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INTRODUCTION

FFC occupies a special niche in the industrial and agricultural development of the country with a successful track record of excellence business performance. The company moved from one high level of achievement to other establishing records year after year and is now ranked as a top tier player in the fertilizer industry with highest production capacity and market participation. During the year, FFC acquired 100% management control. Of PSFL, a wholly owned subsidiary of NFC, through competitive bidding on payment of RS.8.15 billion to the Privatization commission. With the integration of PSFL, which now stands dissolved and merged with FFC effective july1, 2002, pursuant to a scheme of amalgamation approved by the Honorable High Court of Sindh, the production capacity of our urea manufacturing facilities has more than tripled from 570 thousand tones p.a. in 1982 to almost 2 million tones p.a. in this short span of less than 25 years of existence. FFC now owns three mega plants worth over 1 billion dollars in terms of replacement value, besides over 49% stake in FJFC. 2002 was a difficult year and business conditions were challenging because of the economic fall out of the recent regional crisis. Uncertain economic and weather conditions, high natural gas prices, global product oversupply, falling international urea prices and weak domestic demand contributed to an extremely difficult operation environment during the year which created a downward pressure on prices and margins. These adverse factors are continuing since past few years and have created intense competition for the industry players; however, once again our diversification has paid dividends and strategies implemented over the years allowed the company to maintain solid financial foundation throughout this prolonged downturn. With a vision to acquire self - sufficiency in fertilizer production in the country, FFC was incorporated in 1978 as a private limited company. This was a joint venture between Fauji Foundation (a leading charitable trust in Pakistan) and Haldor Topsoe A/S of Denmark.

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The initial authorized capital of the company was 813.9 Million Rupees. The present share capital of the company stands at Rs. 3.0 Billion. Additionally, FFC has Rs. 1.0 Billion stakes in the subsidiary Fauji Fertilizer Bin Qasim Limited (formerly FFC-Jordan Fertilizer Company Limited). FFC commenced commercial production of urea in 1982 with annual capacity of 570,000 metric tons Through De-Bottle Necking (DBN) program, the production capacity of the existing plant increased to 695,000 metric tons per year. Production capacity was enhanced by establishing a second plant in 1993 with annual capacity of 635,000 metric tons of urea. FFC participated as a major shareholder in a new DAP/Urea manufacturing complex with participation of major international/national institutions. The new company Fauji Fertilizer Bin Qasim Limited (formerly FFC-Jordan Fertilizer Company Limited) commenced commercial production with effect from January 01, 2000. The facility is designed to produce 551,000 metric tons of urea and 445,500 metric tons of DAP. This excellent performance was due to hard work and dedication of all employees and the progressive approach and support from the top management. In the year 2002, FFC acquired ex Pak Saudi Fertilizers Limited (PSFL) Urea Plant situated at Mirpur Mathelo, District Ghotki from National Fertilizer Corporation (NFC) through privatisation process of the Government of Pakistan. This acquisition at Rs. 8,151 million represents one of the largest industrial sector transactions in Pakistan Recently Fauji Fertilizers Company offered the highest bid of Rs 8.151 billion for the Pak-Saudi Fertilizers Limited here on Saturday. Second highest bidder was the Dawood Hercules that offered Rs 3.78 billion while the lowest bid of Rs 3.602 billion was received from Engro Chemicals. In simple words Fauji Fertilizers Company offered Rs 4.50 billion rupees more than Engro and Rs 4.371 billion more than Dawood Hercules in bidding for Pak-Saudi Company. Sealed bids for the privatization of Pak-Saudi Fertilizer Company were opened by journalists on the request of Privatization Minister in the presence of bidders, senior government officials and private sector representatives. Three

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companies, Fauji Fertilizers, Engro Chemical and Dawood Hercules filed bids for the said company. Fauji Fertilizers offered Rs 135.85 for each share of the Pak-Saudi Company, Dawood Hercules offered Rs 70 per share, while Engro Chemical offered Rs 66.70 for a share. Seeing a far high difference in the price offered by Fauji Fertilizers, the other two bidders did not take interest in contesting privatization of the said company and wished a good luck for FFC. Announcing price offers by the private sector, Minister for Privatization Altaf Saleem declared the Fauji Fertilizers Company as the highest bidder that intends to buy 100 percent shares.

NATURE OF THE BUSINES


The company is a public company incorporated in Pakistan under the Companies Act, 1913, (now the Companies Ordinance, 1984 and its shares are quoted on the stock exchanges in Pakistan. The principal activity of the company is manufacturing, purchasing and marketing of fertilizer, including investment in other fertilizer manufacturing operations.

FFC HISTORY
FFC was incorporated on May 8, 1978. Based Unit at Goth Machhi commenced commercial production in June 1982 with annual designed capacity of 570 thousand tones urea. Based Unit up-graded in April 1992 to produce 695 thousand tones annually. Expansion Unit at Goth Machhi commenced commercial production in March 1993 with designed capacity of 635 thousand Tonnes. FJFC founded in November 1993 with initial contribution of Rs. 1 billion. The companys investment in FJFC now stands at over RS 4 billion. PSFL acquired on May 31,202 and merged with FFC on July 1,2002. Situated at Mirpur Mathelo the plant has annual designed production capacity of 574 thousand tones.

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The aggregate designed production capacity of FFC is three plants now stand at almost 2 million tones annually. Since inception to 2002, FFC has produced and marketed 21million tones of urea. In terms of import substitution this has resulted in national savings of well over 3 billion dollars in foreign exchange. Since inception the company has contributed Rs. 42 billion to the national exchequer in the form of taxes and government levies. The company earned a net profit after tax of over Rs. 3 billion for the fifth time since inception, including 2002. The company was the highest tax payer in the corporate Sector ub 1993/1994. Since inception the company has sold/marketed almost 28 million tones of fertilizers. FFC is the only company providing Mobile Farm Extension Services at the farmers, door-step since 1986. FFC was the first company in fertilizer Sector to achieve in 2002 the highest ever. FFC was the first company in Fertilizer sector to achieve ISO 9002 certification in 1997. FFC has been placed amongst the list of top 25 companies of PAKISAN BY KSE for eight years consecutively, topping the list in 1997. 21.5 million Man-hours of operation without injury were achieved in 2003, the highest ever. The companys annual Reports have been adjudged as one of the best reports in the Chemical sector twice by joint committee of ICAP/ICMAP.

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Vision Statement

Vision Statement

FFC is focused on harmonizing its capabilities and maximizing its potential. FFC's vision for the future envisages diversification and undertaking ventures at home and abroad in collaboration with leading international partners.

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Mission Statement
FFC's mission is to sustain its role as the leader in industrial and agricultural advancement of Pakistan by setting and achieving new and higher goals, and taking initiatives. The Company is committed to ensuring safe and conducive work environment, providing high quality products and allied services to its customers and profitable returns to its shareholders.

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Objectives of the company


The broad objectives of the company are, To sustain its role as market leader in urea production and marketing. To deliver exclusive values and services to the shareholders and customers through its strategies To place great value on social responsibilities and welfare To develop a culture based on principles of honesty, integrity, faireness and respect. To create the agricultural awareness in farmers through media and training. To provide farmers technical services through technical services department free of cost. To hire and retain satisfied workforce To play a vital role in agricultural development of the country To provide the quality products To set high standards for production and sale and achieve these objectives To be environment-friendly organization To promote education in the farmers community by awarding merit scholarships. To help upgrade the capability of fertilizer research, extension and marketing personnel in the transfer of fertilizer technology. To provide a neutral common platform to resolve contentious issues in fertilizer sector.

Vision 21

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FFC has progressed remarkably from its inception in 1978 till to date. Three projects in a span of less than 20 years have been set up. Each of these have incurred an investment of over 300 million US$ amounting to one of the largest investments in Pakistan. This performance record is considered unparalleled in the country and matches high standards any where in the world. At this point in time, the company is preparing to harmonize itself with new century. Building on the foundations of the last 20 years, the company is confident to take on the new challenges. FFC 's vision for the 21st century looks for diversification and establishing projects beyond the territorial limits of the country in collaboration with world famous international industrial holdings. The list of different projects that are being evaluated at present are: Oil Refinery Paper Mill Project Software Development House Off-Shore Fertilizer Complex Mineral Acid Production Petrochemical Revamp of existing FFC facilities

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QULITY POLICY OF FFC

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Company Manufacturing Facilities


The Company has three plants and is a shareholder in FFBL. It markets the whole production of FFBL. PLANT-I PLANT-I PLANT-III PLANT-IV Goth Machhi, Sadikabad, Rahim Yar Khan Goth Machhi, Sadikabad, Rahim Yar Khan Mir Pur Mathelo Fauji Fertilizer Bin Qasim Limited

Company Information
Chairman Lt. Gen. Syed Muhammad Amjad, HI, HI(M) (Retired) CHIEF EXECUTIVE AND MANAGING DIRECTOR Lt. Gen. Mahmud Ahmed, HI(M) (Retired) Secretary Registered Office Plantsite Brig(Retd.) M. Akram Khan (Retd)

93-Harley Street, Rawalpindi Cantt. Goth Machhi, Sadikabad, Rahim Yar Khan.

Marketing Division

Lahore Trade Centre, 11 Shahrah-e-Aiwan-e-Tijarat, Lahore.

Karachi Office

D-143, Block-4, KDA Scheme - 5, Kehkashan Clifton, Karachi.

Auditors

A.F. Ferguson & Co., 10

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Chartered Accountants

BUSINESS AREAS OF THE COMPANY


Engineering Manufacturing Marketing Engineering After the successful start-up of the first plant in mid 1982, a group of selected engineers was assigned to Technology Division-TD (then called CED) Head Office with the objective of providing engineering and technical backup to the plant operations Additional responsibilities that are assigned to TD, include monitoring plant performance, development of new projects, handling capital investment projects, advising management on technical matters and development of a technological base along with consultancy functions. Since 1982, TD has made tremendous progress in the field of Plant Engineering, Project Management, Project Feasibilities and Project Development. The development of TD was equally supported by the FFC management which has recognized the need to promote research and technological development activities. TD is manned by a team of highly trained project engineers, process engineers and IT specialists. Nearly half of the strength is located at the plant to provide on-the-spot assistance to the manufacturing units besides feeding vital plant data to the Head Office for immediate processing. TD is equipped with latest computing facilities along with engineering software from world famous engineering designer M/s Haldor Topsoe of Denmark and other technical software purchased from the engineering companies as well as in-house developed

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software related to engineering and other general purpose need of the company. This technology enables TD to undertake detailed process/engineering design related assignments and to provide most valuable assistance to other departments within the company. TDs most significant contributions to date have been successful project management of FFC Project 1 debottlenecking, FFC Plant Expansion Project 2 and the Fauji Fertilizer Bin Qasim (formerly FJFC) Project. TDs role in all projects starts from the conceptual stage and concludes at the successful commissioning and handing over of the project to the Operation Group. The success achieved so far by TD proves that FFC now possesses requisite in-house capabilities to ensure successful completion of large scale projects within allocated budgets and assigned project schedules. Manufacturing The largest urea manufacturing facility of Pakistan consisting of two ammonia/urea units owned by FFC, is built at Goth Machhi in district Rahim Yar Khan.Goth Machhi is situated at a distance of 2 kms from the main Lahore-Karachi highway and is adjacent to the main railway line. The two plants are based on natural gas from Mari Gas Fields and have an annual designed production capacity of 1.3 million tons of urea. Over the years, the plants have demonstrated an operational excellence which has become a reference for the engineering companies whose process technologies are used here. Delegations from China, Middle East and Far East keep visiting the plant site for gaining first hand knowledge before deciding to purchase a new plant Marketing Division, setup in July, 1978 is responsible for all marketing operations including planning, distribution, sales, farm advisory services, field warehousing, finance and administration. With the commencement of commercial production in June 1982, the company started marketing its urea under the brand name "Sona".

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Marketing The company markets not only Sona urea but also imported nitrogen, phosphate and potash based fertilizers. The Company is also marketing half a million tonnes of sona urea granular manufactured by Fauji Fertilizer Bin Qasim (formerly FFC Jordan Fertilizer Co. Ltd). When FFC came into the market with its production in June 1982, the other manufacturers namely Engro, Dawood Hercules and National Fertilizer Corporation were already well established in the market. The brands of Engro (Engro) and Dawood Hercules (Babber Sher) were considered premium brands in Sindh and Central Punjab respectively. FFC had to face very tough competition from the beginning. This competition coupled with the huge surplus of urea in the domestic market posed a great challenge to the company in the initial years. FFC not only met the challenge by capturing the desired market share but in the process, enhanced the brand image of its product Sona urea which has become the number one brand. During the period 1983 to 1986 when a large urea surplus existed in the country, FFC pioneered urea exports which not only helped in stabilizing domestic urea but also earned valuable foreign exchange for the country. The Government of Pakistan deregulated the trade and prices of phosphatic fertilizers on 21 August 1993. Subsequent to this decision FFC started import of these fertilizers and as a result timely supplies were arranged. Farmers were thus provided with quality product in bags with guaranteed correct weight and this brought about a very positive qualitative change in the phosphatic fertilizer business in the country. The Marketing Division now has the necessary expertise to handle fertilizer imports and exports.

FFC believes in selling a programme rather than just a product. For this, the company has adopted a customer oriented strategy, marketing quality products backed by efficient and effective support services with emphasis on developing the market through practical and innovative farmer education.

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IT is a Joint Venture Office Cherifien des Phosphates (OCP) Group of Morocco and Fauji Group including Fauji Foundation, Fauji Fertilizer Company Limited and Fauji Fertilizer Bin Qasim Limited, have entered into a Joint Venture Company in Morocco named Pakistan Maroc Phosphore S.A with equity of 800 Million Moroccan Dirhams. The proposed project is planned to be located at Jorf Lasfar , Morocco , where OCP already has a large chemical complex. This Project will produce 375,000 MT Phosphoric Acid per year by consuming 1,300,000 MT Phosphate Rock and 370,000 MT Granular Sulfur. It is not a grass root project and will utilize basic infrastructure and ancillary facilities already present at Jorf Lsafar Site. The cost of the project is estimated at US$ 203 Million and is likely to start commercial production by early 2007. It will meet total requirement of phosphoric acid for the DAP production in FFBL plant at Bin Qasim. Fauji Fertilizer Bin Qasim Limited Fauji Fertilizer Bin Qasim Limited is a US$ 461 Million Project, one of the largest in private sector in Pakistan, producing both DAP and Granular Urea for the first time in the country. The project is sponsored by the largest and well known industrial group of Faujis and Jordan Phosphate Mines Company. Fauji Fertilizer Bin Qasim Limited at a glance: Capital Cost: $461 million

Joint Venture of Fauji Foundation and Fauji Fertilizer Company Limited Production Capacity: 1,670 metric tones per day of Granulated Urea and 1,350 metric tones per day of DiAmmonia Phosphate (DAP)

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FFBL has the distinction of producing 13% of urea and 31% of Di-Ammonia Phosphate of the country's total requirement. Termination agreement with Jordan Phosphate Mines Company Limited (JPMC) was signed on 24/06/2003, with the same JPMC is no more a partner or equity holder in the Company. A long term agreement for the Supply of Phosphoric Acid between Maroc Phosphore S.A, a wholly owned subsidy of Office Cherifien Des Phosphates, Morocco was signed on July 21, 2003. DAP Plant recommenced its production on September 22, 2003 and supply of DAP in the market started thereto. Company History Of FFBL By the early nineties, Pakistan was importing almost one million tons of urea and 800,000 tons of DAP per annum. At that time management of Fauji Fertilizer embarked on the FFC-Jordan Fertilizer Project in order to make Pakistan self-sufficient in urea and reduce the import of DAP. After initial discussions with the Jordan Phosphate Mines Company, a preliminary feasibility was undertaken in 1992. By 1993, the detailed feasibility studies was completed and the Lake Charles, USA, ammonia plant was procured for relocation. New plants of DAP and urea were installed and the first production of DAP commenced in Nov 1998, followed by urea in April 1999.

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Vision Statement of FFBL

Our vision and overall corporate strategy is to:

Be a leading fertilizer company with a diverse product base Gain excellence in operations Ensure exemplary Business Ethics Ensure Safety, Healthy and friendly environment Exercise effective corporate governess

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Mission Statement of FFBL

To produce competitively priced, quality fertilizers and achieving sustainable and viable growth rate through excellence and generating optimum profits to the total satisfaction of all stakeholders

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PRODUCTS OF FFBL
Sona Granular It produces 13% of total production

SONA Granular

SONA DAP FFBL produces 31% of countrys demand. It is the sole producer of DAP

SONA DAP

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Fauji Foundation Profile of a Welfare Organisation for Ex-Servicemen


AN ARMY OF BUSINESS INTERESTS Institute of Management & Computer Sciences 1 College of Education 1 Intermediate Colleges 2 Model Schools 81 Vocational Training Centres 67 Technical Training Centres 9 Referral Hospitals 6 Rural Hospitals 5 Fauji Foundation Medical Centres 24 Mobile Health Units 2 Dispensaries 27 Wards in CMH 1 1 (CMH Mardan) Fauji Corn Complex, Jehangiria Fauji Cereals, Rawalpindi Foundation Gas, Rawalpindi Fauji Metals, Rawalpindi Fauji Polypropylene Products, Hub Chowki Fauji Sugar Mills, Tando Muhammad Khan Fauji Sugar Mills, Khoski Fauji Sugar Mills, Sangla Hill Fauji Foundation Experimental & Seed Multiplication Farm, Nukerji, Sind. Fauji Software Company, Rawalpindi. Fauji Medical Transcription, Rawalpindi. Fauji Institute of Information Technology & Medical transcription Fauji Foundation Institute of Management & Computer Sciences, Rawalpindi Fauji Oil Terminal Company, Karachi. NIC Project, Islamabad. Fauji Cement Company Ltd Fauji Fertilizer Company Ltd Fauji Jordan Fertilizer Company Ltd Fauji Kabirwala Power Company Ltd Mari Gas Company Ltd

OVERVIEW OF AN EX-SERVICEMENS WELFARE ORGANISATION


An ex-serviceman who spends his life in an atmosphere of discipline - and fairplay finds it rather difficult to adjust to the cavy conditions. A large number of these simply

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cannot adjust to the non-egalitarian environments - and some are simply baffled and disillusioned. It is unfortunate that the economic conditions - and monetary environments in the country do not permit full social benefits to these otherwise potential human resources. it is here that the Fauji Foundation comes in a big way in providing them social security and such facilities as education for their children and health coverage. Education

Colleges Schools Scholarships

2 64 1,30,942

Technical Training:

Technical Training Centres Vocational Training Centres Fauji Institutes of Comp. Sciences

9 66 2

Medical:

Hospitals Day Health Centres Mobile Dispensaries

12 24 48

The data explains that some quarters thought that the Foundation was a rather privileged outfit. Far from it, the Foundation pays its full quota of taxes, levies and other liabilities as surcharges et al and is never a defaulter on any count. I went on to find the sore point of employment of retired officers and for which a very large number of applicants come up.

