ABSTRACT In this project the goal was to identify and select two countries for the purpose of Fauji

Fertilizers Companys Business expansion plan. There are five major parts to country identification and selection: general analysis, country identification, preliminary selection, in-depth screening, and final selection. Initially 4 countries were identified Zambia, Vietnam, India and Mauritania. Finally Vietnam and India were selected; methodology used for country selection was in-depth screening. Final selection was followed by marketing plan for each country and finally sales for each country were forecasted, on the basis of which we recommend Fauji Fertilizers Company to expand its business to Vietnam and India.

Table of Contents
ABSTRACT...................................................................................................................................................... 0 ...................................................................................................................................................................... 7 FAUJI FERTILIZERS COMPANY; AN INTRODUCTION ...................................................................................... 7 MAJOR HIGHLIGHTS: ................................................................................................................................. 7 POSITIONING:............................................................................................................................................ 8 STRENGTHS: .............................................................................................................................................. 8 WEAKNESSES:............................................................................................................................................ 9 COUNTRIES CONSIDERED FOR EXPANSION: ................................................................................................. 9 ZAMBIA: .................................................................................................................................................... 9 VIETNAM: .................................................................................................................................................. 9 INDIA: ........................................................................................................................................................ 9 MAURITANIA: .......................................................................................................................................... 10 SELECTED COUNTRIES: ............................................................................................................................ 10

........ 11 INDIA; AN OVERVIEW.................................................................................................................................. 11 PEST ANALYSIS OF THE AGRICULTURE INDUSTRY OF INDIA: ...................................................................... 11 POLITICAL ANALYSIS:............................................................................................................................... 11 ECONOMIC ANALYSIS:............................................................................................................................. 12 SOCIAL ANALYSIS: ................................................................................................................................... 12 TECHNOLOGICAL ANALYSIS: ................................................................................................................... 13 PRELIMINARY ANALYSIS: ............................................................................................................................. 13 MACRO ECONOMIC DATA: ..................................................................................................................... 13 GDP - COMPOSITION BY SECTOR: ....................................................................................................... 14 1

AGRICULTURE - PRODUCTS: ................................................................................................................ 14 INDUSTRIES: ........................................................................................................................................ 14 EXPORTS - COMMODITIES: ................................................................................................................. 14 EXPORTS - PARTNERS: ......................................................................................................................... 14 IMPORTS - COMMODITIES: ................................................................................................................. 14 IMPORTS - PARTNERS: ........................................................................................................................ 14 DEMOGRAPHIC DATA: ............................................................................................................................ 14 POPULATION: ...................................................................................................................................... 15 AGE STRUCTURE:................................................................................................................................. 15 POPULATION GROWTH RATE:............................................................................................................. 15 URBANIZATION: .................................................................................................................................. 15 CULTURAL SIMILARITIES BETWEEN INDIA AND PAKISTAN: .................................................................... 15 OCCASSIONS:....................................................................................................................................... 15 FAMILY STRUCTURE: ........................................................................................................................... 15 FOOD: .................................................................................................................................................. 15 LANGUAGES: ....................................................................................................................................... 15 MARRIAGES: ........................................................................................................................................ 16 ART: ..................................................................................................................................................... 16 IN-DEPTH SCREENING: ................................................................................................................................ 16 SIZE AND STRUCTURE OF MARKET ......................................................................................................... 16 MARKET GROWTH: ................................................................................................................................. 16 COMPETITION: ........................................................................................................................................ 16 PUBLIC SECTOR ................................................................................................................................... 16 COOPERATIVE SECTOR ........................................................................................................................ 17 PRIVATE SECTOR ................................................................................................................................. 17 PAKISTANS TRADE WITH INDIA .................................................................................................................. 18 TRADE BARRIERS ......................................................................................................................................... 18 TARIFF BARRIERS IN INDIA ...................................................................................................................... 18 Additional Customs Duties: ......................................................................................................... 18 Customs Act Of India:.................................................................................................................. 18 A Special Additional Duty ............................................................................................................ 18 2

An Additional Surcharge ............................................................................................................. 18 An Educational Cess .................................................................................................................... 18

WTO & SAFTA.......................................................................................................................................... 18 NON-TARIFF TRADE BARRIERS IN INDIA ................................................................................................. 18 Technical Regulations And Standards: ........................................................................................ 19 Import Licensing:......................................................................................................................... 19 Local Content Requirement/Rule Of Origin Issues: .................................................................... 19 Import By State Trading Enterprises: .......................................................................................... 19 Customs, Shipping And Port Procedures/Regulations: ............................................................... 19 Government Procurement Regulations: ..................................................................................... 19 Clearance Of Goods: ................................................................................................................... 19 Travel Restrictions:...................................................................................................................... 19 Inadequate Infrastructure:.......................................................................................................... 19 Excessive Red Tape: .................................................................................................................... 19 Direct Political Opposition: ......................................................................................................... 19

MARKETING PLAN: ...................................................................................................................................... 20 SITUATIONAL ANALYSIS AND MARKET TRENDS: .................................................................................... 20 FORECASTING DEMAND: ........................................................................................................................ 20 COMPANY PROFILE: ................................................................................................................................ 20 COMPETITION: ........................................................................................................................................ 20 CHOICE OF COMPETITION: ..................................................................................................................... 21 Reasons For Choosing DSCL ................................................................................................................ 21 FIRM SPECIFIC ADVANTAGE: ................................................................................................................... 21 SWOT ANALYSIS: ......................................................................................................................................... 21 STRENGTHS: ............................................................................................................................................ 21 WEAKNESSES:.......................................................................................................................................... 21 OPPORTUNITIES: ..................................................................................................................................... 21 THREATS: ................................................................................................................................................. 22 India keeps on revising its tariff plans. In past it had its tariffs ranging from 20-182%. A raise in the tariff will result as a threat to FFC exports. ...................................................................................... 22 MARKETING MIX ......................................................................................................................................... 23 3

