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THE INVESTORS ARE STRONGLY ADVISED IN THEIR OWN INTEREST TOCAREFULLY READ THE CONTENTS OF THE PROSPECTUS ESPECIALLY THERISK FACTORS AT PARA 4.1 BEFORE MAKING ANY INVESTMENT DECISION.

ABRIDGED PROSPECTUSPublic Offer of Rated, Listed and SecuredTerm Finance Certificates

(Engro Rupiya Certificates)

of PKR 4,000 Million

Inclusive of Green Shoe Option of PKR 2,000 million

ENGRO CORPORATION LIMITED(FORMERLY ENGRO CHEMICAL PAKISTAN LIMITED)

3-YEAR FIXED RATE INSTRUMENT

PROFIT @14.5%PER ANNUM (FIXED)

Instrument Rated AA (Double A)

Entity Rating AA (Double A)By The Pakistan Credit Rating Agency Limited (PACRA)

Public Subscription betweenOctober 15, 2010 January 14, 2011 (Both Days Inclusive)

During Banking Hours

Date of Publication of this Prospectus is October 06, 2010

ADVICE FOR INVESTORS


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ENGRO CORPORATION LIMITED TFC PROSPECTUS

2

Summary of the Issue

Issuer Engro Corporation Limited (Engro)

Purpose of the Issue The proceeds of the Issue will be utilized to finance the cash needsof Engro Corporation for investments in its subsidiaries (For details

refer to para 3.2)

Issue Amount Upto PkR 4,000 million (inclusive of a Green Shoe Option of PkR2,000 million)

Tenor 3 years from the Issue Date

Profit Rate 14.5% p.a.

Profit payment frequency Semi Annually

Profit Accrual From the Date of Investment

Minimum Investment Rs. 25,000/-

Denomination of TFC Rs. 5,000/- or in multiples thereof

Subscription Period 3 months

TFC Schedule Date of opening of subscription period October 15, 2010

Date of closing of subscription period January 14, 2011

Date of Interim Profit Payment1 January 31, 2011

Issue Date February 01, 2011

First Profit Payment July 31, 2011

Second Profit Payment January 31, 2012

Third Profit Payment July 31, 2012

Fourth Profit Payment January 31, 2013

Fifth Profit Payment July 31, 2013

Sixth and Final Profit Payment January 31, 2014

Principal Repayment in full January 31, 2014

Maturity Date January 31, 2014

Allotment basis First come first served

Holding of TFCs TFCs may be held either in physical form or in book entry (scrip-less) form through CDS of CDCPL

Principal Redemption 0.1% of the principal amount in five equal semi-annual installmentsin the first thirty (30) months and the remaining 99.9% of theprincipal amount in the thirty-sixth (36th) month (For details refer to

1Please refer to para 3.4.3


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para 3.4)

Put Option (EarlyRedemption)

The investors/TFC holders may ask the Company for earlyredemption at anytime from the Date of Investment subject to aservice charge of 2% of the Outstanding Issue Price and 15 dayprior notice (For details refer to para 3.4.2)

Security The TFC has been secured by way of first ranking floating chargeover all the present and future movable properties (includinginvestments) of Engro Corporation Limited but excluding presentand future trade marks and copyrights of ECL and excluding itsshares in Engro Energy Limited and Engro Polymer & ChemicalsLimited (Charged Assets) at 125% of the outstanding principalamount. These charges have been created in favor of IGIInvestment Bank Limited (Security Trustee) for safeguardinginterest of the TFC holders. The Company may, with prior writtenconsent of the Trustee, create further first ranking pari passucharges over the Charged Assets (For details refer to para 4.2)

Bankers to the Issue MCB Bank Limited, Standard Chartered Bank (Pakistan) Limited,Bank Alfalah Limited, NIB Bank Limited, Bank Al Habib Limited,Allied Bank Limited, Habib Bank Limited, United Bank Limited, JSBank Limited, Askari Bank Limited, Citibank N.A. Pakistan

Trustee IGI Investment Bank Limited (IGI)

Registrar & Transfer Agent Central Depository Company of Pakistan Limited(CDCPLRATING)

Entity Rating

Instrument Rating

AA (Double A) by PACRA (For details refer to para 6.4)

AA (Double A) by PACRA (For details refer to para 6.4)

Risk Factors For details refer to para 4.1

Listing Karachi Stock Exchange (KSE)

Pre-IPO None

Underwriting None


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PART I

1. APPROVALS, CONSENTS AND LISTING ON THE STOCK EXCHANGE

1.1. APPROVAL OF THE SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN

Approval of the Securities and Exchange Commission of Pakistan as required under section 57(1)of the Companies Ordinance, 1984 (the Ordinance) has been obtained for the issue, circulationand publication of this Prospectus.

It must be distinctly understood that in giving this approval, the Securities and ExchangeCommission of Pakistan does not take any responsibility for the financial soundness of anyscheme or for the correctness of any of the statements made or opinions expressed byEngro Corporation Limited (ECL or the Company or the Issuer) in this Prospectus.

1.2. CLEARANCE OF THE PROSPECTUS BY THE KARACHI STOCK EXCHANGE

This Prospectus for the issue of rated, listed and secured Term Finance Certificates (TFCs) has

been cleared by the Karachi Stock Exchange (Guarantee) Limited (KSE) in accordance with therequirements under its Listing Regulations. While clearing the Prospectus, the KSE neitherguarantees the correctness of the Prospectus nor the ability of ECL to redeem the TFCs.

1.3. FILING OF PROSPECTUS AND OTHER DOCUMENTS WITH THE REGISTRAR OFCOMPANIES

The Company has delivered to the Registrar of Companies, Karachi as required under section 57(3) and (4) of the Companies Ordinance 1984, a copy of this Prospectus signed by all the Directorsof the Company together with all the necessary documents.


