Engro Polymer & Chemicals Ltd.

Engro Polymer & Chemicals Ltd.
Financial Statements for the

Half Year ended June 30, 2009
COMPANY INFORMATION
Chairman Asad Umar
President & Chief Executive Asif Qadir
Directors Isar Ahmad

Shahzada Dawood
Masaharu Domichi
Takeshi Hagiwara
Shabbir Hashmi
Waqar A. Malik
Khalid Mansoor
Khalid S. Subhani
Company Secretary Arshaduddin Ahmed
Board Audit Committee Isar Ahmad

Masaharu Domichi
Shabbir Hashmi
Khalid S. Subhani
Bankers Allied Bank Ltd.

Askari Commercial Bank Ltd.
Bank Al Falah Ltd.
Bank Al Habib Ltd.
Barclays Bank Plc., Pakistan
Citibank N.A.
Deutsche Bank AG
Dubai Islamic Bank Ltd.
Samba Bank Ltd. (Formerly Crescent Commercial Bank Ltd.)
Faysal Bank Ltd.
Habib Bank Ltd.
Hongkong Shanghai Banking Corporation
MCB Bank Ltd.
Meezan Bank Ltd.
National Bank of Pakistan
NIB Bank Ltd.
Standard Chartered Bank (Pakistan) Ltd.
United Bank Ltd.
Auditors A. F. Ferguson & Co., Chartered Accountants

State Life Building No. 1-C, I.I. Chundrigar Road, Karachi.
Registered Office First Floor, Bahria Complex I, 24 M.T. Khan Road, Karachi - 74000
Manufacturing Facility EZ/1/P-II-1, Eastern Zone, Bin Qasim, Karachi.
Share Registration Office FAMCO Associates (Private) Limited [Formerly Ferguson Associates (Private) Limited]
1st Floor, State Life Building 1-A, I.I. Chundrigar Road, Karachi - 74000,
Tel: 2427012, 2426597, 2425467
Website www.engropolymer.com
UAN 111-411-411
2
DIRECTORS’ REPORT &
UNAUDITED CONDENSED
INTERIM FINANCIAL STATEMENTS
FOR THE HALF YEAR ENDED JUNE 30, 2009
3
DIRECTORS’ REPORT TO THE SHAREHOLDERS ON UNCONSOLIDATED
CONDENSED INTERIM FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED
JUNE 30, 2009
On behalf of the Board of Directors of Engro Polymer & Chemicals Limited, we are pleased to present the unaudited
accounts of the Company for the six months ended June 30, 2009.
Business Review
Domestic sales of PVC during the quarter ended June 30, 2009 were the highest ever for any quarter at 35,500
tons as compared to 30,200 tons sold during same period last year. The increase in sales volumes was driven by
higher usage in public sector projects and agricultural sector. In addition to this, rising price trend of PVC contributed
to increased buying by customers. Domestic sales of PVC during first six months were 64,400 tons as compared
to 55,600 tons during the same period in 2008. Production for the quarter was 34,600 tons taking total production
for six months to 60,900 tons versus 49,800 tons in 1H08.
Global PVC price rose to reflect higher feedstock prices driven by hike in oil prices. Availability of VCM during the
quarter remained tight as key manufacturers underwent planned shutdowns with no significant reduction in demand
resulting in a squeeze in the PVC-VCM margin to US$ 146 per ton in 2Q09 as compared to US$ 273 per ton in
the same period last year.
The Company successfully launched sale of Caustic soda and Sodium hypochlorite to domestic customers at the
end of second quarter. During this period, the Company sold 760 tons and 464 tons of Caustic soda and Sodium
hypochlorite respectively. Market has been quite receptive and the Company is confident that it will be able to
capture a sizeable share of the caustic soda market due to its high quality product, competitive pricing, dedicated
distribution fleet and commitment to a high level of customer service.
Revenue during the first six months was Rs. 4,945 million, an increase of 13% over same period 2008. During
second quarter, the Company earned a profit after tax of Rs. 82 million. Profit after tax for six months is Rs. 7 million
as compared to Rs. 427 million last year mainly because of the lower PVC-VCM margin, higher depreciation and
financial costs due to the addition of new PVC plant and Utilities.
Near Future Outlook
PVC plants are running satisfactorily. The Chlor-alkali and EDC plants have been successfully tested and have
commenced production. The Company exported 3,800 tons of EDC in July. VCM plant is under trials, commercial
operation of the integrated complex is expected to be achieved in third quarter. Infrastructure to sell up to 12 MW
of power to KESC is complete, whereas work on the remaining 6 MW will be completed by mid-August. Supply of
power is expected to commence in third quarter.
Demand of PVC in domestic market in third quarter is expected to be lower due to slow down of activity during
Ramadan and Eid holidays. Based on progress made by the Company in entering the caustic soda market, the
Company will continue to penetrate the domestic market to sell out its production and will also explore export
opportunities.
The profitability of the Company will be dependent on successful commissioning of the VCM plant as it will allow
the economic benefits of a fully integrated site to flow.
Asif Qadir Masaharu Domichi

President & Chief Executive Director
Karachi
July 24, 2009
4
Half Yearly Report – 2009

A member firm of
A.F.Ferguson & Co.

Chartered Accountants
State Life Building No. 1-C
I.I. Chundrigar Road, P.O. Box 4716
Karachi-74000, Pakistan
Telephone: (021) 2426682-6 / 2426711-5
Facsimile: (021) 2415007 / 2427938
AUDITORS’ REPORT TO THE MEMBERS ON

REVIEW OF UNCONSOLIDATED CONDENSED INTERIM
FINANCIAL INFORMATION
Introduction
We have reviewed the accompanying unconsolidated condensed interim balance sheet of Engro Polymer and
Chemicals Limited as at June 30, 2009 and the related unconsolidated condensed interim profit and loss account,
unconsolidated condensed interim statement of comprehensive income, unconsolidated condensed interim statement
of changes in equity and unconsolidated condensed interim cash flow statement together with the notes forming
part thereof (here-in-after referred to as the “condensed interim financial information”), for the half year then ended.
Management is responsible for the preparation and presentation of this condensed interim financial information
in accordance with approved accounting standards as applicable in Pakistan. Our responsibility is to express a
conclusion on this condensed interim financial information based on our review.
The figures of the condensed interim profit and loss account and the condensed interim statement of comprehensive
income for the quarters ended June 30, 2008 and 2009 have not been reviewed, as we are required to review only
the cumulative figures for the half year ended June 30, 2009.
Scope of Review
We conducted our review in accordance with International Standard on Review Engagements 2410, “Review of
Interim Financial Information Performed by the Independent Auditor of the Entity”. A review of interim financial
information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and
applying analytical and other review procedures. A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance
that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not
express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the accompanying condensed
interim financial information as of and for the half year ended June 30, 2009 is not prepared, in all material respects,
in accordance with approved accounting standards as applicable in Pakistan.
Karachi
Date: July 24, 2009
Engagement Partner:
Sohail Hasan
Lahore Office: 505-509, 5th Floor, Alfalah Building, P.O. Box 39, Shahrah-e-Quaid-e-Azam, Lahore-54000, Pakistan Tel: (92-42) 6285078-85 Fax: (92-42) 6285088
Islamabad Office: PIA Building, 3rd Floor, 49 Blue Area, Fazal-ul-Haq Road, P.O. Box 3021, Islamabad-44000, Pakistan Tel: (92-51)2273457-60 Fax: (92-51) 2277924
Kabul Office: House No. 4, Street No. 3, District 6, Road Karte-3, Kabul, Afghanistan. Tel: (93-799) 315320-203424
ENGRO POLYMER & CHEMICALS LIMITED
UNCONSOLIDATED CONDENSED INTERIM PROFIT AND LOSS ACCOUNT (UNAUDITED)
(Amounts in thousand except for earnings per share)
Quarter ended Half year ended

June 30, June 30, June 30, June 30,
2009 2008 2009 2008
Note Rupees
Net sales 2,566,120 2,473,419 4,945,407 4,368,754
Cost of sales 17 (2,235,216) (1,924,091) (4,530,009) (3,457,100)
Gross profit 330,904 549,328 415,398 911,654
Distribution and marketing expenses 18 (102,259) (80,919) (181,957) (149,291)
Administrative expenses 19 (50,634) (47,022) (78,138) (69,639)
Other operating expenses 20 (39,450) (101,571) (87,564) (132,091)
Other operating income 41,254 25,673 55,121 88,420
Operating profit 179,815 345,489 122,860 649,053
Finance costs 21 (60,641) (7,752) (119,005) (15,560)
Profit before taxation 119,174 337,737 3,855 633,493
Taxation (37,162) (100,035) 3,200 (206,398)
Profit for the period 82,012 237,702 7,055 427,095
Earnings per share - basic and diluted 0.16 0.46 0.01 0.83
The annexed notes 1 to 26 form an integral part of this unconsolidated condensed interim financial information.


