Company Profile Fauji Fertilizer Co.

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Good performance

Apr 02 - 08, 2001

Fauji Fertilizer Company Limited, since its inception has been playing a momentous role in the development of the economy, agriculture and fertilizer industry. FFC is the largest manufacturer of urea with the brand name ''Sona''. In addition to its own production of Sona urea prilled it also markets Sona urea granular and Sona DAP produced by FFC Jordan Fertilizer Company Ltd. (FJFC).

Fauji Fertilizer Company Limited (FFC) was incorporated in May 1978 as a public limited company in the private sector. It was established through collaboration between Fauji Foundation and M/s. Haldor Topsoe A/S of Denmark as a joint venture of Pakistani and foreign shareholders.

The first urea plant located at Goth Machhi near Sadiqabad in Rahim Yar Khan District was completed at a cost of Rs. 3,300 million and commenced commercial production in June, 1982. In its first year of operations, the plant operated at its designed capacity of 570,000 metric tons which was a record achievement for any plant of this size any where in the world. As a result of highly efficient operations, good maintenance and strong technical support the production of Sona urea kept improving. To achieve still higher production and efficiency a major modification step was accomplished in March 1992, which increased the yearly production to 695,000 metric tons which was 122 per cent of the original design.

FFC places great emphasis on safe operations which is reflected by the several awards given to FFC by National Safety Council of USA. FFC plants are energy efficient and considerable efforts and investments have been made to ensure that they are environment friendly.

FFC began its marketing operations in April 1979. The objective of the three years ''Seeding Programme" was to market imported fertilizers in order to develop and establish its own marketing and distribution network to handle its plant production. The marketing division is responsible for all marketing activities such as sales, distribution, field warehousing, planning, farm advisory services, finance, advertising/sales promotion and administration.

With the commencement of production in June 1982, FFC started marketing of "SONA" urea and imported phosphatic and potassic fertilizers allocated to the Company by the Government. From the very beginning a growth oriented marketing strategy was adopted keeping in view future expansions. FFC operates in all the four provinces and Azad Kashmir. The marketing area has been divided into 11 regions and 61 sales districts with a network of 3,000 dealers well trained in fertilizer use, basic agronomy and salesmanship. This network is spread over 1400 locations. This is supplemented by direct sales to sugar mills, cotton ginners, rice millers and large farms. In addition to direct shipments from the Plant and imported fertilizers from Karachi, customers are being supplied from over 130 field warehouses spread all over the country. The selling effort is effectively supported by good advertising and sales promotion.

FFC, by the grace of Allah, was able to meet all the challenges faced in the early years. It was able to market its entire production and obtain the desired market share. Sona urea was immediately accepted by the farmers and soon established itself as a premium brand. With the commencement of production of FFC's first urea plant, the country became not only self-sufficient but also surplus in urea. FFC therefore exported urea to many countries which continued during the years 1983-1986 when local demand again exceeded indigenous production. From 1986 our country again started importing increasing quantities of urea. FFC again rose to the challenge for achieving the goal of self-sufficiency in urea. In 1988 the 'Company embarked on a project to set up another urea plant to manufacture 635,000 metric tons of urea per year at a cost of 7 billion rupees. FFC Project II comprising of new ammonia and urea plants commenced commercial production in March 1993.

With a combined production of over 1.4 million tons from both the plants, FFC achieved the market leadership in urea market. FFC's current share in urea market is 44%.

The Government of Pakistan deregulated the trade and prices of phosphatic fertilizers on Aug. 21, 1993. Subsequent to this decision FFC started self imports 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.

A strong Farmer Advisory Service with qualified agronomists established in 1981, has continued to expand and improve during the last 19 years. It provides soil-testing facility to the farmers at a very nominal cost in addition to conducting crop demonstrations, field days, farmer meetings, group discussions and farm visits. Technical literature containing latest information on major crops for transferring know-how to the maximum number of farmers is produced. The qualified and trained agronomists providing the above services are fully mobile with four wheel drive vehicles for use in the rural areas and are equipped with the necessary audio/visual aids.

Since its establishment FFC has achieved many landmarks in different areas of its operations. All product sales from June 1982 to September 2000 are 22.89 million metric tons. This includes sales of 18.2 million metric tons of Sona urea including exports of 0.39 million metric tons during urea surplus years, which in a span of 19 years is a remarkable achievement. The company saved foreign exchange valuing over US$ 2.9 billion through import substitution and exports for the country. It has directly and indirectly provided employment opportunities to hundreds of individuals. To date over 29 billion rupees have been paid to the Government through duties, taxes and excise duty/surcharge on gas.

In 1991, the Company was listed on Karachi and Lahore Stock Exchanges and in 1992 on Islamabad Stock Exchange. Shares were offered to the Company's employees to motivate and promote a sense of participation among them. In 1993/94 FFC achieved the distinction of paying the highest income tax in the country's corporate sector. Based on the exemplary dividends to the shareholders and the other criteria of Karachi Stock Exchange FFC was selected and placed in the list of top 25 best performing companies of Pakistan consecutively for 6 years since 1994. In 1997 FFC topped the list. The company has continued to operate profitably and has been paying dividends to its shareholders on a regular basis. lSO-9002 certification received in November 1997 confirms the excellent operational and maintenance skills of the employees at the Plants and their high level of performance.

To meet the growing requirement of fertilizer in the country and reduce dependence on imports, FFC with JPMC of Jordan has set up a new company under the name of FFC-Jordan Fertilizer Company Limited (FJFC) with a designed capacity of producing 446 thousand metric tons of DAP and 551 thousand metric tons of granular urea. FFC has a 30 % equity participation in this new company. This is the first time DAP and granular urea is being manufactured locally. The Plant commenced its commercial production on Jan. 01, 2000. FFC has undertaken the marketing of FJFC products through its already established marketing network. With its inherent advantages, granular urea has supplemented FFC prilled urea and DAP has broadened our product range.