engro powergen prospectus
DESCRIPTION
ENGRO POWERGEN QADIRPUR LIMITEDTRANSCRIPT
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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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Page 2 of 72
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
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________________________
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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Page 13 of 72
(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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Page 23 of 72
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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Page 24 of 72
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%
4th Quarter (Oct-Dec) 2011 100.3% 96.3%
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%
4th Quarter (Oct-Dec) 2012 101.1% 95.3%
Full year 2012 100.5% 93.9%
1stQuarter(Jan- Mar) 2013 101.1% 97.8%
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Page 25 of 72
*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%
1stQuarter(Jan- Mar) 2014 98.8% 95.0%
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Page 26 of 72
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
PKR in Million Jun14 (HY) Dec13 Dec12 Dec11 Dec10
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
PKR in Million Jun14 (HY) Dec13 Dec12 Dec11 Dec10
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)
Dividend per share 10.5 11.5 12.0 9.0 13.0
Bonus 20% 25% 10% 20% 20%
Colgate Palmolive (Pakistan) Limited (June Year-end)
Dividend per share 14.0 14.0 14.0 13.50 11.50
Bonus 10% 20% 15% 15% 15%
Cyan Limited (December Year-end)
Dividend per share 10.0 4.0 2.5 2.5 2.0
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