(Amounts in thousand)
UNCONSOLIDATED CONDENSED INTERIM STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)

2009 2008 2009 2008
Rupees
Other comprehensive income:
Hedging reserve
Gain arising during the period 76,029 14,754 46,755 14,754
Less:
- Reclassification adjustments for
(gains)/losses included in profit and loss 592 – 932 –
- Adjustments for amounts transferred to

initial carrying amount of hedged items 2,160 (911) 5,012 (911)
Income tax relating to hedging reserve (27,573) (4,845) (18,445) (4,845)
Other comprehensive income for the period - net of tax 51,208 8,998 34,254 8,998
Total comprehensive income for the period 133,220 246,700 41,309 436,093


UNCONSOLIDATED CONDENSED INTERIM STATEMENT OF CHANGES IN EQUITY (UNAUDITED)
Share Share Employees’ Hedging Unappropriated Total

capital premium share reserve profit
compensation
reserve
Rupees
Balance as at January 1, 2008 (Audited) 4,436,000 425,216 – – 315,603 5,176,819
Final dividend for the year ended

December 31, 2007 - Rs. 0.54 per share – – – – (252,896) (252,896)
Total comprehensive income for the half year

ended June 30, 2008 – – – 8,998 427,095 436,093
Share capital issued 767,677 614,141 – – – 1,381,818
Share issuance cost, net – (59,637) – – – (59,637)
Balance as at June 30, 2008 (Unaudited) 5,203,677 979,720 – 8,998 489,802 6,682,197
Total comprehensive loss for the half year

ended December 31, 2008 – – – (48,098) (73,810) (121,908)
Options granted during the period – – 9,858 – – 9,858
Balance as at December 31, 2008 (Audited) 5,203,677 975,438 9,858 (39,100) 415,992 6,565,865
Unvested options lapsed during the period – – (266) – – (266)

ended June 30, 2009 – – – 34,254 7,055 41,309
Balance as at June 30, 2009 (Unaudited) 5,203,677 975,438 9,592 (4,846) 423,047 6,606,908


UNCONSOLITED CONDENSED INTERIM CASH FLOW STATEMENT (UNAUDITED)
Half year Half year

ended ended
Note June 30, 2009 June 30, 2008
Rupees
CASH FLOWS FROM OPERATING ACTIVITIES
Cash generated from operations 22 2,014,197 991,276)

Finance costs paid (720,706) (47,720)
Long term loans and advances 39,602 28,910)
Provisions 10,968 40,316)
Income tax paid (92,450) (41,529)
Net cash inflow from operating activities 1,251,611 971,253)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment (1,734,605) (4,180,570)

Purchases of intangible assets (1,495) (930)
Retention money against project payments (418,625) 242,709
Proceeds from disposal of operating assets 3,390 1,167
Short term investments (484,073) (1,500,000)
Proceeds from sale of short term investments – 4,094,905
Income on short term investments and bank deposits 29,157 34,798
Net cash outflow from investing activities (2,606,251) (1,307,921)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long term borrowing 3,355,596 1,947,298)

Proceeds from issue of share capital – 327,465)
Share issuance cost – (91,750)
Repayments of long term borrowing (130,000) (1,305,429)
Dividend paid – (252,896)
Net cash inflow from financing activities 3,225,596 624,688)
Net increase in cash and cash equivalents 1,870,956 288,020)

Cash and cash equivalents at beginning of the period (745,295) 200,844)
Cash and cash equivalents at end of the period 1,125,661) 488,864)

10

NOTES TO THE UNCONSOLIDATED CONDENSED INTERIM FINANCIAL INFORMATION (UNAUDITED)
1. LEGAL STATUS AND OPERATIONS
Engro Polymer & Chemicals Limited (the Company) was incorporated in Pakistan in 1997 as a public unlisted company
under the Companies Ordinance, 1984. The Company was listed on Karachi Stock Exchange in 2008 and on Islamabad
and Lahore Stock Exchanges during the current period.
The Company is a subsidiary of Engro Chemical Pakistan Limited. The address of its registered office is 1st Floor, Bahria
Complex I, M. T. Khan Road, Karachi. The Company’s principal activity is to manufacture, market and sell Poly Vinyl
Chloride (PVC), PVC compounds and other related chemicals.
In 2006, the Company commenced work on expansion plan in respect of its existing capacity and backward integration
project (the Project). The Project’s total cost is estimated at US$ 240,000, which includes construction of Ethylene Di
Chloride, Vinyl Chloride Monomer (VCM), Chlor Alkali and Power plant. The new plants are being setup adjacent to the
Company’s existing PVC facilities in the Port Qasim Industrial Area.
2. BASIS OF PREPARATION
This condensed interim financial information is unaudited and has been prepared in accordance with the requirements of
the International Accounting Standard 34 – ‘Interim Financial Reporting’. The figures for the half year
ended June 30, 2009 have, however, been subjected to limited scope review by the auditors, as required by the Code of
Corporate Governance.
This condensed interim financial information is being submitted to the shareholders in accordance with section 245 of the
Companies Ordinance, 1984 and should be read in conjunction with the audited annual financial statements of the Company
for the year ended December 31, 2008.
3. ACCOUNTING POLICIES
3.1 Except as disclosed below, the accounting policies adopted in the preparation of this condensed interim financial information
are consistent with those applied in the preparation of audited annual financial statements of the Company for the year
ended December 31, 2008.
3.2 The following new standards and amendments to standards are mandatory for the first time for the financial year beginning
January 1, 2009:
- IAS 1 (revised), ‘Presentation of financial statements’. The revised standard prohibits the presentation of items of
income and expenses (that is ‘non-owner changes in equity’) in the statement of changes in equity, requiring ‘non-
owner changes in equity’ to be presented separately from owner changes in equity. All ‘non-owner changes in equity’
are required to be shown in a performance statement.
Companies can choose whether to present one performance statement (the statement of comprehensive income) or
two statements (the profit and loss account and the statement of comprehensive income).
The Company has elected to present two statements; a profit and loss account and a statement of comprehensive
income. The condensed interim financial information has been prepared under the revised disclosure requirements.
- The SECP vide S.R.O. 411 (1) / 2008 dated April 28, 2008 notified the adoption of IFRS 7 ‘Financial Instruments:
Disclosures’. IFRS 7 is mandatory for company’s accounting periods beginning on or after the date of notification i.e.
April 28, 2008. IFRS 7 has superseded IAS 30 and disclosure requirements of IAS 32. Adoption of IFRS will only
impact the format and extent of disclosures presented in the financial statements. The Company will consider the
requirements of IFRS 7 in the annual financial statements for the year ending December 31, 2009.
- In addition to above, following new standards and amendments to standards are mandatory for the first time for the
financial year beginning January 1, 2009 and are also relevant for the Company. However, the adoption of these new
standards and amendments to standards did not have any significant impact on the financial information of the Company:
11

