Fertilizers Business witnessed an increase in revenue and profitability over the last year primarily on the back of both higher fertilizers offtake and prices, coupled with one-off tax effects i.e. reduction in the corporate tax rate from 30% to 25% in a phased manner. The domestic fertilizers industry continues to face challenges in the guise of prior subsidy receivables and long lead time in its disbursements.

The business continues to explore opportunities within the agriculture sector in Pakistan to create value for its stakeholders by leveraging its strong position in the agri-space. The business continued to expand its footprint in the Crop Sciences business (seeds and pesticides) and is evaluating other business opportunities to improve farmer productivity.

For the Polymer business, 2018 proved to be a year of economic consolidation. The business completed debottlenecking of PVC and VCM while maintaining smooth plant operations, achieved strong operational performance, maintained market share and completed the initial ground work for expansion projects while developing a strong balance sheet thus enabling it to capitalize on the opportunities. The business achieved record PVC production, witnessed a 27% increase in revenue and posted a PAT of PKR 4,930 million.

Within our Energy sector assets, the development of the Thar Coal Mine continues at full pace and remained on schedule. During June 2018, coal from the first seam of the open-pit mine was extracted from a depth of 140 meters below the surface. On the Thar Power Generation Plant front, the project development continues at a steady pace. During the year, the powerplant was successfully connected with the national grid for the purpose of receiving back-feed required for plant start-up. In partnership with the Government, both projects are expected to remain on track for completion by mid-2019 to help resolve the energy demand in the country. The Qadirpur Power Plant continued to demonstrate a billable availability factor of 100%. Due to natural field depletion of permeate gas, net electrical output to the national grid was lower as compared to last year resulting in lower earnings. Circular debt has been a persistent problem in the domestic energy sector and despite improvement of fuel mix for power generation, the issue remains urgent.

Elengy Terminal handled 74 cargoes during the year as compared to 70 cargoes during 2017. It delivered 223.8 bcf re-gasified LNG into the SSGC network. The availability factor remained at 97.3% for the year.

Engro Vopak Terminal witnessed a volumetric decrease of 11% for chemicals and LPG handled over last year, which is mainly attributable to lower LPG imports due to availability of locally produced LPG and imports through the road network. The business completed 21 years of safe operations without lost work injury and continued to maintain health, safety and quality standards.

Engro Foods’ profitability decreased from last year owing to continuous decline in the Specialized Tea Creamer category due to the cost pressures following the tax legislative changes announced in the previous year, followed by price increases placing the business at a disadvantage to loose milk. Further, competition has also been intensifying in the recent past with the entry of multiple players on the back of discounting, especially in rural areas.

An increased focus on the rice business followed by business restructuring, fixed costs rationalization, improvement in operational efficiencies and reducing commodity price risk exposure resulted in significantly lowering its losses. The business achieved an 82% increase in the quantity of rice processed over last year. The business exported 11,950 tons of rice during 2017, an increase of 33% year-on-year.