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PART II

2. HISTORY AND PROSPECTS

2.1. BACKGROUND AND HISTORY

Established in 1965 as a fertilizer company and subsequently named Exxon Chemical PakistanLimited, the Company was renamed Engro Chemical Pakistan Limited (ECPL) in 1991 when Exxondecided to divest out of the fertilizer business globally. ECPL was later renamed Engro CorporationLimited (ECL) on January 01, 2010, and its fertilizer business demerged into a new company EngroFertilizers Limited.

Engro Corporation Limited was formed in the interest of better managing and overseeing businesses

of subsidiaries and affiliates that are currently part of Engro's capital investments. A significant part

of this change is the demerger and transfer of Engros expanding fertilizer business into a separate

wholly owned subsidiary.

Shareholding Structure

As of June 30, 2010, the shareholding structure of Engro Corporation Limited was as follows:

Shareholding Breakdown

Shareholder CategoryNo. of Shares

held%

Shareholding

Joint Stock Companies 152,208,99746.44%

Dawood Hercules Chemical Ltd. 124,982,408

Individuals 79,712,289 24.32%Financial Institutions 23,168,382 7.07%Insurance Companies 25,410,471

7.75% Central Insurance Co. Ltd. 11,858,251

Modaraba Companies 12,095,784 3.69%

Investment Companies 1,879,321 0.57%

Cooperative Societies 17,600 0.01%Others 33,243,975 10.14%Total 327,736,819

As per Annual Audited Accounts 2009, total number of shares issued by ECL were 297,942,563. InApril 2010, there has been a 10% bonus issue which has increased the total shareholding to327,736,819 shares.

ECL is listed on the Karachi, Lahore and Islamabad stock exchanges and has a total paid-up capital1

of PKR 3,277.37 million where as total market2 capitalization stood at PKR 56,888.56 million. As atestament to ECLs blue chip corporate status, the Company has been a frequent winner of theCorporate Excellence Award of the Management Association of Pakistan as well as the Top 25Companies Award of the Karachi Stock Exchange. Further, ECLs corporate and socialresponsibility initiatives have been recognized internationally at various forums.

1Unaudited accounts as of June 30, 2010

2As of June 30, 2010


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ECL has diverse business interests in fertilizer, PVC, bulk chemical storage, food processing, powergeneration etc. through various subsidiaries and joint ventures.

The following is a summary financial snapshot of Engro Corporation Limited on a consolidated basis:

*As of 31st

December

2.2. FINANCIAL OVERVIEW

ECLs income comprises of dividends received from its subsidiaries and royalty income from itsfertilizer business. Following are the subsidiaries and affiliates of the Company as at June 30, 2010:

Subsidiaries and AffiliatesNo. of shares held

by ECLPercentage Holding

Engro Polymer & Chemicals Ltd. 372,810,000 56.19%

Engro Eximp (Pvt) Ltd. 10,000 100%

Engro Management Services (Pvt) Ltd. 250,000 100%

Engro Foods Ltd. 542,300,000 100%

Engro PowerGen Ltd. 9,276,000 100%

Avanceon Ltd. 25,066,667 62.67%

Engro Energy Ltd. 304,000,000 95%

Engro Fertilizer Ltd. 298,000,000 100%

Engro Vopak Terminal Ltd. (Joint Venture) 45,000,000 50%

Arabian Sea Country Club (Affiliate) 500,000 N.A.

Year Ended December(Rs. Million) 1H June30, 2010 2009* 2008* 2007* 2006* 2005*

Revenue 33,725 58,152 40,973 34,121 20,240 18,757

Profit After Tax 3,197 3,719 4,207 2,834 2,139 2,284

Shareholders Equity 31,942 29,344 23,548 18,278 9,796 7,541

Total Assets 152,700 132,105 80,802 49,236 20,054 14,397

Total Liabilities 120,757 102,761 57,254 30,958 10,258 6,856

Total Paid-up Capital 3,277 2,979 2,128 1,935 1,682 1,529

Net Profit Margin (%) 9.48 6.40 10.27 8.31 10.57 12.18

Return On Equity (ROE) % 10.01 12.67 17.87 15.50 21.84 30.28

Breakup Value per share (PKR) 97.46 98.49 110.65 94.47 58.23 49.31Earnings Per share (PKR) 10.37 13.54 16.36 15.05 12.02 14.12

Dividend Per share (PKR) 2.00 6.00 6.00 7.00 9.00 11.00

Market value per share (PKR) 173.58 183.27 96.46 265.75 169.00 164.45

Price to Earnings ratio (x) 16.74 13.54 5.90 17.66 14.06 11.65


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2.3. BOARD OF DIRECTORS OF ENGRO CORPORATION LIMITED

The Companys affairs are governed by a Board ofDirectors, which currently consists of the ChiefExecutive Officer (CEO) and twelve other Directors. The CEO has an overall responsibility tomanage the portfolio of businesses of the Company.

Directors Name AddressDirectorships held in otherCompanies/Organizations

HUSSAIN DAWOODChairman

11th FLOOR, DAWOODCENTRE, M.T. KHANROAD,KARACHI. PAKISTAN

Dawood HerculesChemicals Limited

Pakistan BusinessCouncil

Pakistan PovertyAlleviation Fund

Beaconhouse NationalUniversity

Pakistan Center forPhilanthrophy

Karachi EducationInitiative/Karachi Schoolfor Business &Leadership

Karachi EducationInitiative (UK)

Asia House, London

Dawood Corporation(Private) Limited

Patek (Private) Limited

Sach International(Private) Limited

The Dawood Foundation

ASAD UMARChief Executive

8 FLOOR, THE HARBORFRONT BUILDING, HC # 3,MARINE DRIVE, BLOCK 4,CLIFTON, KARACHI,PAKISTAN

Engro Foods Limited

Engro Vopak TerminalLimited

Engro Polymer &Chemicals Limited

The Pakistan BusinessCouncil

Lahore University ofManagement Sciences

Avanceon Limited

Advanced Automation LP

Karachi EducationInitiative/Karachi Schoolfor Business &Leadership

Pakistan Institute ofCorporate Governance

Engro Powergen Limited

Pakistan Chemical and


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Energy Sector SkillsDevelopment Company

