Introduction of Engro Foods

Engro Foods Limited is subsidiary of Engro Corporation Which is one of the most reputed enterprises in Pakistan with more than 40 years of diversified business operations in the areas of fertilizer and chemicals.

Engro was formerly Exxon Chemical Pakistan Limited until 1991, when Exxon decided to divest their fertilizer business on a global basis and sold off its equity of 75% shares in existent company.

The Employees of Engro, in partnership with leading international and local financial institutions bought out Exxon’s equity and the company was renamed as Engro Chemical Pakistan Limited.

Engro Foods started its business operations in 2005-06.

Top quality brands like Olper’s, Olper’s Lite, Tarang, Omore, Olfrute, Dairy Omung, Al Safa, Tarraka and Omung Lassi have been successfully launched

Introduction of Engro Foods

Engro Foods has already set up two processing plants at Sukkur and Sahiwal and a Dairy Farm at Nara.

Engro Foods is now venturing into North American market starting from Halal Foods category and acquired a company launched Meat products with name of AL SAFA.

Vision & Mission Statement

Vision Statement 

“To be the premier Pakistani enterprise with a global reach,

passionately pursuing value creation for all stakeholders”

Mission Statement

“Our mission is twofold, to help farmers maximize their farm

produce by providing quality plant nutrients and technical

services upon which they can depend. To create wealth by

building new businesses based on company and country

strengths in petrochemicals, information technology,

infrastructure, food and other agriculture sectors.”

Diversified Portfolio of Engro Pakistan

 

Engro Fertilizers Limited(Fertilizer Manufacturing and Marketing Company)

Engro Polymer & Chemicals Limited(Manufacturer and Marketer of PVC Chemicals)

Engro Vopak Terminal Limited(Chemicals and Petrochemical Storage Company)

Engro Foods Limited (Foods Company)

Engro Powergen Limited   (Power Generation Company)

Diversified Portfolio of Engro Pakistan

 Elengy Terminal Pakistan Limited (LNG Storage and Marketing Company)

Engro EXIMP (Pvt.) Limited (Exporter & Importer of Micro-Nutrients and

Fertilizer)

Products Portfolio

Quick Facts & Figures 12 Brands

1,243 Employees

45% Market Share of Dairy Products

Market Share in 310 Cities in Pakistan18 states in USA4 Provinces in Canada

18th Largest Customer of Tetra Pak World Wide

2nd Largest Company of Chilled Milk Collection of Pakistan

900 Milk Collection Centers

35,000 farmers directly linked with EFL

Quick Facts & Figures

2 Milk Processing Plants

One Production Farm having 2,615 cattles (16% Milk Produce of Total Production)

Milk Production Capacity is 700 Thousand Liters per Day.

Profit Growth 406% in 2011

Revenue Growth 42.6% 2011

30 Billions Revenue for 2011

EPS Rs.1.22 for 2011

Total Assets Rs.16,639 Millions

SWOT ANALYSISStrengths

Efficient milk collection system. Keeping high quality standards. Successful diversification. Product Innovation Strong Financial Position Huge Capacity for Production Growing Sales Worldwide fame of Engro. Qualified Work Force Market Share Better Integrated distribution and warehousing

facilities. Engro food has the third-generation UHT milk plants in

the country.

SWOT ANALYSIS

Weakness Engro Foods is having only one its own dairy farms. Centralize Decisions High Price Less Promotion Activities Selective Target Market High milk collection & distribution costs. The competitors like Nestle and Haleeb Foods have a much

diversified line of dairy products then Engro FoodsUnable to fulfill the demand of local powder milk market. Local Company

SWOT ANALYSISOpportunities Flexible government policies for food industry. Expansion of Food Business Awareness of Packed Milk Availability of Raw Material Market Capitalization Diversification Export Opportunities May merge with other global businesses to eliminate competitors. Having Capable of expanding into other markets of the world Has the potential to innovate and differentiate the company's products to

sustain a Competitive advantage Increase in the consumption of processed milk will lead to increase in sales for

the company.

SWOT ANALYSISThreats

Competition with Nestle, Haleeb, Walls. and the new entrants, Mature Market High inflation rate. International Marketing Standards Change in prices might create certain barriers in terms of the

profit margins Low purchasing power. Recessionary period in business cycle. High Taxes Seasonal Factors Economic Condition Price Consciousness of consumers Suppliers Behavior

EFE MATRIXKEY STRATEGIC FACTORS Weights Rating Weight Score

OpportunitiesRaw Material Availability 0.06 3 0.18Market Capitalization 0.05 3 0.15Diversification 0.07 4 0.28Awareness 0.05 3 0.15Expansion 0.05 3 0.15Flexible Govt. Policy 0.04 2 0.08Innovation & Technology 0.04 2 0.08Exports 0.06 3 0.18Joint Ventures 0.05 2 0.10

ThreatsHigh Taxes 0.06 3 0.18New Entrants 0.07 4 0.28Seasonal Factors 0.04 2 0.08Low Purchasing Power of consumers 0.05 2 0.10Change in prices might loss sales 0.05 2 0.1Suppliers Behaviors 0.05 3 0.15Economic Conditions 0.05 3 0.15Price Consciousness of consumers 0.05 2 0.10Mature Market 0.06 3 0.18International Market Standards 0.05 3 0.15TOTAL 1 - 2.82

EFE MATRIX RESULTAccording to above EFE Matrix

the EFL average score is 2.82, which seems to be good from the minimum average score 2.50, but Engro should more work hard to be the market leader in food industry.