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categorically that the number of vacancies with the Foundation is very small and now the GHQ Welfare Directorate has also been associated with the process of finding work for retired officers. But now some more vacancies have been created within the Foundation. It is not possible to present the entire budget of the Foundation in this presentation nor even a glimpse of its entire gamut of activities. I have tried just to highlight some of its more important facets. Finally, one should think that Fauji Foundation is a unique outfit for the welfare of exservicemen. It is both highly humanitarian and forward looking in its industrial planning. One should hope that the present MD will continue with the good work of presenting the activities of his outfit personally, as he did so admirably so far. He must be congratulated for that. Fauji Foundation (FF) may be singled out for its unique performance and operation. It is run with vision and egalitarian purposes. Of course it must make money for its dual role but as I have put it the outfit has much loftier overall goals which are humanitarian and not purely money minting which any thrifty and miserly business house can easily make notwithstanding the dubious means employed for this goal. FF is unique in this respect that it looks after the welfare of a good over nine million exservicemen who are invariably ignored by the other government agencies - and are terribly oppressed and miserable once they shed their uniforms. These poor souls notwithstanding their expertise are misfits and it is FF which comes to their rescue - in providing, health, education and re-employment facilities. FF in fact has a massive mandate as it rightly claims to be A charitable trust for the welfare of ex-servicemen, and their dependents. No other business house in the country has such a massive egalitarian mandate - irrespective of the profits made by it. FF is a bit of a miracle - and over a short period of time it has grown phenomenally - and its present assets stand at over 9 billion which were just around Rs 18 million in midfifties. Surely it is remarkable feat - and a real success story.

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FF has earned a very considerable applause outside the country - and it also earned the coveted The World Veterans Federation Rehabilitation Prize in 1997 at Seoul (Republic of Korea). The citation for this remarkable prize is worth quoting. It runs that the prize was awarded for its remarkable achievements in looking after ex-servicemen and their families in providing healthcare, education, technical training, employment, artificial limbs and other facilities for the rehabilitation of disabled ex-servicemen, thus enabling them to be full-fledged citizens contributing to the welfare of their communities. Very few like outfits or NGOs can boast of such a remarkable performance. The performance of FF is more remarkable especially as the foundation is a selfsupporting entity in entirety. It is a charitable trust which receives no financial assistance from either the Federal or the Provincial governments. It also does not get any donations from any other source. It has to generate its own funds for the massive humanitarian mandate. FF beneficiaries include the following categories of service personnel:

Released, retired and discharged personnel of the Regular armed forces who are citizens of Pakistan. Legally wedded wives and widows of the above personnel. Sons of ex-servicemen up to the age of 18 years - and beyond for education and technical training stipends. Unmarried daughters of ex-servicemen - and divorced daughters until remarried. Invalid sons of ex-servicemen for medical treatment (No age bars.) Cadets of service academies invalided out of service for disabilities attributable to military service.

This is a mouthful - and out of sheer necessity, the foundation has to do well in its commercial ventures where it must invest wisely, and run the business shrewdly. A very brief business profile of FF is indicated as below: Fully Owned Projects include:

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Fauji Sugar Mills Tando Mohammad Khan. Fauji Sugar Mills Khoski. Fauji Sugar Mills Sangla Hill. Fauji Sugarcane Experimental & Seed Multiplication Farm. Fauji Cereals. Fauji Corn Complex. Fauji Polypropylene Products Foundation Gas.

Shareholding Projects include:


Fauji Fertilizer Company Limited. Fauji Oil Terminal and Distribution Company Limited. Fauji Cement Company Limited. Mari Gas Company Limited.

New Projects consist of:


Fauji Kabirwala Power Company Limited. FFC- Jordan Fertilizer Company Limited.

It is through wise investment and expert management that FF has established a nitche in the Private Sector. The industrial units/ projects have been set up with great care and some of the factors which have been taken into account for this area:

Availability of raw material in the area. Marketing prospects for the finished goods/products. Preference given to declare tax free areas by the government. Geological and environmen

Parameters related to the project. Availability of civic amenities, administrative facilities and infrastructure. Setting up of profit earning intensive mega projects with foreign investors, over labour intensive smaller projects.

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Terms and conditions and at times restrictions imposed by financial institutions - and the lenders. At first glance it appears that the welfare projects have been established somewhat arbitrarily, and many ex-servicemen who do not have such facilities located in their areas feel that way. In fact it is far from it - and there is a perfect rationale for the location of every such facility. And at some repetition the criteria for such locations has a perfect reason. The main factors taken into account for each location are as below:

Proliferation of the benefits to the area which are densely populated by the exservicemen. Creation of a balance between the province and different regions within the province by setting up of projects on the basis of percentage of ex-servicemen residing in the area. Setting up of the projects in areas with good communications and other administrative facilities needed for the smooth running of these projects.

In fact as commonly - and rather erroneously thought there was no arbitrary consideration for setting up of a particular project in a special area. It is most confidence giving and interesting to see the pace of growth of welfare projects. This growth is indicated in an inset. It will be seen that it is most accelerated in the medical and education sectors especially in the current year. Finally here we have an outfit which has set a pace both in industrial development - and welfare sectors which is most confidence giving. And sure, the management of this outfit

has been most prudent to have developed to such an extent from almost a scratch over such a short time.

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It is heartening that the foundation has in its pipeline still higher goals - and diverse investment which I am sure will be equally profitable as the previous investments have been.

INTRODUCTION TO INDUSTRY

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About Fertilizer Fertilizer is, simply, plant food. Macronutrients Plants need large amounts of three nutrients nitrogen, phosphorus, Potassium. Just like the human body needs vitamins and minerals, plants need nutrients in order to grow. Plants need large amounts of three nutrients -- nitrogen, phosphorus, and potassium. These are commonly referred to as macronutrients. Fertilizer makers take those three nutrients from nature and put them into soluble forms that plants can easily use. Minor nutrients or Micronutrients There are a number of other nutrients plants need in small amounts. These are referred to as the minor nutrients, or micronutrients. These many nutrients are typically produced separately, but end up being mixed together in varying amounts to match the needs of a particular crop. The analysis found on each bag or bulk shipment of fertilizer tells the farmer or consumer the amount of nutrients being supplied. States have a system of laws and regulations that ensure the fertilizer is properly labeled and delivers the amount of nutrients stated on the bag. Our world would be vastly different without commercial fertilizers. Following World War II, new technologies allowed for the rapid expansion of fertilizer production. Coupled with growing food demand and the development of higher-yielding

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crop varieties, fertilizer helped fuel the Green Revolution. Today, the abundance of food we enjoy is just one way fertilizers help enrich the world around us. While fertilizers provide many important benefits that are necessary for our way of life, the improper use of fertilizers can harm our environment. In order to capture the important benefits of fertilizer, we will have to work hard to ensure our products are safe. We've used the most recent developments in science to study our products and make sure safety comes first.

GLOBAL OVER VIEW OF FERTILIZER


World Fertilizer Use Our world would be vastly different without agriculture and agriculture is impossible without fertilizer. Around the globe it is produced and used. The following data is about consumption and then production. In thousand metric tons of nutrient, years ending June 30*
World Consumption Item Nitrogenous Fertilizers

Phosphate Fertilizers

Potash Fertilizers

Total Fertilizers

1961/62 1962/63 1963/64 1964/65 1965/66 1966/67

11,588 13,137 14,760 16,474 19,097 22,179

10,931 11,612 12,929 14,490 15,799 17,414

8,664 9,231 9,999 10,920 12,106 12,736

31,182 33,981 37,688 41,884 47,003 52,329

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1967/68 1968/69 1969/70 1970/71 1971/72 1972/73 1973/74 1974/75 1975/76 1976/77 1977/78 1978/79 1979/80 1980/81 1981/82 1982/83 1983/84 1984/85 1985/86 1986/87 1987/88 1988/89 1989/90 1990/91 1991/92 1992/93 1993/94 1994/95 1995/96 1996/97 1997/98 1998/99 1999/00 2000/01 2001/02

24,210 26,248 28,471 31,756 33,536 36,144 39,204 38,425 44,420 45,263 49,120 54,252 57,223 60,776 60,452 61,173 67,117 70,836 70,354 72,481 75,811 79,543 79,115 77,175 75,633 73,657 72,388 72,430 78,357 82,590 81,317 82,814 84,917 80,949 81,970

18,140 19,037 19,801 21,117 22,435 24,009 25,870 23,986 25,609 27,323 28,549 30,046 31,196 31,700 30,946 31,086 33,177 34,442 33,463 34,769 36,291 37,612 37,568 35,970 35,241 31,190 28,962 29,566 30,663 31,104 33,293 33,312 33,288 32,472 33,050

13,928 14,525 15,210 16,435 17,340 18,542 20,401 19,534 21,370 22,849 22,938 24,456 24,054 24,244 23,749 22,853 25,410 25,959 25,673 26,167 27,374 28,005 26,685 24,684 23,732 20,492 19,131 20,051 20,661 20,885 22,577 22,041 22,096 21,778 22,711

56,277 59,810 63,482 69,308 73,310 78,695 85,475 81,945 91,399 95,435 100,607 108,754 112,472 116,720 115,147 115,112 125,704 131,237 129,490 133,417 139,476 145,159 143,368 137,829 134,606 125,339 120,480 122,046 129,681 134,579 137,188 138,167 140,302 135,198 137,730

Major Fertilizer Producing Countries


Million metric tons, years ending June 30* Country 1997/98 1998/99 1999/00 2000/01 2001/02

Nitrogen

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China India United States Russian Federation Canada

20.2 10.1 13.8 4.1 3.7

21.5 10.5 13.5 4.1 3.7

22.8 10.9 11.2 5.0 4.1

21.5 10.9 9.9 5.4 3.9

22.1 10.7 10.6 5.5 3.5

United States China India Russian Federation Brazil

9.0 6.4 3.0 1.9 1.4

9.0 6.7 3.2 1.7 1.4

Phosphate 8.5 6.4 3.4 2.0 1.4

7.3 6.7 3.7 2.3 1.5

7.6 7.4 3.9 2.4 1.4

Canada Russian | Federation Belarus Germany Israel

9.0 3.4 3.3 3.4 1.5

9.2 3.5 3.4 3.6 1.7

Potash 8.2 4.0 3.6 3.5 1.7

9.2 3.7 3.4 3.4 1.7

8.2 4.3 3.7 3.5 1.8

Source: Food and Agriculture Association (FAO)

FERTILIZERS ISSUES
The core purpose of The Fertilizer Institute is to bring the viewpoints and interests of members to bear on public policy issues. Here's a rundown on the position on some of the hottest current issues. Fertilizer and the Environment The fertilizer industry is committed to producing and helping farmers use fertilizer in ways that meets the environmental challenges of modern society. At both production sites and across the world in daily working with farmers, we continue to improve our environmental performance.

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International Trade As an internationally-traded commodity, fertilizer is an important part of the export economy. Fertilizer manufacturers serve customers around the globe. The members of The Fertilizer Institute support the removal or reduction of trade-distorting subsidies, tariffs, and non-tariff barriers to trade. the members believe free trade benefits both manufacturers and consumers of fertilizer products. Methamphetamine In some areas, thieves are stealing fertilizer products to manufacture the illegal drug methamphetamine. This practice needs to stopped urgently. Metals in Fertilizers Some fertilizer products contain very small amounts of metals that are not beneficial to plant growth. These metals occur in products because they occur in nature as part of the ore bodies or in the raw materials used to make fertilizers. Three separate scientific studies on the safety of these metals in fertilizers have all come to the same conclusion -that they generally do not pose a threat to human health or the environment. Perchlorate Perchlorate is a compound found in natural deposits and is also manufactured for various industrial purposes, mainly as a propellant for rocket fuel. Perchlorate is also used as a solid propellant for fireworks, road flares and air bags. Recent evidence also indicates that perchlorate is naturally occurring in the atmosphere and in certain arid environments; including in trace amounts in Chilean nitrate deposits. Chilean nitrate fertilizers represent about 1/10th of 1 percent of the commercial fertilizer market. The primary manufacturer of these Chilean nitrates has modified its manufacturing process to reduce perchlorate contents below 100 ppm, and when blended into other fertilizers, the perchlorate content is usually less than 10 ppm, and often undetectable. A joint TFI/EPA round robin study

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published in 2002 indicated that commercial fertilizers in general do not contain perchlorate. Transportation Fertilizer is transported from manufacturing plants and terminals by rail, truck, barge and pipeline. Fertilizer transportation is regulated at both the Federal and state level. The respective Boards hold jurisdiction over the railroads and over rail mergers, another area of concern for the fertilizer industry. In the past, The Fertilizer Institute has worked to monitor transportation issues -- whether hazmat or rail mergers -- on behalf of its members

PAKISTAN
Pakistan is a agricultural economy. The importance of fertilizer in agrarian economy is above abord. Population Land Population with agricultural profession over 150 millons 796096 km square 70 %

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Domestic Production of Fertilizer by Products


Urea
(tonnes)
PERIOD Dawood Hercules 153,672 209,534 142,856 157,381 212,243 207,776 225,203 218,610 217,334 250,317 249,641 214,340 197,006 237,982 244,522 NFC Engro PakSaudi 130,600 137,674 133,378 128,669 124,484 285,204 290,565 355,510 322,589 298,369 385,416 391,258 375,207 461.665 466,412 312,218 252,223 286,475 288,045 281,767 249,456 271,347 310,955 329,352 304,120 320,062 273,260 292,752 63,981 0 NFC PakNFC PakNFC PakAmercian 0 0 0 0 0 0 0 0 0 2,000 115,778 151,017 176,963 146,762 179,226 FFC Total

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

China* Arab Kharif Season 57,219 57,004 46,896 48,907 52,021 60,710 59,719 62,908 58,546 45,865 52,740 59,899 60,372 38,622 24,928 56,956 9,116 52,559 54,901 57,432 56,054 54,451 3,580 58,684 0 58,250 0 52,238 0 59,408

312,162 312,829 311,973 367,700 650,900 689,600 700,100 698,184 729,866 721,559 816,157 915,360 1,007,834 1,262,314 1,341,099

1,022,875 1,008,063 987,413 1,064,422 1,373,805 1,544,675 1,586,209 1,665,143 1,660,816 1,688,698 1,997,559 2,007,499 2,108,030 2,224,942 2,290,667

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1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04

190,590 182,769 85,695 186,090 214,628 173,918 141,199 167,263 152,802 161,446 188,011 193,780 168,408 190,094 165,464

123,184 134,057 138,633 136,026 323,669 333,221 405,572 350,150 380,078 416,320 407,777 416,597 430,128 413,140 489,115

306,085 291,643 280,298 256,157 329,846 271,287 272,971 241,602 308,455 299,734 313,600 309,571 318,696 0 0

Rabi Season 60,468 53,603 60,657 53,228 60,701 48,989 41,364 31,501 471 41,322 41,072 0 0 0 0

61,499 57,486 53,474 44,930 39,488 40,313 60,965 62,685 34,714 39,925 47,184 50,852 41,683 47,776 64,555

0 0 0 0 0 0 0 0 0 69,747 74,744 57,933 126,459 136,775 127,453

332,920 295,474 307,588 413,100 622,400 610,800 702,900 765,793 766,254 701,967 857,448 903,140 978,001 1,356,952 1,341,654

1,074,746 1,012,032 926,345 1,089,540 1,590,732 1,478,528 1,624,971 1,618,994 1,642,774 1,730,461 1,929,836 1,931,873 2,036,375 2,144,737 2,188,241

Domestic Production of Fertilizer by Products


Urea
1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 402,906 369,299 218,064 380,457 424,677 398,619 251,168 270,134 264,686 274,392 544,913 582,438 602,222 538,942 562,026 512,767 617,095 525,595 Fiscal Year 112,568 114,880 106,064 115,970 109,276 118,188 110,071 102,523 123,020 87,649 100,822 91,739 0 0 0 0 0 0 625,121 629,869 630,054 925,900 1,306,500 1,301,100 2,108,865 2,050,278 1,902,296 2,306,110 3,103,854 3,000,313

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1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04

360,223 377,278 384,721 412,101 435,962 376,107 397,704 424,914 411,663

731,396 692,799 663,364 772,188 818,374 780,677 871,960 887,510 855,836

565,120 556,050 618,383 624,732 602,676 605,464 517,327 0 0

72,620 65,545 26,986 97,344 73,070 0 0 0 0

111,487 112,667 92,104 96,809 101,750 109,625 98,720 102,000 122,590

0 0 0 124,612 200,124 233,838 300,600 289,690 310,717

1,417,200 1,453,796 1,498,610 1,422,671 1,736,195 1,877,546 2,073,518 2,703348 2,734,028

3,258,046 3,258,135 3,284,168 3,550,457 3,968,151 3,983,257 4,259,829 4,407462 4,434,834

*: M/S Schon Group purchased the plant operated for sometime and now is closed.

MAIN FERTILIZER PRODUCER IN PAKISTAN

1. Fauji Fertilizer Company (FFC) 2. Fauji Fertilizer Bin Qasim (Pvt) Ltd. (FFBQ) 3. National Fertilizer Corporation of Pakistan (Pvt) Ltd. 4. Dawood Hercules (DH)

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FERTILIZER PRODUCTION IN PAKISTAN

Fertilizer Production Capacity in Pakistan 2002-03


000 Tones S. No. 1 2 3 4 Plant and Location Lyallpur Chemicals and Fertilizer Limited, Faisalabad Jaranwala Hazara Phosphate Pvt. Ltd. Haripur. Pak American Fertilizer (Pvt). Ltd. Daudkhel Pak Arab Fertilizer (Pvt). Ltd. Multan Company Name National Fertilizer Corporation of Pakistan (Pvt) Ltd. (NFC)12 NFC 12 NFC12 NFC NFC NFC NFC Product SSP SSP10 SSP3 Urea1 Urea4 CAN9 NP Start Year 1957 1967 1989 1998 1962 Capacity 0 90 90 346 92 450 305

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5 6 7

Pak. Saudi Fertilizers Pvt. Ltd. Mirpur Mathelo FFC Pak-China, Haripur (Presently not in operation) Dawood Hercules, Sheikpura Engro Chemical Pakistan Ltd. Dharki Engro Chemical Pakistan Limited (ECPL) Schon Pak-China Dawood Hercules (DH)

Urea Urea13 Urea5 Plant1 Urea8

1980 1982 1971 1968

557 102 445 850

(Dahirki)

Plant2 Urea 11 NPK Plant 1 Urea6

1993 2001 1982 1330 100

Fauji Fertilizers Co. Ltd., Machi Ghot

Fauji Fertilizer Company (FFC) Plant 2 Urea7 Urea2 DAP2 1993 1998 1998

10

Fauji Fertilizer Bin Qasim (Pvt) Ltd, Karachi. Urea Total Total All Products

Fauji Fertilizer Bin Qasim (Pvt) Ltd. (FFBQ)

550 446 4,272 5,753

Product Wise, Domestic Production Of Fertilizer in Pakistan


Product Wise, Domestic Production Of Fertilizer
1997-98 Urea Dawood Hercules Engro NFC Pak-Saudi NFC Pak-China NFC Pak-Arab NFC Pak-Amercian FFC Sub Total DAP Sona FFC CAN NFC PAK-ARAB AS NFC PAK-American 385 663 618 27 92 0 1,499 3,284 0 315 0.5 1998-99 1999-2000 2000-01 412 772 625 97 97 125 1423 3,551 46 339 0 436 818 603 73 102 200 1736 3,968 298 386 0 376 781 605 0 110 234 1,877 3,983 325 374 0 2001-02 398 872 517 0 99 301 2,073 4,260 67 329 0 000 Tons 2002-03 425 888 613 0 102 290 2,703 4,407 0 335 0

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NP NFC PAK-ARAB SSP NFC LC&FL J.Wala NFC Hazara Fert. Sub Total N:P:K TOTAL

293 0 0 0 1 3,894

284 4 17 21 1 4,242

261 73 73 146 1 5,060

285 78 81 160 2 5,128

306 78 84 162 63 5,187

305 75 72 147 75 5,269

Spot analysis
SPOT ANALYSIS OF FERTILIZER SECTOR Number of Units a. Public 4 b. Private 6 Total 10 Employment 7,563 Technology High Technology Source of Machinery Italy, England, Denmark, USA, Japan, Local

Installed Capacities (000 Tons) Public Sector Private Sector Total Total Investment Contribution to GDP 1,373 4,384 5,753 Rs. 87 Billion 0.40%

Fertilizer Policy 2001

Fertilizer Policy has been announced with effect from 1st July, 2001.

