,technologies, products, brands andexpertise that will benefit our customersand drive the new company to evengreater success.

33% Specialty Chemicals

40% Decorative Paints

27% Performance Coatings

Revenues by Segment

• Around 68,000 employees*

Key facts

• Chemicals Industry leader on theDow Jones Sustainability Indexes

• Listed on Euronext Amsterdamstock exchange

• Global Fortune 500 company• Chemicals: focused platforms for growth

• #1 global position in Performance Coatings

• The world biggest DecorativePaints company

• ¤ 15 billion in 2006 revenues*

* 2006 pro forma figures

All Businesses of ICIPakistan have become apart of Akzo Nobel’scontinuing portfolioscomprising coating andchemicals.

With a solid standing in themarket, we at ICI Pakistanare excited to be a part ofthis new Company. We arewell poised to capture thedynamic avenues it offersfor future growth in coatings& chemicals and are set tobecome bigger, better andmore focused than everbefore.

August 2007

It was announced on 13th August2007 that Akzo Nobel and ICI Plc. hadreached an agreement on the termsof a recommended cash offer by AkzoNobel for ownership of ICI Plc.

October 2007

An agenda and accompanyingShareholder’s Circular werepublished stating that, subject to theapproval of the shareholders of AkzoNobel and ICI Plc, completion of theICI deal was to take place on 2ndJanuary 2008.

November 2007

During the month of November,Extraordinary General Meetings ofthe shareholders of both Akzo Nobeland ICI Plc were held, during whichAkzo Nobel and ICI Plc shareholdersvoted 79% and 92.5% respectivelyin favor of the acquisition.

January 2008

On 2nd January 2008, the acquisitionof ICI Plc by Akzo Nobel was officiallycompleted and the two companiesbecame one.

How ithappened


2120

Annual Report 2007

Polyester BusinessThe Polyester Business manufactures and markets polyester staple fibre (PSF), asynthetic cotton, mainly used in the textile industry for producing blended (with cotton)polyester rich yarn, fabrics and clothing. ICI Pakistan started manufacturing operationsin 1982 by setting up its Polyester plant at Shiekhupura near Lahore.

Soda Ash BusinessSoda Ash Business produces and caters to approximately 70% of the Country’srequirement for this commodity. Soda Ash has a wide variety of applications inconstruction, hygiene, packaging and the paper industry and, therefore, it is animportant intermediate product to the end manufacturing industry. Situated in Khewrathe plant began commercial production in 1944.

Paints BusinessThe Paints Business operates in the Decorative, Industrial and the Refinish segments.Wide range quality products and services, innovation and a legacy of strong brandssuch as Dulux have been the foundations of this enterprise. Based in Lahore, the Paintsplant was acquired by ICI Plc in 1965.

Life Sciences BusinessThe Life Sciences Business comprises three divisions: Pharmaceuticals, Animal Healthand Seeds. The Pharmaceuticals Division markets a portfolio of leading prescriptiondrugs sourced from renowned principals and has launched a range of brandedgenerics. The Animal Health Division markets superior quality veterinary medicines forlivestock and poultry from world-renowned companies as well as some of its ownbrands. The Seeds Division is one of the leading providers of hybrid seeds in theCountry and a market leader in both thehybrid sunflower and fodder segments.

Chemicals BusinessThe Chemicals business comprises aunique and diversified portfolioencompassing General Chemicals,Specialty Chemicals, and National Starchproducts. The General ChemicalsBusiness imports, blends, distributes andsells over 250 products/ variants fromsixteen well-reputed international tradingpartners serving every key industry inPakistan. The Specialty ChemicalsBusiness manufactures and markets textileauxiliaries, adhesives, paint lattices, cropprotection emulsifiers and a range ofprocess chemicals. Based in Karachi theplant has been operational since 1968.

ICI Pakistan Businesses

40%

19%

22%

10%

9%

Polyester

Soda Ash

Paints

Life Sciences

Chemicals

Turnover

Operating Result

22%

29%29%

13%

7%

Polyester

Soda Ash

Paints

Life Sciences

Chemicals

Value added products sourced fromwell renowned business partnersallows the Chemical Business toprovide specialty finishes givingcustomers the competitive edge. Thebusiness also provides the most costeffective products to local pesticidesmanufacturers, making ICI Chemicalsthe preferred supplier of emulsifiersfor crop protection. In addition ourcustomers are provided high qualitytechnical services and solutions.

Delivering Value to CustomersUnderstanding our consumers’ needs has always been the key to deliveringvalue at ICI Pakistan. To suit changing demands we continue to offer newproducts and solutions true to the foundations of our customer focussedstrategy. Each of ICI Pakistan’s Businesses strive in their own unique way toproduce value that exceeds expectations.

Paints

Continuing with the reputation of marketinginnovative high quality products, ICI Paintshas the distinction of being the pioneer ofodourless technology in solvent-bourneproducts. Our leadership in colour givesconsumers endless possibilities offering over6000 colours complemented by free colourconsultancy service.

Polyester

The Polyester Business developedimproved performance fibre resulting

in value added benefits forcustomers in the Polyester

Viscose and PurePolyester

segment byreducingshrinkage atthe fabricstage.

Besides trouble shooting, the technicalservice team advises customers onmethods to optimize mill conditionsand enhance productivity.

Soda Ash

In Soda Ash Business initiativeslaunched in logistics and key accountmanagement assisted customers inimproving efficiencies by cutting downworking capital reducing inventory,warehousing and distributionexpenses.

