Strategic Management Report

BBA FALL 2008 batch

2012
The Following Report highlights all the strategic aspects of the Engro Corp., including Engro foods, chemicals/polymers and fertilizers strands.

Chapter 1 Engro? What is Engro?

Engro Corporation
1. Introduction and history of Engro (Corporate History and emergence)

Engro is one of Pakistans most progressive, growth oriented organizations, yet it never forgets
where it came from. History is the part of what Engro is actually today. Diverse range of strategic Business Unit represent Engros rich legacy of innovation and growth.

History Embedded From Esso to Engro 1

1957-1966

In 1957, the search for oil by Pak Stanvac, an Esso/Mobil joint venture led to the discovery of
the Mari Gas field near Daharki, which is the rural village in upper Sindh. Esso proposed the establishment of a urea plant in that area which led to a fertilizer plant agreement signed in 1964. In the succeeding year, Esso Pakistan Fertilizer Company Limited was incorporated, with 75% of the shares owned by Esso and 25% by the general public. The Production of urea plant in Daharki started in 1968, after the proper establishment is 1966, at US $43 million with an annual production capacity of 173,000 tons; it was the single largest foreign investment by a multinational corporation in Pakistan at the time. A full-fledged marketing organization was established which undertook agronomic programs to educate the farmers of Pakistan. As the nations first fertilizer brand, Engro (then Esso) helped update traditional farming practices to enhance farm yields, directly impacting the quality of life not only for farmers and their families, but for the nation at large. As a result of these efforts, consumption of fertilizers increased in Pakistan, paving the way for the Companys branded urea called Engro, an acronym for Energy for Growth.

http://engro.com/our-company/our-history

1966-1991

As part of an international name change program, Esso became Exxon in 1978 and the
Company was renamed Exxon Chemical Pakistan Limited. The Company continued to prosper as it relentlessly pursued productivity gains and strived to attain professional excellence. In 1991, Exxon decided to divest its fertilizer business on a global basis. The employees of Exxon Chemical Pakistan Limited, in partnership with leading international and local financial institutions, bought out Exxons 75% 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 financial performance, growth of the core fertilizer business, and diversification into other businesses. UK and USA were the first International sites for Engro to establish the fertilizer manufacturing plant. Engro Chemical Pakistan Limited then started a journey of venturing into other sectors including foods, energy, industrial control and automation, PVC resin manufacturing and marketing, and chemical terminal and storage. 2000 onwards

In 2009 plans were announced of demerging the fertilizer business into an independent
operating company. The expansion and growth in the company necessitated a change in the way the company operated and conducted business. Keeping in view the operations of multi category businesses, expansion strategy and growth vision, the management decided that the various businesses would be better served if the Company was converted to a holding company. As a result it was decided to demerge the fertilizer business and establish a holding company structure to manage the affairs of various businesses. To reflect the change in the scope of mandate and scale of operations, Engro Chemical Pakistan Limited has been renamed as Engro Corporation Limited with effect from January 1, 2010. Engro Corp, as the holding company is responsible for the long term vision of the company, overseeing the performance of the subsidiaries and affiliates, allocation of capital, management

of talent, leadership development, HR guiding policies, leadership role in public relations and CSR activities, control structures, legal and IT support. Engro Corp will maintain a lean structure with a focused scope, allowing maximum empowerment to the subsidiaries and affiliates to drive the operations of their respective organizations.

Business level Information of Engro (SBUs)

Engro Chemicals and PVC

Engro Fertilizers

Engro Foods

Engro Foods Engro Foods Limited was officially launched as a fully owned subsidiary of Engro in 2004. Using dairy as a stepping stone to enter into the food business, the Company has established high-tech processing units in Sukkur and Sahiwal, along with an ice cream production facility in Sahiwal. Top quality brands like Olpers, Olwell, Tarang, Omore and Owsum have been successfully launched under the wheel of Companys dairy products. To support these brands and their highest standards of quality, Engro Foods has invested heavily in milk processing and milk collection infrastructure. With an acquisition of Al Safa . a fast growing and established

Halal meat brand . Engro Foods is now venturing into North American market starting from Halal Foods category. The new organization, Engro Foods Canada Ltd. with a subsidiary Engro Foods USA, LLC, intends to aggressively grow the business in this market. With the vision of Elevating Consumer Delight Worldwide, Companys significant focus will be towards the global operations in the years to come. Engro Fertilizers Engro Fertilizers Limited is a wholly owned subsidiary of Engro Corporation and a renowned name in Pakistans fertilizer industry. Engro Fertilizers holds a vast, nationwide production and marketing infrastructure and produces leading fertilizer brands optimized for local cultivation needs and demand. Engro Fertilizers is also a leading importer and seller of Phosphate products, which are marketed extensively across Pakistan as phosphate fertilizers. Their extensive market development activities have ensured a sustained pull for their primary and secondary fertilizer products and sellout productions since launch. Engro Fertilizers Limited was incorporated in June 2009, following a decision to demerge fertilizer concern from its parent company Engro Chemical Pakistan Limited. The continual expansions and diversifications in its enterprises necessitated a broad restructuring in Engro Chemical operations and management. To facilitate better oversight, Engro Chemical Pakistan was converted into a holding company named Engro Corporation, and its fertilizer business was subsequently demerged to a newly formed Engro subsidiary that was Engro Fertilizers Limited. Engro Fertilizers is poised to become the leading urea manufacturer in the country following major upgrading of its manufacturing capabilities. ENVEN (Upgraded plant technology) criteria tremendous expansion in Engros urea manufacturing facility went into production in November 2010 and looks set to end. Engro is a dynamic company driven by a vision to improve productivity and lifestyle for thousands of farmers across Pakistan. Engro Polymers and Chemicals Engro Polymer & Chemicals Limited, an Engro subsidiary, is Pakistans leading manufacturer and marketer of PVC (polyvinyl chloride) resin, with an annual PVC production of 150,000 tons. The Company markets its products under the brand name of SABZ. Following

recent expansion, the Company now has an integrated facility with the capability to manufacture EDC, VCM, Chlorine and Caustic soda. The Company is the sole producer of PVC resin, hence plays a pivotal role in ensuring the sustainability of the domestic PVC industry and provides support through the provision of quality products and technical services. It also invests in developing new products and markets; as part of market development it is looking to set up a complete business line for the construction industry by promoting PVC based doors and windows. Engro Polymer & Chemicals Limited has been consecutive winners of ACCA-WWF Environment Reporting awards for its environment performance reports; consequently, the Company was nominated to be on the panel of judges for the award. Engro Polymer & Chemicals Limited won the Annual Environment Excellence Award from National Forum for Environment and Health for the fourth time in 2009.