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In next 10 years Pakistan will need additional 2 million tons of fertilizers for local consumption.

Salient Features Policy has four parts:


Existing Fertilizer Plants New Fertilizer Plants Existing Plants Planning for expansion and BMR NPK Compounds.

For Existing Plants, annually gas prices would increase effective July 2001 to July 2006 @ Nil, 5%, 7.5%, 10%, 12.5%, 15% respectively. The feedstock gas prices are frozen for 10 yrs in case of new plants but only for 7 yrs in case of expansion / BMRE. Thereafter the price is to be $ 1.10 MMBTU or prevailing Middle East price which ever is higher. Fuel Gas price will be same as for other industrial consumers in the country. For new Investments the price of feed gas will be the Middle Eastern Price prevailing on the date of signing of the GSA or $ 0.77/MMBTU which ever is higher and a discount (less the discount of 10%) Gas will be allocated to new fertilizer plants on the principle of first come, first served basis.

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Recognizing the expected growth in fertilizer demand, the government has decided to dedicate the shallow reservoir of Mari Gas field to the Fertilizer Industry. Custom duty of 5 % under SRO: 457(I)/2004 is leviable on import of plant, machinery & equipments (not Manufactured Locally) for fertilizer Projects. Second hand machinery/plant is importable at same duty as new plants i.e. 10%. Duty free import of raw materials for NPK production i.e. Di-Ammonia Phosphate, Mono-Ammonia Phosphate, Triple Super Phosphate etc. Selling price shall remain deregulated and benefit would be passed to customers. To ensure this objective Ministerial Committee would meet when required. Reduction in withholding tax on import of certain types of fertilizer from 6% to 1%, to reduce the cost of fertilizer inputs. Withholding taxes at the time of import of fertilizer shall be adjusted against assessed income tax of the year in case fertilizer is imported by a manufacturer of Fertilizer. Tax relief: First year allowance or Initial Depreciation Allowance @ 50% of Machinery & equipment cost or as provided under income tax laws shall be allowed. Concessions as per declining in concession policy for additional feed gas in the case of expansion, BMR resulting in enhanced production capacity would be available for 5 years.

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A relief of Rs.100/- per bag in the price of Phosphatic Fertilizer.


Import of Fertilizers Product Urea AS DAP NP TSP SSP SOP 10:15:20 MOP Total 1999-00 114 21 819 122 15 22 11 5 12 1,141 2000-01 86 15 773 47 0 0 0 15 22 958 2001-02 0 32 919 26 0 0 20 5 11 1,013 000 Tons 2002-03 0 17 1,124 30 9 0 16 0 0 1,223

Supply Demand Projection Urea Deficit / Year 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 Supply Demand 4,170 4,390 4,170 4,499 4,170 4,612 4,170 4,727 4,170 4,845 4,170 4,966 4,170 5,090 4,170 5,218 4,170 5,348 Surplus -220 -329 -442 -557 -675 -796 -920 -1,048 -1,178 Supply 292 450 450 450 450 450 450 450 450

DAP Deficit / Demand 1,069 1,123 1,179 1,238 1,300 1,365 1,433 1,505 1,580 Surplus -777 -673 -729 -788 -850 -915 -983 -1,055 -1,130 40

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National Fertilizer Development Centre (NFDC)


The National Fertilizer Development Centre (NFDC) was set up by the Government of Pakistan (Planning and Development Division) in December 1977. After a brief period of aid from the United Nations Development Programme (UNDP) it has been assisted by the Food and Agriculture Organization (FAO) of the United Nations with Trust Funds from Norway (NORAD) upto May 1981, and from the Netherlands upto December, 1997. NFDC is a multidisciplinary research and development organization at the federal level that integrates disciplines such as economic planning, pricing and subsidies, privatization and deregulation, production and imports, marketing and credit, agronomy and soil science, research, extension and training. In co-operation with the various federal and provincial institutions, NFDC studies all fertilizer-related problems from the supply source to the farmers' fields, with a view to helping in the formulation of Government policies and their implementation and to give support to other institutions. Bottlenecks in fertilizer imports and production, trade and use, agronomic efficiency and impact on crop productivity are increasing both in frequency and intensity due to increasing fertilizer use consumption in Pakistan crossed the 10,000 nutrient tonnes mark in 1956, the 100,000 nutrient tonnes mark in 1966-67, 1,000,000 nutrient tonnes mark in 1979-80, 2,000,000 nutrient tonnes mark in 1992-93 and touching 3,222,000 nutrient tonnes mark in 2004-05. Per hectare average fertilizer use for cropped area increased from about 5 kg in 1964-65 to about 55 kg in 1981-82 and 147 kg in 2003-04. The existence in Pakistan of a number of agencies and organizations, working on different aspects of fertilizer production, trade, research, extension and use made it desirable for the Government to have neutral institution with the objectives to provide a common platform.

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OBJECTIVES OF NFDC
The current broad objectives of NFDC are: To provide objective and comprehensive advice to all levels of Government, to the fertilizer industry and to other parties as may be relevant, on all matters related in any way to the fertilizer sector of Pakistan and its relations with the international fertilizer community. To conduct research studies on physical and economic returns on fertilizer use to farmers, impact of input prices on crop output, deregulation/privatization of fertilizer in order to facilitate policy decisions. To conduct fertilizer use surveys at farm level to monitor fertilizer use by crops, impact on crop productivity, crop responses to fertilizers and problems faced by farmers. To monitor the status of all aspects of fertilizer use development: production, imports, consumption, prices and evaluate situation critically for the information and action by the concerned organizations, so that timely actions can be taken to effect improvement. To promote efficient, balanced and environmental friendly integrated use of plant nutrients for sustainable agricultural growth. To help upgrade the capability of fertilizer research, extension and marketing personnel in the transfer of fertilizer technology. To provide a neutral common platform to resolve contentious issues in fertilizer sector. To launch new initiatives in soil fertility and plant nutrition management.

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PROGRAMMES AND ACTIVITIES


NFDC's programmes are classified as core activities, special programmes and areas of special interest and collaboration. Core activities Constitute those regarded as the central functions of NFDC. These include data base; demand forecasting; intenrational prices; fertilizer situation reviews; (monthly, seasonal and annual); special technical notes; fertilizer use surves; crop responses; fertilizer bibliographic updates; fertilizer esearch reviews, training courses contributions to and participation in national and international fora and computerized library documentation and retrival of literature. Special programmes and areas of special interest and collaboration include:

Studies on privatization in the fertilizer sector Fertilizer use development programme, e.g. integrated crop nutrition, balanced fertilization and fertilizer use efficiency Fertilization in horticulture (e.g. fertigation, investigations with new products and application techniques) Fertilizer advisory services promotion of blends/compounds Assist soil testing laboratories

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Establishment of a regional centre on pant nutrition management and development.

ORGANIZATIONAL LINKS OF NFDC


National NFDC works in close collaboration with the Federal Ministries and their executive arms concerned with fertilizer use development. The most important among these are: Ministry of Food and Agriculture, its Fertilizer Cell; Department of Plant Protection; Pakistan Agricultural Research Council, Ministry of Finance and the credit institutions; Ministry of Industries and Production and the National Fertilizer Corporation operating public sector fertilizer plants, Ministry of Petroleum and Natural Resources, etc. At the provincial level NFDC maintains liaison with the Provincial Governments, agricultural universities and research institutes, soil testing and soil fertility laboratories and extension and training organizations, pesticides associations, importers and distributors, and testing laboratories, etc. NFDC works in close liason with private sector fertilizer producers and marrketing agencies. Some joint activities are being planned. NFDC is also represented on various committees at national and provincial level. International

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Food and Agriculture Organization (FAO) of United Nations : NFDC since its establishment is getting financial as well as technical support from FAO. NFDC is regarded as a pioneer institution of the FAO Plant Nutrition Management Service, Land and Water Development Division and is termed as a `Centre of Excellence. Agricultural Economics Institute (LEI), Hague, Netherlands : NFDC and LEI, Hague, the Netherlands have signed a memorandum of understanding for technical co-operation between both the organizations. Fertilizer Advisory Development and Information Network for Asia and the Pacific (FADINAP) - ESCAP, Bangkok : NFDC is a technical liaison office for

FADINAP and jointly had carried a number of studies, training programmes and information management/dissemination in the country. International Fertilizer Industry Association (IFA) - Paris, France : NFDC is a member of IFA and shares international statistics of fertilizer consumption, production and trade in addition to studies on Plant Nutrition Management World Phosphate Institute (IMPHOS), Morocco : World Phosphate Institute and NFDC work jointly in promotional activities particularly on balanced fertilization, establishment of soil test crop response calibration studies. International Fertilizer Development Centre (IFDC), Muscle Shoals, USA : NFDC has close technical collaboration with IFDC in human resources development and exchange of technical know-how. Egyptian Fertilizer Development Centre (EFDC), Egypt : NFDC has signed a MOU with EFDC for technical co-operation in the field of fertilizer use development activities.

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International Potash Institute (IPI), Switzerland : IPI and NFDC has close technical collaboration and some joint studies on potash use development are carried out in the country. Other International Institutions : NFDC shares information with number of national/regional institutions such as : Fertilizer Association of India, Fertilizer and Pesticides Authority, Manila, Philippines, National Fertilizer Secretariat, Sri Lanka and Arab Fertilizer Association, Cairo.

FERTILIZER INDUSTRYS PERFORMANCE


Three leading manufacturers of urea in the country have recently released their accounts for the first half of 2005. It was encouraging to note that urea off-take during these six months increased by 18 per cent as compared to the corresponding period last year. But, according to the manufactures, the demand has flattened out gradually. Still the off-take was comparable with the consumption in the pervious two years. Indigenous production of urea has improved requiring lesser import of the commodity. The demand for phosphatic fertilizer took a quantum leap registering a 16 per cent increase. Various types of fertilizers are used in the country but urea remains the commodity with in the largest demand sector. The urea market is dominantly shared by three manufacturers namely, Fauji Fertilizer Company Limited, Dawood Hercules Chemicals Limited, Engro Chemical Pakistan Limited . All the three are listed at the Karachi Stock

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Exchange. Fauji has the largest production capacity and contributed 46 per cent of the total sale in 1997 followed by Engro 20 per cent and Dawood 11 per cent. The other manufacturer controlling any significant market share is Pak Saudi Fertilizer. FFC-Jordan Fertilizer Company Limited is a joint venture between Fauji Fertilizer Company and a Jordanian company. DEMAND VS SUPPLY The demand for urea has been increasing consistently and significantly. This is due to two factors: the government of Pakistan (GoP) besides offering various incentives to the fertilizer manufacturers to keep the cost of production low also extending soft term loans to growers for the purchase of various inputs. The manufacturers have been able to take the fullest advantage of the GoP policies and have expanded the production capacities over the years. This, on the one hand, has helped the country in achieving self sufficiency in the production of urea and, on the other hand, has reduced the foreign exchange expenditure on import of the product. Consumption of urea is seasonal. In the past, during the peak consumption period, some unscrupulous elements used to indulge in black marketing of the commodity. However, with the enhanced availability of indigenously produced urea and an elaborate dealers network the manufacturers have been able to minimise such incidence. GAS SUPPLY One of the factors responsible for phenomenal increase in the indigenous production of urea is the policy of the government regarding supply of gas (feedstock) at concessional rate. The policy has benefited the country. When the first urea manufacturing plant was established in the country in 1967 by Exxon Chemical, its installed capacity was only 148,000 tonnes per annum. The policy has encouraged establishment of new units and expansion of installed capacities by the manufacturers. The total installed capacity in the country now exceeds 3.2 million tonnes.

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This capacity will be further increased by one million tonnes by the end of this year when the current expansion by ECPL and FFC-Jordan starts commercial production. However, some of the analysts believe that the advantage of supply of gas at concessional rates to fertilizer manufacturers is not being passed on to the farmers. In their views, at present the international prices of urea are lower than its domestic price. And therefore, they suggest that efforts should be made by the manufacturers to lower urea price. The manufacturers do not agree with this. They say that they have been importing expensive urea in the past and selling at lower prices virtually subsidising urea sale a responsibility of the government. Therefore, if the price of urea has declined in the international market, they should not be asked to lower the domestic price. In their views, it is a temporary phase as there is an over supply situation in the global markets. At this time the GoP must protect the local industry.

NEED FOR NITROGENOUS FERTILIZER Since the lands in the country are deficient in nitrogenous material, urea has to be used to overcome the deficiency. The urea sale is directly linked to the purchasing power of farmers and the availability of credit to them. The cash flow to farmers is directly related to the prices of agriculture produce and the yields achieved during the preceding year. When there is a bumper crop and support prices are higher, the growers get more cash inflow. During the last few years, the income of cotton growers was adversely affected due to curl leaf virus (CLV) attacks on cotton crop. Following the losses incurred to the cotton growers on various grounds, many of the farmers, particularly in Punjab, in order to avoid further losses, switched over to sugarcane cultivation. But, they could not get the similar income mainly because the climatic conditions of the area were not suitable for the cultivation of sugarcane. The

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result was that per acre yield was low and recovery of sugar was also below than the average recovery achieved in Sindh the main sugarcane growing belt in the country. The manufacturers also say that over the years, urea production capacity in the country has been increased which has gradually lowered the import bill of urea. While many other industries enjoying similar incentives have not taken the fullest advantage of the GoP policies, it is most probably, the fertilizer industry, which has exploited the best advantage of the policy. The country is almost self sufficient in indigenous production of urea. The industry has achieved the stage of potential earner of foreign exchange for the country. The export of surplus production can be done by the urea manufacturers to pay for the import of DAP type fertilizer and completely free the GoP from its import. With the commencement of DAP type fertilizer by FFC-Jordan the import bill of the commodity will be reduced partly because the country will be importing a major portion of the raw material from Jordan. Some of the industry experts say that the country has exported urea in the past and, therefore, concerted efforts should be made to make this a regular export commodity. They say that by the end of this year the installed capacity in the country will be increased by one million tonnes. Therefore, the country is expected to achieve surplus in 2007 may be a temporary phase but the country must make the best efforts to exploit this potential. According to these analysts, during the last few years, the capacity utilisation of urea manufacturing units remained low on account of load-shedding of gas. To substantiate their point of view they quoted the example of Dawood Hercules. During 1997 the capacity utilisation was around 82 per cent. The plant has been running above designed capacity in the past. They also said that while all the other urea manufacturing unit had increased their installed capacity, Dawood Hercules had not been able to expand its capacity in spite of increasing demand for urea in the country. However, the other group believes that the industry is still to achieved the status of potential export earner. The quantities imported over the year have varied sharply. While

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the total import of urea in 1994 was only 78,000 tonnes, and import of another 450,000 tonnes is expected before the end of the year. LOGISTICS During the peak demand period the three urea manufacturers, Engro, Fauji and Pak Saudi, face serious logistic problems. This include availability of trucks and railway wagons, heavy traffic and frequent traffic jams on National Highway as all these units are located within a radius of 100 kilometers. The manufacturers have been demanding, for a long time, of the government to expand the roads but the problem still persists.
Market Fauji Engro Dawood Others Share 60% 20% 10% 10%

Engro Chemical Pakistan Limited, formally known as Exxon Chemical Pakistan, was established in 1967 with an installed capacity to produce 147,000 tonnes of urea annually. The Company has already expanded the urea production capacity to 750,000 tonnes per annum. After the completion of current expansion programme, the annual production capacity will be enhanced to 850,000 tonnes per annum besides improving plant energy efficiency and strengthening the environment conservation measures. The delay in manufacture and shipment of some critical equipment by an overseas supplier has delayed completion of project from March 2004 to last quarter of the year. The project cost due to the change in scope and delayed commissioning has increased from US$ 59 million to US$ 72 million. However, according to the Company sources, the project economics remain unchanged due to enhancement in gas utilisation efficiency. After undertaking major expansions, ECPL is diversifying its operations. Engro Paktank Terminal Limited, the 50:50 joint venture of the Company with Royal Pakhoed of The

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Netherlands was formally inaugurated in May this year. The jetty and chemical storage facility at Port Qasim was built at a cost of US$ 65 million. Engro Asahi Polymer & Chemical Limited (EAPCL) is a joint venture of ECPL with Asahi Glass and Mitsubishi Corporation of Japan for the production of PVC resin. The project is also being built at Port Qasim. It will have a capacity to produce 100,000 tonnes of resin annually. The project cost is estimated around Rs. 4 billion. Dawood Hercules Chemicals Limited has not been able to enhance its production capacity lately. The Company operates on a gas network which is primarily domestic consumer oriented. Any increase in demand for gas or reduced gas availability, due to the fault in the system, immediately results in diversion of supply to domestic consumers particularly in winter months. fertilizer plants in some other areas were able to achieve at least 10 to 12 per cent production above the designed capacityindicating capacity utilisation at 85 per cent as against a capacity utilisation of 76 per cent during the corresponding period in 2004. It is believed that the average capacity utilisation for the year will improve to 90 per cent provided there is no load-shedding of gas. However, to achieve capacity utilisation above designed capacity the Company needs supply of gas at optimum level. This will not be possible without improving the pipeline network. OUTLOOK By the end of year 2005, approximately one million tonnes of additional urea manufacturing capacity is expected to come on stream in the country. This would not only improve the availability of the product but would also result into greater competition. With the present downward trend in the international price of urea, the ability to recover escalation in cost through higher prices will be limited. To remain successful in the tough competition it will be necessary for the manufacturers to focus on cost control and improved productivity.