– IFRS 2 (Amendment), ‘Share based payment’
– IAS 19 (Amendment), ‘Employee benefits’
– IAS 23 (Amendment), ‘Borrowing costs’
– IAS 27 (Revised), ‘Consolidated and separate financial statements’
– IAS 36 (Amendment), ‘Impairment of assets’
– IAS 38 (Amendment), ‘Intangible assets’
– IAS 39 (Amendment),’Financial instruments: Recognition and measurement’
3.3 The following new standards, amendments to standards and interpretations are mandatory for the first time for the financial
year beginning January 1, 2009, but are not currently relevant to the Company:
– IAS 28 (Amendment), ‘Investment in associates’

– IFRS 8, ‘Operating segments’
– IFRIC 13, ‘Customers loyalty programmes’
– IFRIC 15, ‘Agreement for the construction of real estate’
– IFRIC 16, ‘Hedges of a net investment in a foreign operation’
4. ACCOUNTING ESTIMATES
The preparation of this condensed interim financial information in conformity with the approved accounting standards
requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process
of applying the Company's accounting policies. Estimates and judgments are continually evaluated and are based on
historical experience and other factors, including expectation of future events that are believed to be reasonable under
the circumstances. Actual results may differ from these estimates.
In preparing this condensed interim financial information, the significant judgments made by management in applying the
Company's accounting policies and the key sources of estimation and uncertainty are the same as those that apply to
annual financial statements for the year ended December 31, 2008.
Unaudited Audited
June 30, December 31,
2009 2008
Rupees
5. PROPERTY, PLANT AND EQUIPMENT
Operating assets, at net book value - notes 5.1 and 5.2 4,648,183 1,987,643
Capital work-in-progress - note 5.3 13,698,529 14,147,123
18,346,712 16,134,766
5.1. Additions to operating assets during the period/year were as follows, which mainly
relates to capitalisation of new Poly Vinyl Chloride (PVC) plant during the period:
Leasehold land – 3,348

Building on leasehold land 168,221 –
Plant and machinery 2,621,816 –
Furniture, fixtures and office equipment 11,209 19,940
Vehicles 14,355 20,384
2,815,601 43,672
5.2. During the period, assets costing Rs. 7,987 (December 31, 2008: Rs. 9,936), having net book value of Rs. 2,504
(December 31, 2008: Rs. 3,622) were disposed off for Rs. 3,390 (December 31, 2008: Rs. 3,971).
12

Unaudited Audited
2009 2008
Rupees
5.3 Capital work-in-progress mainly relates to the Project and comprises of:
Plant and machinery 11,417,963 12,523,057

Ethylene pipeline and power cables 63,602 61,486
Water and gas pipelines 246,193 233,016
Building on leasehold land 29,992 163,301
Other ancillary costs - note 5.3.1 1,934,062 1,140,230
Furniture, fixtures and equipment 2,471 19,170
Advances for vehicles 4,246 6,863
13,698,529 14,147,123
5.3.1 The ancillary costs, directly attributable to the Project, comprise:
Salaries, wages and benefits 358,416 315,240

Training and travelling expense 73,397 74,439
Borrowing costs, including mark-up on finances
being capitalized at the rate of 15.25%
(December 31, 2008: 13.45%) - net 1,089,174 591,713
Legal and professional charges 33,640 43,103
Storage and handling 260,481 –
Depreciation charge 22,102 13,763
Others 96,852 101,972
1,934,062 1,140,230
6. INTANGIBLE ASSETS – Computer Software
Additions made during the period amounted to Rs. 1,495 (December 31, 2008: Rs. 7,180).
7. STOCK-IN-TRADE
Raw and packing materials - note 7.1 879,243 327,670

Work-in-progress 18,780 21,293
Finished goods 177,946 810,355
1,075,969 1,159,318
7.1 This includes stock-in-transit amounting to Nil (December 31, 2008: Rs. 155,925) and stocks held at the storage facilities
of Engro Vopak Terminal Limited, a related party, amounting to Rs. 566,332 (December 31, 2008: Rs. 22,148).
13

Unaudited Audited
2009 2008
Rupees
8. DEFERRED EMPLOYEES’ COMPENSATION EXPENSE
Balance at beginning of the period/year 4,381 –
Add: Deferred employees’ compensation expense recognized

on grant date – 9,858
Less:
- Unvested share options lapsed during the period/year (89) –
- Amortization for the period/year (2,161) (5,477)
2,131 4,381
9. SHORT TERM INVESTMENTS
At fair value through profit or loss
Mutual fund securities 488,702 –
10. BORROWINGS
During the period:
- the Company entered into a Syndicated Term Finance Agreement with a consortium of local banks on February 21,
2009 for Rs. 1,500,000. The facility is repayable in thirteen semi annual installments commencing six months from
Commercial Operations date of the Project or six months from December 30, 2009 (whichever is earlier). The facility
carries mark-up at the rate of 3% over six months KIBOR and monitoring fee of Rs. 300 for the first year and Rs. 500
per annum, thereafter. Commitment fee at rate of 0.15% per annum is also payable on that part of the finance that
has not been drawn. During the period, Company has drawn down Rs. 1,100,000 against the facility.
- the Company has drawn down the remaining balance of US$ 30,000 against the loan agreement/facility with International
Finance Corporation (IFC). There is no change in the terms and conditions of the loan.
11. DERIVATIVE FINANCIAL INSTRUMENTS
The Company has entered into interest rate swap agreements for notional amounts aggregating to US$ 40,000, with banks
to hedge its interest rate exposure on floating rate foreign currency borrowings from International Finance Corporation
(IFC). Under the swap agreements, the Company would receive six month USD-LIBOR on respective notional amounts
and will pay fix rates, which will be settled semi annually. Details of the swap agreements are as follows:
Notional Effective Termination Fixed Rate Fair value as at Fair value as at
Amounts Date Date % June 30, 2009 December 31, 2008
US $
Rupees
15,000 December 15, 2008 June 15, 2017 3.385 19,968 60,154
5,000 June 15, 2009 June 15, 2017 3.005 84 –
15,000 June 15, 2009 June 15, 2017 2.795 (10,641) –
5,000 June 15, 2009 June 15, 2017 2.800 (1,956) –
40,000 7,455 60,154
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Unaudited Audited
2009 2008
Rupees
12. DEFERRED INCOME TAX
Credit/(Debit) balances arising due to:
- accelerated depreciation allowance 1,048,034) 548,080)
- net borrowing costs capitalized 334,160) 160,054)
- recoupable carried forward tax

losses and minimum turnover
tax - note 12.1 (903,492) (221,243)
- unrealized foreign exchange losses

and provision for retirement and
other service benefits (43,713) (25,243)
- provision against custom duty and

SED refundable (6,454) (6,454)
- fair value of hedging instruments (2,609) (21,054)
- share issuance cost, net to equity (51,566) (51,566)
- others (1,277) _
373,083) 382,574)
12.1 Deferred income tax asset is recognized for tax losses and minimum turnover tax available for carry-forward to the
extent that the realization of the related tax benefit through future taxable profits is probable. The aggregate tax
losses available for carry-forward at June 30, 2009 amount to Rs. 2,318,287 (December 31, 2008: Rs. 439,677),
on which the deferred income tax asset has been recognized.
Unaudited Audited
2009 2008
Rupees
13. SHORT TERM BORROWINGS
Running finance utilized under mark-up

arrangements - note 13.1 35,645 717,568
Short term finance _ 125,000
35,645 842,568
15