Life Sciences

The Life Sciences Business ensureshigh service to itscustomers byfocusing on thetraining anddevelopment ofits large salesteam for allthree divisions,Pharmaceuticals,Animal health and Seeds. Thelatest product offering is "brandedgenerics", within the Pharmaceuticalsdivision, placed to plug the demandgap for quality antibiotics atcompetitive rates. Complemented bycomprehensive knowledge of theseproducts, the front line ICI teamreaches across the country to shareinformation and knowledge with itscustomers in an ethical way.

Chemicals


2322

Awards and Achievements

2007

• ICI Pakistan Ltd receives FBRAward

ICI Pakistan received an award fromthe Federal Board of Revenue(FBR), for supporting FBR’s‘National Conference on TaxAdministration Reforms’. The awardwas presented by SecretaryGeneral, RevenueDivision/Chairman, FBR, Mr MAbdullah Yusuf to Mr Waqar A Malik,CE of ICI Pakistan Ltd and ChairmanPakistan PTA Ltd.

• Best Corporate Report Award2006 3rd Prize in the Chemicaland Fertilizers Sector

A joint evaluation committee of theInstitute of Chartered Accountantsof Pakistan and the Institute of Costand Management Accountants ofPakistan declared the AnnualReport of the Company for the yearended 31 December 2006 to be3rd Best Corporate Report amongstlisted companies in the Chemical& Fertilizer sector.

• Distributor of the Year Award -2007

The Life Sciences Businesses’Animal Health Division was awardedthe 'Distributor of the Year Award -2007' by their Principal, ScheringPlough Animal Health.

• ICI Leadership Awards forSustained SHE Excellence

ICI award for Sustained SHEexcellence was received by thefollowing businesses and functionsfor their defined level of SHEperformance for 2006 based onICI Group criteria: Chemicals,Life Sciences and Karachi Offices.

• R&I Award for Sustainability 2007

R&I Award for Sustainability waspresented to the Soda Ash businessfor 2007 in recognition of itscontinued commitment to CorporateSocial Responsibility.

Mr Waqar A Malik receiving FBR Award from Mr M Abdullah Yusuf.

Mr Feroz Rizvi receiving Award from Mr TariqIqbal Khan

Amounts in Rs' 000

2007 % 2006 %Value addition

Net sales including sales tax 24,639,198 99 20,879,318 99Other operating income 165,919 1 129,207 1

24,805,117 100 21,008,525 100 Value distribution

Materials and services 17,527,876 71 14,602,526 69Government taxes and duties * 2,819,647 11 2,384,092 11Employees' remuneration & benefits 1,421,554 6 1,395,611 7Operating & other costs 1,251,240 5 1,170,668 6Dividends 763,413 3 763,413 4Profit retained 1,021,387 4 692,215 3

24,805,117 100 21,008,525 100

ICI Pakistan Value Addition and its Distribution

* Includes deferred tax charge Rs 675.133 million ( 2006: Rs 662.169 million).

Materials and services

Government taxes and duties*

Employees' remuneration & benefits

Operating & other costs

Dividends

Profit retained

2006

69%7%

11%

6%3%4%

Materials and services

Government taxes and duties*

Employees' remuneration & benefits

Operating & other costs

Dividends

Profit retained

2007

71%6%

11%

5%3% 4%


2524

Annual Report 2007

Spreading the light of inspiration

Reportof theDirectors

The Directors are pleased to present their report together with the audited financialstatements of the Company for the year ended 31 December 2007.

In continuation of the announcement reported in the half yearly results regardingacceptance of Akzo Nobel’s cash offer by the Board of ICI Plc, Akzo Nobel’s formaloffer for acquisition of ICI Plc UK, the parent company of ICI Omicron B.V., wasapproved by the shareholders of both the companies and subsequently by theregulatory authorities in December 2007. The take over process was completed on2 January 2008 and with this acquisition, Akzo Nobel has become the ultimate holdingcompany of ICI Pakistan Limited.

ICI Pakistan Limited continues to be a direct subsidiary of ICI Omicron B.V. AllBusinesses of ICI Pakistan shall be part of Akzo Nobel’s continuing portfolio, whichcomprises Coatings and Chemicals.

Akzo Nobel is a multicultural company, with the distinction of being the world’s leadingCoatings manufacturer as well as being a major worldwide supplier of Chemicals,holding strong global positions in many markets. It is a Fortune 500 company andlisted on the Euronext Amsterdam stock exchange. Akzo Nobel is the Chemicalsindustry leader on the Dow Jones Sustainability Indexes as well as being includedon the FTSE4Good Index.

With their unwavering commitment and dedication to the pursuit of excellence,people are the brightest source of light at ICI Pakistan.

ICI PakistanManufacturers Limitedcommissions itsSpecialty ChemicalsPlant at Karachi.

1968ICI PakistanManufacturers Limitedincreases capacity ofSoda Ash Plant to45,000 tonnes.

1966The name of KhewraSoda Ash Companychanges to ICI PakistanManufacturers Limited.

1966ICI Plc acquires50% of FullerPaints.

1965

(L to R)Mr Muhammad Zahir, Executive DirectorMr Tariq Iqbal Khan, Non-Executive DirectorMr Mueen Afzal, Non-Executive DirectorMr M J Jaffer, Non-Executive ChairmanMr M Nawaz Tiwana, Non-Executive DirectorMr Waqar A Malik, Chief ExecutiveMr Feroz Rizvi, Executive DirectorMr Pervaiz A Khan, Executive Director

Not in pictureMr David R Carter, Non-Executive Director,Mr Philip Gillett, Non-Executive Director,

The Khewra Soda AshCompany is listed onKarachi StockExchange (G) Limited.