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The policies of the government assign the highest priority to allocation of gas for the fertilizer industry to boost agriculture production in the country. It is necessary that the government abides by the policy and meets industry demand for allocation of additional gas at reasonable price. To ensure availability of urea at competitive prices the government must avoid any escalation in the gas (feedstock) prices in the near future as the government intends to enhance production of food and cash crops in the country. Besides, the industry has become a potential foreign exchange earner. Efforts should be made to enable the industry to earn foreign exchange after freeing the country from its import liability.

BOARD OF DIRECTORS
Chairman Lt. Gen. Syed Muhammad Amjad, HI, HI(M) (Retired) Chief Executive Officer and Managing Director Lt. Gen. Mahmud Ahmed, HI(M) (Retired) NOMINATED BY DIRECTORS Dr. Haldor Topsoe Mr. Qaiser Javed Fauji Foundation Fauji Foundation 52

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Brig. Arshad Shah, SI(M) (Retired) Mr. Tariq Iqbal Khan Brig. Aftab Ahmad (Retired) Brig. Ghazanfar Ali (Retired) Syed Zaheer Ali Shah Mr. Khawar Saeed Dr. Nadeem Inayat Mr. Istaqbal Mehdi Brig. Munawar Ahmed Rana (Retired)

Fauji Foundation National Investment Trust (NIT) Fauji Foundation Fauji Foundation Government of Pakistan (GOP) National Bank of Pakistan (NBP) National Investment Trust (NIT) Pak Kuwait Investment Company Fauji Foundation

Responsibilities, Powers and Functions of Board of Directors


The role and responsibilities of the chairman and the chief executive officer are distinct, clearly defined and documented and are carried out separately by the two officers. The board exercise its powers to carry out its duties with a sense of object judgment and independence in the best interests and the company has circulated a statement of ethics and business practices to establish a standard of conduct, as a model corporate citizen , for the board and employees of the company. Each year, the director attend the orientation coerces of their duties and responsibility to manage the affairs of the company on behalf of the shareholders; these courses are also attended by the management of the company. The board has also adopted vision and mission statements and an over all corporate strategy for the company and formulated policies including risk management, procurement of the goods and services marketing ,terms of credit and discount,

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acquisition and disposal of of fixed assets and write-off inventories, bad debts, loans and advances, investments and disinvestments of funds with maturity period exceeding six months, borrowing, donations, charities, delegations of financial powers, transitions with related parties, loans and advances, human resource management including succession planning , healthy ,safety and environment . decisions on material transitions or significant matters are documented through resolution passed at their meetings and circulated for approval. The board monitors the operations of the management through three standard committees. Implementations of the decisions, policies and strategies along with maintenance of their record have been delegated to the management under the supervision of the Chief Executive and Managing Director of the company and is executed and controlled through management committees.

Management
Chief Executive Officer and Managing Director Lt. Gen. Mahmud Ahmed HI(M) (Retired)

GENERAL MANAGERS
General Manager Technology & Operations Mr. Abdul Waheed Sheikh General Manager Finance (Operations) Mr. Abid Maqbool General Manager Marketing Dr. Muhammad Sadiq General Manager Admin

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General Manager HR General Manager Technical Operations Mr. Abdul Waheed General Manager Industrial Relations General Manager Plant (Goth Machhi) Mr. Tahir Javed General Manager Plant (Mirpur Mathelo) Syed Iqtidar Saeed
COMPANY SECRETARY

Brig. Muhammad Saleem Suleman SI(M) (Retired)

Meetings of the Board.


The chairman presides over meetings of the board and encourages the participation and contribution of executive and non executive directors. The directors meet at least once in each quarter. Additional meetings are called upon when required. In 2004 a total of seven meetings were held which were also attended by chief Financial Officer and the Comp[any Secretary. The chief Financial Officer and the Comp[any Secretary are the employees of the company and are not entitled to cast votes at the meetings. Written notices of the meetings along with agenda and its details were circulated seven days in advance. Minutes of each meeting are recorded and circulated by the company within 30 days. In these meetings the issues generally discussed are: Approval of quarterly financial statements Approval of half yearly financial statements

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Approval of annual financial statements Annual business plans Annual budgets Quarterly forecasts and annual forecasts Cash flow projections Performance monitoring Internal audits reports External audit recommendations Agreements and contracts Amendment of laws Agreement with staff unions Collective Bargaining Agents (CBA) Status of payments of debts and obligations and repayments of loans The board, after each meeting, gives the recommendations to strengthen and formalize the corporate decision making process.

Meeting of the Marketing Division.


All the heads of departments meet every Tuesday to

To present the weekly reports to GMM To discuss the sales situation To look at the competitors activities To monitor the performance against monthly and annual plans To monitor fertilizer supply and demand situation. Tries to devise strategies to over come problems if any.

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In every month a monthly meeting is held in which reports for the month of all departments are presented to GMM. In monthly meetings the targets and plans for next month are also set. In these meetings monthly sales of FFC against the same period of last year and monthly sales of competitors are also analyzed. Sales of all regions are rewieved. Sales performance of all sales officers are compared with targets Best sales officer of the month is selected and rewarded. Expenses for the month are approved. These meetings are presided over by GMM. All these meetings are held at Lahore marketing office. Annual meeting of all the managers of Marketing Division is also held.

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Marketing Network

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Departments in Marketing Division


Marketing Division Lahore contains the following departments. These departments are listed according to the schedule of my internship schedule at the office. 1. Distribution 2. Warehousing 3. Administration 4. Human Resources 5. Industrial Relations and Welfare 6. Procurement 7. Finance 8. IT Unit 9. Technical Services 10. Planning 11. Sales Promotion 12. Sales North Zone 13. Regional Office Lahore 14. General Manager Marketing

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Introduction of All the Departments: Sales Promotion


No of the executives Department Head Senior SPO SPO No of the Staff Total employees Objectives To create ,augment and maintain the demand of FFBL and FFCL products To enhance and sustain brand image and corporate image Improve company visibility in the mind of consumers To safe guard company logo To strengthen brand loyalty 3 Mrs Nabila Mr. Sultan Ahmad Mr. Iqbal Ahmad 3 6

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Sales North Zone


General Manager Marketing Senior Sales Manager North zone contains these regions Total No of Management Employees (lhr. Off.) Regional officers No. of staff Employees Total Regions 1. Lahore 2. Faisalabad 3. Sahiwal 4. Peshwar 5. D.I.Khan 4 5 3 5 Dr. Muhammad Sadiq Zia Mahmood Minhas

Functions of North zone


Conduction sale forecast for regions include in North zone Monitoring sales allocation as per decided ratios Monitoring daily sales Studying competitors price structure Co-coordinating regions included in North zone Managing sales force of North zone Checking and inventory Coordination wit top management

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Ensuring availability controlling warehouses Monitoring of product Monitoring and keeping record of turnover of productivity

REGIONAL OFFICE LAHORE

General Manager Marketing Senior Sales Manager Regional Manager Sales officer Lahore Technical sales Officer No. of staff Employees

Dr. Muhammad Sadiq Zia Mahmood Minhas Mr. Arshad Mahmood Mr. Masood Mr. Zahid Nawaz 3

The regional office Lahore is a front line department. It is actually involved with direct sales of fertilizer and interacting with dealers. The regional manager, regional TSO and the sales officer Lahore district are working with assistance of stock members .For three days Tuesday Thursday the officers are on field visits and for rest 2 working days they perform their office work. The districts included in Lahore region :

Lahore Region
1. Gujranwala 2. Sheikhupura 3. M.B.Din 4. Rawalpindi 5. Sialkot 6. Hafizabad

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Activities
Monitoring product wise /district wise achievement with respect to targets Monitoring current market situation with respect to fertilizer industry Monitoring competitors activities in detail Managing warehouses, their sales and closing stocks Appointing and terminating dealers as regard to their performance, literate goal is to have a strong dealer network

Distribution Department
General Manager Marketing Senior Distribution and Warehousing Manager Senior Executive Distribution Executive Distribution Distribution Officer No. of staff Employees Dr. Muhammad Sadiq Mr.Shakeel Ahmad Mr. Riaz Ahmad Mr. Afzal Mughal Mr. Salman Ali 3

Distribution department is of the major department helping the sales force. The primary function of distribution department is to ensure effective and efficient distribution of product from plants up to the final customers.

Objectives of Distribution Department


Ship out entire production of FFC and FFBL plants and imported fertilizer in accost effective manner(3.4 MT approx) Satisfying 3580 dealers , 1632 direct customers and 169 warehouses.

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Truck generation for 1556 sales points. Plan and undertake self imports/exports and ensure prompt handling , quality packing ,correct weight, timely delivery and documentation. Monitor packing availability and arrange safe storage of surplus production during lean months. Follow up of product quality complaints. Coordinate with plant management to ensure smooth operations. Maintain liaison with Pakistan railway , NLC, port authorities and suppliers.

Transportation Arrangements
Private trucking contractions NLC Pakistan railways

Dispatches 2004
Fig in KT

Ex Goth Macchi Ex Mirpur Mathelo Ex Bin Qasim Ex Port Total

Road 1348 652 871 244 3315

Rail 111 73 85 12 282

Total 1459 725 956 256 3397

Ratio 92:08 90:1 91:09 95:05 92:08

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Customer served

Dealers Direct customers

3580 1632

Total

5212

Warehousing Department
General Manager Marketing Senior Marketing Service Manager Senior Distribution and Warehousing Manager Warehousing Manager Senior Executive Warehousing Warehousing Manager No. of staff Employees Dr. Muhammad Sadiq Mr. Asad Sultan Mr. Shakeel Ahmad Brig.Retd. Ghulam Rasool Sahi Mr. Riaz Ahmad Mr. Ahsan khan 3

The ware housing department is involved in completing the formality For hiring And dehiring of warehouses (on need basis) , appointment of handling contractors, watch and ward contractors. The record of inventories is maintained and physical inspection of the warehouse and product are carried out to ensure safety and security. This department works in collaboration with distribution department.

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Functions of warehousing department


Coordinating of warehouse department with regions regarding warehouse selection, training of supervisors, planning capacity of warehouses To conduct inspections of the warehouses on planned and surprise basis Each warehouse is inspected around 17 time a year. Warehousing department is considered with processing of o Lease agreements o Watch and ward agreements o Handling agreements o Watch and ward bills

Conduct the training of warehouse supervisors. Preparing the operational , capital and revenue budgets on yearly basis. Formulating warehouse plans. Preparing weekly capacity reports.

Zone wise Warehouses and capacity

Zone

North Central South Total

Regions 5 5 4 14

Warehouses 63 53 49 165

Capacity MT 136700 119400 78400 334500


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Type of Warehouses
Strategic Warehouses Permanent warehouses Temporary warehouses Purely temporary warehouses

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Administration Department
General Manager Marketing Administration Manager Administration Esxecutive No. of staff Employees Dr. Muhammad Sadiq Col. Retd. Muhammad Khalid Maj. Retd. Khaani 3

Administration department is involved with conducting the administration function of the fauji fertilizers of the marketing division

Functions
Provision and maintenance of transport i.e. Cars, Jeeps and Poor vehicles Ensure availability of utilities like gas, electricity, telephone, E-mail, and Photocopy facility. Under take protocol duties. i.e. reception, transport, and ticketing etc. For company gussets and officers Ensure the implementation of company policies and rules Provision of uniform to entitle staff (Qasids, Chowkidars, electricians and drivers) Ensure proper maintenance of the office premises and guesthouses Take disciplinary action under the rules where necessary Disposal of unusable assets of company Managing three major types of transport system related to marketing division; Company maintained Company assisted cars/Jeep Pool transport

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Transport holding
Holding of marketing division transport is as under Company assigned cars Company assisted cars Company maintained cars 23 91 63 Total=177

Human Resource Department


General Manager Marketing Administration Manager Senior Executive HR HR Officer-I No. of staff Employees Dr. Muhammad Sadiq Col. Retd. Muhammad Khalid Col. Retd. Asad Sukhaira Mr. Qamar 3

The FFC Management, acknowledging the importance of human resources has always placed personnel management at the top of its priority list. The Human Resources Department, therefore, right from the inception of the Company has played a vital role in steering the Company through all its phases, operations and progress. The functions of Human Resources Department vis-a-vis personnel management and human resources development are going side by side and it is due to the progressive approach and dynamic philosophy of the management that Personnel Management remains abreast with the latest style of management ensuring high level of motivation and satisfaction of the work force under varied situations. Personnel policies are kept updated and are periodically modified to respond to the latest socio-economic changes and market trends of the country. 69

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Hiring quality manpower, keeping them happy, satisfied and motivated are the pillars of the Human Resources Department; justice, fair play and merit oriented treatment are some of the ingredients of processing cases by the Human Resources Department. For Human Resource development, another aspect which receives its due share is training. The employees are exposed to various kinds of cross training, technical courses, management courses, workshops and seminars both at home and abroad. At Plant site, the Company has a Technical Training Centre, which is unique, and the only centre in Asia having a true replica of the Plant for providing realistic training as far as possible, to the employees. Employees' welfare has all along received due consideration by the Management. A number of agreements have been signed with CBA Workers Union, resulting in handsome remuneration packages to employees. The company, since its inception, has undertaken five salary revisions for Management employees, to remain amongst the top paying organizations of the country. It is due to the sheer sincerity, welfare oriented policies and concern for every single employee that there has never been any strike, lock out or go slow in FFC. Human resources department of the marketing division is responsible for the employees related to marketing division. Maintaining their attendance and payroll of the staff while officers and executives get their pay directly from head office. Functions Work out warehouse supervisor visors requirements in consultation with regional manager and arrange recruitment and transfer activities according to head office instructions. 1. Maintain up to date personal records, statistics including leave records , relating to management and non- management employees. 2. Interpret company policy and provision of necessary ruling where required.

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Handling cases relating to following subjects


Employment/appointment of non management employees. Temporary / contract / daily wages according to authorization. Promotion of non management employees Pay and allowances of non management employees. Leaves (annual, causal, special, sick) are managed for all employees. Transfer claims of all employees. House/rent allowances advances Also the House building loans

Industrial Relations and Welfare Department


General Manager Marketing Administration Manager Senior Executive IR & W No. of Staff Employees 2 Dr. Muhammad Sadiq Col. Retd. Muhammad Khalid

The IR department in organization is formed under the IRQ 69 [industrial relation ordination] of Punjab labor laws act and is under the approval of Management & joint Labor Department of Punjab Govt .IR basically deals with the Labor laws implication in an organization and has to negotiate legislatively with the CBA certified labor union at the office .The criterion for formation of IR department is a office having at least 50 employees and its provisions given in the Punjab as well as GOP labor laws. The IR department not only negotiates with the labor unions but also responsible handling with the labor

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One of the functions of IR department at FFC to tackle with all types of court problems. There are labor courts at regional level .At present there are 24 courts in Pakistan. Any employee who may have a complaint about the management can go to the court so IR department representative follow the case

Major Activities
Leave records of workers Appointment records Record of upgrading Annual increment record Vertical performance appraisal records Staff no allocation

Procurement Department
General Manager Marketing Administration Manager Senior Executive procurement Manager Procurement No. of Staff Employees 2 Dr. Muhammad Sadiq Col. Retd. Khalid Col. Retd. Ghyoor

Procurement department at marketing is responsible for the purchases. Purchases for the following offices are made by Lahore Marketing Division,3 zonal officies,14 regions,5 FAC,s,Finance and distribution offices at Goth Macchi ,Mirpur Mathelo distribution office at FFBL port and head office requirements

GOALS

To procure quality goods at the most economical and competitive rat

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FUNCTIONS
Quality, Economical and timely procurement of items /spares for marketing division and plants ensuring complete backup support /after sales services. Price enquiry of different items to estimate the price so that the budgeted amount may be endorsed on the PR before initiation Disposal of obsolete /surplus/scrap material Continuous updating of reliable vendors list for both plants and marketing division

PROCEDURES INVOLVED IN PROCUREMENT STEPS


Raising of purchase request Approval of PR Request for quotation Bid opening Comparative statement Placement of order Delivery receipt of goods Verification of bills against orders Final payment

IT DEPARTMENT
General Manager Marketing Administration Manager Senior Executive IT Dr. Muhammad Sadiq Col. Retd. Khalid Mr Sherazi

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No. of Staff Employees Information Technology unit was properly setup in FFC Marketing division Lahore. IT unit is one of the most important departments working at marketing division Lahore. The Unit has to play a leading role in the marketing division in order to enable all the department to perform all their functions effectively and efficiently .It enables the management to make timely decisions.

OBJECTIVES OF IT UNITS
To meet computing needs of all the departments of all the departments of the marketing divisions. To design and develop, efficient, effective and user friendly information systems To provide the maintenance services and proper updating of all these systems To properly cope with the security and ethical challenges related to information technology and information system To design proper feed back and control procedures toward achievement of its goals.