PRODUCT OFFERINGS: ............................................................................................................................ 23 SONA UREA ......................................................................................................................................... 23 DAP...................................................................................................................................................... 23 FFC SOP ............................................................................................................................................... 23 PRICE: ...................................................................................................................................................... 23 FERTILIZER INDUSTRY PRICE IN INDIA:.................................................................................................... 24 PLACE/ DISTRIBUTION:............................................................................................................................ 24 PROMOTION: .......................................................................................................................................... 24 MARKETING STRATEGIES: ........................................................................................................................... 25 FORECASTING COST/REVENUE: .............................................................................................................. 26 DISCOUNT: .......................................................................................................................................... 26 VIETNAM; GENERAL COUNTRY ANALYSIS:.................................................................................................. 27 POLITICAL SITUATION ............................................................................................................................. 27 ECONOMIC SITUATION ........................................................................................................................... 27 SOCIO CULTURAL SITUATION.................................................................................................................. 28 TECHNOLOGICAL SITUATION .................................................................................................................. 28 REASON FOR CHOOSING VIETNAM: ........................................................................................................... 29 PRELIMINARY ANALYSIS: ............................................................................................................................. 29 MACROECONOMIC DATA ....................................................................................................................... 29 DEMOGRAPHIC DATA ................................................................................................................................. 31 POPULATION: .......................................................................................................................................... 31 AGE STRUCTURE: .................................................................................................................................... 31 POPULATION GROWTH RATE.................................................................................................................. 31 URBANIZATION: ...................................................................................................................................... 31 IN-DEPTH SCREENING ................................................................................................................................. 31 MARKET PROFILE .................................................................................................................................... 31 MARKET SEGMENTATION: ...................................................................................................................... 31 FERTILIZER MARKET SIZE, CONSUMPTION PATTERNS, AND GROWTH .................................................. 32 COMPETITION: ........................................................................................................................................ 32 Big nitrogenous fertilizer producers ........................................................................................... 32 Big phosphate producers ............................................................................................................ 32 4

NPK fertilizer producers .............................................................................................................. 33 State-owned enterprises............................................................................................................. 33 Proportion of top 10 fertilizer importers to Vietnam: ................................................................ 33

IMPORT TARIFFS ..................................................................................................................................... 33 TRADE BARRIERS ..................................................................................................................................... 34 Import prohibitions: ............................................................................................................................ 34 Quantitative restrictions and non-automatic licensing: ..................................................................... 34 Special authority regulation: ............................................................................................................... 34 Foreign exchange system: ................................................................................................................... 34 Customs: ............................................................................................................................................. 35 Taxes: .................................................................................................................................................. 35 Automatic licensing:............................................................................................................................ 35 Trading rights: ..................................................................................................................................... 35 MARKETING PLAN FOR VIETNAMESE FERTILIZER MARKET ........................................................................ 36 EXECUTIVE SUMMARY ............................................................................................................................ 36 SITUATIONAL ANALYSIS .......................................................................................................................... 36 OVERVIEW............................................................................................................................................... 36 COMPANY: .............................................................................................................................................. 37 CUSTOMERS: ........................................................................................................................................... 37 COMPETITION: ........................................................................................................................................ 37 SWOT ANALYSIS: ......................................................................................................................................... 38 STRENGTHS: ............................................................................................................................................ 38 WEAKNESSES:.......................................................................................................................................... 38 OPPORTUNITIES: ..................................................................................................................................... 38 THREATS: ................................................................................................................................................. 38 MARKETING OBJECTIVES ............................................................................................................................ 38 FINANCIAL OBJECTIVES ............................................................................................................................... 38 MARKETING MIX ......................................................................................................................................... 39 PRODUCT OFFERED: ................................................................................................................................ 39 PLACE: ..................................................................................................................................................... 39 AGENTS: .............................................................................................................................................. 39 5

PROMOTION: .......................................................................................................................................... 39 PRICING: .................................................................................................................................................. 39 INDUSTRY PRICES: ................................................................................................................................... 40 Formula used: ..................................................................................................................................... 40 Payment: ............................................................................................................................................. 40 Discount: ............................................................................................................................................. 40 Determined Price: ............................................................................................................................... 41 TARGET MARKET ..................................................................................................................................... 41 Mekong River Delta and southeastern region: ........................................................................... 41 Southern region: ......................................................................................................................... 41 Northern region: ......................................................................................................................... 41

POSITIONING IN VIETNAM ...................................................................................................................... 41 GENERAL MARKETING STRATEGIES ............................................................................................................ 41 MARKETING ORGANIZATION: ................................................................................................................. 42 REVIEW AND CONTROL:.......................................................................................................................... 42 SALES FORECAST: .................................................................................................................................... 42 FFCs FSA: ............................................................................................................................................ 42 Choosing competition: ........................................................................................................................ 42 1st years sale: ..................................................................................................................................... 42 Calculating for industry sales: ............................................................................................................. 42 Calculating for market share: .............................................................................................................. 43 PROFIT CALCULATIONS: .......................................................................................................................... 43 REFERENCES: ............................................................................................................................................... 44

