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Fauji Fertilizer Company

Limited
Group Members

Ansaria Jamshan (62)

Hira Ramzan (67)
Amir Ramzan (31)
Khurram Altaf (120)
Subhan Khan (25)

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 Agenda

• Purpose
• Companies’ Background
• Trend Analysis
• Ratio Analysis
• Conclusion

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 Purpose
FFCL vs. Engro
The purpose of our project is to
perform financial analysis of Fauji
Fertilizer Company Limited and
compare its financial growth with
Engro Chemical Pakistan Limited.
Proposed Company: Fauji Fertilizer
Company Limited
Competitor: Engro Chemical 4
 Fauji Fertilizer Limited
Company
With a vision to acquire self - sufficiency in fertilizer
production in the country, FFC was incorporated in 1978
as a private limited company.

• 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.
•FFC commenced commercial production of urea in 1982
with annual capacity of 570,000 metric tons.
•Production capacity was enhanced by establishing a
second plant in 1993 with annual capacity of 635,000
5
metric tons of urea.
Fauji Fertilizer Limited
Company (Contd.)

• 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
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Pakistan
 Mission Statement

FFC is committed to play its leading role

in industrial and agricultural
advancement in Pakistan by providing
quality fertilizers and allied services to its
customers and given the passion to
excel, take on fresh challenges, set new
goals and take initiatives for
development of profitable business
ventures
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 Engro Chemical
Pakistan Limited
• The proposal was approved by the government in 1964
• Subsequently in 1965, the Esso Pakistan Fertilizer Company
Limited was incorporated, with 75% of the shares owned by
Esso and 25% by the general public.
• A full-fledged marketing organization was established which
undertook agronomic programs to educate the farmers of
Pakistan.
• As the nation’s first fertilizer brand, Engro (then Esso)
helped modernize traditional farming practices to boost farm
yields, directly impacting the quality of life not only for
farmers and their families, but for the community at large.
• As a result of these efforts, consumption of fertilizers
increased in Pakistan, paving the way for the Company’s8
branded urea called "Engro", an acronym for "Energy for
Vision Statement

“ To be the premiere Pakistani enterprise with a

global research, passionately pursuing value
creation for all stakeholders.”

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 Trend Analysis

Fauji Fertilizer Company

Limited
For Years 2007-2008

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 Trend Analysis
Trend analysis ‘Income Statement’:
Net Sales
2006 2007 2008 06 vs. %age 07 vs. %age
07 08
29951 28429 30593 (1522) (5.08) 2164 7.612
Cost of Sales
2006 2007 2008 06 vs. %age 07 vs. %age
07 08
20242 18312 18235 (1930) (9.54) (77) (0.42)
Gross Profit
2006 2007 2008 06 vs. %age 07 vs. %age
07 08
9709 10117 12358 408 4.21 2241 22.15
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 Trend Analysis
Expenses
2006 2007 2008 06 vs. %age 07 vs. %age
07 08
3984 3968 4260 (16) (0.04) 292 7.36

Net Income
2006 2007 2008 06 vs. %age 07 vs. %age
07 08
6985 7815 10041 830 11.88 2226 20.48

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Trend Analysis-Graph

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 Trend Analysis
Trend Analysis ‘Balance Sheet’
Plant & Equipment
2006 2007 2008 06 vs. %age 07 vs. %age
07 08
9608 10390 12731 782 8.1 2341 22.53

Long Term Investments

2006 2007 2008 06 vs. %age 07 vs. %age
07 08
6409 6325 7745 (84) (1.31) 1420 22.45

Long Term Loans & Advances

2006 2007 2008 06 vs. %age 07 vs. %age
07 08
77 143 163 66 85.43 20 14.23
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Trend Analysis-Graph

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 Trend Analysis
Revenue Reserve
2006 2007 2008 06 vs. %age 07 vs. %age
07 08
7862 7635 7190 (227) (2.88) (445) (3.49)

Non Current Liabilities

2006 2007 2008 06 vs. %age 07 vs. %age
07 08
1194 2671 5378 1477 123.72 2707 101.34

Current Liabilities
2006 2007 2008 06 vs. %age 07 vs. %age
07 08
10884 11476 11824 592 5.44 348 3.03

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Trend Analysis -Graph

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 Component Analysis
Component analysis ‘Income Statement’
Year 2008