Engro Fertilizers Limited

State Bank of Pakistan Engro Eximp (Private)

Limited Open Society Institute of

Pakistan

ARSHAD NASAR NO.25, FALCON ENCLAVEAIR FORCE OFFICERSSOCIETY(AFOS)TUFAIL ROADLAHORE CANTT.PAKISTAN

Pakistan IndustrialDevelopment Corporation

Foundation forAdvancement of Sciences& Technology (FAST)

Funds for Inclusion ofPeople with Disabilities(FIPD)

National University


ISAR AHMAD 11th FLOOR, DAWOODCENTRE, M.T. KHANROAD,KARACHI. PAKISTAN


Engro Foods Limited

Dawood LawrencepurLimited


Central InsuranceCompany Limited

Tenaga Generasi Limited

SHABBIR HASHMI 90/1, STREET 11,KHAYABAN-E-SEHARDHA,PHASE VIKARACHI.PAKISTAN


LMKR Holdings (Private)Limited


UBL Fund Managers Engro Fertilizers Limited

Sindh Engro Coal MiningCompany Limited

SHAHZADA DAWOOD 11th FLOOR, DAWOODCENTER

M.T.KHAN ROADKARACHI.PAKISTAN

Avanceon Limited

Dawood Corporation

(Private) Limited Dawood Hercules

Chemicals Limited

Dawood LawrencepurLimited

Engro Foods Limited


Engro Vopak Terminal


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Limited

National ManagementFoundation - Lums


Engro Powergen Limited Petek (Private) Limited

Pebbles (Private) Limited

The Dawood Foundation Engro Fertilizers Limited


ABDUL SAMADDAWOOD

10 FLOOR, DAWOODCENTRE, M.T. KHANROAD, KARACHI,PAKISTAN

Central InsuranceCompany Limited


Dawood Corporation(Private) Limited

Inbox BusinessTechnologies (Private)Limited

Patek (Private) Limited


Sui Northern GasPipelines Limited

The Dawood Foundation

Pebbles (Private) Limited


Dawood Lawrencepur

Limited Engro Fertilizers Limited

MUHAMMADALIUDDIN ANSARI

30-G, 5 GIZRI STREET,PHASE IV, DHA,KARACHI, PAKISTAN

Dewan Drilling Limited

Dewan Petroleum(Private) Limited

National ClearingCompany of PakistanLimited

Al-Meezan InvestmentManagement limited


SAAD RAJA 31 BELLFIELD AVENUEHARROW, MIDDLESEXHA3 6ST, UK

_

ASIF QADIR ENGRO POLYMER &CHEMICALS LTD.BAHRIA COMPLEX-I,M.T.KHAN ROAD,KARACHI, PAKISTAN


Engro Polymer Trading(Private) Limited

Inbox Business


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Technologies (Private)Limited

Unicol Limited

Engro Powergen Limited Engro Fertilizers Limited

Sindh Engro Coal MiningCompany Ltd.

Pakistan PovertyAlleviation Fund

KHALID S. SUBHANI 8TH FLOOR, THE HARBORFRONT BUILDING, HC # 3,MARINE DRIVE, BLOCK 4,CLIFTON, KARACHI,PAKISTAN


Engro Vopak TerminalLimited


Engro Eximp (Private)Limited

KHALID MANSOOR 7TH

FLOOR, THE HARBORFRONT BUILDING, HC # 3,MARINE DRIVE, BLOCK 4,CLIFTON, KARACHI,PAKISTAN


Engro Energy Limited



RUHAIL MOHAMMADChief Financial Officer

7 FLOOR, THE HARBORFRONT BUILDING, HC # 3,MARINE DRIVE, BLOCK 4,CLIFTON, KARACHI,PAKISTAN

Engro ManagementServices (Private) Limited

Avanceon Limited

Engro Foods Limited

Sigma LeasingCorporation Limited

Engro Energy Limited Engro Powergen Limited


Engro Eximp (Private)Limited


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PART III

3. TERM FINANCE CERTIFICATES AND RELATED MATTERS

3.1. 1st

ISSUE OF LISTED TFCS TO THE GENERAL PUBLIC

The Issue consists of PKR 4,000 million (inclusive of green shoe option of PKR 2,000 million) to beissued in the form of rated, listed and secured Term Finance Certificates (TFCs) being theinstrument of Redeemable Capital under section 120 of the Ordinance for a tenor of three (3)years.

This will be the first TFC Issue by Engro Corporation Limited. The Company was formerly knownas Engro Chemical Pakistan Limited and had issued TFCs for the expansion of its fertilizerbusiness and for its working capital requirements. All previous TFC issues by Engro ChemicalPakistan Limited are now part of Engro Fertilizers Limited.

The TFCs will be offered to the general public under the brand name of engro rupiya certificatein sets of six (6) scrips (TFCs) with an accompanying Certification of Holding Term Finance

Certificates, each set having an aggregate face value of PKR 5,000/- or in multiples thereof. Theminimum amount of application for the subscription of TFCs is PKR 25,000/-. The TFC isstructured to redeem 0.1% of the principal amount in five equal semi-annual installments in the firstthirty (30) months and the balance 99.9% of the principal amount in the thirty-sixth (36 th) month.The redemption value of the TFCs shall be specified on the TFC itself. For more details, pleaserefer to para 3.4.

There is no pre-IPO placement; the entire amount is available for subscription by the publicincluding both individual and institutional investors for three (3) months from the date ofcommencement of public subscription. However, if the target amount i.e. PKR 4,000 million(inclusive of the green shoe option) is subscribed before the end of subscription date, subscriptionperiod will be closed immediately. Since there is no minimum subscription requirement, allsubscription amounts up to the target amount (inclusive of the green shoe option) will be listed on

the KSE.

3.2. PRINCIPAL PURPOSE FOR THE USE OF SUBSCRIPTION MONEY

The subscription money, as and when received by the Bankers to the Issue, shall be transferred tothe designated bank account of the Company and will be utilized by the Company.Following is thetentative investment plan:

Subsidiary Amount in PKR millionEngro Fertilizers Limited 3,000 by way of loansEngro Foods Limited 1,000 by way of equity

In case the subscription money received is below the target amount, the shortfall will be metthrough borrowings either by Engro Corporation Limited or directly by the respective subsidiary.

