Engro Chemical Pakistan Limited

3Q 2008 Business Results

Security Analysts’ Briefing

October 30th, 2008
 Urea Market Environment

y Market demand for Urea, during the nine months period ended September 30,
2008 was 4 million tons, an increase of 18% over the same period last year
(3.4 Million tons).

y Increase is attributable to three major reasons:

- Better farm economics for rice
- Increase in sowing of BT Cotton (which requires greater application of fertilizer
over conventional cotton varieties), &
- Urea substitution by farmers over costlier DAP.

y Local production at 3.73 million tons was 6.5% higher for the nine months ended
September 30, 2008 as compared to 3.5 million tons during the same period last
year.

y Whereas the demand for Urea increased, the supply of urea got severely
impacted due to less than required imports.

3Q 2008 Security Analyst Briefing

 Urea Market Environment, continued…

y The Government imported a volume of 80 kT of urea vs. an agreed volume of

300 kT for Kharif.

y This caused a severe shortage of Urea in the market and led to price flare up
creating significant stress on the Industry, which worked in close coordination with
Government at local levels to manage the situation.

y International urea prices remained firm and on average the landed price of
imported urea was approximately Rs. 2,400 as against the prevailing average
domestic price of Rs. 600 per bag. Spot landed price of imported urea is
approximately Rs 1,450 per bag.

y The fertilizer industry continues to make significant contribution to the agricultural

economy, by keeping domestic prices substantially lower than international prices.

y The industry provided a subsidy to farmers of approximately Rs. 100 Billion for the
nine months ended September 30, 2008.
3Q 2008 Security Analyst Briefing
 Urea Industry Supply and Demand

Volume kT YTD 3Q 2008 YTD 3Q 2007

Opening Inventory 148 235

Production 3,741 3,505

Imports 211 55

Sales 4,024 3,406

Closing Inventory (Net) 62 389

3Q 2008 Security Analyst Briefing

 Phosphates Market Environment

y Industry wide sales volume of Phosphatic fertilizers decreased by over 60%

to 0.3 million tons as compared to 0.8 million tons for the same period last
year.

y Industry demand remained unusually low due to the higher Phosphate prices
and absence of subsidy notification from the government.

y in June this year, the government had announced increase in its DAP subsidy
from Rs. 470/bag to Rs. 1,000/bag.

3Q 2008 Security Analyst Briefing

 Phosphates Market Environment, continued…

• The government later on announced an increase in the subsidy amount to

Rs 2,200/bag, formal notification from MINFAL was issued. However no
subsidy amount has been released to date even after ECC approval.

• Industry continues to sell at Rs. 3,050/bag.

y September International DAP and MAP price averaged around $ 1085 / ton.

y Current price at approx. $ 870 - $ 900 per ton.

3Q 2008 Security Analyst Briefing

 Engro 9 Months 2008 Highlights
Urea
• Engro Urea production during 2008: 740 kT vs. 692 kT in 2007.
• 2008 Engro Urea Sales including imported Urea at 806 kT, higher than 2007 by 23% due to
higher industry demand as well as higher carryover inventory from last year.
• Fuel gas price was increased by 31% to Rs. 329.54/mbtu with effect from July 1, 2008. Feed
gas price remained unchanged. GST not claimable effective June 10th has increased raw material
cost.
• Engro Urea weighted average NSR of Rs. 593/bag for 2008 was 11% higher vs. 2007.
• Going forward, we expect urea demand to remain strong in the backdrop of short supply
sentiment which is expected to persist in the near term.

Zarkhez
• Zarkhez production in 2008 was 79 kT, a 14% decrease over 2007 due to lower sales forecast.
• Sales volume was 71 kT in 2008 compared to 90 kT in 2007. A 26% decline due to lower
market demand caused by higher product prices.

Phosphates
y Sales volume was 54 kT in 2008 compared to 248 kT for the same period last year, as a result
of lower market demand.
y Industry closing inventory is higher at over half a million tons.
y ECPL expects to maintain its 20% market share.

3Q 2008 Security Analyst Briefing

 Engro Operating Highlights

Volume kT YTD 3Q 2008 YTD 3Q 2007

Production

Urea 740 692

Zarkhez* 79 93

Sales

Engro Urea** 787 614

Zarkhez* 71 96

Phosphates 54 248

Urea market share 20% 19%

* including 17 kT NP ** excluding 19 kT of Imported Urea for YTD 3Q 2008

3Q 2008 Security Analyst Briefing

 Engro Financial Highlights

Sept 30 Sept 30
Rs Million
2008 2007 +
ƒ Higher Urea Sales
Sales 14,682 13,083

COGS (9,527) (9,886) ƒ Increase in Urea &

Zarkhez margins

Gross Profit 5,155 3,197

• Higher dividend from
EXIMP & EVTL
Selling and distribution expenses (1,062) (981)
-
Financial/other charges (net) (1,295) (554)
• Increase in financial
charges
Other Income 1,612 651
• Reduction in EPCL
Profit before Tax 4,410 2,313 dividend

Tax (1,050) (720)

PAT 3,359 1,593

3Q 2008 Security Analyst Briefing

 Joint Venture & Subsidiary Highlights

Engro Vopak

y Profit after tax of Rs 306 million for YTD 3Q 2008, versus Rs 356 million for the same period
last year.
y Revenue for 2008 was Rs 833 million, an increase of 12% over YTD 3Q last year.
yEngro’s share of dividend amounted to Rs 157.5 million during the nine months ended 30
September, 2008.

Engro Ploymer & Chemicals Ltd (Formerly Engro Asahi)

y Profit after tax of Rs 589 million versus Rs 307 million for the same period last year.
y Revenue during the nine month period was Rs 6,536 million as against Rs 4,691 million last
year
y Our share in the company was 56% as compared to 80% at the same time last year.
y YTD 3Q 2008 domestic sales volume at 78 kT versus 74 kT in 2007.
y EPCL was formally listed on the KSE.

3Q 2008 Security Analyst Briefing

 Joint Venture & Subsidiary Highlights

AVANCEON (Formerly Engro Innovative)

y Increased revenue by 33% to Rs 1,248 million during nine months.

y Posted net loss of Rs 128 million as against Rs 166 million, showing reduction in
losses by 23%.

Engro Energy

y Project remains on track for completion.

y Engro sold 5% equity to IFC, funds of which were received in October.

3Q 2008 Security Analyst Briefing

 Joint Venture & Subsidiary Highlights

Engro Foods Ltd.

y Production in nine months ended 30th September almost doubled over last year.
y EFL turnover was Rs 5,661 million versus Rs 2,456 million in the same period last
year. An increase of 130%.
y EFL incurred a loss of Rs 544 million in the nine month period, due to its planned
expansion and market development activities.
y Distribution network now stretches to 122 towns with direct numerical coverage of over
62,473 outlets.
y Ice cream project remains on track with civil works having commenced.

3Q 2008 Security Analyst Briefing

Fertilizer Expansion Project

3Q 2008 Security Analyst Briefing

 Expansion Project Funding Requirement

Project Costs Amount in USD mn

Initial Cost 980
Revised Cost (mainly due to exchange and
1,030
Interest rates)

Additional debottlenecking project (which will

20
increase capacity by 23 kT)
Total 1,050

Financed through additional equity (profit) retention, approximately $ 50 million and

the remaining through debt.

3Q 2008 Security Analyst Briefing

THANK YOU

3Q 2008 Security Analyst Briefing