Engro - a historical perspective

In 1991, Exxon decided to divest its fertiliser business on a global basis. Inspired by conviction in the Company's growth potential, the employees of Exxon Chemical Pakistan Limited, in partnership with leading international and local financial institutions bought out Exxon's 75 percent equity.
This was at the time and perhaps still is the most successful employee buy-out in the corporate history of Pakistan. Renamed as Engro Chemical Pakistan Limited, the Company has gone from strength to strength, reflected in its consistent and enviable financial performance, growth of the core fertiliser business and successful business diversification into other fields.
In 2006, Forbes Asia listed Engro amongst the 200 Best under a Billion (in sales) Companies in Asia. Its performance & outlook is following the declared Vision "to be the Premier Pakistani Enterprise with a global reach, passionately pursuing value creation for all stake holders."
CORPORATE GOVERNANCE:
Engro's governance structure responds to the industry's best practices demands ensuring that all aspects with respect to economic, environmental and social obligations are fully considered and business decisions are taken after evaluating their impact on the company's triple bottom line - People, Planet and Profits.
The corporate governance model is implemented through three committees, including the Management Committee, the Health, Safety and Environment Committee and the Compensation, Organisation & Employee Development Committee.
An integral component of the corporate governance model is the Company's ten-member Board of Directors. The Board of Directors represents employees and shareholders, thereby ensuring valuable feedback from these two important stakeholder groups.
Engro's corporate governance strategies aim to achieve higher standards in the future, fully in conformity with the United Nations Millennium Development Goals.
MANAGEMENT:
Engro's professional expertise can be assessed both quantitatively and qualitatively. On the numbers side a quick look at key financial indicators say it all. Sales for the year 2006 stood at Rs 17.6 billion. Profit after tax was Rs 2.55 billion - a new record for the Company and higher by 10 percent over the previous year.
The Engro team has been acclaimed for its ingenuity and expertise in the fields of fertilisers, energy and management. The Company is now gaining recognition in the food and automation sectors. It is 100 percent compliant on NEQS requirements and initiated disclosure to Sindh Environmental Protection Agency. Engro's Health, Safety and Environment Management Systems stipulate specific and timely reporting requirements of all events. The company has been continuously monitoring and controlling its environmental footprint and has invested more than Rs 390 million since 1991 for environmental protection.
Several committees are working towards continuously improving health, safety and environmental performance, including the Corporate HSE Committee, divisional HSE Committees, numerous Safe Operation committees, Departmental Safety Committee and the Shop Floor Safety Committee.
Engro has implemented ENCON (Energy Conservation) Project and reduced energy consumption per ton of urea by a substantial 31.6 percent over 15 years. The WWF has conducted a fauna & flora survey of Engro Chemical's site and has identified no major impacts on biodiversity.
Professional management practices have been endorsed through various international certifications that the Company holds. Pakistan Credit Rating Agency in its recent annual review of the Company's credit worthiness has upgraded Engro's long-term ratings and maintained its short-term ratings as AA "Double A" and "A One Plus" respectively.
HR PRACTICES:
Engro's core values are guided by UN Global Compact principles and are based on a firm recognition of human rights and individual responsibility. HR Best Practices are reflected in policies for hiring, career advancement, business decisions, procurement, social contributions and still others.
Engro is an equal opportunity employer. The company has a non-discriminatory policy for hiring and treatment of personnel in the workplace Human resource policies support diversity and forbid harassment. The company maintains a policy of competitive remuneration for its employees and holds regular trainings, seminars and workshops to enhance employees' skills and technical knowledge.
Engro acknowledges and respects a worker's right to freedom of association in policy and practice as evidenced by 52 percent union membership and certification to SA 8000:2001.
CORPORATE SOCIAL RESPONSIBILITY:
The Company bases its CSR program on the 10 principles of UN Global Compact. The first and foremost commitment is to maintain ethical behaviour in all aspects of business.
The CSR social investment projects principally cover the fields of healthcare, education, infrastructure development, conservation and local sponsorship. The Company's social investments and philanthropic contributions exceeding Rs 52 million have directly benefited over 130,000 individuals at the grassroots level.
Engro was the first national company to publish a CSR report based on the Global Reporting Initiative (GRI). In 2006, Engro received the highest taxpayer award in chemical sector awarded by Large Taxpayers Unit. The same year Engro's "Project Hope" was declared the most outstanding CSR project in the healthcare category and awarded the Asian CSR award held at Manila, Philippines. This is the first CSR award ever given to a Company in Pakistan.