FAUJI FERTILIZERS COMPANY; AN INTRODUCTION

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. Additionally, FFC has Rs. 1.0 Billion stakes in the subsidiary Fauji Fertilizer Bin Qasim Limited (formerly FFC-Jordan Fertilizer Company Limited). There is oligopoly in the fertilizer industry of Pakistan lead by Fauji Fertilzer Company and followed by Engro chemicals, Fauji Fertilizer Bin Qasim and Dawood Hercules. The marketing area is divided into 3 sales zones, 14 sales regions and 65 sales districts with a network of 3,300 well trained dealers. This network is spread over 1500 locations. Due to seasonality of fertilizer consumption, the Company has a network of 157 field warehouses with a capacity of over 300 Kt to meet its storage requirements. The company markets over 3.4 million tons of fertilizers annually comprising 2.8 million tons of urea and 0.6 million tons of locally manufactured as well as imported phosphatic / potassic fertilizers. The company has also started marketing Boron to address the micro-nutrient deficiency in the soils, under its brand name SONA. The company has also exported urea to China, Iran, Philippines, India, Bangladesh, Sri Lanka, Thailand, Tanzania and Afghanistan in the past and holds around 60% share of the domestic urea market. FFC has so far contributed an aggregate of over Rs. 94 billion to the Government by way of taxes, levies, custom duties, excise duty/ surcharge on gas purchases besides providing employment to hundreds of individuals.

MAJOR HIGHLIGHTS:
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 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. 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 privatization process of the Government of Pakistan. This acquisition at Rs. 8,151 million represents one of the largest industrial sector transactions in Pakistan. Operations at the company's projects are conducted in a safe manner. This 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 environmentally and ecologically friendly. FFC from the very beginning was able to meet the challenges and market the entire production of FFC plants, even at the time of first plants startup when the country was surplus in urea. FFC captured the desired market share and has constantly been increasing it even more than the production share. FFC established SONA as a premium brand which is widely accepted by the farming community and is synonymous with high quality. The company ensured guaranteed correct weight to the farmers. This brought a very positive qualitative change in the fertilizer business. FFC is listed on all the Stock Exchanges of the country and is one of the most traded scrip. The company has been placed in the list of top 25 companies of Pakistan for sixteen years consecutively since 1994. FFC has so far contributed an aggregate of over Rs. 94 billion to the Government by way of taxes, levies, custom duties, excise duty/ surcharge on gas purchases besides providing employment to hundreds of individuals. FFC understands the collective responsibility towards achieving a greener earth and directs all its energies and efforts to achieve this. Over the years, FFC has built and preserved an innovation-adept culture that promotes transparency & accountability through honesty, integrity and diligence in its dealings with employees, customers and all other stakeholders. FFC considers diversification as a major factor behind corporate sustainability in the future economic/ business scenario. Fauji Fertilizer will only sell the highest quality fertilizers, recognizing that there are already many fertilizer imports already going on in India and it can achieve the desired position in the market by keeping In view the quality standards. Fauji Fertilizers will leverage its competitive edges to achieve the desired positioning. FFC is the market leader in the urea sales and is expected to maintain its dominant position till 2010. FFC holds a market share of 50% in Urea production and over all share of above 63% including the DAP share by FFBL. FFCs brand SONA holds the position of premium brand of Pakistan.
8

POSITIONING:

STRENGTHS:

FFC is one of the cheapest blue chip stock being traded with a strong dividend history and healthy earning potential. FFC among all its competitors lower than average Cost Of Goods Sold per ton. Its entity FFBL is the only DAP fertilizer producer in the entire country. FFC holds 3 plants in major ends of Pakistan that not only decrease the distribution costs but also produce above their capacity at 115%. FFC has its own Marketing Division responsible for all marketing activities such as sales, distribution, field warehousing, planning, farm advisory services, finance, advertising/sales promotion and administration.

WEAKNESSES:
It produces limited types of fertilizers on its own. Fauji Fertilizers despite of being the market leader depends on imports for fertilizers other than Urea DAP to fulfill the countys demand. FFC is less volatile than the market. Normally FFC has not out performed the index.

COUNTRIES CONSIDERED FOR EXPANSION:

As per CIA fact book data; Pakistan along with Zambia, Vietnam, India, Kiribati, and Mauritania have a GDP nominal per capita of 1000 US$ according to the 2009 estimates. However from detailed analysis we came up with the following observations:

ZAMBIA:
Zambia in fact is a poor country and is a major importer of fertilizer as majority of its population depends upon agriculture for livelihood. However this GDP representation is at 1000 only because of its declining population trend. It is not a true representative of its economic situation. Also there is not much political stability in Zambia so it is not a good idea to expand the business there.

VIETNAM:
As for Vietnam it has a huge potential market for fertilizers there. Generally speaking, Vietnam is considered a politically and socially stable country. Vietnam seldom faces religious issues and race conflict in comparison with other ASEAN countries such as Indonesia, Philippines and China.

INDIA:
India being the neighboring country to Pakistan and sharing its border with it is a good market for expansion of fertilizer business. There are many cultural, social and

economical similarities between India and Pakistan. Also India is the worlds largest importer and consumer for fertilizer. So it is a hot spot for expansion of business.

MAURITANIA:
Mauritania has its half the population still depends on agriculture and livestock for a livelihood. However there are no major agricultural exports on its part. The agricultural products comprise of its sea food mainly hence not leaving it dependant on fertilizers imports.

