FAUJI FERTILIZER COMPANY LIMITED
Dec 17 - 30, 2007
ABOUT THE COMPANY: FFC was incorporated in 1978 as a private limited company. It was a joint venture between Fauji Foundation (a leading charitable trust in Pakistan) and Haldor Topsoe A/S of Denmark. FFC commenced commercial production of urea in 1982 with an 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. 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 privatization process of the Government of Pakistan. The initial authorized capital of the company was Rs.813.9mn. The present share capital of the company stands at Rs3bn. FFC participated as major shareholders 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. FFC controls 51% stake in Fauji Fertilizer Bin Qasim, the only Dia ammonium Phosphate (DAP) producer in Pakistan.
Currently, FFC is the largest fertilizer (urea) manufacturing company in Pakistan. It has a production capacity of 1.9mn tons. The company has a monopoly in Punjab province, which is the hub of agricultural activity in Pakistan.
Business Area: The business area of the company comprises of: Manufacturing, Engineering and Marketing.
MANUFACTURING: The largest urea manufacturing facility of Pakistan consisting of three ammonia/urea units owned by FFC. The plants are based on natural gas from Mari Gas Fields and have an annual designed production capacity of 1.9mn tons of urea.
Engineering: After the successful start-up of the first plant in mid 1982, a group of selected engineers were assigned to Technology Division-TD 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.
Marketing: Marketing Division, setup in July, 1978 is responsible for all marketing operations including planning, distribution, sales, farm advisory services, field warehousing, finance and administration. The Company is also marketing the produce of Fauji Fertilizer Bin Qasim.
As part of maintenance shutdown in the companies, FFC would be undergoing curtailment of production for a different period in its three different plants. The phase wise shut down of the three plants is:
1) 1-month plant shut down at Unit-III in 2007. The production capacity of this plant is 30% of FFC's total capacity.
2) Unit-II will be shut down in 2008 and it holds 33% of the total FFC capacity.
3) 15-days shut down at Unit-I in 2009 which holds 37% of FFC total capacity.
Urea sales by the Company were recorded at 1,635 thousand tons, only 1% lower than sales during the corresponding period of last year. The Company also sold almost the entire stock of imported urea during the period which was recorded at 70 thousand tons. The off-take was considerably lower than last year's sales owing to lower import by the Government due to declining demand during the first half of 2007. The Company additionally sold 280 thousand tons of "Sona" urea granular and 16 thousand tones of imported urea on behalf of FFBL, achieving market share of 59% during the period. The Company marketed 318 thousand tons of DAP during the period, including 251 thousand tons of "Sona" DAP on behalf of FFBL, with market participation of 42%. Company's after tax profit of Rs3.85bn (EPS: Rs7.8) was higher by 27% compared to profit of Rs.3.03bn (EPS: Rs6.14). Earnings from sources other than fertilizer sales amounted to Rs1.07bn which included 17.5% dividend income from FFBL as compared to 10% received last year.
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