3.3. MINIMUM SUBSCRIPTION

There is no requirement of minimum subscription as the issue is not project specific but theproceeds of the issue will be utilized for meeting the cash needs of Engro Corporation Limited forinvestments in its subsidiaries and affiliates.


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3.4. REDEMPTION OF TFCs

A register for TFC holders will be maintained or cause to be maintained by the Company. Theregister will be closed for a period of 7 days prior to the profit payment date. The company will givea minimum of 14 days notice to the Exchange prior to the Book Closure for Profit payments.Investors can redeem TFCs earlier than maturity by exercising Put option (see para 3.4.2) or the

TFCs will redeem as per schedule detailed in para 3.4.1.

All payments will be made either through crossed cheque, pay order or direct bank deposit on thebasis of option exercised by the applicant in the TFCs Subscription Application. In case of chequeor pay order, the instrument will be dispatched to the mailing address of the registered holder ofthe TFC.

3.4.1 TFCs held till Maturity

For TFCs held till maturity, the TFC holders will not need to physically go to the counters of anyspecific bank in order to have the TFCs redeemed.

All payments will be made either through crossed cheque, pay order or direct bank deposit on thebasis of option exercised by the applicant in the TFCs Subscription Application. In case of chequeor pay order, the instrument will be dispatched to the mailing address of the registered holder ofthe TFC.

The terms of redemption of TFCs held till maturity are as follows:

Tenor 3 years

Principal RepaymentThe TFC is structured to redeem 0.1% of the Principalamount in the first 30 months and 99.9% in the 36thmonth.

Profit Rate 14.5% per annum

Profit Payment

An interim profit payment for the period from the Date ofInvestment till the Issue Date will be made before thedispatch or credit, as the case may be, of the TFCs afterthe close of subscription period. All subsequent profitswill be payable semi-annually in arrears on theoutstanding Principal amount from the Issue Date.

The redemption schedule for TFCs held till Maturity of an aggregate face value of PKR 25,000based on profit rate of 14.5% per annum is set out in the table below:

Months

Principal

Redemption

Profit @

14.5%

Zakat @

2.5%

Withholding

Tax @ 10%

Total

Payment

Principal

Payment in %

Principal

Outstanding

6 5 1,812.50 0.13 181.25 1,636.13 0.02% 24,995

12 5 1,812.14 0.13 181.21 1,635.80 0.02% 24,990

18 5 1,811.78 0.13 181.18 1,635.47 0.02% 24,985

24 5 1,811.41 0.13 181.14 1,635.15 0.02% 24,980

30 5 1,811.05 0.13 181.11 1,634.82 0.02% 24,975

36 24,975 1,810.69 624.38 181.07 25,980.24 99.90% -

Total 25,000 11,926.85 625.00 1,192.69 35,109.17 100.00%


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Notes: The above redemption schedule includes deduction of Zakat and Withholding Tax. For

applicability of these, please refer to para 3.5 and 3.7 below, respectively. The above redemption may be subject to Income Tax. For its applicability, please refer to

para 3.6.

3.4.2 Put Option (Early redemption)

Investors have the option to pre-maturely redeem the outstanding TFCs anytime from the Date ofInvestment subject to a service charge of 2% on Outstanding Issue Price, 15 day prior writtennotice, and in case of partial call option the amount to be redeemed should either be PkR5,000/- or in multiples thereof. The outstanding amount (Outstanding Issue Price) equal to orless than PkR 5,000/- may be redeemed in full only. Profit will be paid till the date the Companyreceives the redemption notice.

In case of TFCs held in physical form, TFC holders can exercise the Put Option by submittingRedemption Notice directly to the Company or to any of the branches of the following banks:

MCB Bank Limited Standard Chartered Bank (Pakistan) Limited

In case of TFCs held in CDS, TFC holders can exercise the Put Option as per the CentralDepository Company of Pakistan Limited Regulations.

TFCs applied for redemption will not be tradable in the secondary market. In case of physicalcertificates, the investor will have to surrender the certificates along with the redemption notice.TFCs held in CDS will be cancelled when the redemption notice is received by the Company.

By way of an example, the redemption schedule for TFCs of an aggregate face value of PkR25,000 based on profit rate of 14.5% per annum and redeemed at the end of 27 th month from theIssue Date is set out in the table below:

Months

Principal

Redemption

Profit @

14.5%

Zakat @

2.5%

Withholding

Tax @ 10%

Total

Payment

Principal

Payment in %

Principal

Outstanding

6 5 1,812.50 0.13 181.25 1,636.13 0.02% 24,995

12 5 1,812.14 0.13 181.21 1,635.80 0.02% 24,990

18 5 1,811.78 0.13 181.18 1,635.47 0.02% 24,985

24 5 1,811.41 0.13 181.14 1,635.15 0.02% 24,980

27 24,480 905.53 612.01 90.55 24,683.36 97.92% -

Total 24,500 9,210.64 612.51 921.06 32,177.47 98.00%

Notes:

The above redemption schedule includes deduction of Zakat and Withholding Tax. Forapplicability of these, please refer to para 3.5 and 3.7 below, respectively.

The above redemption may be subject to Income Tax. For its applicability, please refer topara 3.6.

The above redemption schedule includes deduction of a service charge of 2% of theoutstanding Issue Price of the TFC.


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Profit will be paid to the TFC holder till the date the Company receives the redemption noticeand will be computed on 365 day year basis.