SELECTED COUNTRIES:
On the basis of the detailed analysis FFC has come up with following two countries for expansion of business:

1. Vietnam; For exporting Urea only 2. India; For exporting of both Urea and DAP

10

BUSINESS EXPANSION PLAN FOR FAUJI FERTILIZER COMPANY LIMITED FOR INDIA

INDIA; AN OVERVIEW
India is developing into an open-market economy, yet traces of its past autarkic policies remain. Economic liberalization, including reduced controls on foreign trade and investment, began in the early 1990s and has served to accelerate the country's growth, which has averaged more than 7% per year since 1997. India's diverse economy encompasses traditional village farming, modern agriculture, handicrafts, a wide range of modern industries, and a multitude of services. Slightly more than half of the work force is in agriculture, but services are the major source of economic growth, accounting for more than half of India's output, with only one-third of its labor force. An industrial slowdown early in 2008, followed by the global financial crisis, led annual GDP growth to slow to 6.5% in 2009, still the second highest growth in the world among major economies. India escaped the brunt of the global financial crisis because of cautious banking policies and a relatively low dependence on exports for growth.

PEST ANALYSIS OF THE AGRICULTURE INDUSTRY OF INDIA:

POLITICAL ANALYSIS:
Realizing the importance of Indian agricultural production for economic development, the central Government of India has played an active role in all aspects of agricultural development. Planning is centralized, and planned priorities, policies, and resource allocations are decided at the central level. Food and price policy also are decided by the central government. Thus, although agriculture in India is constitutionally the responsibility of the states rather than the central government, the latter plays a key role in formulating policy and providing financial resources for agriculture. The main objectives of the 11

Government's price policy for agricultural produce, aims at ensuring remunerative prices to the growers for their produce with a view to encourage higher investment and production. Government of India has also approved proposals for joint ventures, foreign collaborations, industrial licenses and 100% export in or with the agricultural sector. One of the most critical obstacles of policies applications in agricultural sector is in ensuring food security - access of the population to sufficient food to meet nutritional requirements. Food security issues tend to cover not only issues related to availability and stability of food supplies but also issues of access to this supply. This last is related to the resources needed to procure the required quantity of food which include fertilizers, farmer literacy and proper irrigation.

ECONOMIC ANALYSIS:
India is a two-tier economy, with a cutting-edge and globally competitive knowledge-driven service sector that employs the brightest of the middle classes on the one hand, and a sprawling largely rain-fed agricultural sector that employs the majority of the vast and poorly educated labour force, on the other. The agricultural sector, with fishing and forestry, accounts for around 20% of GDP, services 53% and manufacturing 27%. Agriculture represents an important economic activity for a large population of the developing world Indias agricultural sector provides employment for about 60% of the countrys work force and accounts for one-fifth of GDP. Both in terms of foreign investment and number of jointventures / foreign collaborations, the consumer food segment has the top priority. The other attractive features of the Indian agro industry that have the capacity to lure foreigners with promising benefits are the deep sea fishing, aqua culture, milk and milk products, meat and poultry segments. In 1990s the Government cut the fertilizer subsidy to reduce New Delhi's fiscal deficit by removing grants and subsidies from the budget. The government action led to a reduction in the use of chemical fertilizers and protests by farmers and opposition from political parties. The government was forced to continue the subsidies but at a somewhat lower level. Agricultural exports from India were 44 percent of total exports in FY 1960, decreasing to 27 percent in2003. Over the period 1994-2005, the drive for market liberalization and globalization has severely imposed on the rural household economies. The traditional mode of agricultural practice has been destroyed. The government allocations on the agriculture sector constantly register a decline. The recent economic system giving a free hand to multinational corporations in agriculture sector has further caused a rapid shrinkage of the traditional practices and replacement of folk crop varieties with high yielding and hybrid varieties, which escalated the cost of agricultural production while stagnating productivity. The farm credit system in Indian agriculture, evolved over decades has been instrumental in enhancing production and marketing of farm produce and stimulating capital formation in agriculture.

SOCIAL ANALYSIS:
Since its independence in 1950s, foreign aid has made a significant contribution to the agricultural progress in rural India. Increasingly since independence, India has been sharing its agricultural technology with other developing countries. Numerous foreign scientists have received special and advanced training in India; hundreds of foreign students have attended Indian state agricultural universities. In the late 1980s and early 1990s, India provided short and long-term training courses to hundreds of foreign specialists each year under a variety of programs, including the Technical Cooperation Scheme of the Colombo Plan for Cooperative Economic and Social Development in Asia and the Pacific and the Technical Cooperation Scheme of the Commonwealth of Nations Assistance Program. India is one of the oldest civilizations with a kaleidoscopic variety and rich cultural heritage. During the period of 55years independence, it has achieved multifaceted socio-economic progress and is now the tenth industrialized country in the world and the sixth nation to have gone into outer space to conquer nature for the benefit of the people. However, those people employed in agricultural sector, are those 12

less educated, living in rural areas. More than 60% of the Indias population is dependent on the agriculture. The last ten years of development in the agriculture sector in India, show that the lower government investment in agriculture and market driven system has adversely affected the livelihood of rural India. Large numbers of women are engaged in agriculture, primarily in the production and processing of food. With male-selective migration from rural areas on the increase, women are often left behind to take care of both family and the farm on their own. According to the 2001 census, 27.5 percent of cultivators in the rural areas are female, while in the case of agricultural labour, as much as 46.9 percent are women. Of the rural workforce, an overwhelmingly large proportion, i.e., 80% are employed in the agriculture sector. About 36.5% (40.6 million) work as cultivators on their own/family landholding, while about 43.4 percent (48.4 million) are engaged as hired agricultural labour. It is, therefore, obvious that women play no small role in food production. In other words the mode of female participation in agricultural production varies with the land owning status to farm household. Womens roles range from managers to landless labour. Also, as globalization shifts agriculture to capital and chemical intensive system, women bear disproportionate costs of both displacement and health hazards.