13.1 The aggregate facilities for running finance available from various banks, representing the sales price of all mark-up
arrangements, amounts to Rs. 1,700,000 (December 31, 2008: Rs. 1,275,000). The corresponding purchase price is
payable on various dates during the ensuing year. Mark-up is chargeable at rates net of prompt payment rebate and is
based on relevant KIBOR plus 1.25% to 3%. During the period, the mark-up rates, net of prompt payment rebate, ranged
from 12.39% to 17.37% per annum (December 31, 2008: 10.37% to 17.6% per annum). The facilities are secured by a
floating charge over stocks and book debts.
Unaudited Audited
2009 2008
Rupees
14. TRADE AND OTHER PAYABLES
Includes amount due to following related parties:
- Mitsubishi Corporation 1,155,217 740,811
- Engro Vopak Terminal Limited 86,830 15,046
1,242,047 755,857
15. PROVISIONS
As at June 30, 2009, the Company had paid Rs. 95,163 (December 31, 2008: Rs. 91,616) on account of Special Excise
Duty (SED) on import of plant and machinery for the Project. Out of this amount it has adjusted Rs. 58,476
(December 31, 2008: Rs. 54,929) in the monthly sales tax returns against SED on goods produced and sold by the
Company. The Company had approached the Federal Board of Revenue to obtain a clarification in respect of the adjustment
of SED made by the Company in monthly sales tax returns. Pending such clarification the Company based on prudence
had made provision for the amount adjusted of Rs. 58,476 and for the balance remaining of Rs. 36,687 included in loans,
advances, deposits, prepayments and other receivables. However, during the period, the Company received show cause
notices from the Additional Collector (Adjudication) – Federal Board of Revenue, stating that the Company, by adjusting
the aforementioned SED, has violated the provisions of the Federal Excise Act, 2005 and the Federal Excise Rules, 2005
read with SRO 655(1)/2007 and that the amount adjusted is recoverable from the Company under the Federal Excise Act,
2005 alongwith default surcharge and penalty. In response to these notices the Company has filed a Constitutional Petition
before the Honourable High Court, Sindh, on May 18, 2009. The High Court is in the process of evaluating the Constitutional
Petition. The Company is confident that the ultimate outcome of the matter will be in its favour, however, based on prudence
is maintaining the aforementioned provision. Further, a provision of Rs. 7,421 for surcharge and penalty thereagainst upto
June 30, 2009 has also been made.
16. CONTINGENCIES AND COMMITMENTS
16.1 Commitments
- Capital expenditure for the Project referred to in note 1, under the contracts signed as at June 30, 2009 but not yet
incurred amounts to Rs. 108,544 (December 31, 2008: Rs. 1,305,738).
- Performance guarantees issued by banks on behalf of the Company as at June 30, 2009 amounts to Rs. 591,450
(December 31, 2008: Rs. 264,200).
16

17. COST OF SALES
Quarter ended Half Year ended

2009 2008 2009 2008
Rupees
Opening stock of work-in-progress 31,810 13,817 21,293 22,861
Raw and packing materials consumed 1,934,633 1,460,616 3,326,793 2,811,732

Salaries, wages and staff welfare 43,504 19,535 86,803 47,451
Fuel, power and gas 71,567 31,545 175,831 67,178
Repairs and maintenance (2,137) 1,098 21,443 4,731
Depreciation 69,701 41,718 139,489 83,947
Consumable stores 13,781 6,978 19,651 8,840
Purchased services 5,313 5,442 10,018 9,708
Storage and handling 44,308 30,999 87,127 64,238
Training and travelling expenses 1,001 1,829 1,728 2,496
Communication, stationery and other
office expenses 613 450 856 733
Insurance 8,377 2,431 20,430 4,863
Other expenses 3,340 2,196 4,918 2,196
2,194,001 1,604,837 3,895,087 3,108,113
Closing stock of work-in-progress (18,780) (14,018) (18,780) (14,018)
Cost of goods manufactured 2,207,031 1,604,636 3,897,600 3,116,956
Opening stock of finished goods 206,131 619,628 810,355 640,170

Closing stock of finished goods (177,946) (300,173) (177,946) (300,173)
28,185 319,455 632,409 339,997
Cost of sales - own manufactured product 2,235,216 1,924,091 4,530,009 3,456,953

- purchased product _ – _ 147
2,235,216 1,924,091 4,530,009 3,457,100
17

June 30, 2009 June 30, 2008 June 30, 2009 June 30, 2008
Rupees
18. DISTRIBUTION AND

MARKETING EXPENSES

Advertising, sales promotion and
entertainment 11,176 10,522 20,817 15,712
Product transportation and handling 73,621 52,013 124,382 98,531
Rent, rates and taxes 444 1,241 1,874 1,751
Purchased services (985) 1,414 790 4,347
Insurance 282 197 552 354
Depreciation 849 1,105 1,907 1,992
office expenses 472 1,204 965 1,826
Others 822 1,106 1,312 1,684
102,259 80,919 181,957 149,291
19. ADMINISTRATIVE EXPENSES

Rent, rates and taxes 4,493 3,469 7,748 5,485
Insurance 107 44 208 44
Depreciation 1,205 1,631 2,550 2,706
Amortization 429 168 739 318
Communication, stationery and
other office expenses 2,140 2,310 5,358 3,281
Others 2,754 5,171 4,405 5,492
50,634 47,022 78,138 69,639
20. OTHER OPERATING EXPENSES

Legal and professional charges 1,378 140 2,305 210
Auditors' remuneration 267 240 267 440
Donations 1,467 108 1,375 450
Provision against custom duty
refundable – 18,043 – 18,043
Sales tax receivable written off – 219 – 219
Workers' profit participation fund 206 18,288 206 34,059
Workers' welfare fund 78 7,315 78 13,623
Foreign exchange loss - net 35,905 57,218 82,793 65,047
Others 149 – 540 –
39,450 101,571 87,564 132,091
18

21. FINANCE COST Rupees
Interest/Mark-up on:
- long trem borrowings 52,748 4,876 97,988 9,958
- short term finances 4,570 819 16,698 2,276
Guarantee commission 316 – 625 –
Bank charges and others 3,007 2,057 3,694 3,326
60,641 7,752 119,005 15,560
Half year ended

June 30, 2009 June 30, 2008
Rupees
22. CASH GENERATED FROM OPERATIONS
Profit before taxation 3,855 633,493
Adjustments for non cash charges

and other items:
Provision for staff retirement and other

service benefits 539 3,470
Ineffective portion of changes in fair value of
derivative financial instrument – ( 9 11 )
Amortization charge 739 318
Income on deposits (45,666) (46,234)
Amortization of deferred employee
compensation expense 1,984 –
Realized gain on short term investments (1,977) (33,635)
Unrealized fair value gain on short term
investments (4,629) (2,053)
Provision against custom duty refundable – 18,043
Provision against special excise duty – 339
Finance costs 119,005 15,559
Profit on disposal of operating assets (886) (173)
Operating assets written off – 243
Working capital changes - note 22.1 1,797,287 314,172
2,014,197 991,276
22.1 Working capital changes
(Increase) / Decrease in current assets
Stores and spares (31,665) (7,375)

Stock-in-trade 83,349 186,134
Trade debts (85,715) (1,888)
Loans, advances, deposits, prepayments
and other receivables (net) 115,592 (143,818)
81,561 33,053
19

25. DATE OF AUTHORIZATION FOR ISSUE
This unconsolidated condensed interim financial information was authorized for issue on July 24, 2009 by the Board of
Directors of the Company.
26. CORRESPONDING FIGURES
In order to comply with the requirements of International Accounting Standard 34 - ‘Interim Financial Reporting’, the
unconsolidated condensed interim balance sheet and unconsolidated condensed interim statement of changes in equity
have been compared with the balances of annual audited financial statements of preceding financial year, whereas, the
unconsolidated condensed interim profit and loss account, unconsolidated condensed interim statement of comprehensive
income and the unconsolidated uncondensed interim cash flow statement have been compared with the balances of
comparable period of immediately preceding financial year.