Note: PLEASE NOTE THAT THE ISSUER HAS NO CALL OPTION

3.4.3 Profit Payments

Profit will be paid at a fixed rate of 14.5% per annum from the Date of Investment. To bring allTFCs at par before dispatch or credit, as the case may be, an interim profit payment for the periodfrom the Date of Investment till the Issue Date will be made before the dispatch or credit, as thecase may be, of the TFCs after the close of subscription period. From the Issue Date, allsubsequent profits will be payable semi-annually in arrears on the outstanding Principal amount.The following table illustrates profit payment for the interim period and for the three years periodcommencing from the Issue Date:

Profit Payment Profit Period Profit Payment Date

Interim Interim Period (Date of Investment till the Issue Date) January 31, 2011

First February 01, 2011 to July 31, 2011 July 31, 2011

Second August 01, 2011 to January 31, 2012 January 31, 2012

Third February 01, 2012 to July 31, 2012 July 31, 2012

Fourth August 01, 2012 to January 31, 2013 January 31, 2013

Fifth February 01, 2013 to July 31, 2013 July 31, 2013

Sixth & Final August 01, 2013 to January 31, 2014 January 31, 2014

3.5. DEDUCTION OF ZAKAT

Zakat is deductible in case of TFCs held by Muslim citizens of Pakistan, except where a statutorydeclaration of exemption is filed, and in case of certain non-corporate entities such as Trusts,Funds (subject to being qualified for non-deduction of Zakat in terms of the Zakat and UshrOrdinance, 1980) etc. Zakat shall be deducted at the time of redemption of the principal amount ofthe TFCs or on the market value based on the closing rate on KSE on the first day of Ramzan,whichever is lower, at the rate of 2.50% on such dates as the concerned TFC becomes due forredemption in a Zakat year.

3.6. INCOME TAX

Any income derived from the Term Finance Certificates shall be subject to income tax as per theIncome Tax Ordinance, 2001. According to this Ordinance, the tax shall be deducted @ 10% ofthe gross amount of profit paid as per the First Schedule, Part 3, Division 1, Para (a), and shall be

deemed to be the final discharge of tax liability on the profit arising to a tax payer other than acompany, under subsection 3 of Section 151 of the Income Tax Ordinance, 2001.

3.7. DEDUCTION OF WITHHOLDING TAX

ECL is required to withhold tax, currently at the rate of 10%, from profit payments to all investorsexcept companies and resident individuals whose investment amount is up to PKR 150,000 underClause 59, part (IV), Second Schedule of Income Tax Ordinance 2001.


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3.8. CAPITAL GAINS TAX

Any capital gains derived from the sale of Term Finance Certificates shall be subject to capitalgains tax as per the Income Tax Ordinance, 2001.

3.9. CAPITAL VALUE TAX & WITHOLDING TAX ON SALE/PURCHASE OF TFCs

Pursuant to the provisions of Section 233A of the Income Tax Ordinance, 2001 & Capital ValueTax (Finance Act 1989) the following charges are applicable on sale/purchase of securities:

0.02% Capital Value Tax (CVT) will be charged on purchase of all modarba certificates andinstruments of redeemable capital as defined in the Companies Ordinance, 1984

0.01% Withholding Tax (WHT) will be charged on sale of all shares, modaraba certificates,and instruments of redeemable capital as defined in the Companies Ordinance, 1984.

3.10. MARKET MAKING

The TFCs will be listed on the Karachi Stock Exchange. JS Global Capital Limited (formerlyJahangir Siddiqui Capital Markets Limited) will act as Market Maker for the issue. The role of themarket maker will be to offer bid & ask quotes for the TFCs at a spread of 0.50% and 1.50% inyield, or equivalent price terms, for marketable or non-marketable lots respectively. Price will bedetermined by market maker in light of prevailing liquidity, interest rates and credit risk on theissuer.

Marketable lots are defined as any amount upto PKR 1 million face value with minimum face valueof PKR 25,000 and Non-Marketable lots are defined as any amount less than PKR 25,000 facevalue or more than PKR 1 million face value. Market Maker will trade TFCs which are eitheravailable for transfer with CDS or physically in the form of printed certificates.

3.11. DISCLOSURE OF DEFERRED TAXATION

Deferred tax is recognized using the balance sheet method, providing for all temporary differencesbetween the carrying amounts of assets and liabilities for financial reporting purposes and theamounts used for taxation purposes. Deferred tax is measured at the tax rates that are expected tobe applied to the temporary differences when they reverse, based on the laws that have beenenacted or substantively enacted by the reporting date.

A deferred tax asset is recognized only to the extent that it is probable that future taxable profitswill be available against which temporary difference can be utilized. Deferred tax assets arereviewed at each reporting date and are reduced to the extent that it is no longer probable that therelated tax benefit will be realized.

The balance of deferred tax liability for Engro Corporation Limited as at June 30, 2010 is PKR 158thousand. Break up is as follows:Amounts in 000

Accelerated depreciation PKR (16)

Retirement & other Service benefits PKR 174

PKR 158


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PART IV

4.1. RISK FACTORS

Business Risks

i. Diversification

In order to diversify future cash flows of the Company, ECL has been diversifying andexpanding in a number of sectors including foods, power generation, informationtechnology, PVC manufacturing and bulk chemical handling and storage business. TheCompany also aims to capitalize on the synergies between its various subsidiaries and

joint ventures. This exposes the Company to the risks that diversification may pose.

Mitigants

ECL has a successful track record in profitably managing its associated businesses.Individual companies are run by independent teams of professional and competent

management personnel. Where required, as in Engro Foods Limited, ECL has hiredexperienced professionals. Further, all ventures are backed by extensive due diligenceand/or through participation of world-renowned joint venture partners (Vopak in EngroVopak Terminal Limited, and Mitsubishi Corporation in Engro Asahi) to provide thenecessary technical expertise. ECLs recent diversification into food business has beenvery successful with the flagship brand Olpers capturing 36% of the market share in ashort span of time and the IPP of Engro Energy Limited achieving commercial operationsdate in record time.

Instrument Risks

i. Default Risk

Given the secured nature of the instrument, while there is a default risk, the chances ofdefault are very low as confirmed by the TFC Rating.

Mitigants

Instrument has been secured by first ranking floating charge over the shareholding ofECL in some of its subsidiary companies and affiliates and certain other assets of theCompany at 125% of the outstanding principal amount.