SYSTEMS DEVELOPED BY I.T UNITS


Sales accounting system General accounting system Order processing system Regional information system Sales promotion system Distribution management system Procurement system Human resource system 74

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Finance department
The finance department working at marketing division Lahore is responsible for all the sales collections either sales are made directly through plant or through warehouses. the finance department is divided into two sections. 1. General accounting 2. Sales Accounting

Specific responsibilities of General accounting


Payroll of permanent and temporary staff employees Deduction of income tax from payroll and deposition in govt. treasury. Forwarding detailed of provident fund contribution of permanent employees to head office. Reimbursement of regional imprested/distribution imprested. Forwarding of L/C opening request to head office for import of fertilizer. Processing of export related documents. Deduction of income tax from various supplies and deposit into government treasury. Maintenance of books of account including fixed assets ,supplies , employees etc Payment of telephone , electricity and medical bill Payment in respect of bags and line for imported fertilizers Clearing and forwarding charges in respect of import of fertilizer

Specific responsibilities of the Sales Accounting


Maintenance of dealership records 75

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Processing and banking of sales and proceeds received from field force for the sale of fertilizer Transfer of data to plants for shipment Transfer of funds to head office recording of invoices for sales ex-warehouses Receiving data from plants for direct sales Processing of bank Guarantees for secured credit sales Monitoring of unsecured credit sales to fauji sugar mills/forms Preparation of pricing and discount structure for various fertilizers Receiving data from plants for warehouse shipment Recording of stock movement reports Overall reconciliation of stock movement with intimation of head office Follow up receivables for sale through rail Recording of stocks receives from FFBL for sale on their behalf Sending the information regarding dealers balance recovery of receivables on various accounts to field force for

Annual Business plan of FFC Review and development of


Historical data Key assumptions Inputs from regions

Review meeting
SMs/RMs/Deptt.Managers GMM Collation and submission to Head office, review by management, Board of directors, approval

Budgetary control
Circulations to cost controllers

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Quarterly budget variance reports Monthly revised cash flow statements Review of import requirements of fertilizer

FFC related statements/ reports Daily / fortnightly


Remittance status Sales status

Monthly
Trial balance and related schedule Receivables report along with age analysis Revised cash flow statements Finance dept progress report Capital budget utilization statues Progress report of sales and w/h dispatches Stock report to insurance company and banks Bank reconciliation statements Tax deduction at source Dealer network status report

Quarterly
Budgeted vs actual expenses comparison Performance review of marketing operations

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Yearly
Trial balance and related schedule Proposed capital and revenue budget Inputs for tax returns Inputs for companys annual reports

Technical Department
General Manager Marketing Technical Services Manager Technical Services Executive Services Officer Dr. Muhammad Sadiq Mr. Riaz Ahmad Mr. AurangzaiTechnical Mr. Naseem Ahmad

Technical department is providing support function to sales. Company is providing technical services all over the country free of cost. Senior technical executive who is reporting to SMSM heads the technical department. The 14 technical officers are serving in 14 regions all over the country in coordination with sales officers. Mission Statement of Technical Department Help the farmer optimize utilization of his resources to rejuvenate farm productivity and increase his income

Objectives
Farmer education /training Dissemination of latest and complete package of technology Promotion of balanced fertilizer use Focus on increasing farmers income Counter fertilizer misconception

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Enhancing crop yield/overall crop production Supplement government effort for agricultural

Functions
Establish proper linkage sales and technical services Increase and faces on farm management expertise Professional development on personnel Collaborative research

Farm Advisory Services


Fauji Fertilizer Company Limited has been providing Agricultural Advisory Services to the farming community throughout Pakistan since 1981, for increasing the agriculture production in general and the farmers economic returns in particular. Our organization in pursuit of its national commitment and moral obligation maintains regular contact with farmers and Agricultural Institutions to ensure constant and efficient transfer of latest technology. The company is providing quality farm advisory services all over the country through its 5 Farm Advisory Centers and 14 Regional Technical Services Officers. Farm Advisory Centers are located at D.I. Khan, Jhang, D.G. Khan, Mirpur Khas and Kasur. Each centre has a team of five Agricultural Experts, providing multifarious advisory services through crop demonstrations, field days, farmer meetings, village meetings, crop seminars, farm visits and group discussions. All the centers are fully equipped with modern sophisticated computerized Soil & Water Testing Laboratories and high-tech extension equipment. Moreover, FFC has also established a micronutrient testing laboratory at Farm Advisory Centre Jhang having Atomic Absorption Spectrophotometer and other analytical instruments. Soil Testing is a valuable tool to propagate appropriate and balanced use of chemical fertilizers and to identify soil problems. Soil/water samples are collected from farmers fields and analyzed in the laboratories. Fertilizer recommendations are developed on the basis of soil analysis and recommendation reports are delivered to the growers for proper and balanced fertilizer use. The soil/water testing and micronutrient

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analysis facility is offered free of cost. Besides these five farm advisory centers, we have 14 Technical Services Officers based at 14 Regional Offices of FFC spread all over the country extending these services in their respective areas. To further strengthen our advisory services and facilitate our farmers, we also publish crop, vegetable, orchard brochures, agro-grams, posters and pamphlets containing latest information regarding production technologies of crops, and orchards grown in Pakistan. For a stronger direct link and timely guidance of farmers, we publish a quarterly Urdu News Letter Zari Report containing season specific information regarding crops, fruits, vegetables, improved agronomic practices and articles on agricultural issues. Following is the list of crop brochures available with us:

Wheat Brochure

Cotton Brochure

Sugarcane Brochure

Rice Brochure

Maize Brochure

Potato Brochure

Mango Brochure

Citrus Brochure

Banana Brochure

Apple Brochure

Vegetable Brochure

Guava Brochure

Oil Seed Brochure

Salt-affected Soils Brochure

These brochures and Zari Report are also available in the Kashtkar Desk of our website .

To improve the fertilizer use efficiency and to obtain optimum crop yields, a Fertilizer Guide Book has also been published containing comprehensive information on various fertilizers available in Pakistan, their application methods and their economic use. FFC has also adopted the pragmatic approach of telecasting crop documentaries on PTV before the onset of sowing season of major crops. In these documentaries all the components of crop production are covered with sufficient elaboration. Cotton, wheat, sugarcane and rice documentaries can be viewed in the Kashtkar Desk of our website.

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We encourage our farmers to get registered on our mailing list by sending a request in writing or through e-mail at the following addresses to receive copies of our published material free of cost. For any further information or agricultural advisory service, please visit any of our nearest Farm Advisory Centers or Regional Offices closer to you.

Technical Services Department


(Marketing Division) Fauji Fertilizer Company Limited Lahore Trade Centre, 11-Shahrah-e-Aiwan-e-Tijarat, Lahore Phones: 042 6365119
Farm Advisory Centre D.I. Khan Farm Advisory Centre Jhang

Faqir Manzil, Dial Road, D.I. Khan Jhang Phone: 0961 741701

Near Chenab College, Chiniot Road,

Phone: 0471 - 671118

Farm Advisory Centre Kasur

Farm Advisory Centre Vehari

Faqiriay Wala, 3 km Khudian Road, Kasur

2.5 km, Khanewal Road, Vehari 81

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Phone: 0492-671848, 0492-2003977

Phone: 067-3361913, 3360223

Planning Department
The planning department is the integral part of fauji fertilizer company. Senior executive planning who is responsible to SMSM ,heads it. The department coordinate the activities of all other departments within marketing division .Major responsibility of the department is collection of information about competitors and analyzing their strategies.

Functions
Coordination and development of annual business plan Provision of historical information to regions and senior sales managers for developing sales forecast Finalizing sales forecast with coordination related sales force Preparation of fertilizer data book Monitoring international fertilizer price trend Preparing Pakistan industry Urea market participation reports Chairmans report for board of directors meeting containing analysis,FFC performance And industry situation. These reports are prepared on need basis Preparation of Fertilizer Industry Report Reviewing FFC sales performance on quarterly basis Develop plans for training of officers Monthly analysis of FFC ex-plant road and rail fright analysis

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Policy Formulation Procedure


At FFC, polices are devised at the peak level. Board of Directors and Executive Committee devise strategies keeping in view the vision, mission and the objectives of the company. These strategies are executed according to the instructions of top level of hierarchy. Top management and middle management are given powers to carry out the operations for the achievement of long-term objectives. They encourage the views and suggestions of employees as well. It helps in the effective implementation of the formulated strategies.

Corporate Governance Practices


Good governance has always been vied as an inspiration by the board in enhancing the timeliness , accuracy, comprehensiveness and transparency of financial and non financial information and the board endorses the practices contained in the code of corporate governance of the listing regulations in performance of the boards duties and enforcement at all management and non- management levels.

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Corporate responsibility for the overall strategy , assets management and operations of the company and for identifying and overcoming any challenges , business and macroeconomic risks faced by the company and devising business ventures for sustained growth in long term profitability of the company aimed at enhancing the shareholders returns.

Managerial Policies:
AUDIT PRACTICES
A number of excellent manuals are available for the professional auditor or the member of a directors examining committee who wishes to familiarize himself with specific audit techniques. Good auditing can be said to consist of substantial verification of the accuracy and completeness of a FFC records and of the safety and efficiency of its operations. In FFC most direct form of auditing is simple rechecking have a second person redo what someone else has already done. In addition to this, some direct spotchecking has an important place in the audit program even where controls are well developed.

POLICIES FOR ATTRACTING DEPOSITS


Although management and directors of FFC do have absolute control over the level of their deposits, they can never the less influence the amount the FFC hold. Because

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deposits are so important to the profitable operation of FFC, the FFC tends to compete aggressively for them. Among the factors determining the level of deposits in a FFC are some that the FFC usually cannot affect significantly, some of the leading are monetary and fiscal policy and the level of general economic activity.

POLICIES REGARDING EMPLOYEES


Some of the policies adopted by the FFC regarding employees and personnel are as:

RECRUITMENT The standards set by FFC when it first selects its employee largely determine the caliber of the staff in the future. The FFC urges the recruitment of several young MBAs at competitive salaries. There is a known need for officer replacements in five or 10 years, it behooves management to look for prospective employees who are believed at the outset to have officer potential because of their education, aptitude, interest or previous experience for clerical personnel, the FFC maintains close relationships with guidance directors of local high schools and colleges it also encourages employees to bring in their friends and it see to it that students have opportunities to visit the FFC and head about some of the advantages of working there. The FFC allows summer employment programs to allow college students to see the challenges of fertilizer careers and are always alert for able and interested people employed at other companies or in other fields.

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TRAINING
The newly hired employee generally starts as a clean state on which nothing has yet been written. The employees attitude towards the FFC and job are shaped by the first few weeks of experience. In the process of learning the first few simple tasks the employee grasps the relationship between what he is doing and the work of the department or the FFC as a whole. New employees have a fundamental need for a broad idea of their job- in short for orientation. As we can say, good training is an art if not a science and should be entrusted only to those within an organization who have an aptitude for it or who have received special training in the instruction of others. Thus FFC emphasizes both cases i.e. to challenge the employees so that they will continue to be interested in FFC and will realize the need for continued training as their responsibilities become greater.

SALARY (PAY SCALES)


The principal criteria for a well considered salary policy are, first, the relationship of the FFC salary scale to salaries paid for comparable jobs in the community and the industry and, second, the relationship of the salary paid to one person to that paid to others for jobs of comparable difficulty within the FFC. The salary administration of FFC is reasonable as at many factors contribute towards the working conditions job security, prestige and opportunity for advancement all enter into the competitive package. FFC provides fringe benefits to or better than those offered in other industries pension plans, hospitalization, and group life insurance are the rules prevailing in the FFC. A more effective incentive is a well designed profit sharing plan with benefits that vary from year to year in direct proportion to the financial success of the FFC operations.

COMMUNICATION

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A good deal of verbal interchange takes place in FFC each day. It is a two way street. The competent officers discuss rather than directs, listens as well as interacts. The FFC makes the communication channel more effective by staff meeting eventually it is an extent ion of the conversational or discussion technique but embraces a larger segment of the organization. Such meetings are regular features of efficiently operated FFC and take a wide variety of forms, ranging from daily or weekly officers meetings to annual weekend conferences. The major portion of communication necessary for the day to day operations of a FFC consists of simple person to person conversation more complex ideas, however, gain clarity if they are put in writing. Thus the FFC is talented in the ability to write clearly which is an invaluable management talent that needs constant practice and development.

EDUCATION:
FFC focuses on the higher quality of education. The officers employed in the FFC are mostly graduated from either foreign universities or some of the leading universities in the country.

MOTIVATION LEVEL
Job design for motivation is another personnel approach that has been increasingly emphasized in recent years. Job contents, methods and relationships are structured not only to satisfy technological and organizational requirements but also to accommodate human needs for meaningful and self-fulfilling work. Jobs are being designed to fit the people who hold them in the hope that greater employee motivation (which is essential to higher productivity) will result. Sensitivity training and / or organizational development programs have been used to aid in the broad development of Top executive talent and teamwork.

RETIREMENT

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The FFC does not emphasis on having regular employees. Mostly the employees are hired on contractual basis, making them feel insecure about their jobs. Therefore most of the time the employees are interested in finding secure and more appropriate job.

GROWTH OPPORTUNITIES
FFC provides growth opportunities to its employees and officers, as it deals with many leading institutions.

Major managerial policies, practices/styles


FFC has the strong management system to run the business. Today FFC is one of the most successful companies and its all due to its superb managerial policies. There are many planned policies which are adopted by the company.

Human Resource Policy


FFC has strong human resource policy. The management believes that their employees are major assets of the company. Just because of this policy the company continues to benefit from the efforts of its valuable people, who are actually, the strength of FFC through training and development activities the human resource policies aim at the improved working conditions all over the organization. The various personnel strategies can be that the employees are chosen solely on the basis of merit and they are given monetary rewards and incentives with a view to increasing the commitment and motivation of the employees. Although the salaries are not really competitive if you look at the market scenario yet the employees are quite satisfied as they are working in an excellent environment and enjoying as an employee of a market leader.

Marketing and Sales Policies

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Marketing and sales departments serve as backbone in the company. FFC has fully planned and organized marketing and sale policies. Meetings are held where decisions are taken for the efficient functioning of the companys marketing and sales areas because the company depends a lot on its marketing and sale policies. Marketing budget is carefully determined and sales people incentives and salaries are reviewed from time to time. There are certain other essential things about the sales strategies. Products are sold throughout Pakistan with no change in prices anywhere. In case of consumer products the freight are born by the company. The customers are offered no discount and also products are sold on cash basis. In case of industrial products freight are the responsibilities of the customer. Moreover, the cost of change in design is charged to the customer. Marketing, however, supports all these sales strategies by product development through the creation of public awareness, promotion and customer contacts.

Backward Integration Strategy


FFC follows the backward integration to support their business. They try to acquire the related companies or part of business to give a boost to the business growth.

Financial Policies
FFC has the well established rules for their financial transactions. One of the most important strategies in this regard is of investment. Before making investment future is seen rather than the present i.e. investment is made only in the projects, which will increase the sales in the future.

Customer Relationship

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FFC adopts the strong customer relationship policy. They think customer as the king. They are following 20 80 strategy in dealing with the customers.

Internal Strong Relationship


Packages maintain a strong relationship between the departments. All departments are interrelated. It is one of the main aspects of strategic management that all the various functions performed in the company by the different departments must have interrelation and collaboration if company wants to achieve success. Thus synergy is given a lot of importance. FFC has many other policies to run their business. These all contribute to the success to the success of the FFC.

MANAGERIAL STYLES
Management is process of utilizing material and human resources to accomplish designated objectives. It involves the organization, direction, coordination and evaluation of people to achieve these goals. The role of manager is to assemble the best work team he can obtain and then to provide a supportive motivational environment to guide that team to accomplish agreed upon objectives. The essence of management is the activity of working with people to accomplish results. It involves organizing, motivating, leading, training communicating with and coordinating others.

MANAGING THE ORGANIZATION


The management of the FFC focuses on some of the objectives that it wants to achieve. The way managers treat and deal with their subordinates in order to accomplish the multiple objectives of the organization is determined primarily by management system of

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beliefs about the nature of man and about the determinants of cooperation in an organized endeavor.

IMPACT OF MANAGEMENT STYLES ON EMPLOYEES:


MOTIVATION
The term motive implies action to satisfy a need. Motivation can be defined as a willingness to expend energy to achieve a goal or a reward. The management styles adopted by the FFC affect greatly, and employees are motivated in order to enhance their performance and achieve the derived goals.

MORALE AND PRODUCTIVITY


The employees of the FFC possess high morale, and thus exhibit high productivity. The employees are happy and are also productive workers. Job attitudes and morale are quite positive for two reasons. Firstly employees gain social satisfaction from interactions at the work place. Working conditions and supervision good, secondly high morale result from high motivation to produce. In other words we can say, that management should put its eggs in the basket that creates a high-motivated work force. PROMOTION FFC decisions about promotions are decided upon the basis of merit in ones present position and ability and potential to assume the impossibilities of higher level positions. Sometimes other factors are considered such as length of service, education, training courses completed, previous work history and the like.

The guiding principles for Recruitment


FFC encourages the recruitment of fresh graduates than experienced once, except for high managerial posts where experience is must. The management believes in developing the employees according to the requirements of the organization.

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Recruitment and Selection Criteria


FFC has designed a sound but easy method of recruitment. When any department needs an employee, it sends its requirement to the Human Resource Department, which in turn advertises the vacancy in the leading newspapers and asks for the qualified people. In case of the posts requiring some experience, only interview method is used to select the best candidate.

Recruitment of Workers
Minimum qualification for the post of the workers is Matriculation 2nd Division with science subjects. The workers should not be more than 21 years old and must be medically fit. These are employed as "Apprentice Trainee". If the performance of the worker is satisfied during the probation period, he is hired. Normally workers get promotion after two years on the recommendation of their supervisors. This post is not advertised.

Recruitment of Executives 1) Job Identification


When any department requires an employee, it sends its requirement to the Human Resource Department.

2) Recruiting & Hiring


For recruiting and hiring some factors are taken into consideration. These factors are as follow: Nature of the job; and Time required filling the vacancy.

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Keeping in view the time constraints, advertisements are given in the newspapers. Otherwise if the vacancy has to be filled immediately, the Human Resource Department contacts the authorized institutions, universities etc. Budget constraints Process The recruiting and hiring process starts from the applications submitted by the degree holders. They provide their CVs along with the applications. These applications and CVs are screened out on the basis of: Merit; Institute; and Experience etc. After this, approximately 50% of the applicants are selected for the further process. Then the H.R Department lists out the salient features of the CVs (only the accepted CVs). Then the H.R. Manager takes a test based on: English comprehension; Basic mathematics; Data sufficiency; I.Q. and Some questions about the particular job, for which the applicants have applied. After taking the test, the top 10, 20 or 30 applicants (according to the job requirement) are chosen for the first interview. At this stage the selection of applicants also depends on the H.R. Manager and the departmental head. Normally 30% of the applicants, who have given the test, are selected for interview. Through telephone calls or letters, the selected applicants are informed about the date and time of the interview. Normally two

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interviews are taken. H.R. Manager and the departmental head take first interview. In this interview they observe: Alertness; Confidence; Leadership skills; Relevant knowledge; Social acceptance; Interests; Communication skills; First impression; and Maturity

According to these observational factors rating or grading is made. Normally 5% rating in each factor is acceptable. Then successful candidates are called for final interview which is taken by: General Manager Deputy General Manager Human Resource Manager Departmental Head (sometimes)

Previous traits or factors are once again examined. After the final interview, the selected applicants are sent for medical test and then the Industrial Relations Manager issues them the appointment letters.

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Training & Development*


Appointed persons are trained for six months; they are given the title Management Trainee. In the Consumer Products Division after one year they are given the designation of Assistant Manager Sales. The trainee is given a brief view (orientation) of the company, various processes, rules & regulations etc. this orientation is two months. After the orientation program, the participants may ask to put forward a short report or presentation . After the 6 months training, the trainee goes to H.R. Manager and tells him what he has learnt in this program. Some external courses may be offered not only to the existing employees but also to the new trainees. These courses are held in, LUMS PIM Intek Solution British Council Informatics Employers Federation of Pakistan

Performance & Appraisal


Performance & appraisal are two sides of a coin. Immediate officer appraises performance. For the appraisal of the performance, there is a Performa, which is filled by immediate officer. This Performa is named as (PPE) Performance Planning & Evaluation. There are seven sections in this form. The particulars of the candidates are written on the top of the form.