EFL’s major opportunity is Diversification.

EFL’s major Threat is New Entrants.

CP MATRIXCOMPETITIVE PROFILE MATRIX

Critical Success Factors WeightENGRO FOODS NESTLE HALEEB

Rate Score Rate Score Rate Score

Research and Development 0.08 3 0.24 3 0.24 3 0.24

Advertisement 0.08 3 0.24 4 0.32 2 0.16

Financial Position 0.09 4 0.36 4 0.36 3 0.27

Market share 0.07 3 0.21 3 0.21 2 0.14

Product Quality 0.08 3 0.24 3 0.24 3 0.24

Price Competitiveness 0.08 3 0.24 3 0.24 3 0.24

Management 0.08 4 0.32 4 0.32 3 0.24

Global Expansion 0.08 2 0.16 4 0.32 2 0.16

Certifications 0.06 2 0.12 3 0.18 2 0.12

Diversification 0.05 4 0.20 3 0.15 2 0.10

Customer Services 0.06 3 0.18 3 0.18 3 0.18

Sales & Distribution Network 0.06 3 0.18 3 0.18 2 0.12

Production Capacity 0.07 3 0.21 3 0.21 3 0.21

Alliances 0.06 3 0.18 3 0.18 2 0.12

TOTAL 1 - 3.08 - 3.33 - 2.54

CP MATRIX RESULTAccording to above CPM Matrix, EFL’ s

Average Score is 3.08EFL’s strong competitor is NESTLE

which Average score is 3.33. EFL has high average score than

HALEEB FOODS. Nestle is better than EFL in

Advertisement and Global Expansion.While EFL has strong Diversification

strength than Nestle.

Strategies in Action

Market Penetration

Market Development

Product Development

Backward Integration

Forward Integration

Diversification

Financial Evaluation of EFL

S.NO. Key Factors 2011 20101 Return on Investment (ROI) 5.70% 1.41%

2 Return on Equity (ROE) 12.31% 3.43%

3 Profit Margin 2.92% 0.84%

4 Market Share 45% 31%

5 Debt to Equity 51% 51%

6 Earnings Per Share (EPS) 1.22 0.31

7 Sales Growth 42.6% 25.8%

8 Asset Growth 33.53% 27.23%

Strategy Evaluation stage includes measuring organizational performance and taking corrective actions. We can measures EFL performance through following key facts.

FINANCIAL AUDIT

Recommendations/ Suggestions

Engro Foods should have much diversified bi-product line of dairy products like

Nestle & Haleeb.

They should introduce new promotions to get customers’ attention

EFL should expand its dairy farms so that they can get competitive advantage.

EFL should focus on Market Penetration, Market Development and Product

Development strategies with more efforts to be the market leader.

They should go expand its capacity to enter into in international market like

Nestle.

Engro Foods can be into Co-branding with other brands like Olper’s with Lipton

tea bags, Olper’s with different biscuits etc. to increase their sales

They can also move towards other foods products like Nestle launch Kit Kat

Chocolate, Meggi Noodles, Sweets Candies etc.

Conclusion Engro is going to be a market leader due to different reason like

its financial position, product quality, R & D, market share, sales growth etc. Its price is more or less equal to its competitors, it matches its quality with its competitors and capturing its competitor’s share from market. Engro is using its brand name and its packaging is good to promote its products and EFL is becoming very popular as compared to its competitors.

  Company has planned to make Omore world class premier quality

brand like existing brands of Engro Foods. Company is also working on cereals in coming years. They has planned to move other dairy products as are offering by its competitors Nestle like yogurt, flavoured yogurt (raita), cereal for babies etc. Foods competitors Nestle and Haleeb are biggest threat. There are opportunities and doors for new players are open who can be the future competitors.

Consumer is aware now, there is need to maintain the quality of products. Consumers perceptions and price differentials can cause threat for the company, Consumer’s preferences changes timely and prices might create certain barriers in terms of the profit margins for ENGRO FOODS.

In short Engro Foods should grow and maintain its position. That is why EFL is increasing Market Penetration, Market Development & Product Development strategies.

THANK YOU

Questions & Answers