Furthermore, the Company has been assigned a long term entity rating of AA (DoubleA) and short term entity rating of A1+ (A One plus) by PACRA.

The Instrument has been assigned rating of AA (Double A) by PACRA.

ii. Liquidity Risk

By investing in the TFC the investor assumes the risk of not being able to sell the TFCwithout adversely affecting the price of the instrument.

Mitigants

The TFCs are to be listed on KSE, which will act as provider of liquidity for TFCs during


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the life of the instrument by facilitating secondary market trades. In addition, the marketmakers would also make market for the instrument. Investors can also exercise the PutOption anytime from the Date of Investment as explained in detail in para 3.4.2.

iii. Interest Rate or Price Risk

Fluctuations in interest rates, and underlying inflation, may adversely affect the yield tothe investors.

Mitigants

The structure of the product is such that the investor can redeem the TFCs anytime afterthe Date of Investment.

iv. Capital Market Risk

The TFC issue will be listed on KSE and the TFC holders will be able to sell or buy TFCsthrough the members of KSE and through market maker subsequent to the listing of theissue. Price of TFCs will depend on the bond market behavior and the performance of

the Company. Hence price may rise or fall and result in increase or decrease in the valueof TFCs to any extent.

v. Reinvestment Risk

Investors in fixed income securities face the risk that the interest rate at which the interimcash flows can be re-invested may fall and that the investor may not have suitableavenues for investing interim cash flows.

vi. Financial Projection Risk

The Company has prepared financial projections on the basis of various assumptionsthat current market conditions continue to prevail and are subject to change. Anyunforeseen events such as problems arising out of lower than projected production andsales by subsidiaries and affiliates, and consequent receipt of dividends by the Companyhave not been taken into account. The investors assume the risk that due to theunforeseen events the Company may not be able to maintain consistent growth.

vii. Changes in Tax Regime

Any adverse change in the existing Tax regime for investment in TFCs, may affect theredemption and profit for the TFC investors.

viii. Regulatory Risk

Changes in the regulatory framework may have an effect on the returns to investors in sofar as such changes impact the return on the TFCs

ix. Exchange Rate Risk

Depreciation of the Rupee may adversely affect the yield to the overseas investors.


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Note: It is stated that all material risk factors with respect to this issue have beendisclosed to the best of knowledge and belief and that nothing has beenconcealed in this respect.

4.2. THE SECURITY

The TFC has been secured by way of first ranking floating charge over all the presentand future movable properties (including investments) of Engro Corporation Limited butexcluding present and future trade marks and copyrights of ECL and excluding its sharesin Engro Energy Limited and Engro Polymer & Chemicals Limited (Charged Assets) at125% of the outstanding principal amount. These charges have been created in favor ofIGI Investment Bank Limited (Security Trustee) forsafeguarding interest of the TFCholders. The Company may, with prior written consent of the Trustee, create furtherfirst ranking pari passu charges.

1. Nature of Charge

Engro Corporation Limited has created first ranking floating charge over all the present

and future movable properties (including investments) of Engro Corporation Limited butexcluding present and future trade marks and copyrights of ECL and excluding its sharesin Engro Energy Limited and Engro Polymer & Chemicals Limited (Charged Assets) infavour of IGI Investment Bank Limited, as Security backing the TFC. The Company shallbe free to transfer and sell part of Charged Assets without consent or NOC of theSecurity Trustee or the TFC Holders, as long as the total value of charge in favour of theTrustee after such sale/transfer does not fall below 125% of the outstanding principalamount then secured. However, the Company shall intimate the Security Trustee,the changes in the assets backing the TFC within seven working days of suchchanges, if any. The Company may, with prior written consent of the Trustee, createfurther first ranking pari passu charges.

2. Detail of assets backing the TFC

a. Shares as Security

Engro Corporation Limited is the Parent (holding) Company and its main assets are inthe form of shares held in its subsidiaries and affiliates. Details of shares held by EngroCorporation Limited as on June 30, 2010 for the purpose of security for this TFC Issue isas under:

Subsidiaries and AffiliatesShares of

Rs. 10 eachPercentage

Holding

BreakupValue per

share (PkR)

Total Value(PkR Million)

Engro Eximp (Pvt) Ltd. 10,000 100% 147,256.80 1,472.57

Engro Management Services (Pvt) Ltd. 250,000 100% 10.21 2.55

Engro Foods Ltd. 542,300,000 100% 7.64 4,141.44

Engro PowerGen Ltd. 9,276,000 100% 55.69 516.55

Avanceon Ltd. 25,066,667 62.67% 0.76 19.04

Engro Fertilizer Ltd. 298,000,000 100% 39.58 11,795.11

Engro Vopak Terminal Ltd. (JV) 45,000,000 50% 13.13 591.06


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Arabian Sea Country Club (Affiliate) 500,000 N.A. N.A. N.A

Total 920,402,667 18,538.33

b. other assets

These include cars, computers, and other such assets of values which are minorcompared to shareholdings. The book value of all such other assets as at June 30, 2010,is PkR 86,032,000/-.

Presently, there are no charges on the above mentioned assets backing the TFC.

4.3. THE TRUSTEE

In order to safeguard the interests of the TFC holders, IGI Investment Bank Limited has beenappointed to act as Trustee for the issue. The Issuer shall pay to IGI Investment Bank Limited atrustee fee of PKR 500,000 per annum. The fee shall be payable at the beginning of each yearcommencing from the date of signing of the Trust Deed and on each subsequent anniversary thereof.

The bankers to the Issue have been instructed to inform the Trustee on a regular basis of thesubscriptions received.

As per the terms of the Declaration of Trust executed between ECL and the Trustee, the Trustee willensure the following:

The terms and conditions of the Declaration of Trust and Security Documents are adheredto; and

The interests of the TFC holders are safeguarded by taking the actions that it deemsnecessary (as prescribed by the Declaration of Trust) in the event of any breach of termsand conditions of TFC Instrument and the Declaration of Trust by ECL.