1957The Khewra Soda AshCompany is incorporatedas a public limitedcompany.

1953ICI establishes its firstmanufacturing site forthe production of sodaash at Khewra.

1944


2726

Annual Report 2007

Fuller Paintschanges its nameto Paintex Limited.

1973ICI PakistanManufacturers Limitedincreases capacity ofSoda Ash Plant to65,000 tonnes.

1979ICI PakistanManufacturers Limitedis listed on LahoreStock Exchange (G)Limited.

1980ICI Pakistan ManufacturersLimited sets up itsPharmaceutical processingunit in Dhaka (formerly EastPakistan).

1970ICI Pakistan ManufacturersLimited commissions NewDense Ash Plant at Khewra

1982Imperial Chemical Industries(Pakistan) (Private) Limited andPaintex Limited merge into ICIPakistan Manufacturers Limited

1985

■ The 50ktpa Soda Ash ExpansionProject was completed on timewithout any safety related incidentand the commercial productioncommenced as per plan.

■ The Company is investing over Rs2 billion in major projects: furtherexpansion of Soda Ash plant by anadditional 65ktpa and an investmentin ICI Pakistan PowerGen Limited(wholly owned subsidiary of ICIPakistan Limited) to finance a wasteheat recovery & power plant projectgenerally known as Co-Gen.

■ As a part of the Company’s socialresponsibility and commitment forthe rehabilitation of the earthquakeaffected areas, ICI PakistanFoundation with the support of yourCompany’s employees and otherassociated company, constructeda girls’ primary school at Bararkot,near Garhi Habibullah for over 200students costing Rs 15.2 million,besides donating Rs 2.9 million toother charitable institutions.

■ The Company was given the ThirdBest Corporate Report award forthe year 2006 organized jointly bythe Institute of CharteredAccountants of Pakistan and theInstitute of Cost and ManagementAccountants of Pakistan.

ICI Pakistan’s performancehighlights - 2007 compared with2006:

■ All Businesses achieved growth insales volume. Polyester Businessposted record sales volumewhereas Soda Ash Businessachieved record productionconsecutively for the third year.

■ Gross profit was up by 18%.

■ Operating result was up by 20%. All

Businesses except Paints recordedhighest ever-operating results. Weakperformance of the domestic autoindustry buffeted the Paints Businessresults which were 2% lower thanlast year despite double digit growthin sales volume of Decorative andRefinish segments.

■ Financial charges were significantlydown by 54%.

■ Profit before and after tax at Rs2,768.5 million and Rs 1,784.8million were up by 31% and 23%respectively.

■ Earnings per share increased by23% from Rs 10.49 per share to Rs12.86 per share.

Dividends

Your Directors are pleased to announcea final dividend of 35% i.e. Rs 3.50 pershare of Rs 10.00 each of the issuedand paid-up capital of Rs 1,388,023,000. This, including the interim dividend of25%, makes a total dividend of 60%.

Projects

The 50ktpa Soda Ash Expansion Projectcosting Rs 1.0 billion was completedwithout any safety related incident andcommercial production commenced asper plan in March 2007. Work on the65ktpa Soda Ash Expansion Project isprogressing as per plan. The project isexpected to be completed in the secondquarter of 2009.

Your Company, with shareholdersapproval, announced an investment ofRs 600 million (Rs 400 million in equityand Rs 200 million as loan) in its whollyowned subsidiary ICI Pakistan PowerGenLimited on waste heat recovery & powerplant project generally known as Co-Gen. Work on this project is progressingas per plan and the project is expectedto commission in July 2008.

Safety, Security, Health andEnvironment (SSHE)

Your Company continues to demonstrateits strong commitment to all aspects ofSafety, Security, Health and Environmentlinked to its Business operations.

■ No injury was reported by anymanufacturing site, trading businessor corporate function.

■ Full compliance with the HealthAssessment and Work Environmentmonitoring programs resulted incompleting the year without areportable occupational illness.

■ All Effluent Treatment Plants wereoperated and maintained to the besttechnical standards and the liquideffluents from all sites were incompliance with the applicableNational Environment QualityStandards.

■ The energy consumption and wastegeneration per unit of production in2007 for Polyester, Paints andChemicals Businesses were lowerthan 2006. In Soda Ash, both energyconsumption and waste generationin 2007 remained at par with lastyear due to commissioning activitiesof 50ktpa Soda Ash ExpansionProject and gas curtailment inDecember 2007.

Acknowledgement

The impressive results of your Companyin 2007 would not have been realizedwithout the contribution of highly diligentand committed employees, devotedcustomers and continued supportreceived from the suppliers. The Boardwould like to thank all the stakeholdersand the management for their valuablesupport and untiring efforts, whichenabled the Company in achieving thefinancial and operational targets.

Detailed Review of Company’sPerformance Follows:

Overview

In the first half of 2007 and in the initialmonths of the fiscal year 2007-08, theeconomy continued to grow at a goodpace. However, higher inflation andsignificant increase in commodity pricesput corporate sector profitability underpressure. In addition, in Q4 2007, lawand order concerns and extended gas

shortage adversely affected the businessenvironment.