TECHNOLOGICAL ANALYSIS:
The last few decades have witnessed a visible transition in the industrial landscape of India. Technology has helped society to cut across the traditional boundaries for getting converted into an emerging information society. The Government's long-term vision on Information and Communication Technology (ICT) in the Agriculture Sector aims to bring farmers, researchers, scientists and administrators together by establishing a system known as Agriculture Online for the exchange of ideas and information. A land information system has already started using geographic information systems (GIS) and remote sensing to help the farmers to plan their activities and facilitate decisionmaking and planning at the local level. Farmers can find out the chemical composition of their land through lab testing to know how fertile their land is and what should they grow to make maximum profits. Achievements of Indian agriculture supported by technology like development of High Yielding Varieties (HYV) of seeds, new hybrids of different crops, research in the area of vaccine production, varietal development through somoclonal variations, developing better quality products and transgenic in crops such as brinjal, tomato, cauliflower and cabbage have strengthened the field. In 21st century agriculture, application of modern biotechnologies like DNA finger printing, tissue culture, terminator gene technology and genetic cloning will hold the key in raising the productivity. Also considering the irrigation needs in Indian agriculture, emphasis has to be given to promote the proven cost-reducing micro-irrigation technology of drips irrigation which helps conserve water reduces fertilizer inputs and ensures higher productivity. With all the benefits that technology can provide, there is an important issue of providing sufficient and appropriate education for the labour to increase their skill sin technology application that could be beneficially used for agro sector.

PRELIMINARY ANALYSIS:
MACRO ECONOMIC DATA:
Fertilizer usage and need of a country is heavily dependant over the macro economic growth of that country. There has been tremendous increase in all the macroeconomic fields of Indian economy a view of which is as under.

13

Data Year

for

GDP

GDP (official Ex Rate) $1.237 trillion

GDP(Real Growth Rate) 7.40%

GDP (PPP)

Exports

Imports

Exchange Rates

Natural Gas Imports 12.62 billion cu m

2009 2008 2007

$3.68 trillion $3.427 trillion $3.191 trillion

$3,200

$168.2 billion $198.6 billion

$274.3 billion $323.1 billion

46.78

7.40% 9%

$3,000 $2,800

43.319 41.487

Comparis on to 5 world

10

$165

22

14

17

GDP - COMPOSITION BY SECTOR:

agriculture: 17.1% industry: 28.2% services: 54.6% (2009)

AGRICULTURE - PRODUCTS:
rice, wheat, oilseed, cotton, jute, tea, sugarcane, lentils, onions, potatoes; dairy products, sheep, goats, poultry; fish

INDUSTRIES:
textiles, chemicals, food processing, steel, transportation equipment, cement, mining, petroleum, machinery, software, pharmaceuticals.

EXPORTS - COMMODITIES:
petroleum products, precious stones, machinery, iron and steel, chemicals, vehicles, apparel

EXPORTS - PARTNERS:
UAE 12.87%, US 12.59%, China 5.59% (2009)

IMPORTS - COMMODITIES:
crude oil, precious stones, machinery, fertilizer, iron and steel, chemicals

IMPORTS - PARTNERS:
China 10.94%, US 7.16%, Saudi Arabia 5.36%, UAE 5.18%, Australia 5.02%, Germany 4.86%, Singapore 4.02% (2009)

DEMOGRAPHIC DATA:
Demographic data is the key towards identifying is there is a market existing in the country or not. The greater the number of population greater is the dependency on agriculture ultimately resulting in fertilizer requirements. 14

POPULATION:
1,173,108,018 (July 2010 est.) country comparison to the world: 2

AGE STRUCTURE:
0-14 years: 30.5% (male 187,197,389/female 165,285,592) 15-64 years: 64.3% (male 384,131,994/female 359,795,835) 65 years and over: 5.2% (male 28,816,115/female 31,670,841) (2010 est.)

POPULATION GROWTH RATE:

1.376% (2010 est.) country comparison to the world: 89

URBANIZATION:
urban population: 29% of total population (2008) rate of urbanization: 2.4% annual rate of change (2005-10 est.)

CULTURAL SIMILARITIES BETWEEN INDIA AND PAKISTAN:

India and Pakistan due to the reason of being tied in the same region for hundreds of years before the independence have same looks, skin colours, median age along with several cultural commonalities between them.

OCCASSIONS:
As the occasions like Eid and celebrations like Independence have traditionally united all of Pakistan, similarly celebrations like Holi and Diwali would show the world true colours of india. Just like we in Pakistan do not differentiate between Muslims and non-Muslims at the time of Eid, similarly, in India everbody plays Holi and everybody enjoys Diwali.

FAMILY STRUCTURE:
The majority of Pakistani and Indian women are homemakers, and men are generally referred to as the breadwinners. The largest percentage of working women in both the countries are nurses or teachers. The joint family remains popular.

FOOD:
The spices and the type of dishes made in both the countries are almost similar.It can be found in the culture of both the countries that either there is lunch or a time of dinner all the family members sit around the table and enjoy their meals, chit chat together even in such type of busy life.

LANGUAGES:
There are multiple languages spoken in both the countries . Punjabi, Gujrati, Pushto, Kashmiri and Urdu are the common languages of both the countries and are also the most widely spoken.

15

MARRIAGES: Marriages often are arranged, and caste plays an important role. Both unrelated and crosscousin marriage trend in prevalent in both the countries. ART: There is a huge similarity between the literature, graphic and performance art of both the countries. The folklores that both countries share are also common.