4.4. THE TRUST DEED

The Trust Deed dated September 17, 2010 (Declaration of Trust) executed between theCompany and IGI Investment Bank Limited specifies the rights and obligations of the Trustee.In the event of ECL defaulting on any of its obligations under the terms of the Declaration of Trust,the Trustee may enforce ECLs obligations in accordance with the terms of the Trust Deed. Theproceeds of any such enforcement shall be distributed to the TFC Holders at the time on apari passu basis in proportion to the amounts owed to each TFC holder pursuant to theTFCs.

4.5. EVENTS OF DEFAULT AND SECURITY ENFORCEMENT PROCEDURE

The event of default will be governed under Article 8 of the Declaration of Trust executed betweenthe Company and the Trustee to the Issue. It is clarified, however, that in the event of default, theTFC holders acting through the Trustee shall be entitled to initiate legal proceedings against theCompany for recovery of the outstanding amount payable under the TFCs.

The Obligations shall become immediately due and payable, and the Security shall becomeimmediately enforceable by a declaration of the Trustee, notified to the Issuer, upon theoccurrence of an Event of Default.


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Under Section 8.1.1 of the Declaration, each of the following events constitute an Event of Defaultand is reproduced below:

a) the failure of the Issuer to:

i. redeem any Coupon on its respective Redemption Date and to pay the Redemption

Amount and / or any portion thereof on such Redemption Date;

ii. pay any amounts payable by the Issuer under this Declaration and such failurecontinues for a period of three (3) consecutive days irrespective of whether or not ademand for the payment of the same has been made upon the Issuer;

b) default by the Issuer in the performance or observance of or compliance with any of its othermaterial obligations or undertakings under the Declaration of Trust and Deed of FloatingCharge;

c) an event of default (howsoever described and / or defined) occurs under a TransactionDocument;

d) any representation or warranty made or deemed to be made or repeated by the Issuer in orpursuant to this Declaration is found to be incorrect and / or misleading in any materialrespect;

e) the Issuer enters into an arrangement for the benefit of its creditors in respect of anyFinancial Indebtedness;

f) the Issuer:

i. voluntarily or involuntarily becomes the subject of bankruptcy or insolvencyproceedings except for proceedings which are frivolous in nature; and / or

ii. elects to become a party to or is subject to any proceedings or procedure under anylaw for the relief of financially distressed debtors, except for proceedings which arefrivolous in nature; and / or

iii. is unable or admits in writing its inability to pay its debts as they mature, to theTrustee; and / or

iv. a receiver or an administrator is appointed for all or any material part of its assets orbusiness;

g) the Issuer is unable or admits its inability to meet its payment obligations in respect of itsFinancial Indebtedness as the same fall due, suspends making payments on any of itsFinancial Indebtedness or, by reason of actual or anticipated financial difficulties,commences negotiations with one or more of its creditors with a view to rescheduling itsFinancial Indebtedness or any portion thereof;

h) a moratorium is declared in respect of any Financial Indebtedness of the Issuer;

i) any corporate action, legal proceedings or other procedure or steps are taken in relation tothe suspension of payments, winding-up, dissolution, administration or reorganisation (byway of voluntary arrangement, scheme of arrangement or otherwise) of the Issuer other thana solvent liquidation or reorganisation;


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j) enforcement of any Security Interest over substantial assets of the Issuer;

k) any governmental agency nationalizes, acquires or expropriates (with or without compensation)any material or all the assets of the Issuer including but not restricted to the Secured Assets;

l) the Issuer fails to meet any of its material obligations under this Declaration and the samehas a Material Adverse Effect;

m) any other event or circumstance arising out of the Issuers negligence or default whichresults in a Material Adverse Effect;

n) any Financial Indebtedness of the Issuer is declared to be or otherwise becomes due andpayable prior to its specified maturity as a result of an event of default (howsoeverdescribed);

o) any commitment for any Financial Indebtedness of the Issuer is cancelled or suspended by acreditor of the Issuer, as a result of an event of default (however described);

p) it is or becomes unlawful for the Issuer to perform any of its material obligations under thisDeclaration;

q) any obligation or obligations of the Issuer under this Declaration or any TransactionDocument are not, or cease to be, legal, valid, binding or enforceable and the cessationindividually or cumulatively has a Material Adverse Effect;

r) the Issuer repudiates this Declaration or evidences an intention to repudiate this Declaration;

s) any Security Document ceases to be in full force and effect or is declared to be void or isrepudiated and the conditions resulting in the repudiation are not remedied and / orreplacement Security Documents are not executed within a period of fifteen (15) days from

the date on which the Security Documents become void and /or are repudiated;

t) any court or arbitrator passes a final non-appealable judgment or arbitral award for payment,against the Issuer and the Issuer fails to effect such payment within thirty (30) days from thedate on which the obligation to pay arises;

u) the Issuer fails to comply with any law or regulation to which it may be subject and the samehas a Material Adverse Effect;

v) the Issuer fails to comply with the covenants set out in this Declaration and such failurecontinues for a period of thirty (30) days from the date of receipt of a notice by the Issuerfrom the Trustee in respect of the same or from the date on which the Issuer has knowledgeof the same, whichever is earlier;

w) the Issuer suspends, ceases, or threatens to suspend or cease, to carry on all or asubstantial part of its business or to change the nature of its business from that undertakenat the date of this Declaration;

x) any event or series of events (whether related or not) occurs which would have a MaterialAdverse Effect.


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4.6. OVERDUE LOANS

There are no overdue loans (local and foreign currency) on the Company.

4.7. EXPENSES OF THE ISSUE

The initial expenses of the issue paid or payable by the Company inclusive of all commissions areestimated to be PKR 249,067,500/-.


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PART V

5.1. INVESTOR ELIGIBILITY

Investors include the following:

Pakistani citizens resident in or outside Pakistan or Persons holding two nationalitiesincluding Pakistani nationality;

Foreign Nationals whether living in or outside Pakistan;

Companies, bodies corporate or other legal entities incorporated or established in or outsidePakistan (to the extent permitted by their constitutive documents and existing regulations, asthe case may be);

Mutual Funds, Provident/pension/gratuity funds/trusts, (subject to the terms of the TrustDeed and existing regulations); and

Branches in Pakistan of companies and bodies corporate incorporated outside Pakistan.