Going forward, growing energyshortages, widening trade deficit, law &order concerns and expected recessionin the US are significant challenges facingthe economy. In view of the prevailingpolitical unrest and higher oil prices, theState Bank of Pakistan has lowered its

GDP forecast for the fiscal year 2007-2008 from 7.0 - 7.4% to 6.6 - 7.0%.

Major Accomplishments in 2007:

■ Your Company completed the yearwithout any injury to its employees,supervised or other contractors.

ICI Pakistan ManufacturersLimited sets up Polyester plant atSheikhupura with a capacity of12,000 tonnes.

1982


2928

Annual Report 2007

Surging forward

Polyester

Bullish trend in crude oil prices continuedthroughout 2007 due to the persistentpressure on supplies with prices peakingat an all time high of USD 98 per barrel.PSF feedstock prices, on the contrary,moved increasingly independent ofcrude oil based on their own respectivesupply/demand dynamics. IncreasingPTA supply overhang in the region ledto softening of PTA prices despite therise in crude oil prices. MEG supplysuffered a major setback at the end ofQ3 as two large global manufacturersfaced serious technical problems,leading to supply shortages. Resultantly,MEG prices peaked at USD 1,720/tonne,which was 100% higher than the year’sopening price of USD 840/tonne.Regional PSF prices moved in line withfeedstock prices. Domestic PSF pricesalso increased but faced continuingresistance due to difficult businessconditions in the textile industry anddumping of product by the Chineseproducers.

Domestic textile industry faced seriouschallenges during 2007 mainly due toreduction in the cotton crop from 14.5million bales to approximately 11 millionbales and power & gas outages, whichseverely affected the performance ofthe domestic textile industry.

Despite lacklustre performance of thedomestic textile sector, the local PSFmarket grew by 3% over last yearprimarily due to higher blend ratio infavour of PSF. The Business achieved

record sales volume of 113,027 tonnes,an increase of 17% over last year dueto expansion of its customer base andmanufacturing constraints at one of thedomestic PSF manufacturers.

On the regulatory front, finaldetermination of the anti-dumping dutyon Korea, Indonesia and Thailand wasannounced by the National TariffCommission and anti-dumping duty ofup to 10.26% was imposed on importof PSF from these countries. However,this decision has been challenged bythe spinners group in the high court forimports made under the DTRE scheme.

In the fiscal budget 2007-08, theGovernment re-included PSF in theDTRE scheme and announced 3.5%R&D support for PSF manufacturers andspinners as mutual beneficiaries. Thegovernment has yet to issue the officialnotification (SRO) pertaining to the same.

With higher volume sold andimprovement in unit margins, operatingresult for the year at Rs 641.9 millionwas significantly better than last year.This level of profitability, although higherthan last year, is not satisfactoryconsidering the level of investmentsmade in this Business as well as thosemade in ICI Pakistan’s wholly ownedsubsidiary (ICI Pakistan PowerGenLimited) for generating uninterruptedcaptive electricity to run the polyesterplant efficiently.

Steering the flow of the business in the right direction,the Polyester Business expanded

its customer base and increased volume.* Compared to the same period last year

Operating Result – Rs Million 346.0 132% 641.9 38%

Sales Volume(Fibre & POY Chips) – Tonnes 34,386 40% 113,027 17%

Production Volume(Fibre & POY Chips) – Tonnes 33,448 37% 110,656 15%

Q4 2007 Variance* YTD 2007 Variance*

ICI Pakistan PowerGenLimited is incorporatedas a public limitedcompany.

1991The Companyname changes toICI Pakistan Limited.

1987ICI Pakistan increasescapacity of PolyesterPlant to 19,000 tonnes

1987ICI Pakistanlaunches itsSeeds Business.

1991ICI PakistanFoundation isregistered as acharitable trust.

1991ICI Pakistanincreases capacityof Soda Ash Plantto 100,000 tonnes.

1991ICI Pakistan’s PaintsBusiness introduces Duluxrange of natural white colorswith added fragrance.

1992

Turnover

Rs m 10,236

8,6489,145

8,458

10,345

2003 2004 2005 2006 2007

Operating Result

Rs m 642

24

157

329

466

2003 2004 2005 2006 2007


3130

Annual Report 2007

Advancement that shines

Soda Ash

The Soda Ash Business delivered anotheroutstanding year and achieved recordproduction level of 260,596 tonnes due toincreased plant capacity with 50ktpa ExpansionProject.

During 2007, soda ash demand remainedsubdued, as the silicate segment was affectedthroughout the year due to raw materialshortages faced by the soap industry. Inaddition, prevailing political uncertainty and lawand order situation in the country especially inthe second half of the year affected consumptionby the bazaar segment. Despite weak demand,the Business managed to deliver 3% growth insales volume by successfully exporting theavailable product to the regional markets.

Coke prices in Q4 2007 increased by 56% overthe same period last year due to strong demandand increase in the export tax in China. Tomitigate the impact of this cost-push, theBusiness had to increase selling prices in orderto partially recover the escalating input costs.Growth in net sales income and control overcosts enabled the Business in achievingoperating result of Rs 862.6 million which was36% higher over 2006.

Soda Ash achieved stellar results during the year with recordproduction and sales facilitated by increased plant capacity, true tothe ICI tradition of advancement that knows no boundaries. * Compared to the same period last year


Sales Volume – TonnesSoda Ash & Sodium Bicarbonate 73,423 13% 277,732 3%

Production Volume – TonnesSoda Ash & Sodium Bicarbonate 69,876 12% 260,596 8%


ICI Pakistan commissionsa plant for manufacturingof specialized automotivepaints.