IN-DEPTH SCREENING:
SIZE AND STRUCTURE OF MARKET
The agricultural sector has always been an important contributor to the India GDP. This is due to the fact that the country is mainly based on the agriculture sector and employs around 60% of the total workforce in India. The agricultural sector contributed around 25% to India GDP in 2009. Agriculture in India is the means of livelihood of almost two thirds of the work force in the country. It has always been INDIA'S most important economic sector. Dependence on India agricultural imports in the early 1960s convinced planners that India's growing population, as well as concerns about national independence, security, and political stability, required self-sufficiency in food production. This perception led to a program of agricultural improvement called the Green Revolution and the growth in food-grain production is a result of concentrated efforts to increase all the Green Revolution inputs needed for higher yields: better seed, more fertilizer, improved irrigation, and education of farmers. Since then government has taken several steps to encourage the imports of fertilizers to increase the capacity of the arable land.

MARKET GROWTH:
Agriculture Growth Rate in India GDP has slowed down for the production in this sector has reduced over the years. The agricultural sector has had low production due to a number of factors such as illiteracy, insufficient finance, unavailability of sufficient fertilizers and inadequate marketing of agricultural products. Further the reasons for the decline in Agriculture Growth Rate in India GDP are that in the sector the average size of the farms is very small which in turn has resulted in low productivity. Also the Growth Rate of the Agricultural Sector in India GDP has declined due to the fact that the sector has not adopted modern technology and agricultural practices. Agriculture Growth Rate in India GDP has also decreased due to the fact that the sector has insufficient irrigation facilities. As a result of this the farmers are dependent on rainfall, which is however very unpredictable.

COMPETITION:
Following is the list of competition that FFC will have to face entering the Fertilizer market in India.

PUBLIC SECTOR 1. National Fertilizers Limited 2. Fertilisers and Chemicals Travancore Ltd. 3. Rashtriya Chemicals & Fertilizers Limited 4. Madras Fertilizers Limited 5. Paradeep Phosphates Limited
16

6. Pyrites, Phosphates & Chemicals Limited 7. Fertilizer Corporation of India Limited 8. Projects & Development India Limited COOPERATIVE SECTOR 1. Indian Farmers Fertiliser Cooperative Ltd. 2. Krishak Bharati Cooperative Limited PRIVATE SECTOR 1. Gujarat State Fertilizer Company Limited 2. Coromondel Fertilisers Limited 3. Shriram Fertilisers & Chemicals Limited 4. Zuari Industries Limited 5. Southern Petrochemicals Inds. Corpn. Ltd. 6. Mangalore Chemicals & Fertilizers Limited 7. Gujarat Narmada Valley Fertilisers Co. Ltd. 8. Duncans Industries Limited 9. Deepak Fertilizers & Petrochemicals Ltd. 10. Indo-Gulf Fertlizers & Chemicals Corpn. Ltd. 11. Godavari Fertilizers & Chemicals Limited 12. Nagarjuna Fertilizers & Chemicals Limited 13. Chambal Fertilizers & Chemicals Limited 14. Tata Chemicals Limited 15. Oswal Chemicals & Fertilizers Limited

17

PAKISTANS TRADE WITH INDIA

The Pakistan and India feud dates back to 1947 and is deep rooted in the economic, political and religious conflicts between both nations. Even though trade between both countries has improved it has mostly been in the favor of India.

2003-2004 Pakistani exports $93.68 millions, Imports from India $382.67 million 2008-2009 Pakistani exports $391.61millions, Imports from India $1.20 billion

This increase in exports/imports has occurred mainly due to the additions in the list of items for free trade between both countries.

TRADE BARRIERS
TARIFF BARRIERS IN INDIA
Despite the efforts to open up for trade, average tariffs of both countries remain relatively high. Indias average tariff stands at 22.2 percent, while Pakistans is 14.9 percent. These can be viewed in perspective of a developing country median of 11.2 percent. The imports in India are subject to various types of duties. The highest rate of basic customs duty in India is 70 percent. Some agricultural products are subject to import duties as high as 80 to 150 percent. Other duties include:

Additional Customs Duties: which are levied on all items imported into India, and are equivalent to the excise duty payable on goods manufactured in India; Customs Act Of India: A special duty equivalent to 5 percent of the value of goods on specific articles mentioned in the Customs Act. A Special Additional Duty which is levied on all articles with varying rates; An Additional Surcharge which is levied from time to time with varying rates but for most goods equal to 1 percent; An Educational Cess of 2 percent levied on all imports in the 2004 budget. After the goods are landed, imports are also subject to taxes by the Indian states-octroi, local sales tax and local government sales tax and toll tax, etc.

WTO & SAFTA

WTO guidelines required India to grant Pakistan most favored nation status which they did 10 years ago. This entitled Pakistan all trade advantages that other countries receive (same tariff rates.) Pakistan however has not done the same for India. South Asian Free Trade Agreement (SAFTA) calls for both nations to lower their tariff rates to zero by 2012.

NON-TARIFF TRADE BARRIERS IN INDIA

According to the World Trade Organizations (WTO) definition, non-tariff barriers (NTBs) include all measures, other than tariffs, that are used to protect domestic industry. The WTO considers the following to be major NTBs: 18