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Plant Sites
The year witnessed exceptional performance at every level . plant operating efficiencies surprised all previous records with large margins. Cost effective and professional solution are adopted to address any major potential reliability threats. Plants reliability improvements projects remained of prime importance and significant progress has been achieved by addressing major unreliable areas and chronic problems. System implementation through enforcement of FFC,s operational, maintenance, plant monitoring, housekeeping and safety practices remained in the lime light and deficiencies were overcome utilizing the gap analysis approach. The continued with selective investments necessary to sustain profitability , improve operations and maintain its position at the leading fertilizer manufacturer in the country.

Plants Goth Machhi


Operational performance of the plants 1&2 Goth Machhi was excellent during the year with a total SONA urea production of 1458 thousand tonnes. Plant 1 created a new record of daily urea production this year. Annual maintenance turnarounds of both plants were carried out in the first quarter of 2004 and were executed safely and successfully within the stipulated time. Comprehensive inspection and major overhauls of equipment and machines were carried out in house . various modification jobs were also executed to improve operational efficiencies. With on going efforts to improve plant reliability and performance, maintenance turnarounds are now schedule on bi-annual basis. The continious decline in natural gas supply pressure from Mari gas field poses a new challenge with a direct impact on production . general water shortage in the country with frequent canal closures and declining water fliw in the rivers in the past few years has also put more strain on our water supply wells. Dedicated booster compressor have been planned to be commissioned in the first quarter of 2005 to boost gas supply pressure and further expansion of raw water resources and its optimization is currently under way to

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meet water requirements.In our endeavour of self reliance in areas of critical maintenance activities, refurbishment of old bimetallic stripped of plant 3 was successfully completed in the fabrication shop which made this expensive equipment operational again at plant 1. detailed engineering of energy revamp project of plant 1 Ammonia unit is under process and commissioning is expected in 2006. this implantation would result in an energy saving of 0.3 Gcal/ Met ammonia. Utilization of the safe natural gas would also result in 18 thousand tonnes of additional urea production. ]evaluation of existing BFW heat exchanger E-211 was carried out for vibration and leakage estimation. The exchanger has completed its useful life and order has been placed for a new exchanger with modified design.

Plant Mirpur Mathelo


Taping the potential of our recently acquired plant Mirpur Mathelo has resulted in a noteworthy efficiency of 125% of name plate capacity with annual production 716 thousand tonnes, 14% in excess of last year output. We are pleased to report that the company was able to achieve the required SONA urea quality level forFFC urea produced by the plant 3, which was formally declared As SONA urea on March 2004. we are confident that benefits will continue to acquire to the company by providing value added quality products to our customers. To fulfil our commitment with the GOP for enhanced urea production, annual maintenance turn around of the plant was deffered to 2006 after careful technical review of efficiency maintained during tge period of meet the increase in demand. To meet its commitment to the Govt . FFC has also planned de- bottlenecking of its plant three for increasing nameplate production capacity to 725 thousand tonnes annually in a normal year. Almost all the piping isometrics of Urea Hydrdolyzer projects have been approved and most of the piping / equipment erection work has been completed. The project is ready for commissioning after turnaround 2006 and will help reduce NH3 contents of effluent water and provide additional urea production of 17 MTPD. Cooling tower packing

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replacement for another two cells shall be completed before the onset of next summer season and is expected to yield a saving of Rs. 12.50 million per annum through improved energy efficiency. Information technology culture was successfully inculcated at the plant in order to reduce and simplify routine workload and to keep pace with modern technology. the marks are modern fiber optic network , new inventory management system and computer training of all employees.

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MARKETING MIX
Marketing Mix consists of major components: Product, Place, Promotion and Price. These components are called marketing decision variables because a marketing manager can vary the type and amount of each element. One primary goal is to create and maintain a marketing mix that satisfies consumers needs for a general product type. Marketing mix often is viewed as controllable variables because they can be changed. However, there are no limits to how much these variables can be altered. They are not totally controllable. Major components of Marketing Mix:

1. Product 2. Place 3. Price 4. Promotion

1. PRODUCT:
It can be defined as every want satisfying attribute a consumer receives in making an exchange, including psychological as well as physical benefits. It includes product planning, product research and development; product testing; and the service accompanying the product.

2. PRICE:
It is the value that one puts on the utility that one receives of goods and services. It includes price determination; pricing policies; and specific pricing strategies.

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3. Place:
It is the making available of products in quantity desired to as many customers as possible and to hold the total inventory, transportation and storage costs as low as possible. It includes selection. Coordination, and evaluation of channels; transportation; warehousing; and inventory control.

4. Promotion:
It is used to facilitate exchanges by informing one or more groups of people about an organization and its products. Promotion includes such areas as sales management; personal selling; advertising sales promotional programs and all other forms of marketing communications.

Product
Sona Urea
Sona Urea is the most concentrated solid, straight nitrogenous and most widely used fertilizer in the country. Mostly it is manufactured in the form of prills, but FFC is producing in prilled as well as granular forms. Prilled and granular fertilizers are white in color, free flowing, readily soluble in water and both contain 46% Nitrogen. Because of its high solubility, it is suitable for solution fetilizers and folira application. Urea is the best suited to our soild because some of the salient physical and chemical charecteristices of Sona Urea Prilled and Granula are below.

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ActualStatus Description Prilled Physical Condition Nitrogen(%) Moisture (%) Biuret (%) Fines (%) AV Prill Size (mm) Free Flowing Prills 46 < 0.30 0.80 ~ 0.87 < 1.0 1.82 ~ 2.0 Granular Free Flowing Granules 46 < 0.30 0.80 ~ 0.87 Dust Free 2.0 ~ 5.0

DAP
Sona DAP is the most concentrated phosphatic fertilizer containing 46% P2O5 and 18% Nitrogen. From nutrients' concentration point of view, it has got the highest quantity of total nutrients in a 50 KG bag i.e. 32 KG of nutrients / bag. The highest concentration of plant nutrients i na bag helps saving costs of transportation, handling, storage and application. It is the widely used phosphatic fertilizer in the world as well as Pakistan. The solubility of DAP is more than 95%, which is highest among the phosphatic fertilizers available in the country. Due to high solubility it can also be used through fertigation as well as by foliar application. Its nitrogen to phosphoris ratio ( 1 : 2.5 ) makes it an idea fertilizer for Basal application to meet the initial requirement of most of the crops. Having an ultimate acidic effect on the soil, it is well suited for our alkaline soils. Its salient characteristics are listed below:

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Sona DAP

Description Nitrogen(%) P2O5 (%) Crushing Strength (Kg) Size (mm) Moisture (%)

Actual Status 18 46 6 2~4 < 0.7

FFC SOP
This fertilizer is an important source of Potash, which is a quality nutrient for production of crops especially fruits and vegetables. Potash is an important nutrient for activation of enzymes in the plant body and helps increasing sugar and starch contents. Potash improves the resistance of the plants against pests, diseases and stresses like water / frost injury etc. FFC SOP contains 50% K20 in addition to 18% sulfur, which is also an important nutrient especially for oil seed crops and it also has an ameliorating effect on salt-affected soils. As readily soluble in water so it can be used through fertigation as well as foliar application. SOP is well suited fertilizer for all types of crops and soil. Use of potassic fertilizer in Pakistan is minimal, which needs to be promoted for qualitative as well as quantitative crop production.

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Price
Sona Urea(P) Sona Urea(G) Sona DAP Sona SOP Sona Boron Rs. 480 Rs.485 Rs.1035

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PLACEMENT
The product is distributed directly from the plants. There is a great demand of fertilizers in the country and company is having in advance orders. But to make the whole system very smooth a company is having well structured distribution department. Which coordinates with carriers both company and individuals, Because fertilizers is required in all the parts of the country and FFC being a national firm takes it as it obligation that its product is distributed trough out the country. The company also ensures that the prices of the product do not vary in any part of the country because of transportation cost. For this purpose company gives some discount to those dealers, who belong to far-flung areas. The distribution department makes contract with private contractors to accomplish the tasks. The contractors are responsible for any loss to the product on the way. The management also pays surprise visit at different dealers shop to ensure that the quantity in the bag, quality and price are the same as suggested by the company policy.

Distribution
Distribution department is of the major department helping the sales force. The primary function of distribution department is to ensure effective and efficient distribution of product from plants up to the final customers.

Objectives
Ship out entire production of FFC and FFBL plants and imported fertilizer in accost effective manner(3.4 MT approx)

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Satisfying 3580 dealers , 1632 direct customers and 169 warehouses. Truck generation for 1556 sales points. Plan and undertake self imports/exports and ensure prompt handling , quality packing ,correct weight, timely delivery and documentation. Monitor packing availability and arrange safe storage of surplus production during lean months. Follow up of product quality complaints. Coordinate with plant management to ensure smooth operations. Maintain liaison with Pakistan railway , NLC, port authorities and suppliers. Transportation Arrangements Private trucking contractions NLC Pakistan railways

Dispatches 2004
Fig in KT

Ex Goth Macchi Ex Mirpur Mathelo Ex Bin Qasim Ex Port Total

Road 1348 652 871 244 3315

Rail 111 73 85 12 282

Total 1459 725 956 256 3397

Ratio 92:08 90:1 91:09 95:05 92:08

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Customer served

Dealers Direct customers

3580 1632

Total

5212

Zone wise Warehouses and capacity


Zone

North Central South Total

Regions 5 5 4 14

Warehouses 63 53 49 165

Capacity MT 136700 119400 78400 334500

Type of Warehouses
Strategic Warehouses Permanent warehouses Temporary warehouses Purely temporary warehouses

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Promotion
Promotion is the backbone of the successful marketing network. But in fertilizer industry in Pakistan companies need little promotion to achieve its objectives. And the reason is because demand is greater than supply. But FFC does it for many good reasons one of them is to protect its brand name, that is SONA Actually company wants that whenever any former in the country thinks to use fertilizers the only name that should come into his mind should be SONA. Fertilizer industry is different from FMCGs. IN fertilizer industry the users mainly residing in rural areas. So, many problems including media and education level arises. FFC in spite of all these hurdles take all the option to promote their product. As a matter of fact, FFC is using different mediums to promote its product. Especially promotion becomes crucial when company needs to introduce a new product.

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FFC marketing division Lahore has a sales promotion department, which is working under marketing service department, is responsible all the promotional activities. The department is using various ways to promote their products. These are

Different Medias used at FFC for promotion


Television Radio CCTV Print media Road side Point of purchase

Electronic Media
Ptv Ptv -world KTN (Sindhi Language) GEO Indus T.V ARY-Digital

Campaigns
Kharif campaign Rabi campaign

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Radio
National radio channels Add duration 10sec-60sec All around the year

CCTV
Islamabad airport Multan airport Faisalabad airport Lahore railway station Multan railway station Hyderabad railway station Faisalabad railway station Daewoo coaches Daewoo lounges

Print Media
National dailys Regional news paper International magazines National magazines Regional cultural magazines Add size 108 pcm(standard size of add)

Road side Advertisement

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Jumbo hoardings Bill boards Ware house boards Dealer shops boards Plastic whole signs

Point of Purchase
Crop posters Corporate posters Crop booklets Agro grams Zari reports Buntings

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Company Analysis in Terms Of:


Vertical Analysis (Common size statements) Horizontal Analysis (indexed analysis) Ratio Analysis o o o o o o o Liquid ratios Financial leverage / solvency ratios Coverage ratios Activity ratios Profitability ratios Du-pont analysis Market ratios

Book values per share (with assumed changes) Projections of income statement (with assumed changes) Sensitivity analysis

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Balance Sheet
Balance sheet SHARE CAPITAL & RESERVES share capital capital reserve reserve for issue of bonus shares revenue reserve NON CURRENT LIABILITIES DEFERRED TAXATION 2407000 CURRENY LIABILITIES trade & other payables interest & mark up accrued short term borrowings current portion of long term financing loan murabaha taxation proposed dividend TOTAL LIABILITIES ASSETS FIXED ASSETS (TANGIBLE) property, plant & equipment FIXED ASSETS (INTANGIBLE) goodwill LONG TERM INVESTMENTS LONG TERM LOANS & ADVANCES 67328 LONG TERM DEPOSITS & PREPAYMENTS 3492 CURRENT ASSETS stores, spare & loose tools stock in trade trade debts loans & advances deposits & prepayments other receivables short term investments cash & bank balances TOTAL ASSETS 1727309 219180 1407736 86368 24633 560895 4464157 1055830 26443107 3040 1686980 681297 1876381 63982 23111 560526 2200845 1834148 27219468 63920 5831105 74233 100000 2184088 1741 83333 598297 2522000 3356904 83562 2972333 1447011 1740 41667 329910 384743 27219468 2004 2949703 160000 442455 8742749 2868403 2003 2564959 160000 8797753 4556886

26443107

2004 9180716 1778464 5866999

2003 9259008 1883079 7083151

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Horizontal Analysis
SHARE CAPITAL & LIABILITIES SHARE CAPITAL & RESERVES share capital capital reserve reserve for issue of bonus shares revenue reserve NON CURRENT LIABILITIES DEFERRED TAXATION -4.56 CURRENY LIABILITIES trade & other payables interest & mark up accrued short term borrowings current portion of long term financing loan murabaha taxation proposed dividend TOTAL LIABILITIES ASSETS FIXED ASSETS (TANGIBLE) property, plant & equipment FIXED ASSETS (INTANGIBLE) goodwill LONG TERM INVESTMENTS LONG TERM LOANS & ADVANCES 5.33 LONG TERM DEPOSITS & PREPAYMENTS 14.87 CURRENT ASSETS stores, spare & loose tools stock in trade trade debts loans & advances deposits & prepayments other receivables short term investments cash & bank balances TOTAL ASSETS 2.39 -67.83 -24.98 34.99 6.59 0.07 102.84 -42.43 -2.85 73.70 -11.16 -96.64 50.94 0.06 100.00 81.35 -100.00 -2.85 0.05 -0.85 -5.56 -17.17 2004 15.00 0.00 -0.63 -37.05

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Horizontal Analysis of Balance Sheet


There is a decrease in cash and bank balance during 2003-2004, which is of 2.85%. There is overall decrease in Total assets. Total liabilities have increased by 14.61% which is due to increase in stockholders equity increased by 46.3%. company is attracting more capital from investors in order to expand its operations.

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HORIZONTAL ANALYSIS

LIABILITIES:

liabilities horizontal analysis


150

100

50

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

Series1

-50

-100

-150

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ASSETS:

assets horizontal analysis


120

100

80

60

40

20

Series1

0 1 -20 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

-40

-60

-80

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VERTICAL ANALYSIS :

Under vertical analysis of income statement each item is stated as a percentage of net sales. Under vertical analysis of balance sheet each asset is stated as a percentage of Total assets and each liability and stockholders equity item is stated as a percent of Total Liabilities and Stockholders Equity. Under common size statements all items are stated in term of percentages, as calculated in vertical analysis.

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Vertical Analysis
vertical analysis SHARE CAPITAL & RESERVES share capital capital reserve reserve for issue of bonus shares revenue reserve NON CURRENT LIABILITIES DEFERRED TAXATION 9.102561 CURRENY LIABILITIES trade & other payables interest & mark up accrued short term borrowings current portrion of long term financing loan murabaha taxation proposed dividend TOTAL LIABILITIES ASSETS FIXED ASSETS (TANGIBLE) property, plant & equipment FIXED ASSETS (INTANGIBLE) goodwill LONG TERM INVESTMENTS LONG TERM LOANS & ADVANCES LONG TERM DEPOSITS & PREPAYMENTS 0.013206 CURRENT ASSETS stores, spare & loose tools stock in trade trade debts loans & advances deposits & prepayments other receivables short term investments cash & bank balances TOTAL ASSETS 6.532171 0.828874 5.323641 0.326618 0.093155 2.121139 16.88212 3.992836 100 0.011168 6.197696 2.502977 6.893526 0.23506 0.084906 2.059283 8.085555 6.738368 100 22.05151 0.280727 0.37817 8.259574 0.006584 0.315141 2.262582 100 9.265427 12.33273 0.306994 10.91988 5.316088 0.006392 0.153078 1.212037 1.413485 100 2004 11.1549 0.605073 1.673234 33.06249 10.84745 2003 9.423252 0.587815 32.32155 16.74128

0.007579 34.71875 6.725624 22.18725

0.007359 34.01612 6.918133 26.02237

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Vertical analysis of balance sheet


Vertical analysis shows that
There is an increase in the capital from year 2003 to 2004 which is 9.42 to 11.15; this significant increase shows that people are willing to invest in the business of the company. There is also increase in the reserves of the company due to which the worth of the company has been increased. Some of the current liabilities of the company are increasing with the minor fractions but some of the current liabilities (trade payables, murabaha, current portion of financing ) showing a little bit higher increase ,which means these liabilities are increasing, but are backing up the short term investments and some of the other current assets. There is an overall decrease in the assets of the company in 2004 as compared to 2003, including fixed and current assets, but some of the current & fixed assets are also increasing at the same time . But the company is using its assets productively in its operations.

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Income Statement

PROFIT AND LOSS ACCOUNT

2004 sales cost of sales gross profit other incomes 21027030 13157653 7869377 933762 8803139 OPERATING EXPENSES distribution cost other operating expenses operating profit financial cost NET PROFIT BEFORE TAXATION provision for taxation NET PROFIT AFTER TAXATION EARNING PER SHARE basic & diluted 1766652 560494 6475993 372949 6103044 2099000 4004044 13.57441

\2003 21034629 13701319 7333310 457413 7790723

1851170 488206 5451347 520838 4930509 1786000 3144509 10.66044

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Horizontal analysis

2004

sales cost of sales gross profit other incomes

-0.03613 -3.96798 7.310028 104.1398 12.99515

OPERATING EXPENSES distribution cost other operating expenses operating profit financial cost NET PROFIT BEFORE TAXATION provision for taxation NET PROFIT AFTER TAXATION -4.56565 14.80686 18.7962 -28.3944 23.78122 17.5252 27.33447

EARNING PER SHARE basic & diluted

27.33447

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Horizontal analysis of Income Statement:


During 2003-2004 there is a significant decrease in cost of goods sold by 4%. Financial charges have been decreased by 28% which is good sign for the company and it is due to increase in the equity financing. Net profit increased by 27% which is tremendous achievement for the company.

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Vertical analysis

2004

2003

sales cost of sales gross profit other incomes

100 62.57495 37.42505 4.44077 41.86582

100 65.13697 34.86303 2.174571 37.03761

OPERATING EXPENSES distribution cost other operating expenses operating profit financial cost NET PROFIT BEFORE TAXATION provision for taxation NET PROFIT AFTER TAXATION EARNING PER SHARE basic & diluted 8.401814 2.665588 30.79842 1.773665 29.02476 9.982389 19.04237 8.800583 2.320963 25.91606 2.476098 23.43996 8.490761 14.9492

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Vertical analysis of income statement:


There is a very slight decrease in the sales but as compared to that decrease there is a huge decrease in the cost of goods sold, due to which increase in the gross profit, at the same time increase in the other incomes and decrease in the operating & financial costs leading to a huge increase in the profits of the company.