21

and its subsidiary company
DIRECTORS’ REPORT &

UNAUDITED CONSOLIDATED CONDENSED
INTERIM FINANCIAL STATEMENTS
22
DIRECTORS’ REPORT TO THE SHAREHOLDERS ON CONDENSED
CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE HALF YEAR
ENDED JUNE 30, 2009
On behalf of the Board of Directors of Engro Polymer & Chemicals Limited, we are pleased to present the unaudited
consolidated accounts of the Company for the six months ended June 30, 2009.
Business Review
Domestic sales of PVC during the quarter ended June 30, 2009 were the highest ever for any quarter at 35,500
tons as compared to 30,200 tons sold during same period last year. The increase in sales volumes was driven by
higher usage in public sector projects and agricultural sector. In addition to this, rising price trend of PVC contributed
to increased buying by customers. Domestic sales of PVC during first six months were 64,400 tons as compared
to 55,600 tons during the same period in 2008. Production for the quarter was 34,600 tons taking total production
for six months to 60,900 tons versus 49,800 tons in 1H08.
Global PVC price rose to reflect higher feedstock prices driven by hike in oil prices. Availability of VCM during the
quarter remained tight as key manufacturers underwent planned shutdowns with no significant reduction in demand
resulting in a squeeze in the PVC-VCM margin to US$ 146 per ton in 2Q09 as compared to US$ 273 per ton in
the same period last year.
The Company successfully launched sale of Caustic soda and Sodium hypochlorite to domestic customers at the
end of second quarter. During this period, the Company sold 760 tons and 464 tons of Caustic soda and Sodium
hypochlorite respectively. Market has been quite receptive and the Company is confident that it will be able to
capture a sizeable share of the caustic soda market due to its high quality product, competitive pricing, dedicated
distribution fleet and commitment to a high level of customer service.
Revenue during the first six months was Rs. 4,965 million, an increase of 14% over same period 2008. During
second quarter, the Company earned a profit after tax of Rs. 82 million. Profit after tax for six months is Rs. 13
million as compared to Rs. 428 million last year mainly because of the lower PVC-VCM margin, higher depreciation
and financial costs due to the addition of new PVC plant and Utilities.
Near Future Outlook
PVC plants are running satisfactorily. The Chlor-alkali and EDC plants have been successfully tested and have
commenced production. The Company exported 3,800 tons of EDC in July. VCM plant is under trials, commercial
operation of the integrated complex is expected to be achieved in third quarter. Infrastructure to sell up to 12 MW
of power to KESC is complete, whereas work on the remaining 6 MW will be completed by mid-August. Supply of
power is expected to commence in third quarter.
Demand of PVC in domestic market in third quarter is expected to be lower due to slow down of activity during
Ramadan and Eid holidays. Based on progress made by the Company in entering the caustic soda market, the
Company will continue to penetrate the domestic market to sell out its production and will also explore export
opportunities.
The profitability of the Company will be dependent on successful commissioning of the VCM plant as it will allow
the economic benefits of a fully integrated site to flow.

Karachi
July 24, 2009
23

A member firm of
A.F.Ferguson & Co.

State Life Building No. 1-C
I.I. Chundrigar Road, P.O. Box 4716
Karachi-74000, Pakistan
Telephone: (021) 2426682-6 / 2426711-5
Facsimile: (021) 2415007 / 2427938
AUDITORS’ REPORT TO THE MEMBERS ON

REVIEW OF CONSOLIDATED CONDENSED INTERIM
FINANCIAL INFORMATION
Introduction
We have reviewed the accompanying consolidated condensed interim balance sheet of Engro Polymer and
Chemicals Limited and its subsidiary company, Engro Polymer Trading (Private) Limited as at June 30, 2009 and
the related consolidated condensed interim profit and loss account, consolidated condensed interim statement of
comprehensive income, consolidated condensed interim statement of changes in equity and consolidated condensed
interim cash flow statement together with the notes forming part thereof (here-in-after referred to as the “consolidated
condensed interim financial information”), for the half year then ended. Management is responsible for the preparation
and presentation of this consolidated condensed interim financial information in accordance with approved accounting
standards as applicable in Pakistan. Our responsibility is to express a conclusion on this consolidated condensed
interim financial information based on our review.
The figures of the condensed interim profit and loss account and the condensed interim statement of comprehensive
income for the quarters ended June 30, 2008 and 2009 have not been reviewed, as we are required to review only
the cumulative figures for the half year ended June 30, 2009.
Scope of Review
We conducted our review in accordance with International Standard on Review Engagements 2410, “Review of
Interim Financial Information Performed by the Independent Auditor of the Entity”. A review of interim financial
information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and
applying analytical and other review procedures. A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance
that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not
express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the accompanying consolidated
condensed interim financial information as of and for the half year ended June 30, 2009 is not prepared, in all
material respects, in accordance with approved accounting standards as applicable in Pakistan.
Karachi
Date: July 24, 2009
Engagement Partner:
Sohail Hasan
Lahore Office: 505-509, 5th Floor, Alfalah Building, P.O. Box 39, Shahrah-e-Quaid-e-Azam, Lahore-54000, Pakistan Tel: (92-42) 6285078-85 Fax: (92-42) 6285088
Islamabad Office: PIA Building, 3rd Floor, 49 Blue Area, Fazal-ul-Haq Road, P.O. Box 3021, Islamabad-44000, Pakistan Tel: (92-51)2273457-60 Fax: (92-51) 2277924
Kabul Office: House No. 4, Street No. 3, District 6, Road Karte-3, Kabul, Afghanistan. Tel: (93-799) 315320-203424
ENGRO POLYMER & CHEMICALS LIMITED AND ITS SUBSIDIARY COMPANY
CONSOLIDATED CONDENSED INTERIM PROFIT AND LOSS ACCOUNT (UNAUDITED)
(Amounts in thousand except for earnings per share)

2009 2008 2009 2008
Note Rupees
Net sales 2,566,194 2,473,419 4,965,472 4,368,754
Cost of sales 17 (2,235,216) (1,924,091) (4,530,009) (3,456,540)
Gross profit 330,978 549,328 435,463 912,214
Distribution and marketing expenses 18 (102,259) (80,919) (194,754) (149,291)
Administrative expenses 19 (50,634) (47,120) (78,138) (69,737)
Other operating expenses 20 (39,500) (102,782) (87,614) (133,302)
Other operating income 41,303 36,228 60,656 90,533
Operating profit 179,888 354,735 135,613 650,417
Finance costs 21 (60,653) (7,753) (120,963) (15,561)
Profit before taxation 119,235 346,982 14,650 634,856
Taxation (37,162) (106,363) (1,399) (206,398)
Earnings per share - basic and diluted 0.16 0.47 0.03 0.83
The annexed notes 1 to 26 form an integral part of this consolidated condensed interim financial information.

26

CONSOLIDATED CONDENSED INTERIM STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)

2009 2008 2009 2008
Rupees
Other comprehensive income:
Hedging reserve
Gain arising during the period 76,029 14,754 46,755 14,754
Less:
- Reclassification adjustments of
(gains)/losses included in profit and loss 592 – 932 –
- Adjustments for amounts transferred to

initial carrying amount of hedged items 2,160 (911) 5,012 (911)
Income tax relating to hedging reserve (27,573) (4,845) (18,445) (4,845)
Other comprehensive income for the period - net of tax 51,208 8,998 34,254 8,998
Total comprehensive income for the period 133,281 249,617 47,505 437,456
The annexed notes 1 to 26 form an integral part of this consolidated condensed interim financial information.