Technical Regulations And Standards: that has sampling or customs inspection, requirement of technical/standard certification. India employs sanitary and phytosanitary rules in the agricultural sector, and other health and safety regulations (e.g. in pharmaceuticals), which may in part serve the purpose of discouraging trade. Import Licensing: one of the major barriers as import licensing has been largely abandoned since 2001 Local Content Requirement/Rule Of Origin Issues: including labeling and marking rules, packaging rules specification and local content/rule of origin schemes, Import By State Trading Enterprises: Government-mandated import monopolies in the areas of agricultural and petroleum products are also in place. Customs, Shipping And Port Procedures/Regulations: Cumbersome customs procedures because of limited number of ports & inland custom ports for imports, Sea and land transportation between the countries is also difficult. Ships plying between Indian and Pakistani ports are obliged to first touch a third country port before being allowed to harbor. Government Procurement Regulations: In addition, the misuse of WTO provisions regarding domestic industry protection (e.g. laws pertaining to anti-dumping, countervailing, and safe guard measures, subsidy to agriculture and industry, etc.) also constitute very effective non-tariff barriers. Clearance Of Goods: hurdles in inter-provincial movement of goods because of security checks and delays in clearing consignments, Travel Restrictions: Trade through Attari can only be done by rail while trade though Wagah can only be done by road. Gates are only open from 8:00 am to 4:00pm. It is closed at 4:00pm for the border ceremony. Inadequate Infrastructure: Poor transportation linkages within roads and railways, sea port restrictions and bureaucratic regulations Excessive Red Tape: Constraints on Visas. Due to the non-availability of representatives of local banks from either country in the other, LC opening is another major problem, since India allows opening of LCs only in the banks recognized by the Indian government. Direct Political Opposition: continuously changing political parties focus on the short-term goal rather than the long-term.

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MARKETING PLAN:
SITUATIONAL ANALYSIS AND MARKET TRENDS:
Today, India stands as the third largest fertilizer consumer and producer of the world. It has been observed that the subsidies on Indian fertilizer have been rising at constant rate. This is due to the rise in the cost of production and the inability of the government to raise the maximum retail price of the fertilizers. The population of the country is rapidly increasing at 1.5% annually. This requires higher production of food grains. The total cropped area is only 30% of the net geographical area, which is not enough for increasing the agricultural productivity. Now, the main focus is on the improvement of the farm income, for which the fertilizer industry needs to lay more stress on the agricultural activities in the country. The Fertilizer Association of India (FAI) has been set up a model which is based on several factors that include fertilizer prices, high yielding areas, irrigated areas, fertilizer nutrient prices and previous years' fertilizer consumption.

FORECASTING DEMAND:
An estimate of the demand and supply till the end of the 11th five year plan is given in the chart below:

Supply Year

Demand

Demand Supply Gap Demand of K N+P+K (IMPORTS)

N+P 2007-08 2008-09 2009-10 2010-11 2011-12 16950 17585 18595 19912 19965

N+P+K 23125 24085 25035 25960 26900 8835 9305 9405 9178 10235 2660 2805 2965 3130 3300

COMPANY PROFILE:
Fauji Fertilizers Companys overview is given in the beginning.

COMPETITION:
Already mentioned in In-depth screening.
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CHOICE OF COMPETITION:
FFC has chosen DSCL DSM Shriram Consolidated Limited to be its competitor. DSCM is amongst the first urea manufacturers in India starting way back in the 1960's. Their fertilizer operations are characterized by highly optimized production process delivering high capacity utilization & proven abilities in erection, commissioning, operation & troubleshooting of Ammonia/Urea plant.

Reasons For Choosing DSCL 1. Over the last 4 decades of operations, SHRIRAM' has developed a strong presence in the rural market and is identified with premium quality reliability and high trust. Their positioning in the market is the same as FFC plans to position itself so on this basis it has chosen this particular company. 2. Secondly as FFC is going to take first entry in the market, DSCL have also recently made an entry into the Southern region where they are working on their products to gain acceptance. And somewhat by the initial feedback from the farming community there, they plan to further strengthen their presence in that market. So FFC plans to compete on the same parameters i.e. Brand Recognition, Brand Acceptance and High Volume Profitable Sales. 3. DSCLs Urea plant, has a Production capacity of 379,000 tons per annum whereas aggregate capacity of FFC by all its plants sums up around 2,100,000 tons. After fulfilling the demands of the country 379,000 tons per annum is a very suitable target for FFC to set for exports.

FIRM SPECIFIC ADVANTAGE:

FSA of FFC lies in urea production as it is the market leader in Pakistani fertilizer industry holding 50% share in the entire market for urea and its combine share with FFBL is 63% where FFBL is the only DAP producer in Pakistan capturing 30% shares. And its profit margin is the highest as compared to all the companies which sell imported DAP. FFC has its plants in the major regions of the country and thus has the lowest Sales and Distribution cost.

SWOT ANALYSIS:
STRENGTHS:
FFCs strengths have been mentioned in the beginning while giving companys introduction.

WEAKNESSES:
FFCs weaknesses have been mentioned in the beginning while giving companys introduction.