1993ICI Pakistan addsPolyol blending facilityto its SpecialtyChemical Plant

1993ICI Pakistan increasescapacity of Soda AshPlant by 50,000 tonnesto 185,000 tonnes.

1994ICI Pakistan marksthe 50th anniversaryof Soda Ashproduction atKhewra.

1994ICI Pakistan’soperating profitcrosses the onebillion rupee mark forthe first time.

1995ICI PakistancommissionsSodiumBicarbonate plant.

1995ICI Pakistanlaunches SHE(Safety, Health &Environment)Challenge 2000.

1995ICI Pakistan increasesPolyester fibre capacityto 60,000 tonnes andpolymerization capacityto 91,000.

1996

TurnoverOperating Result

Rs m 4,936

3,179

4,0734,395

3,447

2003 2004 2005 2006 2007

Rs m 863

415 410

590635

2003 2004 2005 2006 2007


3332

Annual Report 2007

Colours that sparkle

Paints

The Paints Business delivered a mixedperformance in 2007. Demand in theDecorative and Refinish segmentsremained strong leading to double-digitgrowth in sales volume in both thesegments. Decorative segment growthwas driven by launch of new innovativepremium products and expansion in themid tier segment whereas, rapidexpansion in the overall car populationwith the import of second hand cars ledto growth in the Refinish segment. In theIndustrial segment demand remainedsubdued due to weak performance ofdomestic auto manufacturing industry.Sales volume in the Industrial segmentwas in line with last year.

As reported in the third quarter results,Kansai Paints Japan terminated itstechnical services agreement withICI Pakistan Limited citing change incontrol/ownership of the ICI Group.Consequently, the Business stoppedsupplies of Kansai products to the autoindustry. The Business however,continues to maintain its presence in theauto industry by supplying non-Kansaiproducts to this sector.

Higher sales volume led to 13% growthin net sales income over 2006. In spiteof improved sales income, Businessposted marginally lower operating resultthan last year on account of pressureon unit margins in the Industrial segment,higher advertising and other expensesto support business growth &development.

* Compared to the same period last year

Operating Result – Rs Million 131.3 (45)% 852.5 (2)%

Sales Volume – Kilolitres 9,428 13% 38,834 12%

Production Volume – Kilolitres 9,778 14% 39,188 10%


Operating Result

The Paints Business continues in ICI Pakistan’slongstanding tradition of success, with applications inthe industry as varied as the sparkling colours itproduces.

ICI Pakistan Limited islisted on IslamabadStock Exchange (G)Limited.

1997ICI Pakistan is awarded secondposition for “ Best Corporate Accounts”in the non-financial sector for its 1998Annual Report by the South AsianFederation of Accountants

1999ICI Pakistancommissionsits PTA Plant.

1998ICI Pakistan’s PTABusiness demergesinto a separate entity,Pakistan PTA Limited.

2000ICI Pakistan increasescapacity of Polyester Plantby 44ktpa completedthrough FayzanManufacturing Modaraba.

2002

853

395

496536

871Rs m

2003 2004 2005 2006 2007

Turnover

2003 2004 2005 2006 2007

5,812

2,989

4,114

5,072

3,575

Rs m

ICI PakistanlaunchesERP (SAP)implementation.

2001


3534

Annual Report 2007

Innovation that illuminates

Life Sciences

The Life Sciences Business deliveredanother successful year with double-digit growth in all the segments. ThePharmaceutical, Seeds and AnimalHealth segments grew at 10%, 26% and47% respectively on the back of robustdemand in the existing product rangeand diversification of portfolio.

With exceptional growth in all thesegments, net sales income for full yearwas 20% higher than last year andoperating result at Rs 402.9 million was22% higher than 2006.

Continuing to light the way forward in new directions,the Life Sciences Business has achieved a successful

year as a result of growing demand and expanding its portfolio.


Turnover – Rs Million 1,046.4 41% 2,710.3 21%


* Compared to the same period last year

ICI Pakistan’sPharmaceutical Divisionenters the anti-infectivesegment with its first brandedgeneric 'Icef'.

2006ICI Pakistan achievescompliance withSection 404 of theSarbanes Oxley Act.

2006ICI Pakistan’s Paints businesslaunches its first super premiumrange - 5 in 1 technology brandDulux Pentalite Classic.

2006Zestril of ICI Pakistan’sPharmaceutical Divisionbecomes the top sellingace-inhibitor in Pakistan.

2004ICI Pakistan crossesthe Rs.2 billion markin operating result forthe first time.

2006SSH&E

Ethics

Transparency

CustomerObsession

BusinessExcellence

Innovation

ValuingPeople

ICI Pakistan launches sevencore values – sets of beliefand principles, which theemployees live and work by.

2006As a part of an asset modernizationand improvement plan thePolyester Business commissionsa sixth processing line.

2006

Rs m

2003 2004 2005 2006 2007

403

142

204237

329

2003 2004 2005 2006 2007

Rs m 2,710

1,524

2,0822,236

1,593

TurnoverOperating Result


3736

Annual Report 2007

Expertise that soars

Chemicals

Demand in the General ChemicalsBusiness remained strong with growthin the downstream industries coupledwith aggressive expansion of customerbase. The Trading segment continuedto grow throughout the year, as businessenvironment remained buoyant acrossmost target industries. The Polyurethanessegment also performed well throughoutthe year on the back of growth in theappliances, insulation and footwearsegments.