27

CONSOLIDATED CONDENSED INTERIM STATEMENT OF CHANGES IN EQUITY (UNAUDITED)
Share Share Employees’ Hedging Unappropriated Total

capital premium share reserve profit
compensation
reserve
Rupees
Balance as at January 1, 2008 (Audited) 4,436,000 425,216 – – 316,412 5,177,628
Final dividend for the year ended

December 31, 2007 - Rs. 0.54 per share – – – – (252,896) (252,896)

ended June 30, 2008 – – – 8,998 428,458 437,456
Share capital issued 767,677 614,141 – – – 1,381,818
Balance as at June 30, 2008 (Unaudited) 5,203,677 979,720 – 8,998 491,974 6,684,369
Total comprehensive loss for the half year

ended December 31, 2008 – – – (48,098) (78,105) (126,203)
Options granted during the period – – 9,858 – – 9,858
Balance as at December 31, 2008 (Audited) 5,203,677 975,438 9,858 (39,100) 413,869 6,563,742
Unvested options lapsed during the period – – (266) – – (266)

ended June 30, 2009 – – – 34,254 13,251 47,505
Balance as at June 30, 2009 (Unaudited) 5,203,677 975,438 9,592 (4,846) 427,120 6,610,981
The annexed notes 1 to 26 forn an integral part of this consolidated condensed interim financial informaion.

28

NOTES TO THE CONSOLIDATED CONDENSED INTERIM FINANCIAL INFORMATION (UNAUDITED)
1. LEGAL STATUS AND OPERATIONS
The Group consists of Engro Polymer and Chemicals Limited (the Company) and it’s wholly owned subsidiary company
Engro Polymer Trading (Private) Limited.
The Company was incorporated in Pakistan in 1997 as a public unlisted company under the Companies Ordinance, 1984.
The Company was listed on Karachi Stock Exchange in 2008 and on Islamabad and Lahore Stock Exchanges during the
current period. The Company is a subsidiary of Engro Chemical Pakistan Limited. The address of its registered office is
1st Floor, Bahria Complex I, M. T. Khan Road, Karachi. The Company’s principal activity is to manufacture, market and
sell Poly Vinyl Chloride (PVC), PVC compounds and other related chemicals.
In 2006, the Company commenced work on expansion plan in respect of its existing capacity and backward integration
project (the Project). The Project’s total cost is estimated at US$ 240,000, which includes construction of Ethylene Di
Chloride, Vinyl Chloride Monomer (VCM), Chlor Alkali and Power plant. The new plants are being setup adjacent to the
Company’s existing PVC facilities in the Port Qasim Industrial Area.
2. BASIS OF PREPARATION
This consolidated condensed interim financial information is unaudited and has been prepared in accordance with the
requirements of the International Accounting Standard 34 – ‘Interim Financial Reporting’. The figures for the half year
ended June 30, 2009 have, however, been subjected to limited scope review by the auditors.
This condensed interim financial information is being submitted to the shareholders in accordance with section 245 of the
Companies Ordinance, 1984 and should be read in conjunction with the audited annual financial statements of the Company
for the year ended December 31, 2008.
3. ACCOUNTING POLICIES
3.1 Except as disclosed below, the accounting policies adopted in the preparation of this condensed interim financial information
are consistent with those applied in the preparation of audited annual financial statements of the Company for the year
ended December 31, 2008.
3.2 The following new standards and amendments to standards are mandatory for the first time for the financial year beginning
January 1, 2009:
- IAS 1 (revised), ‘Presentation of financial statements’. The revised standard prohibits the presentation of items of
income and expenses (that is ‘non-owner changes in equity’) in the statement of changes in equity, requiring ‘non-
owner changes in equity’ to be presented separately from owner changes in equity. All ‘non-owner changes in equity’
are required to be shown in a performance statement.
Companies can choose whether to present one performance statement (the statement of comprehensive income) or
two statements (the profit and loss account and the statement of comprehensive income).
The Company has elected to present two statements; a profit and loss account and a statement of comprehensive
income. The condensed interim financial information has been prepared under the revised disclosure requirements.
- The SECP vide S.R.O. 411 (1) / 2008 dated April 28, 2008 notified the adoption of IFRS 7 ‘Financial Instruments:
Disclosures’. IFRS 7 is mandatory for company’s accounting periods beginning on or after the date of notification i.e.
April 28, 2008. IFRS 7 has superseded IAS 30 and disclosure requirements of IAS 32. Adoption of IFRS will only
impact the format and extent of disclosures presented in the financial statements. The Company will consider the
requirements of IFRS 7 in the annual financial statements for the year ending December 31, 2009.
- In addition to above, following new standards and amendments to standards are mandatory for the first time for the
financial year beginning January 1, 2009 and are also relevant for the Company. However, the adoption of these new
standards and amendments to standards did not have any significant impact on the financial information of the Company:
30

– IFRS 2 (Amendment), ‘Share based payment’
– IAS 19 (Amendment), ‘Employee benefits’
– IAS 23 (Amendment), ‘Borrowing costs’
– IAS 27 (Revised), ‘Consolidated and separate financial statements’
– IAS 36 (Amendment), ‘Impairment of assets’
– IAS 38 (Amendment), ‘Intangible assets’
– IAS 39 (Amendment),’Financial instruments: Recognition and measurement’
3.3 The following new standards, amendments to standards and interpretations are mandatory for the first time for the financial
year beginning January 1, 2009, but are not currently relevant to the Company:
– IAS 28 (Amendment), ‘Investment in associates’

– IFRS 8, ‘Operating segments’
– IFRIC 13, ‘Customers loyalty programmes’
– IFRIC 15, ‘Agreement for the construction of real estate’
– IFRIC 16, ‘Hedges of a net investment in a foreign operation’
4. ACCOUNTING ESTIMATES
The preparation of this condensed interim financial information in conformity with the approved accounting standards
requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process
of applying the Company's accounting policies. Estimates and judgments are continually evaluated and are based on
historical experience and other factors, including expectation of future events that are believed to be reasonable under
the circumstances. Actual results may differ from these estimates.
In preparing this condensed interim financial information, the significant judgments made by management in applying the
Company's accounting policies and the key sources of estimation and uncertainty are the same as those that apply to
annual financial statements for the year ended December 31, 2008.
Unaudited Audited
2009 2008
Rupees
5. PROPERTY, PLANT AND EQUIPMENT
Operating assets, at net book value - notes 5.1 and 5.2 4,648,183 1,987,643
Capital work-in-progress - note 5.3 13,698,529 14,147,123
18,346,712 16,134,766
5.1. Additions to operating assets during the period/year were as follows, which mainly relates to capitalisation of new Poly
Vinyl Chloride (PVC) plant during the period:
Leasehold land – 3,348

Building on leasehold land 168,221 –
Plant and machinery 2,621,816 –
Furniture, fixtures and office equipment 11,209 19,940
Vehicles 14,355 20,384
2,815,601 43,672
5.2 During the period, assets costing Rs. 7,987 (December 31, 2008: Rs. 9,936), having net book value of Rs. 2,504 (December
31, 2008: Rs. 3,622) were disposed off for Rs. 3,390 (December 31, 2008: Rs. 3,971).
31

Unaudited Audited
2009 2008
Rupees
5.3 Capital work-in-progress mainly relates to the Project and comprises of:
Plant and machinery 11,417,963 12,523,057

Ethylene pipeline and power cables 63,602 61,486
Water and gas pipelines 246,193 233,016
Building on leasehold land 29,992 163,301
Other ancillary costs - note 5.3.1 1,934,062 1,140,230
Furniture, fixtures and equipment 2,471 19,170
Advances for vehicles 4,246 6,863
13,698,529 14,147,123
5.3.1 The ancillary costs, directly attributable to the Project, comprise:
Salaries, wages and benefits 358,416 315,240