Net Sales =30593

Cost of Sales % = 59.6
Gross Profit % = 40.4
Expenses % = 13.92
Other incomes % = 6.35
Net Income % = 32.82

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 Component Analysis
Component analysis ‘Income
Statement’
Year 2007
Net Sales =28429
Cost of Sales % = 64.41
Gross Profit % = 35.59
Expenses % = 13.93
Other incomes % = 5.86
Net Income % = 27.49

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 Component Analysis
Component analysis ‘Income Statement’
Year 2007

Net Sales =28429

Cost of Sales % = 64.41
Gross Profit % = 35.59
Expenses % = 13.93
Other incomes % = 5.86
Net Income % = 27.49

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Component Analysis-Graph

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 Component Analysis
Year 2008
Total Assets=31919
Property & plant equipment % = 39.88
Long Term Investment % = 24.26
Current assets % = 30.42

Year 2007
Total Assets=29241
Property & plant equipment % = 35.53
Long Term Investment % = 21.63
Current assets % = 36.97
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Component Analysis-Graph

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 Component Analysis
Year 2008
Total Capital & Liabilities=31919
Revenue Reserve % = 22.53
Non Current Liabilities % = 16.85
Current Liabilities % = 37.04

Year 2007
Total Capital & Liabilities=11476
Revenue Reserve % = 26.11
Non Current Liabilities % = 9.14
Current Liabilities % = 39.25

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Component Analysis-Graph

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 Ratio Analysis

FFCL Vs. Engro

Comparison has been
done for year 2007

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 Ratio Analysis Table
Ratio FFCL Engro
Current Ratio 0.942 2.97
Quick Ratio 0.68 2.32
Working Capital -664,958 10,420,660
Receivable Turnover Rates 18.42 14.78
Inventory Turnover Rates 6 5.322
Debt Ratio 0.56 0.59
Gross Profit Ratio 35.59 21.22
Net Profit Ratio 18.86 13.6
Earnings per Share 10.86 16.506
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Ratio Analysis Graph

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 Ratio Analysis-Conclusion
Current Ratio:
FFCL: 0.942
Engro: 2.97

Quick Ratio:
FFCL: 0.68
Engro: 2.32

We can very well see that the short-term debt paying ability
of FFCL is very low as compared to Engro, which is not a good
sign. They neither enough current assets nor enough quick
assets.

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 Ratio Analysis-Conclusion
Working Capital:
FFCL: -664,958
Engro: 10,420,660
The working capital of FFCL is negative which means that they
have more total liabilities than total assets, which is again not
a good sign.

Receivable Turnover Rate:

FFCL: 18.42
Engro: 14.78
This ratio indicates that how often receivables are collected;
in this case FFCL’s performance is better as they collect it
around 18 times in a year as compared to around 15 times of
Engro.

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 Ratio Analysis-Conclusion
Inventory Turnover Rates:
FFCL: 6
Engro: 5.322
This ratio tells that how quickly inventory sells. In this
case again FFCL is doing a bit better than Engro.

Debt Ratio:
FFCL: 0.56
Engro: 0.59
This ratio tells the amount of assets financed by the
creditors. Both companies have almost the same ratio.

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 Ratio Analysis-Conclusion
Gross Profit Rate:
FFCL: 35.59
Engro: 21.22
This ratio tells the profitability of company’s products. So
as we can see that the above ratios clearly tell that FFCL
is getting more profit than Engro.

Net Profit Ratio:

FFCL: 18.86
Engro: 13.6
This ratio tells about management’s ability to control
costs. So here FFCL is again higher than Engro, which
means they have a better control over the costs of
products.

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 Ratio Analysis-Conclusion
Earnings per Share:
FFCL: 10.86
Engro: 16.506
This term tells the net income applicable to each share
of common stock. So here Engro is giving better income
per share than FFCL.

Return on Assets:
FFCL: 0.183
Engro: 0.082118
It measures the productivity of assets; regardless that
how they are produced. In this matter FFCL is doing
quiet better than Engro.

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 Ratio Analysis-Conclusion

Return on Equity:
FFCL: 0.421
Engro: 0.2
This tells the rate of net income earned on the
stockholder’s equity in the business. In this case FFCL is
doing quiet better than Engro.

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 Conclusion

From Ratio Analysis, we have concluded that

profitability of Fauji Fertilizer Company is better as
compared to Engro Chemical Pakistan limited.

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 Thank You!

Questions………!

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