Despite sluggish performance of thetextile sector, Specialty ChemicalsBusiness performed well with substantialgrowth in its products for the agriculturesector and export of textile chemicals.

Following the transfer of manufacturingtechnology in Q2 2007 from NationalStarch & Chemical Company, locallymanufactured specialty adhesives weresuccessfully sold to customers in thetobacco and packaging industry.

With higher sales volume, net salesincome for the year grew by 19% overlast year. The Business achievedoperating result of Rs 211.5 million, whichwas 19% higher than 2006.

With its varied and diverse portfolios, the Chemicals Businesssoared high on the wings of expertise as sales grew, new productstreams were incorporated and markets expanded highlightingthat diversity leads to success.

* Compared to the same period last year** Relates to Polyurethanes and Specialty Chemicals


Sales Volume – Tonnes 5,155 12% 21,168 7%

Production Volume – Tonnes ** 2,285 21% 9,348 15%


ICI Pakistan completes50ktpa expansion of itsSoda Ash plant.

2007ICI Pakistan is awarded the Third BestCorporate Report award for the year 2006by the Institute of Chartered Accountantsof Pakistan and the Institute of Cost andManagement Accountants of Pakistan.

2007ICI Pakistan constructs and handsover a Girls’ Primary School atBararkot Near Garhi Habibullah toEarthquake Reconstruction andRehabilitation Authority.

2007

Operating Result

ICI Pakistan completes50 years of continuouslisting on KarachiStock Exchange.

2007ICI Pakistanannounces 65ktpaexpansion of itsSoda Ash Plant.

2007

Turnover

2,653

6,141

2,036 2,229

2,887

Rs m

2003* 2004* 2005 2006 2007

*Includes, Rs 4,884 m & Rs 1,154 mfor years 2003 & 2004 in respect offurnace oil & coal business.

211

111

79

150

177

Rs m

2003* 2004* 2005 2006 2007

*Includes Rs 47.5 m & Rs (46.8) m foryears 2003 & 2004 in respect offurnace oil & coal business.

Akzo Nobel becomes theultimate holding company ofICI Pakistan Limited.

2008


3938

Annual Report 2007

Profit and Finance

The Company spent Rs. 1,012 million in 2007 on major capital projects and onsustenance to ensure efficiency and integrity of assets.

The 50ktpa Soda Ash Expansion Project costing Rs 1.0 billion was completed asper plan and commercial production commenced in March 2007.

Work on the 65ktpa Soda Ash Expansion Project is progressing as per plan.

Your Company achieved a significant growthin profitability over 2006 and delivered strongfinancial results.

Company’s operating result at Rs 2,971.4million for the year ended 31 December 2007was 20% higher than 2006. Selling &administration expenses increased comparedto last year to support business developmentand growth in the Paints, Life Sciences andChemicals Businesses whereas in Soda Ash,the increase was due to outward freightexpenses on account of higher sales andfuel cost.

Financial charges for the year at Rs 146.4million were 54% lower than last year mainlydue to buyout of the Fayzan ManufacturingModaraba’s plant in September 2006. Withhigher operating result and lower financialcharges, profit before tax at Rs 2,768.5 millionand profit after tax at Rs 1,784.8 million werehigher than last year by 31% and 23%respectively.

Earnings per share at Rs 12.86 increasedby 23% over 2006.

Capital Expenditure

Significant Contribution Towards theNational Economy

Your Company successfully deliveredanother profitable year in line with itsstrategy to grow its businesses andmaintain leading position in therelevant markets.

In 2008, trading conditions areexpected to be difficult. The domesticeconomic indicators point to aslowdown in the GDP growth rate.Given this situation, concerns on law& order and a looming recession inthe developed world, we sincerelyhope that the Government of Pakistantakes appropriate fiscal, monetaryand administrative measures, whichare supportive to the continueddevelopment of the domestic industryand commerce.

On the positive side, the recentlycompleted acquisition of ICI Plc byAkzo Nobel brings with it excitingopportunities. The two companies,combined global presence,technologies, products, brands andexpertise will provide bettercompetitive edge and openopportunities which should benefityour Company and its stakeholdersin the future.

FutureOutlook

In the last twelve years, your Company contributed Rs 31,320 million towards thenational exchequer through taxes, levies, excise duty, sales tax and surcharges,with Rs 2,144.5 million as contribution for the year.

Consequent to his retirement form ICI Plc UK, Mr David J Geeresigned from the Board of Directors of the Company. Mr DavidR Carter was appointed as a non-executive director of the Companywith effect from 15 June 2007 for the remainder of the term until28 April 2008. Mr Andy M Ransom was appointed as the alternatedirector to Mr David R Carter. The Board would like to thank MrGee for his valuable contribution to the successful developmentof ICI Pakistan and welcomes Mr Carter as a new director of theCompany.

The Audit and Remuneration Committees of the Board constitutedto assure good governance, held frequent meetings and submittedtheir considered recommendations to the Board.

Your Company believes that its employees are the most valuableasset and primary reason for its continued success. The Company’sHR policies are value based aimed at creating a culture of highperformance, attracting, retaining and developing the best talent.The Company invests in people through comprehensive trainingand development plans including formal in-house and externaltraining. Coaching and on-the-job training to develop and improveskills are integral part of this philosophy. In 2007, total trainingman-hours were 17,280 as compared to 6,834 in 2006.

As of 31 December 2007, total manpower stood at 1,267.