Training and travelling expense 73,397 74,439
Borrowing costs, including mark-up on finances
being capitalized at the rate of 15.25%
(December 31, 2008: 13.45%) - net 1,089,174 591,713
Legal and professional charges 33,640 43,103
Storage and handling 260,481 –
Others 96,852 101,972
1,934,062 1,140,230
6. INTANGIBLE ASSETS – Computer Software
Additions made during the period amounted to Rs. 1,495 (December 31, 2008: Rs. 7,180).
7. STOCK-IN-TRADE
Raw and packing materials - note 7.1 879,243 327,670

Work-in-progress 18,780 21,293
Finished goods
- own manufactured product 177,946 810,355
- purchased product 220 155
178,166 810,510
1,076,189 1,159,473
32

7.1 This includes stock-in-transit amounting to Nil (December 31, 2008: Rs. 155,925) and stocks held at the storage facilities
of Engro Vopak Terminal Limited, a related party, amounting to Rs. 566,332 (December 31, 2008: Rs. 22,148).
Unaudited Audited
2009 2008
Rupees
8. DEFERRED EMPLOYEES’ COMPENSATION EXPENSE
Balance at beginning of the period/year 4,381 –
Add: Deferred employees’ compensation expense recognized

on grant date – 9,858
Less:
- Unvested share options lapsed during the period/year (89) –
- Amortization for the period/year (2,161) (5,477)
2,131 4,381
9. SHORT TERM INVESTMENTS
At fair value through profit or loss
Mutual fund securities 488,702 43,648
10. BORROWINGS
During the period:
- the Company entered into a Syndicated Term Finance Agreement with a consortium of local banks on February 21,
2009 for Rs. 1,500,000. The facility is repayable in thirteen semi annual installments commencing six months from
Commercial Operations date of the Project or six months from December 30, 2009 (whichever is earlier). The facility
carries mark-up at the rate of 3% over six months KIBOR and monitoring fee of Rs. 300 for the first year and Rs. 500
per annum, thereafter. Commitment fee at rate of 0.15% per annum is also payable on that part of the finance that
has not been drawn. During the period, Company has drawn down Rs. 1,100,000 against the facility.
- the Company has drawn down the remaining balance of US$ 30,000 against the loan agreement/facility with International
Finance Corporation (IFC). There is no change in the terms and conditions of the loan.
11. DERIVATIVE FINANCIAL INSTRUMENTS
The Company has entered into interest rate swap agreements for notional amounts aggregating to US$ 40,000, with banks
to hedge its interest rate exposure on floating rate foreign currency borrowings from International Finance Corporation
(IFC). Under the swap agreements, the Company would receive six month USD-LIBOR on respective notional amounts
and will pay fix rates, which will be settled semi annually. Details of the swap agreements are as follows:
Notional Effective Termination Fixed Rate Fair value as at Fair value as at
Amounts Date Date % June 30, 2009 December 31, 2008
US $
Rupees
15,000 December 15, 2008 June 15, 2017 3.385 19,968 60,154
5,000 June 15, 2009 June 15, 2017 3.005 84 –
15,000 June 15, 2009 June 15, 2017 2.795 (10,641) –
5,000 June 15, 2009 June 15, 2017 2.800 (1,956) –
40,000 7,455 60,154
33

Unaudited Audited
2009 2008
Rupees
12. DEFERRED INCOME TAX
Credit/(Debit) balances arising due to:
- accelerated depreciation allowance 1,048,034) 548,080)
- net borrowing costs capitalized 334,160) 160,054)
- recoupable carried forward tax

losses and minimum turnover
tax - note 12.1 (903,492) (221,243)
- unrealized foreign exchange losses

and provision for retirement and
other service benefits (43,713) (25,243)
- provision against custom duty and

SED refundable (6,454) (6,454)
- fair value of hedging instruments (2,609) (21,054)
- share issuance cost, net to equity (51,566) (51,566)
- others (1,277) _
373,083) 382,574)
12.1 Deferred income tax asset is recognized for tax losses and minimum turnover tax available for carry-forward to the
extent that the realization of the related tax benefit through future taxable profits is probable. The aggregate tax
losses available for carry-forward at June 30, 2009 amount to Rs. 2,318,287 (December 31, 2008: Rs. 439,677),
on which the deferred income tax asset has been recognized.
Unaudited Audited
2009 2008
Rupees
13. SHORT TERM BORROWINGS
Running finance utilized under mark-up

arrangements - note 13.1 35,645 717,568
Short term finance _ 125,000
35,645 842,568
34

13.1 The aggregate facilities for running finance available from various banks, representing the sales price of all mark-up
arrangements, amounts to Rs. 1,700,000 (December 31, 2008: Rs. 1,275,000). The corresponding purchase price is
payable on various dates during the ensuing year. Mark-up is chargeable at rates net of prompt payment rebate and is
based on relevant KIBOR plus 1.25% to 3%. During the period, the mark-up rates, net of prompt payment rebate, ranged
from 12.39% to 17.37% per annum (December 31, 2008: 10.37% to 17.6% per annum). The facilities are secured by a
floating charge over stocks and book debts.
Unaudited Audited
2009 2008
Rupees
14. TRADE AND OTHER PAYABLES
Includes amount due to following related parties:
- Mitsubishi Corporation 1,155,217 740,811
- Engro Vopak Terminal Limited 86,830 15,046
1,242,047 755,857
15. PROVISIONS
As at June 30, 2009, the Company had paid Rs. 95,163 (December 31, 2008: Rs. 91,616) on account of Special Excise
Duty (SED) on import of plant and machinery for the Project. Out of this amount it has adjusted Rs. 58,476
(December 31, 2008: Rs. 54,929) in the monthly sales tax returns against SED on goods produced and sold by the
Company. The Company had approached the Federal Board of Revenue to obtain a clarification in respect of the adjustment
of SED made by the Company in monthly sales tax returns. Pending such clarification the Company based on prudence
had made provision for the amount adjusted of Rs. 58,476 and for the balance remaining of Rs. 36,687 included in loans,
advance, deposits, prepayments and other receivables. However, during the period, the Company received show cause
notices from the Additional Collector (Adjudication) – Federal Board of Revenue, stating that the Company, by adjusting
the aforementioned SED, has violated the provisions of the Federal Excise Act, 2005 and the Federal Excise Rules, 2005
read with SRO 655(1)/2007 and that the amount adjusted is recoverable from the Company under the Federal Excise Act,
2005 alongwith default surcharge and penalty. In response to these notices the Company has filed a Constitutional Petition
before the Honourable High Court, Sindh, on May 18, 2009. The High Court is in the process of evaluating the Constitutional
Petition. The Company is confident that the ultimate outcome of the matter will be in its favour, however, based on prudence
is maintaining the aforementioned provision. Further, a provision of Rs. 7,421 for surcharge and penalty thereagainst upto
June 30, 2009 has also been made.
16. CONTINGENCIES AND COMMITMENTS
16.1 Commitments
- Capital expenditure for the Project referred to in note 1, under the contracts signed as at June 30, 2009 but not yet
incurred amounts to Rs. 108,544 (December 31, 2008: Rs. 1,305,738).
- Performance guarantees issued by banks on behalf of the Company as at June 30, 2009 amounts to Rs. 591,450
(December 31, 2008: Rs. 264,200).
35

17. COST OF SALES
Quarter ended Half Year ended

2009 2008 2009 2008
Rupees
Opening stock of work-in-progress 31,810 13,817 21,293 22,861
Raw and packing materials consumed 1,934,633 1,461,705 3,326,793 2,811,732

Fuel, power and gas 71,567 31,545 175,831 67,178
Repairs and maintenance (2,137) 1,098 21,443 4,731
Depreciation 69,701 41,718 139,489 83,947
Consumable stores 13,781 6,978 19,651 8,840
Storage and handling 44,308 30,999 87,127 64,238
office expenses 613 303 856 733
Insurance 8,377 2,431 20,430 4,863
Other expenses 3,340 1,107 4,918 1,107
2,194,001 1,604,690 3,895,087 3,107,024
Closing stock of work-in-progress (18,780) (14,018) (18,780) (14,018)
Cost of goods manufactured 2,207,031 1,604,489 3,897,600 3,115,867
Opening stock of finished goods 206,131 619,628 810,355 640,170