5.2. MINIMUM AMOUNT OF APPLICATIONS AND BASIS OF ALLOTMENT OF TFCs

a) The minimum amount of application for subscription of TFCs is PKR 25,000/-

b) Applications for TFCs below the aggregate face value of PKR 25,000/- will not beentertained.

c) Applications for TFCs by the general public, including institutions and individuals, must bemade for a minimum of the aggregate face value of PKR 25,000/- or in multiples of PKR5,000/- for amounts above PkR 25,000/-.

d) Allotment of TFCs will be made on first come first served basis and applications forsubscription of TFCs will not be accepted once the target amount of PKR 4,000 million(inclusive of the green-shoe option) is subscribed. In case Bankers to the Issue on any

given day accept subscriptions which result in the target amount being exceeded,then all applications in excess of the target amount will be returned to the applicantsalong with profit at the rate of 14.5% per annum for the number of days for which suchapplicants are deprived of their money plus a further three (3) days profit at the samerate. Therefore, there will be no oversubscription. In order to ensure that allotment ofTFCs is made to the applicants on first come first served basis, the Bankers to theIssue shall mark each Subscription Application with the date and time of their receipt.The applications not marked with date and time of receipt shall be accommodatedafter all the applications properly marked with date and time are accommodated.

e) Allotment of TFCs shall be subject to scrutiny of applications for subscription.

5.3. BANKERS TO THE ISSUE

Code No. Banks1. MCB Bank Limited2. Standard Chartered Bank (Pakistan) Limited3. Bank Alfalah Limited4. NIB Bank Limited5. United Bank Limited6. Habib Bank Limited7. Bank Al Habib Limited


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8. Allied Bank Limited9. JS Bank Limited

10. Askari Bank Limited11. Citibank N.A. Pakistan

5.4. ISSUE, CREDIT AND DISPATCH OF TFCs

The Company shall credit or dispatch, as the case may be, TFCs within thirty (30) days of closure ofsubscription period in compliance with the requirements of KSE Listing Regulations. Consequently,an investor subscribing to the TFC issue on the first day of subscription will be issued TFCs within amaximum of one-twenty (120) days from the first day of subscription. TFCs will be issued either inscripless form in the Central Depository System (CDS) or in the shape of physical scrips on thebasis of option exercised by the applicants. TFCs in physical form shall be delivered to theapplicants through registered mail or courier service whereas scripless TFCs shall be directlycredited through book entries into the respective CDS accounts of allottees maintained with theCentral Depository Company of Pakistan Limited (CDCPL). The TFCs issued directly for inductionin the CDS, without the issuance of the physical certificates and the TFC scrips (with the terms andconditions), shall be subject to the terms and conditions for the issuance of the TFCs specified in

Schedule 5 of the Trust Deed dated September 17, 2010 executed between the Company and theTrustee for the TFC Issue.

The applicants who opt for issuance of TFCs in scripless form in the CDS should fill in the relevantcolumns in the Application Form. In order to exercise the scripless option, the applicant must alsohave a CDS account at the time of subscription. In case where the CDS account is not mentioned oris not correct, physical TFC certificates will be issued.

If the Company defaults on complying with the requirements of the Listing Regulations, it will pay tothe KSE a penalty of PKR 5000/- per day for the period during which the default continues. The KSEmay also notify the fact of such default and the name of the Company by notice and also bypublication in the Daily Quotation.

5.5. TRANSFER OF TFCs

5.5.1 Physical Scrips

TFCs shall be transferred in the manner as provided under the Companies Ordinance, 1984.Transfer of TFCs will be subject to payment of the applicable stamp duty levied by the ProvincialGovernment. Stamp duty on initial issuance will be borne by the Company, while stamp duty onsubsequent transfer will be on account of the TFC holders.

5.5.2 Transfer under Book Entry System

TFCs will be declared as eligible security through CDS of CDCPL. Stamp duty on initial issuancewill be borne by the Company. TFCs, which are in the CDS, shall subsequently be transferred inaccordance with the Central Depositories Act, 1997 and the Central Depository Company ofPakistan Limited Regulations. The transfer fee for all subsequent transfers shall be borne by theTFC holders.


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PART VI

6.1. MATERIAL CONTRACTS / DOCUMENTS

6.1.1 Deed of Floating Charge dated September 17, 2010 between the Company and IGIInvestment Bank Limited;

6.1.2 Declaration of Trust Agreement dated September 17, 2010 between the Company and IGIInvestment Bank Limited;

6.1.3 Credit Rating Report dated August 02, 2010 by PACRA;

6.1.4 Clearance letter dated August 18, 2010 from Karachi Stock Exchange;

6.1.5 Approval letter dated September 22, 2010 from Securities & Exchange Commission ofPakistan.

6.2. INSPECTION OF DOCUMENTS AND CONTRACTS

All the Balance Sheets and Profit & Loss Accounts, Copies of the Memorandum and the Articles ofAssociation, the Auditors Certificates, Trust Deed, the Deed of Floating Charge, the Credit RatingReport, the Clearance letter from Karachi Stock Exchange, and the approval letters from Securities& Exchange Commission of Pakistan may be inspected during usual business hours on anyworking day at the registered office of the Company from the date of publication of this Prospectusuntil the closing of the subscription List.

6.3. LEGAL PROCEEDINGS

There are no cases by or against the Company.

6.4. CREDIT RATING

The TFC Issue has been assigned instrument rating of AA (Double A) and Engro CorporationLimited is also assigned entity rating of AA (Double A) by PACRA.

6.5. REGISTERED HEAD OFFICE

Engro Corporation Limited, 8th Floor, Harbor Front Building, Marine Drive, Block 4, Clifton, Karachi

Signatories to the Abridged Prospectus

sd/- sd/- sd/-

ASAD UMAR RUHAIL MOHAMMAD ANDALIB ALAVIPresident & CEO / Director Chief Financial Officer Company Secretary