People2003 2004 2005 2006 2007

Rs / share

Dividend

2.50

4.00

5.506.00

5.00

Rs m

2003 2004 2005 2006 2007

Profit Before Tax

807

1,110*

1,612

2,118

2,769

*Excluding profit on sale of PPTA shares

2003 2004 2005 2006 2007

Rs m

Capital Expenditure

467 548

2,505*

1,012

1,455

*Includes purchase of plant & machineryfrom Fayzan Manufacturing Modaraba


4140

Annual Report 2007

AuditorsThe present auditors KPMG Taseer Hadi & Co., CharteredAccountants retire and being eligible have offered themselvesfor reappointment.

Compliance with the Code ofCorporate GovernanceAs required under the Code of Corporate Governance dated28 March 2002, the Directors are pleased to state as follows:

● The financial statements, prepared by the managementof the Company present fairly its state of affairs, the resultsof its operations, cash flows and changes in equity.

● Proper books of account of the Company have beenmaintained.

● Accounting policies have been consistently applied inpreparation of financial statements and accountingestimates are based on reasonable and prudentjudgement.

● International Accounting Standards, as applicable inPakistan, have been followed in preparation of financialstatements and any deviation from these has beenadequately disclosed.

● The system of internal control and other such procedures,which are in place, are being continuously reviewed bythe Internal Audit Function. The process of review willcontinue and any weakness in controls will be removed.

● There are no doubts upon the Company’s ability to continueas a going concern.

● There has been no deviation from the best practices ofcorporate governance as detailed in the ListingRegulations.

● Key operating and financial data for the last 10 years issummarised on page 86.

● Outstanding taxes and levies are given in the Notes tothe Financial Statements.

● The management of the Company is committed to goodcorporate governance, and appropriate steps are takento comply with best practices.

Staff Retirement FundsThe values of investments in the staff retirement funds as pertheir respective audited financial statements for the year ended31 December 2006, are as follows:

Value (Rs ‘000’s)

1 ICI Pakistan Management StaffProvident Fund 558,434

2 ICI Pakistan Management StaffGratuity Fund 223,071

3 ICI Pakistan Management StaffPension Fund 824,502

4 ICI Pakistan Management StaffDefined Contribution Superannuation Fund 147,520

5 ICI Pakistan Non-Management StaffProvident Fund 342,542

Directors AttendanceDuring the year, 5 (five) Board of Directors, 4 (four) AuditCommittee and 2 (two) Remuneration Committee meetingswere held. Attendance by each Director/CFO/CompanySecretary was as follows:

Name of Board of Audit RemunerationDirectors Directors Committee Committee

Attendance Attendance Attendance

1 Mr M J Jaffer 5 4 -

2 Mr Waqar A Malik 5 - -

3 Mr Mueen Afzal 5 4 -

4 Mr David R Carter (i) 2 2 1

5 Mr David J Gee (ii) 2 2 1

6 Mr Philip Gillett 1 1 -

7 Mr Pervaiz A Khan 4 - -

8 Mr Tariq Iqbal Khan 1 - -

9 Mr Feroz Rizvi 4 - -

10 Mr M Nawaz Tiwana 5 - 2

11 Mr Muhammad Zahir 5 - -

12 Mr Andy M Ransom (iii) - - 1

13 Mr Nasir Jamal(Company Secretary) 5 4 -

(i) Appointed on the Board w.e.f 15 June 2007(ii)Resigned w.e.f.11June2007

(iii) Alternate director to Mr David R Carter

Leave of absence was granted to Directors who could notattend some of the Board meetings.

Pattern of ShareholdingA statement showing the pattern of shareholding in theCompany together with additional information as at31 December 2007 appears on pages 83-85.

ICI Omicron B.V. continues to hold 75.81% shares, whileInstitutions held 18.31%, and individuals and others held thebalance 5.88%.

The highest and lowest market prices during 2007 wereRs 239.00 and Rs 115.25 per share respectively.

The Directors, CEO, CFO, Company Secretary and theirspouses and minor children did not carry out any transactionin the shares of the Company during the year except forpurchase of 1 share by Mr Mueen Afzal. This is reflected inthe pattern of shareholding. All statutory returns in thisconnection were filed.

Group Financial StatementsThe audited financial statements of the ICI Group for the yearended 31 December 2007 are attached. The ICI PakistanGroup comprises financial statements of ICI Pakistan Limitedand ICI Pakistan PowerGen Limited, a wholly owned subsidiary.

Dated: 14 February 2008Karachi

M J JafferChairman

Waqar A MalikChief Executive


4342

Annual Report 2007

Statement of Compliance with the Code of Corporate Governancefor the year ended 31 December 2007


M J JafferChairman

Waqar A MalikChief Executive

This statement is being presented to comply with the Code ofCorporate Governance contained in the listing regulations ofthe stock exchanges for the purpose of establishing a frameworkof good governance, whereby a listed company is managedin compliance with the best practices of corporate governance.

The Company has applied the principles contained in theCode in the following manner:

1. The Company encourages representation of independentnon-executive directors and directors representing minorityinterests on its Board of Directors. At present the Boardincludes six non-executive directors including one directornominated by NIT.

2. The directors voluntarily confirmed that none of them isserving as a director in more than ten listed companies,including ICI Pakistan Limited, except for Mr Tariq IqbalKhan who is a nominee of National Investment Trust Limited(NIT) and has been granted a waiver from the applicationof the relevant clause of the Code by the Securities andExchange Commission of Pakistan.

