2. Introduction of engro foods
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Engro stands for “energy for
growth”.
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The company was incorporated in
1965
3. INTRODUCTION TO ENGRO FOODS
LIMITED
• Engro Foods Limited is a subsidiary of Engro
Corporation Limited.
• Its have been more than 40 years in fertilizer
and chemical.
• Engro Foods Limited was officially launched as a
fully owned subsidiary of Engro in 2004.
• Two processing plants at Sukkur and Sahiwal.
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6. • Sales:
The revenue
has grown at a very rapid pace from 2006
level . This is primarily attributable to product
innovation launch of new segment.
• Gross Profit:
Gross profit ratio has significantly improved from
7.2% in 2007 is 25.7% in 2012.The significant in gross
profit is consequence of efficiency in production and
economies of scale due to exponential growth in
business volume.
7. • Distribution of Marketing Expenses:
In order to support continuous
growth trajectory, significant expenditure has
been incurred for brand building which led to
manifold increase in marketing costs . with
many brands now in a very established
position , the marketing cost now stand at 12%
of revenue in 2012 compared to 26% in 2007.
8. • Administration & other Expenses:
These expenses have increased
primarily due to larger support functions
required to manage the business growth . the
expenses under these heads are mostly fixed
in nature and therefore, have witnessed
reduction in reiation to revenue.
9. • Finanance Cost:
Finance costs increased with the
higher amount of long term borrowings due to
lowerings of interest of borrowing.
• Provision of taxation:
Directly
attributable to increase in profitability.
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14. Balance Sheet
• 1)Equity :
With time to
time capital injections from the parent
company and private placement 2011, The
share capital has reached to 8.4 million in
2012 from Rs. 2.2 billion in 2006 .The
company incurred losses in earlier years .
However the recent profit has significantly
increased company overall equity position.
15. • 1)Long Term Finances:
in order
to mention the growth momentum ,the
company continues to finance a portion of its
capital requirements by raising long term
loans .Therefore the long term loans have
significantly increased over years . The ratio of
long term loans to equity has gone down to
38:62in 2012 compared to 55:45 in 2007.The
company has been able to reduce this ratio
due to its higher cash generation capacity.
16. • 2) Deferred taxation
Due to taxation losses in earlier years of
operation , the company ‘s deferred tax liability has increased
significantly.
• Current Liabilities
• 1)current portion of Long term finances:
The increase is consequential to higher borrowing.
• 2)Trade Payable:
Trade payables quadrupled over the years in line with the
rising business volume.
• 3)Accrued interest:
Increase in borrowings over the years has led to high year
end accruals for financing obligations
17. • Non current Assets
•
• 1)Plant , property and equipment:
property , plant and
equipment has witnessed a very large increase over the year .
This is due to continuous investment in production facilities
and infrastructure to support growing scale of business.
•
• 2)Long term investment:
In 2009 and 2010,the
Engro food is invested in rice processing . The subsidiary was
later sold to another group company as part of group strategy.
18. • 3)Biological Assets:
This represents value of animals purchased
at the time of establishment of company dairy farm in Nara.
•
• 5)Advance against shares of Engro Foods Natherland:
This represents advance
paid to Engro corps for the purchase of shares Engro foods
Natherland . The company is already managing the al Safa
business in America and Canada markets.
• 5)Stock in Trade:
• The increase in line with the continuous increase in
overall business volume . On average, the company
maintains at least a months inventory to meet sales
demand and production requirements.
19. • 6)Other Receivables
The increase in
receivables is primarily due to two factors
» Increase in sales tax refunds from the government arising
mainly on input tax paid at the time of imports.
» Increase in receivable from Tetra under cost sharing
arrangements . This is the direct consequence of increase
in business volume.
• 7)Short term Investment / cash:
Cash and
short term investments were retained in 2010 & 2011 to
finance upcoming commitments.