Closing stock of finished goods (177,946) (300,173) (177,946) (300,173)
28,185 319,455 632,409 339,997
Cost of sales - own manufactured product 2,235,216 1,923,944 4,530,009 3,455,864

- purchased product _ 147 _ 676
2,235,216 1,924,091 4,530,009 3,456,540
36

Rupees
18. DISTRIBUTION AND

MARKETING EXPENSES

Advertising, sales promotion and
entertainment 11,176 10,522 20,817 15,712
Product transportation and handling 73,621 52,013 137,179 98,531
Rent, rates and taxes 444 1,241 1,874 1,751
Purchased services (985) 1,414 790 4,347
Insurance 282 197 552 354
Depreciation 849 1,105 1,907 1,992
office expenses 472 1,204 965 1,826
Others 822 1,106 1,312 1,684
102,259 80,919 194,754 149,291
19. ADMINISTRATIVE EXPENSES

Rent, rates and taxes 4,493 3,469 7,748 5,485
Insurance 107 142 208 142
Depreciation 1,205 1,631 2,550 2,706
Amortization 429 168 739 318
Communication, stationery and
other office expenses 2,140 2,310 5,358 3,281
Others 2,754 5,171 4,405 5,492
50,634 47,120 78,138 69,737
20. OTHER OPERATING EXPENSES

Legal and professional charges 1,378 141 2,305 211
Auditors' remuneration 317 255 317 455
Donations 1,467 108 1,375 450
Provision against custom duty
refundable – 18,043 – 18,043
Sales tax receivable written off – 219 – 219
Workers' profit participation fund 206 18,288 206 34,059
Workers' welfare fund 78 7,315 78 13,623
Foreign exchange loss - net 33,828 57,218 82,793 65,047
Others 2,226 1,195 540 1,195
39,500 102,782 87,614 133,302
37

21. FINANCE COST Rupees
Interest/Mark-up on:
- long term borrowings 52,748 4,876 97,988 9,958
- short term finances 4,570 819 16,698 2,276
Guarantee commission 316 – 625 –
Bank charges and others 3,019 2,058 5,652 3,327
60,653 7,753 120,963 15,561
Half year ended
June 30, 2009 June 30, 2008

Rupees
22. CASH GENERATED FROM OPERATIONS
Profit before taxation 14,650 634,856
Adjustments for non cash charges

and other items:
Provision for staff retirement and other

service benefits 539 3,470
Depreciation change 143,946 88,645
Ineffective portion of changes in fair value of
derivative financial instrument – (911)
Amortization of deferred employee
compensation expense 1,984 –
Amortization charge 739 318
Income on deposits (45,666) (46,529)
Realized gain on short term investments (1,977) (33,635)
Unrealized fair value gain on short term
investments (4,629) (3,877)
Provision against custom duty refundable – 18,045
Provision against special excise duty – 339
Finance costs 120,963 15,560
Profit on disposal of operating assets (886) (173)
Operating assets written off – 243
Working capital changes - note 22.1 1,748,394 315,979
1,978,057 992,330
22.1 Working capital changes
(Increase) / Decrease in current assets
Stores and spares (31,665) (7,375)

Stock-in-trade 83,284 186,663
Trade debts (39,127) (1,888)
Loans, advances, deposits, prepayments
and other receivables (net) 18,800 (142,515)
31,292 34,885
38

25. DATE OF AUTHORIZATION FOR ISSUE
This consolidated condensed interim financial information was authorized for issue on July 24, 2009 by the Board of
Directors of the Company.
26. CORRESPONDING FIGURES
In order to comply with the requirements of International Accounting Standard 34 - ‘Interim Financial Reporting’, the
consolidated condensed interim balance sheet and consolidated condensed interim statement of changes in equity have
been compared with the balances of consolidated annual audited financial statements of preceding financial year, whereas,
the consolidated condensed interim profit and loss account, consolidated condensed interim statement of comprehensive
income and the consolidated condensed interim cash flow statement have been compared with the balances of comparable
period of immediately preceding financial year.

40

Engro Polymer & Chemicals Ltd.
Head Office: First Floor, Bahria Complex I, 24 M.T. Khan Road, Karachi-74000, Pakistan.
UAN: 111 411 411 PABX: +92-21-5610610, 5610743, 5610753 Fax: +92-21-5611690
Website: www.engropolymer.com
JWT

Engro Polymer &amp; Chemicals Ltd.

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Financial Statements for the

Chairman Asad Umar

President & Chief Executive Asif Qadir

Directors Isar Ahmad

Company Secretary Arshaduddin Ahmed

Board Audit Committee Isar Ahmad

Bankers Allied Bank Ltd.

Auditors A. F. Ferguson & Co., Chartered Accountants

Manufacturing Facility EZ/1/P-II-1, Eastern Zone, Bin Qasim, Karachi.

Near Future Outlook

Asif Qadir Masaharu Domichi

Half Yearly Report – 2009

A.F.Ferguson & Co.

AUDITORS’ REPORT TO THE MEMBERS ON

(Amounts in thousand except for earnings per share)

Quarter ended Half year ended

Net sales 2,566,120 2,473,419 4,945,407 4,368,754

Cost of sales 17 (2,235,216) (1,924,091) (4,530,009) (3,457,100)

Gross profit 330,904 549,328 415,398 911,654

Distribution and marketing expenses 18 (102,259) (80,919) (181,957) (149,291)

Administrative expenses 19 (50,634) (47,022) (78,138) (69,639)

Other operating expenses 20 (39,450) (101,571) (87,564) (132,091)

Other operating income 41,254 25,673 55,121 88,420

Operating profit 179,815 345,489 122,860 649,053

Finance costs 21 (60,641) (7,752) (119,005) (15,560)

Profit before taxation 119,174 337,737 3,855 633,493

Taxation (37,162) (100,035) 3,200 (206,398)

Profit for the period 82,012 237,702 7,055 427,095

Asif Qadir Masaharu Domichi

Half Yearly Report – 2009

Quarter ended Half year ended

Profit for the period 82,012 237,702 7,055 427,095

Other comprehensive income:

- Adjustments for amounts transferred to

Income tax relating to hedging reserve (27,573) (4,845) (18,445) (4,845)

Asif Qadir Masaharu Domichi

Half Yearly Report – 2009

Share Share Employees’ Hedging Unappropriated Total

Balance as at January 1, 2008 (Audited) 4,436,000 425,216 – – 315,603 5,176,819

Final dividend for the year ended

Total comprehensive income for the half year

Share capital issued 767,677 614,141 – – – 1,381,818

Share issuance cost, net – (59,637) – – – (59,637)

Total comprehensive loss for the half year

Options granted during the period – – 9,858 – – 9,858

Share issuance cost, net – (4,282) – – – (4,282)

Unvested options lapsed during the period – – (266) – – (266)

Total comprehensive income for the half year

Asif Qadir Masaharu Domichi

Half Yearly Report – 2009

Half year Half year

Cash generated from operations 22 2,014,197 991,276)

Net cash inflow from operating activities 1,251,611 971,253)

CASH FLOWS FROM INVESTING ACTIVITIES

Purchases of property, plant and equipment (1,734,605) (4,180,570)

Net cash outflow from investing activities (2,606,251) (1,307,921)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from long term borrowing 3,355,596 1,947,298)

Net cash inflow from financing activities 3,225,596 624,688)

Net increase in cash and cash equivalents 1,870,956 288,020)

Cash and cash equivalents at end of the period 1,125,661) 488,864)

Asif Qadir Masaharu Domichi

Half Yearly Report – 2009

Engro Polymer & Chemicals Ltd.

Engro Polymer & Chemicals Ltd.