3. The Directors have voluntarily declared that all the residentdirectors of the Company are registered taxpayers andnone of them has defaulted in payment of any loan to abanking company, a DFI or an NBFI. None of the directorsis a member of a stock exchange.

4. During the year one casual vacancy occurred in the Boardof Directors on 11 June 2007 and it was filled on 15 June2007. The Company has filed the necessary returns in thisregard.

5. The Board of Directors of the Company, in its meeting heldon 23 February 2001, adopted a Statement of Ethics andBusiness Practices which has been regularly circulatedwithin the Company since 2001 and is in the knowledgeof the Company’s directors and employees.

6. The Board of Directors in its meeting held on 25 February2005 approved and adopted a vision/mission statementpursuant to an ‘Employee Satisfaction Survey’ conductedunder supervision of the Board. The statement has beenfurther revised and circulated to the employees of theCompany. The Board of Directors has also approved andadopted a corporate strategy for the Company and

significant policies. The corporate strategy is reviewed bythe Board from time to time as appropriate.

7. All the powers of the Board have been duly exercised anddecisions on material transactions, including appointmentand determination of remuneration and terms and conditionsof employment of the CEO and other Executive Directors,have been taken by the Board.

8. During the year four regular meetings and one emergencymeeting of the Board were held which were all presidedover by the Chairman. Written notices of the regular BoardMeetings, along with agenda and working papers, werecirculated at least seven days before the meetings. Theminutes of all five meetings were appropriately recordedand circulated in time.

9. The Directors have been provided with copies of the ListingRegulations of the Stock Exchange, the Company’sMemorandum and Articles of Association and the Code ofCorporate Governance. Orientation courses, both in-houseand external, were also arranged for the Board in 2003 &2006. Besides a comprehensive paper on ‘Roles andResponsibilities of Directors’ was also circulated to thedirectors for their perusal in November 2006. The directorsare, therefore, well conversant with their duties andresponsibilities.

10.No new appointment of CFO, Company Secretary or Headof Internal Audit has been made during the year.

11.The Report of the Directors for the year ended 31 December2007 has been prepared in compliance with therequirements of the Code and fully describes the salientmatters required to be disclosed.

12.The financial statements of the Company were dulyendorsed by the CEO and CFO before approval of theBoard.

13.The Directors, CEO and executives do not hold any interestin the shares of the Company other than that disclosed inthe pattern of shareholding.

14.The Company has complied with all the corporate andfinancial reporting requirements of the Code.

15.The Audit Sub Committee of the Board has been in existencesince 1992. It comprises four members, all of whom arenon-executive directors including the chairman of thecommittee. ICI Pakistan also has a Remuneration Committeecomprising two non-executive Directors, which has beenin operation since 1997.

16.There have been four Audit Committee meetings duringthe year under review. The Directors have approved therevised terms of reference of the Audit Committee in lightof the Code of Corporate Governance.

17. ICI Pakistan has had an effective internal audit function inplace since the late 1970s. The Board has outsourced theinternal audit function to M/s Ford Rhodes Sidat Hyder &Co. Chartered Accountants, who are considered suitablyqualified and experienced for the purpose and areconversant with the policies and procedures of theCompany. They are involved in the internal audit functionon a full time basis.

18.The statutory auditors of the Company have confirmed thatthey have been given a satisfactory rating under the qualitycontrol review programme of the Institute of CharteredAccountants of Pakistan, that they or any of the partnersof the firm, their spouses and minor children do not holdshares of the Company and that the firm and all its partnersare in compliance with International Federation ofAccountants (IFAC) guidelines on Code of Ethics asadopted by Institute of Chartered Accountants of Pakistan.

19.The statutory auditors or the persons associated with themhave not been appointed to provide other services exceptin accordance with the listing regulations and the auditorshave confirmed that they have observed IFAC guidelinesin this regard.

20.We confirm that all other material principles contained inthe Code have been complied with.

We have reviewed the Statement of Compliance with the bestpractices contained in the Code of Corporate Governanceprepared by the Board of Directors of ICI Pakistan Limited(“the Company”) to comply with the listing regulations of therespective Stock Exchanges, where the Company is listed.

The responsibility for compliance with the Code of CorporateGovernance is that of the Board of Directors of the Company.Our responsibility is to review, to the extent where suchcompliance can be objectively verified, whether the Statementof Compliance reflects the status of the Company’s compliancewith the provisions of the Code of Corporate Governance andreport if it does not. A review is limited primarily to inquiriesof the Company personnel and review of various documentsprepared by the Company to comply with the Code.

As part of our audit of financial statements we are required toobtain an understanding of the accounting and internal controlsystems sufficient to plan the audit and develop an effectiveaudit approach. We have not carried out any special reviewof the internal control system to enable us to express an opinionas to whether the Board’s statement on internal control coversall controls and the effectiveness of such internal controls.

Based on our review nothing has come to our attention, whichcauses us to believe that the Statement of Compliance doesnot appropriately reflect the Company’s compliance, in allmaterial respects, with the best practices contained in theCode of Corporate Governance.

44

Annual Report 2007


KPMG Taseer Hadi & Co.Chartered Accountants

Review Report to the Members on Statement of Compliance withBest Practices of Code of Corporate Governance

Documents

Reaching Greater Heights · Director & Vice President Paints Mr Muhammad Zahir is Vice President Paints Business, and a Director on the Board of Directors of ICI Pakistan Limited