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Ratio analysis Liquid ratios:


Liquid ratios: (i) Current ratio (ii) Quick ratio (iii) Cash to C. liability ratio 2004 1.076 1.051 0.119 2003 1.036 0.957 0.213

CHART:
liquid ratio analysis
1.2

0.8

0.6

2004 2003

0.4

0.2

0 CURRENT RATIO QUICK RATIO CASH TO CURRENT LIABILITIES RATIO

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INTERPRETATIONS:
(i) Company has a sound current ratio in 2004 than 2003. (ii) But the quick ratio is better than the current ratio, and this position has improved within the years 2004 and 2003, this means that company can readily pay off its liabilities. (iii) The cash to current liabilities ratio is weak which means companys cash is more readily utilized, but the company must maintain a specific cash position to improve its cash liquid position.

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Solvency / financial ratios


Solvency / financial ratios (i) Debt equity ratio (ii) Debt to total assets ratio (iii) Total capitalization ratio (ix) Debt to fixed assets ratio 0.195 0.108 0.163 0.261 2004 2003 0.324 0.167 0.245 0.409

CHART:
solvency (financial leverage)ratios
0.45

0.4

0.35

0.3

0.25 2004 2003 0.2

0.15

0.1

0.05

0 DEBT EQUITY RATIO DEBT TO TOTAL ASSETS RATIO TOTAL CAPITALIZATION RATIO DEBT TO FIXED ASSETS RATIO

INTERPRETATIONS:
(I) In year 2004 the companys debt has been reduced against the proportion of the equity, due to payments of debts and increase in equity level the companys position of debt to equity has a significant

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decrease in 2004 as compared to the 2003,there is a decrease of 13% in the debt equity ratios of 2004 and 2003. (ii) There is a 6% decrease in the debt backing up the total assets, in 2004, this is a significant sign that the companys debt position is decreasing and its assets position is improving. (iii) In 2003 the debt portion in the capitalization is 24% while in 2004 it is 16%, there is a decrease in the debt portion of capitalization which is of 8%. Sign of increasing equity. (ix) Fixed assets were backed by 40% debt financing in 2003, but in 2004 this situation has reduced to 26%, showing trend of investment in equity.

Coverage ratios
Coverage ratios 2004 2003 128

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(i) Interest coverage ratio 10.466 Debt coverage ratio --

17.364

3.645

interest coverage ratio

20 18 16 14 12 10 8 6 4 2 0 INTEREST COVERAGE RATIO

2004 2003

INTERPRETATIONS:
Although the interest expenses of the company are increasing but the interest covering capacity of the company is also increasing in 2004 as compared to the 2003, it is also due to the decrease in the cost of the good sold and other operating expenses.

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Turnover ratios
Turnover ratios (i) Debtors turnover ratio 11.21 Debtors collection period (days) (ii) Creditors turnover ratio Creditors payment period (days) 18.51 (iii) Inventory turnover ratio 20.11 Inventory over in days (ix) Total assets turnover 0.773 (x) Investment turnover 1.131 2004 2033 14.94 24 6.23 58.54 60.03 6.08 0.795 1.196 18.15 32 19.72

turnover ratios
70

60

50

40 2004 2003 30

20

10

0 DEBTORS TURNOVER RAITIO DEBTORS COLLECTION PERIOD CREDITORS TURN OVER RATIO CREDITORS COLLECTION PERIOD INVENTORY TURNOVER RATIO INVENTORY TOTAL ASSETS TURNOVER IN TURNOVER DAYS RATIO INVESTMENT TURNOVER RATIO

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INTERPRETATIONS:
(i) In 2004 there is a more rapid turnover of 14.94 against 2003 turnover which is 11.21, at the same time the debtors collection period has also decreased from 32-days to 24-days. This is healthy sign for the company point of view. (ii) The creditors turnover of the company is decreasing from 19.72 in 2003 to 6.23 in 2004, and the payment period is also increasing from 18.51 in 2003 to 58.54 in 2004. With this help the company is in a position to use its cash and different resources for other productive works. (iii) Inventory is showing a tremendous increase in the turnover from 20% to 60%, a tremendous increase of 40% from 2003 to 2004,but at the same time the companys inventory turnover in days has decreased from 18-days to 6-days, which is a remarkable achievement for the company. (iv) Total assets are showing an increased turnover of 79% in 2004 as compared to 77% of 2003. (v) Increase in the investment in the form of equity is showing a gradual improve in its turnover from year 2003 to 2004.

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Profitability ratios
Profitability ratios (i) Gross profit ratio (ii) Net profit ratio 0.149 (iii) Return on investment ratio 0.115 (ix) Return on equity ratio 0.223 0.151 0.272 0.374 0.190 2004 2003 0.349

profitability ratios
0.4

0.35

0.3

0.25

0.2

0.15

Series1 Series2 Series3 Series4 2004 2003

0.1

0.05

0 GROSS PROFIT RATIO NET PROFIT RATIO RETURN ON INVESTMENT RATIO RETURN ON EQUITY

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INTERPRETATIONS:
(i) Gross profit of the company is showing an increase of 3% from year 2003 to 2004, which is due to the decrease in cost of goods sold. This is a slow increase but we know that the sales are also decreasing. (ii) The net profit is improving from 14% in year 2003 to 19% in year 2004, there is an increase of 5%, this shows that the companys other expenses are also decreasing although the financial cost is increasing. (iii) Investments are showing a constant and gradual improve in their returns improving from 11.55% to 15.14% in 2003 to 2004 respectively. (iv) Increase in equity also showing an improving trend in their returns from 22% to 27%.

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Du pont analysis:

Du pont analysis:

2004 0.2723

2003 0.2239

du pont analysis
0.3

0.25

0.2

0.15

Series3 Series4 2004 2003

0.1

0.05

0 DU PONT ANALYSIS

INTERPRETATIONS:
(i) Du pont analysis shows that companys position of sales, total assets, net profit and equity is improving from 22% to 27% in 2003 to 2004 respectively.

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Market ratios:
Market ratios: 2003
(i) Earning per share 10.66 (ii) Dividend per share (iii) Dividend payout ratio (iV) Dividend yield ratio 0.087 (V) Intrinsic value per share 108.69 (Vi) Price earning ratio 8.84 9.38 121.74 10.96 0.81 0.091 8.69 0.81

2004
13.57

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(Vii) Market price to book value

market raios
16

14

12

10 2004 2003

0 EARNING PER SHARE DIVIDEND PER SHARE DIVIDEND PAYOUT RATIO DIVIDEND YIELD RATIO PRICE EARNING RATIO MARKET PRICE TO BOOK VALUE RATIO

ratio

2.41

2.1

INTERPRETATIONS:

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(i) Companys earning per share is increasing from 10.66 in year 2003 to 13.57 in year 2004. This increase will strengthen the companys position in the eyes of the present as well as the potential investors. (ii) Companys dividend is showing an increase of Rs.3 separate from the quarterly announced dividends in the form of interim and other dividends, due to this position the shares of the company have huge market price from its face value. (iii) Dividend payout ratio of the company showing almost no change from year 2003 to 2004. (iv) Dividend yielding capacity of the company is showing an increase of 1% from year 2003 to year 2004. (v) Intrinsic value of the shares of the company is increasing from 108 in year 2003 to 121 in year 2004. Showing a great market appreciation of the companys shares in 2004. (vi) Price earning ratio is showing a slight decrease in the year 2004.

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BOOK VALUE PER SHARE


It is suggested that the company should raise its capital through debt financing instead of equity financing because through debt financing the companys book value of the share increases while through equity financing the book value per share decreases as u can see from the calculations given.

PROJECTIONS
The projections of the income statement for year 2005 shows that if company raise its capital through debt financing then its earning per share increases to 16.38 while raising capital through equity keep the earning per share to 15.60. Therefore company must raise its capital through debt financing.

SENSITIVITY ANALYSIS
Sensitivity analysis shows that increasing tax to 40% and 50% will lower down the earning after tax to 3661826.4 and 3051522 respectively. While increase in sales and decrease in cost leads an increase in the net profit after tax. Increasing cost by 50% will lower down the net profit after tax to 4983721. Decrease in the assets value at the time of liquidation leads to the liquidity value per share as 40.88/ share.

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SIX YEARS TRENDS OF COMPANYS MARKET


year dividend payout ratio(before tax) price earning ratio market price to book value ratio dividend yield ratio market value per share 1999 8 5.08 1.46 16.46 53.2 2000 8 4.59 1.52 15.19 41.1 2001 8.5 3.76 1.06 21.61 40.85 2002 9 7.02 1.22 17.51 73.1 2003 10 8.96 1.32 16.86 95.5 2004 12 10.27 2.81 10.24 139.45

Dividend payout ratio (before tax) analysis:


14 12 10 8 6 4 2 0 divdend payout ratio(before tax)

1999 2000 2001 2002 2003 2004

Companys dividend payout ratio is increasing constantly in the last five years.

Price earning ratio analysis:


12 10 8 6 4 2 0 price earning ratio

1999 2000 2001 2002 2003 2004

Companys price earning ratio is showing a decreasing trend from year 1999 to 2001 and then increasing trend from year 2001 to year 2004.

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Market price to book value ratio analysis:


3 2.5 2 1.5 1 0.5 0 market price to book value ratio

1999 2000 2001 2002 2003 2004

Market price of the company was decreased from year 2000 to year 2001, but from 2001 to 2004 the market price in relation to the book price is increasing and showing a huge increase in 2004.

Dividend yield ratio:


25 20 15 10 5 0 dividend yield ratio

1999 2000 2001 2002 2003 2004

The dividend yielding capacity of the company is showing a decreasing trend from 2001 to 2004.

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Market value per share:

160 140 120 100 80 60 40 20 0 market value per share

1999 2000 2001 2002 2003 2004

The market value of the shares of the company is showing a constant increasing trend from year 2001 to year 2004

Training Programme

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During my internship at FFC my training programme was arranged in the following manner by visiting these departments.

Departments in Marketing Division


Marketing Division Lahore contains the following departments. These departments are listed according to the schedule of my internship schedule at the office. 1. Distribution 2. Warehousing 3. Administration 4. Human Resources 5. Industrial Relations and Welfare 6. Procurement 7. Finance 8. IT Unit 9. Technical Services 10. Planning 11. Sales Promotion 12. Sales North Zone 13. Regional Office Lahore 14. General Manager Marketing

Distribution Department
Distribution department is of the major department helping the sales force. The primary function of distribution department is to ensure effective and efficient distribution of product from plants up to the final customers.

Objectives

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Ship out entire production of FFC and FFBL plants and imported fertilizer in accost effective manner(3.4 MT approx) Satisfying 3580 dealers , 1632 direct customers and 169 warehouses. Truck generation for 1556 sales points. Plan and undertake self imports/exports and ensure prompt handling , quality packing ,correct weight, timely delivery and documentation. Monitor packing availability and arrange safe storage of surplus production during lean months. Follow up of product quality complaints. Coordinate with plant management to ensure smooth operations. Maintain liaison with Pakistan railway , NLC, port authorities and suppliers. Transportation Arrangements Private trucking contractions NLC Pakistan railways

Dispatches 2004
Fig in KT Road 1348 652 871 244 3315 Rail 111 73 85 12 282 Total 1459 725 956 256 3397 Ratio 92:08 90:1 91:09 95:05 92:08

Ex Goth Macchi Ex Mirpur Mathelo Ex Bin Qasim Ex Port Total

Customer served

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Dealers Direct customers Total

3580 1632 5212

Human Resource Department


The FFC Management, acknowledging the importance of human resources has always placed personnel management at the top of its priority list. The Human Resources Department, therefore, right from the inception of the Company has played a vital role in steering the Company through all its phases, operations and progress . The functions of Human Resources Department vis-a-vis personnel management and human resources development are going side by side and it is due to the progressive approach and dynamic philosophy of the management that Personnel Management remains abreast with the latest style of management ensuring high level of motivation and satisfaction of the work force under varied situations. Personnel policies are kept updated and are periodically modified to respond to the latest socio-economic changes and market trends of the country. Hiring quality manpower, keeping them happy, satisfied and motivated are the pillars of the Human Resources Department; justice, fair play and merit oriented treatment are some of the ingredients of processing cases by the Human Resources Department. For Human Resource development, another aspect which receives its due share is training. The employees are exposed to various kinds of cross training, technical courses, management courses, workshops and seminars both at home and abroad. At Plant site, the Company has a

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Technical Training Centre, which is unique, and the only centre in Asia having a true replica of the Plant for providing realistic training as far as possible, to the employees.Employees' welfare has all along received due consideration by the Management. A number of agreements have been signed with CBA orkers Union, resulting in handsome remuneration packages to employees. The company, since its inception, has undertaken five salary revisions for Management employees, to remain amongst the top paying organizations of the country. It is due to the sheer sincerity, welfare oriented policies and concern for every single employee that there has never been any strike, lock out or go slow in FFC. Human resources department of the marketing division is responsible for the employees related to marketing division. Maintaining their pay directly from head office. their attendance and payroll of the staff while officers and executives get

Functions
Work out warehouse supervisor visors requirements in consultation with regional manager and arrange recruitment and transfer activities according to head office instructions. 3. Maintain up to date personal records, statistics including leave records , relating to management and non- management employees. 4. Interpret company policy and provision of necessary ruling where required.

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Handling cases relating to following subjects


Employment/appointment of non management employees. Temporary / contract / daily wages according to authorization. Promotion of non management employees Pay and allowances of non management employees. Leaves (annual, causal, special, sick) are managed for all employees. Transfer claims of all employees. House/rent allowances advances Also the House building loans

Finance department
The finance department working at marketing division Lahore is responsible for all the sales collections either sales are made directly through plant or through warehouses. the finance department is divided into two sections. 3. General accounting 4. Sales Accounting

Specific responsibilities of General accounting


Payroll of permanent and temporary staff employees Deduction of income tax from payroll and deposition in govt. treasury. Forwarding detailed of provident fund contribution of permanent employees to head office. Reimbursement of regional imprested/distribution imprested. Forwarding of L/C opening request to head office for import of fertilizer. Processing of export related documents. Deduction of income tax from various supplies and deposit into government treasury. Maintenance of books of account including fixed assets ,supplies , employees etc Payment of telephone , electricity and medical bill

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Payment in respect of bags and line for imported fertilizers

Specific responsibilities of the Sales Accounting


Maintenance of dealership records Processing and banking of sales and proceeds received from field force for the sale of fertilizer Transfer of data to plants for shipment Transfer of funds to head office recording of invoices for sales exwarehouses Receiving data from plants for direct sales Processing of bank Guarantees for secured credit sales Monitoring of unsecured credit sales to fauji sugar mills/forms Preparation of pricing and discount structure for various fertilizers Receiving data from plants for warehouse shipment Recording of stock movement reports Overall reconciliation of stock movement with intimation of head office Follow up receivables for sale through rail Recording of stocks receives from FFBL for sale on their behalf Sending the information regarding dealers balance to field force for recovery of receivables on various accounts

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Annual Business plan

Review and development of


Historical data Key assumptions Inputs from regions

Review meeting
SMs/RMs/Deptt.Managers GMM Collation and submission to Head office, review by management, Board of directors, approval

Budgetary control
Circulations to cost controllers Quarterly budget variance reports Monthly revised cash flow statements Review of import requirements of fertilizer

FFC related statements/ reports Daily / fortnightly


Remittance status Sales status

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Monthly
Trial balance and related schedule Receivables report along with age analysis Revised cash flow statements Finance dept progress report Capital budget utilization statues Progress report of sales and w/h dispatches Stock report to insurance company and banks Bank reconciliation statements Tax deduction at source Dealer network status report

Quarterly
Budgeted vs actual expenses comparison Performance review of marketing operations

Yearly
Trial balance and related schedule Proposed capital and revenue budget Inputs for tax returns Inputs for companys annual reports

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Planning Department
The planning department is the integral part of fauji fertilizer company. Senior executive planning who is responsible to SMSM ,heads it. The department coordinate the activities of all other departments within marketing division .Major responsibility of the department is collection of information about competitors and analyzing their strategies.

Functions
Coordination and development of annual business plan Provision of historical information to regions and senior sales managers for developing sales forecast Finalizing sales forecast with coordination related sales force Preparation of fertilizer data book Monitoring international fertilizer price trend Preparing Pakistan industry Urea market participation reports Chairmans report for board of directors meeting containing analysis,FFC performance And industry situation. These reports are prepared on need basis Preparation of Fertilizer Industry Report Reviewing FFC sales performance on quarterly basis Develop plans for training of officers Monthly analysis of FFC ex-plant road and rail fright analysis

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Technical Department
Technical department is providing support function to sales. Company is providing technical services all over the country free of cost. Senior technical executive who is reporting to SMSM heads the technical department. The 14 technical officers are serving in 14 regions all over the country in coordination with sales officers. Mission Statement of Technical Department Help the farmer optimize utilization of his resources to rejuvenate farm productivity and increase his income

Objectives
Farmer education /training Dissemination of latest and complete package of technology Promotion of balanced fertilizer use Focus on increasing farmers income Counter fertilizer misconception Enhancing crop yield/overall crop production Supplement government effort for agricultural

Functions
Establish proper linkage sales and technical services Increase and faces on farm management expertise Professional development on personnel Collaborative research

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Farm Advisory Services


Fauji Fertilizer Company Limited has been providing Agricultural Advisory Services to the farming community throughout Pakistan since 1981, for increasing the agriculture production in general and the farmers economic returns in particular. Our organization in pursuit of its national commitment and moral obligation maintains regular contact with farmers and Agricultural Institutions to ensure constant and efficient transfer of latest technology. The company is providing quality farm advisory services all over the country through its 5 Farm Advisory Centers and 14 Regional Technical Services Officers. Farm Advisory Centers are located at D.I. Khan, Jhang, D.G. Khan, Mirpur Khas and Kasur. Each centre has a team of five Agricultural Experts, providing multifarious advisory services through crop demonstrations, field days, farmer meetings, village meetings, crop seminars, farm visits and group discussions. All the centers are fully equipped with modern sophisticated computerized Soil & Water Testing Laboratories and high-tech extension equipment. Moreover, FFC has also established a micronutrient testing laboratory at Farm Advisory Centre Jhang having Atomic Absorption Spectrophotometer and other analytical instruments. Soil Testing is a valuable tool to propagate appropriate and balanced use of chemical fertilizers and to identify soil problems. Soil/water samples are collected from farmers fields and analyzed in the laboratories. Fertilizer recommendations are developed on the basis of soil analysis and recommendation reports are delivered to the growers for proper and balanced fertilizer use. The soil/water testing and micronutrient analysis facility is offered free of cost. Besides these five farm advisory centers, we have

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14 Technical Services Officers based at 14 Regional Offices of FFC spread all over the country extending these services in their respective areas.