Project Hope utilises state-of-the-art technology to provide tertiary healthcare and referral services for rural communities around telemedicine rural spokes established at Gambat, Shikarpur, Jacobabad, Ghotki, Mirpurkhas, Sanghar and Sukkur. The system links rural spokes via video-conferencing systems to specialist doctors located at the hub in Karachi.
There are approximately 20,000 reported snakebite deaths a year in Pakistan. Engro established a snakebite treatment program, which since 1977 has saved more than 68,500 lives. Open 24 hours a day throughout the year, it handled 5,600 cases in year 2006 alone.
The Company's several other regularly sponsored projects and programs include the Engro Thalassemia Centre located in Sukkur, and the Hepatitis B awareness and vaccination program in Daharki.
In Education, Engro's involvement has moved far beyond the traditional financial support or 'cheque-writing' model. This is exhibited through the Katcha Schools program, initiated in 2001. The program now has 11 schools with permanent buildings, 18 trained full-time teachers and over 850 students. Three of the schools were started in collaboration with the USAID.
The company has also undertaken a number of other projects in this field. These include establishment of a central library at IBA Sukkur campus, adoption of six government schools and the TCF School-Engro Campus.
A NATIONAL SUCCESS STORY:
In core business sector of urea fertiliser manufacturing, Engro enhanced urea production from an annual capacity of 270,000 tons in 1991 to 945,000 tons in 2006. In 2006, the Government of Pakistan carried out bidding for allocation of 100 MSCFD gas from Qadirpur Gas field. Engro acquired the rights in 2007 and is accordingly expanding the Urea production facility.
The new plant is expected to be complete in 2010. Subsequently, Engro's market share is expected to rise from the current 20% to 35% in 2011. The planned expansion will be the world's largest single train urea plant with a capacity of 1.3 million tones per annum.
Engro established a 60 million dollars, 50:50 Joint Venture company named "Engro Vopak Terminal Limited" (EVTL) in 1995, with Royal Vopak, a Netherlands based company and one of the foremost terminal operators in the world. This joint venture company operates a modern jetty & terminal at Port Qasim, Karachi for handling and storage of bulk liquid chemicals. In 2007, it will complete 10 years of safe operations without lost work injury.
Engro formed a Joint Venture company with Mitsubishi and Asahi Glass of Japan, namely "Engro Asahi Polymer & Chemicals Ltd", to develop a Polyvinyl Chloride (PVC) resin project at Port Qasim, Karachi. The project with an initial capacity of 100,000 tons per year commenced production in November 1999 and the plant production is being marketed both in domestic and export markets.
In 2006, Engro acquired additional 30% shareholding from Asahi Glass Company (AGS) of Japan. The Board of EAPCL approved an expansion and back integration project involving PVC resin production by 50,000 tonnes (totalling 150,000) and back integrating by setting up an EDC/VCM plant and a Chlor alkali plant. The entire project will cost around 220 million US dollars and is expected to come on stream in a phased manner commencing from 2nd half 2008 and ending in 1st half 2009.
In 2003, Engro acquired 51 percent interest in the Automation & Control Division of Innovative (Private) Limited, a Lahore based company that provides process control industrial solutions in the knowledge based services sector. The company is now named Engro Innovative Automation Limited (EIAL). It is a market leader in Industrial automation business. In 2007, EIAL acquired 70% stake in an automation engineering company in the USA for 7 million US dollars.
Engro is essentially an agro-based company that has a holistic approach to business development. In 2005, the company launched its wholly owned subsidiary Engro Foods Limited (EFL). During 2006, EFL launched UHT milk and cream under the brand name OLPER's and HCLF milk under the brand name OLWELL.
EFL plant located in Sukkur was set up at a cost Rs 1.0 billion and commenced commercial production in March 2006. The EFL plan envisages a fast track growth model, driven by innovative launches to command a product range across the dairy spectrum backed by compatible milk collection infrastructure and top end in the distribution of these products.
In line with its diversification plan, a wholly owned subsidiary of Engro namely, Engro Energy Limited (EEL), was formed in 2006 whose first project is setting up an Independent Power Plant (IPP) near QadirPur, Sindh by 2009-10.
The 16 years since Exxon became Engro have been both exciting and rewarding for the organisation and people associated with it. Challenges have been overcome, goals achieved and new goals set. Engro today stands recognised not only as a successful business operation but also as an excellent case study for doing business in Pakistan.