To further strengthen our advisory services and facilitate our farmers, we also publish crop, vegetable, orchard brochures, agro-grams, posters and pamphlets containing latest information regarding production technologies of crops, and orchards grown in Pakistan. For a stronger direct link and timely guidance of farmers, we publish a quarterly Urdu News Letter Zari Report containing season specific information regarding crops, fruits, vegetables, improved agronomic practices and articles on agricultural issues. Following is the list of crop brochures available with us:

Wheat Brochure Maize Brochure Banana Brochure Oil Seed Brochure

Cotton Brochure Potato Brochure Apple Brochure Salt-affected Soils Brochure

Sugarcane Brochure Mango Brochure Vegetable Brochure

Rice Brochure Citrus Brochure Guava Brochure

These brochures and Zari Report are also available in the Kashtkar Desk of our website .

To improve the fertilizer use efficiency and to obtain optimum crop yields, a Fertilizer Guide Book has also been published containing comprehensive information on various fertilizers available in Pakistan, their application methods and their economic use.

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FFC has also adopted the pragmatic approach of telecasting crop documentaries on PTV before the onset of sowing season of major crops. In these documentaries all the components of crop production are covered with sufficient elaboration. Cotton, wheat, sugarcane and rice documentaries can be viewed in the Kashtkar Desk of our website.

We encourage our farmers to get registered on our mailing list by sending a request in writing or through e-mail at the following addresses to receive copies of our published material free of cost. For any further information or agricultural advisory service, please visit any of our nearest Farm Advisory Centers or Regional Offices closer to you.
Technical Services Department

(Marketing Division) Fauji Fertilizer Company Limited Lahore Trade Centre, 11-Shahrah-e-Aiwan-e-Tijarat, Lahore Phones: 042 6365119
Farm Advisory Centre D.I. Khan Farm Advisory Centre Jhang

Faqir Manzil, Dial Road, D.I. Khan Road, Jhang Phone: 0961 741701

Near Chenab College, Chiniot Phone: 0471 - 671118

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Farm Advisory Centre Kasur

Farm Advisory Centre Vehari

Faqiriay Wala, 3 km Khudian Road, Kasur Phone: 0492-671848, 0492-2003977 3360223

2.5 km, Khanewal Road, Vehari Phone: 067-3361913,

Farm Advisory Centre

Mirpur Khas 162-A, Ali Farms, Gulshan-e-Hussain,


Hyderabad Road, Mirpur Khas Phone: 0233 860760

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Industrial Relationship Department


The IR department in organization is formed under the IRQ 69 [industrial relation ordination] of Punjab labor laws act and is under the approval of Management & joint Labor Department of Punjab Govt .IR basically deals with the Labor laws implication in an organization and has to negotiate legislatively with the CBA certified labor union at the factory .The criterion for formation of IR department is a factory having at least 50 employees and its provisions given in the Punjab as well as GOP labor laws. The IR department not only negotiates with the labor unions but also responsible handling with the labor One of the functions of IR department at FFC to tackle with all types of court problems. There are labor courts at regional level .At present there are 24 courts in Pakistan. Any employee who may have a complaint about the management can go to the court so IR department representative follow the case

Major Activities
Leave records of workers Appointment records Record of upgrading Annual increment record Vertical performance appraisal records Staff no allocation

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Negotiation legislatively with the union Follow up of all types of cases of labor court

Advertising and Sales Promotion


The major function of the advertisement and sales promotion department is to enhance the corporate and brand image of SONA products.

Objective
To create ,augment and maintain the demand of FFBL and FFCL products To enhance and sustain brand image and corporate image Improve company visibility in the mind of consumers To safe guard company logo To strengthen brand loyalty

Different Medias used at FFC


Television Radio CCTV Print media Road side Point of purchase

Electronic Media

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Ptv Ptv -world KTN (Sindhi Language) GEO Indus T.V ARY-Digital

Campaigns
Kharif campaign Rabi campaign

Radio
National radio channels Add duration 17sec-35sec All around the year

CCTV
Islamabad airport Multan airport Faisalabad airport Lahore railway station Multan railway station Hyderabad railway station Faisalabad railway station Daewoo coaches Daewoo lounges

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Print Media
National dailys Regional news paper International magazines National magazines Regional cultural magazines Add size 108 pcm(standard size of add)

Road side Advertisement


Jumbo hoardings Bill boards Ware house boards Dealer shops boards Plastic whole signs

Point of Purchase
Crop posters Corporate posters Crop booklets Agro grams Zari reports Buntings Mobiles

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IT DEPARTMENT
Information Technology unit was properly setup in FFC Marketing division Lahore. IT unit is one of the most important departments working at marketing division Lahore. The Unit has to play a leading role in the marketing division in order to enable all the department to perform all their functions effectively and efficiently .It enables the management to make timely decisions.

OBJECTIVES OF IT UNITS
To meet computing needs of all the departments of all the departments of the marketing divisions. To design and develop, efficient, effective and user friendly information systems To provide the maintenance services and proper updating of all these systems To properly cope with the security and ethical challenges related to information technology and information system To design proper feed back and control procedures toward achievement of its goals.

SYSTEMS DEVELOPED BY I.T UNITS

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Sales accounting system General accounting system Order processing system Regional information system Sales promotion system Distribution management system Procurement system Human resource system Medical control system Technical support system

Procurement Department
Procurement department at marketing is responsible for the purchases. Purchases for the following offices are made by Lahore Marketing Division,3 zonal officies,14 regions,5 FAC,s,Finance and distribution offices at Goth Macchi ,Mirpur Mathelo distribution office at FFBL port and head office requirements

GOALS
To procure quality goods at the most economical and competitive rates

FUNCTIONS
Quality, Economical and timely procurement of items /spares for marketing division and plants ensuring complete backup support /after sales services. Price enquiry of different items to estimate the price so that the budgeted amount may be endorsed on the PR before initiation Disposal of obsolete /surplus/scrap material Continuous updating of reliable vendors list for both plants and marketing division

PROCEDURES INVOLVED IN PROCUREMENT STEPS

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Raising of purchase request Approval of PR Request for quotation Bid opening Comparative statement Placement of order Delivery receipt of goods Verification of bills against orders Final payment

REGIONAL OFFICE LAHORE


The regional office Lahore is a front line department. It is actually involved with direct sales of fertilizer and interacting with dealers. The regional manager, regional TSO and the sales officer Lahore district are working with assistance of stock members .For three days Tuesday Thursday the officers are on field visits and for rest 2 working days they perform their office work. The districts included in Lahore region :

LAHORE
Gujranwala Sheikhupura M.B.Din Rawalpindi

COMPETITORS
DCL Engro NFML Jaffer Brothers 162

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Sialkot Hafizabad

Ali Akbar groups PVT importers

Activities
Monitoring product wise /district wise achievement with respect to targets Monitoring current market situation with respect to fertilizer industry Monitoring competitors activities in detail Managing warehouses, their sales and closing stocks Appointing and terminating dealers as regard to their performance, literate goal is to have a strong dealer network Checking sales performance of all the products and calculating percentage achievements with respect to that month and in comparison with cumulative previous months.

SALES NORTH ZONE


Fauji Fertilizer company has divided Pakistan into three zones North, South and Central .These zones are further divided into fourteen regions and further districts. The allocation of districts is different from civil districts. There are five regions in North zone Lahore Faisalabad Sahiwal Peshwar D.I.Khan

FFC North zone competition


DCL Engro Private importers

Functions of North zone

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Conduction sale forecast for regions include in North zone Monitoring sales allocation as per decided ratios Monitoring daily sales Studying competitors price structure Co-coordinating regions included in North zone Managing sales force of North zone Checking and inventory Coordination wit top management Ensuring availability controlling warehouses Monitoring of product Monitoring and keeping record of turnover of productivity Providing product on secure credit Preparing market participation reports

Challenges
Equitable distribution in short supply situation Cost control Competition Brand image

Strategies
Quality operations/ethical selling Rationalization of warehousing capacities Judicious utilization of secured credit sales Improvement in dealer network

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Emphasis on customer service effective utilization of technical services Human resources development

Administration Department

Administration department is involved with conducting the administration function of the fauji fertilizers of the marketing division

Functions
Provision and maintenance of transport i.e. Cars, Jeeps and Poor vehicles Ensure availability of utilities like gas, electricity, telephone, E-mail, and Photocopy facility. Under take protocol duties. i.e. reception, transport, and ticketing etc. For company gussets and officers Ensure the implementation of company policies and rules Provision of uniform to entitle staff (Qasids, Chowkidars, electricians and drivers) Ensure proper maintenance of the office premises and guesthouses Take disciplinary action under the rules where necessary Disposal of unusable assets of company Managing three major types of transport system related to marketing division; Company maintained Company assisted cars/Jeep Pool transport

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Transport holding
Holding of marketing division transport is as under Company assigned cars Company assisted cars Company maintained cars 23 91 63 Total=177

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Ware Housing
The ware housing department is involved in completing the formality For hiring And dehiring of warehouses (on need basis) , appointment of handling contractors, watch and ward contractors. The record of inventories is maintained and physical inspection of the warehouse and product are carried out to ensure safety and security. This department works in collaboration with distribution department.

Functions of warehousing department


Coordinating of warehouse department with regions regarding warehouse selection, training of supervisors, planning capacity of warehouses To conduct inspections of the warehouses on planned and surprise basis Each warehouse is inspected around 17 time a year. Warehousing department is considered with processing of o Lease agreements o Watch and ward agreements o Handling agreements o Watch and ward bills

Conduct the training of warehouse supervisors. Preparing the operational , capital and revenue budgets on yearly basis. Formulating warehouse plans. Preparing weekly capacity reports.

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Zone wise Warehouses and capacity

Zone

North Central South Total

Regions 5 5 4 14

Warehouses 63 53 49 165

Capacity MT 136700 119400 78400 334500

Type of Warehouses
Strategic Warehouses Permanent warehouses Temporary warehouses Purely temporary warehouses

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SWOT Analysis
Strengths
FFC is the market leader in the fertilizer having 60% of the market share. FFC is using a single brand name SONA for its products like SONA urea, SONA DAP helping farmers to remember the name. Company being the market leader sets standards for the industry

FFC devotes considerable time and efforts to promote awareness regarding good farmers techniques and methods among growers community The company continues to enhance the facility of providing farmers free farm advisory services through farm advisory centres. Currently company is having 5 FACs all over the country. FFC peruses an innovative education oriented advertising policy utilizing electronic/ print media and road side advertisement FFC is only fertilizer company in the industry conducting seminars on core agricultural issues. Inviting local and foreign luminaries In 2004 FFC had record urea production of 2174000 tons from all the plants Company is having strong dealer network all over country that helps in proper availability even in far-flung areas. FFC has developed a well [planned network of 170 field warehouses to ensure that fertilizers is available to the farmers uninterrupted Company has employed well-trained, disciplined and motivated workforce to facilitate to achieve desire targets

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Company is fully automated having the extensive information systems for the plant site as well as the marketing division FFC is offering best package of salaries to its employees comparable with any multinational organization FFC is among one of the top taxpayers in country FFC is introducing Farmer Friendly Culture SONA being the farmers first choice ISO certification Countrywide location of plants It has product range FFC is experienced in production and marketing of product.

Weakness
Size of the company is very large which produces administrative problems. The promotion of the management employees is made after the period of three years. Sales force has to face a tough time when moved to far- flung areas equally in other provinces. Transfers are made after the period of three years , which cause the lack of performance of policies. The high differences between the salary packages of the executives and the employees. The ideas from the bottom are not welcomed; for the most part orders are assigned from higher authorities.

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Lengthy organizational hierarchy.

The insufficiency of technical sales orders. Non- availability transport during peak season. Dumping of fertilizer by the dealers.

Opportunities
Having a strong financial position company can start production of the new product line. Adding some new unit can enhance the production capacity of the plants. Company is in a position to set up a new plant in the country. FFC can participate in the acquisition of their companies being privatized by the government. If FFC decides for the export of Urea it can earn much better revenues. Being an agriculture country and due to increasing awareness about the balanced use of fertilizer, demand for the fertilizer will increase. Company can start over sea investment like that one of PAKISTAN MARCO PHOSPHORSE-SA. The increasing governmental support for meeting the demand pf fertilizer in the country. FFC can export Urea to Afghanistan and other neighbouring countries. Availability of natural gas from Iran can helping setting up a new Urea plant in that vicinity and thus meeting the demand of Urea in the country at cheap rates.

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Threats
Natural gas Farmers liquidity Weather conditions Future fertilizer demand Availability of raw material WTO challenges Fertilizer supply in remote areas. Dumping of under priced imported urea in local markets Inconsistent governmental policies Importing urea due to rising demand Changing fertilizer prices Difficult coexistence between public and private fertilizer

producer/importer Lack of education in grower community New competitors in the industry Long of gas supplies No availability of railway wagons Unbalanced use of fertilizer Phenomenal increase in the prices of basic feedstocks

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Internal Factor Evaluation (IFE) Matrix


KEY INTERNAL FACTORS Internal Strengths
1. Larger fertilizer Producer 2. Highest Market share 3. Growing Sales 4. Countrywide location of plants 5. Goodwill in market 6. Strong Financial Position 7. Corporate Culture 8. Strong Distribution Channel 9. Wider Product line 10. ISO Certification Weights .05 .04 .10 .05 .05 .03 .05 .03 .09 .10 .04 .04 .03 .05 .05 .10 .03 .04 .03 Rating 3 4 3 4 3 3 3 4 4 3 1 2 2 1 2 1 2 2 2 Weighted Score . 15 . 16 .30 .20 .15 .09 .15 .12 .36 .30 .04 .08 .06 .05 .10 .10 .06 .08 .06 2.61

Internal Weaknesses
1. Dumping of the fertilizer by dealers 2. Insuffiency of technical sales officers 3 The administrative problems due to large size of the company 4. Centralized authority 5. Non availability of transport during peak season 6. Low advertising campaigns 7. Sales force has to face tough time in remote areas 8. Very frequent transfers 9. Lengthy hierarchy

TOTAL
0.0 = Not Important 1.0= Important 1 = Major Weakness 2 = Minor Weakness 3 = Minor Strength 4 = Major Strength

External Factors Evaluation (EFE) Matrix


KEY EXTERNAL FACTORS

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External Opportunities

Weights 1. Adding some new units can increase .08 the production capacity of the plants 2. having strong financial position .07 company can introduce new products 3. the increasing govt support for meeting .05 the fertilizer demand in country 4. Opening new marketing office in .05 foreign countries to improve the marketing campaign 5. Advertising in international media and .06 magazines to increase the market share 6. Increasing sales by implementing the .04 credit policy strategies 7. WTO in 2005 (no quota Restriction) .10 more chances of export 8. Strong demand of products in future .05 9. Increasing the customer satisfaction by .03 improving the quality of products 10. Availability of gas from Iran can .05 increase the production of plants 1. Natural gas prices 2. Domestic Competition, entry of new and well financed organization in fertilizer sector 3. Farmers liquidity 4. Per unit cost in increasing, reduction in profits 5. Instable political situation in country 6. WTO challenges 7. Availability of raw material 8. Weak economic structure of Pakistan 9. Weather conditions 10. Increase in prices of raw material .10 .05 .03 .06 .03 .03 .02 .03 .05 .02

Rating 4 3 2 3 3 1 3 2 3 3

Weighted Score .32 .21 .10 .15 .18 .04 .30 .10 .09 .15

External Threats
3 4 3 2 2 2 2 2 3 1 .30 .20 .09 .12 .06 .06 .04 .06 .15 .02 2.74
4 = Superior Response

TOTAL
0.0 = Not Important 1.0= Important
1 = Poor Response 2 = Average Response 3 = Above Average

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Competitive Profile Matrix


Sr .#
1 2 3 4 5 6 7 8

Critical Success Factors


Customer Loyalty Market share Price Competitiveness Management Financial Position Advertising Global Expansion Product Quality Total

FFC

Engro

NFC

Weight Rating Score Weight Rating Score Weight Rating Score .20 .10 .10 .10 .15 .10 .20 .05 3 4 3 4 4 3 4 3 .60 .40 .30 .40 .60 .30 .80 .15 3.55 .20 .10 .10 .10 .15 .10 .20 .05 3 3 3 4 3 4 1 2 .60 .30 .30 .40 .45 .40 .20 .10 2.75 .20 .10 .10 .10 .15 .10 .20 .05 2 3 3 2 2 2 2 2 .40 .30 .30 .20 .30 .20 .40 .10 2.50

The Rating values as follows: 1= major weakness, 2= minor weakness, 3= minor strength, 4= major strength

Interpretations
The Competitive Profile Matrix (CPM) identifies the firms major competitors and its particular strengths and weaknesses in relation to the sample firms strategic position. From the CPM provided above we see that loyalty and the global expansion are the most important critical success factors as indicated by a weight of 0.20 the quality of FFC product is superior as it has a rating of 4; customers loyalty is very high.

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SPACE MATRIX
Rating Total
Average

Financial Strength (FS) 1. Net Income 2. Leverage Ratios 3. Liquidity Position 4. Return on Equity Industry Strength (IS) 1. Pakistan largest producer of fertilizer 2. Increased Demand of products 3. Quality products 4. Bigger market share Environmental Stability (ES) 1. High Inflation Rate 2. Political stability 3. Demand Variability 4. Barriers to Entry in New Markets 5. Competition Competitive Advantage (CA) 1. Highest production 2. Technological Advancement 3. Control over Suppliers and Distributor 4. Customer Loyalty Conclusion FS Average = +2.50 CA Average = -1.75 IS Average = ES Average = +2.25 -3.00 +3 +3 +2 +2 +3 +2 +2 +2 -4 -3 -2 -3 -3 -1 -2 -2 -2 -7 -1.75 -15 -3 +9 +2.25 +10 +2.5

Directional Vector Coordinates: x-axis: (CA: IS) -1.75 + (+2.25) = +0.50 Y-axis: (FS: ES) 2.50 + (-3.00) = -0.50

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(+0.50, - 0.50) FS IS

CA

ES 175

The Internal External Factor (IEF) Matrix:


IFE Total weighted Score

4.0 4.0 EFE Total Weighted Score

3.0

2.0

1.0

2.61

3.0

2.74
2.0

1.0

Interpretations
The Internal External matrix is based on the key dimensions of: the IFE total weighted scores on the x axis and the EFE total weighted scores on the y axis. It can then be divided into 3 major regions that have different strategy implications. In the above matrix it can be seen that both the Products in the sections relating to Grow and Build. Thus intensive strategies (market penetration, market development and product development) or integrative strategies (backward integration, forward and horizontal integration) can be most favorable.

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The Grand Strategy Matrix:


Rapid Market Growth

II
Weak Competitive Position

I FFC
Strong Competitive Position

III

IV

Slow Market Growth

Since FFC has rapid market growth and strong competitive position so it lies in 1st Quadrant of GS matrix .

So it must follow the following strategies Market development Market penetration Product development Since FFC have also excessive resources Forward integration Horizontal integration

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