OPPORTUNITIES:
The growing demand for fertilisers makes the Indian market highly attractive for domestic and foreign manufacturers. Recent policy changes by the government are a welcome step and will open up opportunities for local companies to strengthen their domestic presence and meet global aspirations.
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In FY 08, India imported 6.8-mt of urea, making it one of the largest urea importers in the world. Urea demand is forecast to increase by about 3% per annum to reach 29mt by 2011, The planned capacity additions are not sufficient to meet even this forecast. The main reason for insufficient capacity addition is the unavailability of natural gas at competitive rates. This gives an edge to FFC as Pakistan is self sufficient in terms of Natural Gas. India currently imports about 2-mt of DAP per annum. Indian DAP demand is expected to increase by about 5% per annum till 2012. But the planned capacity additions are not expected to match the projected demand, increasing Indias dependence on imports. Also, unavailability of rock phosphate is a major roadblock for capacity addition. The current dependence on imports of fertilisers, which will only increase further, has virtually turned India into a sellers market for global manufacturers. By 2015, India is expected to face a demand-supply deficit of 8-9-mt of urea. The recent initiatives may result in relieving its heavy dependence on imports in the near future. In the case of phosphatic fertilizers, the raw materials and intermediates are imported in large scale. With the aid of the imported raw materials, phosphatic fertilizers are produced to meet the requirements for the domestic market. The requirement of potash (K) is met entirely through imports. No fertilizer unit of India has any reserve of potash. FFC SOP has major chances to flourish given the scenario. Good monsoonal showers have led to the growth in agriculture, inadvertently increasing the consumption rate of fertilizers. The capacity of India to produce fertilizer again is not sufficient enough to meet the demand ultimately resulting in imports from its part. The Government of India is also deregulating the fertilizer industry as to make it as flexible as possible which is a welcoming act for Exports, Foreign Direct Investment and Joint ventures. As the rate of Urbanization increases the demand of fertilizers has also boosted up at a tremendous level and there has been an impressive excess in the consumption of fertilizers in India. Its gives a good chance to Fauji Fertilizers Company to open up export in India having the potential for producing export quality Urea, DAPS and SOP. Since the consumer prices of both indigenous and imported urea are fixed uniformly, subsidy is also paid on imported urea in order to bridge the difference between the cost of imports and statutorily fixed consumer price. We can say that the Government there is willing to pay for the increasing fertilizer demands.

THREATS:
India keeps on revising its tariff plans. In past it had its tariffs ranging from 20-182%. A raise in the tariff will result as a threat to FFC exports. The market may be reluctant to adopt a Pakistani brand due to the relationship between both the nations. Having USA and China also importing India fertilizer their might be a doubt about the quality of fertilizer being imported from Pakistan.
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The political situation between both the countries keeps getting bitter and there is a continuous threat that trade might be shut down at any point in time. The demand in Pakistan for fertilizers is also rising it might leave FFC behind its export capacity.

MARKETING MIX
PRODUCT OFFERINGS:
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 foliar application.

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 in a 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 ideal fertilizer for Basal application to meet the initial requirement of most of the crops.

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.

PRICE:
The cost of goods sold per ton for most manufacturers is similar. Only FFC has clearly exhibit lower than average COGS per ton. This has more to do with older plants with lower depreciation rather than manufacturing efficiency. FFBL, manufacturing cost is very high as compared to the others FFC. This is due to the fact that FFBL is the only company to manufacture both Urea and DAP fertilizers and DAPs manufacturing process is 23

costlier. But as long as India completely relies on Imports for DAP and SOP so that may also be a positive step towards expansion of FFBL abroad.

In PKR

Cost Of Goods Sold/Tn 2010 2011 11433.05 9958.34 2012 12916.67 10097.42

Cost Of Goods Mfg/Tn 2010 5663.08 9821.92 2011 5933.91 9958.34 2012 6230.33 10097.42

ROE 2010 40% 48.46% 2011 36% 46.69% 2012 35% 45.34%

FFC FFBL In USD FFC FFBL

10143.48 9821.92

118.194 114.447

133.22 116.036

150.507 117.657

64.822 114.447

69.1432 116.036

72.59 117.657

40% 48.46%

36% 46.69%

35% 45.34%

FERTILIZER INDUSTRY PRICE IN INDIA:

The import price parity that includes the price plus tariff plus transport cost to the purchasers location going along in India in the current time as set by the (Government of India Ministry of Chemical and Fertilizers Department of Fertilizer) is

For Urea 12861.03 Indian rupees which is equivalent to 286.518 US$. For DAP this rate is set to be 35789.38 Indian rupees which is equivalent to 797.318 US$.

PLACE/ DISTRIBUTION:
FFC plans to hold DIRECT EXPORTS of fertilizer that constitutes Urea DAP and SOP to India. Being the market leader in Pakistan and the owner of gigantic plants in the major parts of the country it is strong enough to continue using its own name in India as well. The brand name that FFC holds for its fertilizers is Sona which means Gold. The word is present both in Hindi and Urdu language. FFC would forward the freight through Wahga Border and by means of Samjhauta Express train service between Lahore and Attari upto Dehli. In India it will hire a local agent who will be responsible for carrying out distribution in different regions mainly in:

1. Punjab 2. Gujrat.
Reason behind this is that these are the nearest to border and highly arable and thus would reduce transportation cost.

PROMOTION:
FFC has its own Marketing Division. This organization is responsible for all marketing activities such as sales, distribution, field warehousing, planning, farm advisory services, finance, advertising/sales promotion and administration. 24

The Company is also marketing half a million tons of Sona urea granular manufactured by Fauji Fertilizer Bin Qasim (formerly FFC Jordan Fertilizer Co. Ltd).

FFC would join hand with other fertilizer producers to promote use of Fertilizers through fertigation on various crops. It would prepare Crop schedule and circulated to farmers through news bulletin to enhance farmers knowledge. Through Press, T.V. advertisements & wall posters FFC product offerings would be depicted in local languages for usage of these for large areas & for increased yield and quality through increased fertilizer use efficiency. The dealers and extension staff would also be trained in promoting use of Water Soluble Fertilizers. Promoting balanced and efficient use of fertilizers It plans to carry out below line promotion activities (exhibitions, fair, competitions etc) Training programs for dealers are also a part of FFCs promotions strategy It might plan to Provide of value added services at some point in time Use of information technology networks in India for example establish (kisan call Centres) It would carry out promotional campaign under Aman ki Asha which is expected to be viewed and appreciated.

MARKETING STRATEGIES:
With the development of means of transport and storage facilities in India, agriculture has become commercial in character, the farmer those fertilizers that grow better crops and ultimately fetch a better price. Marketing of agricultural products including fertilzers is considered as an integral part of agriculture, since an agriculturist is encouraged to make more investment and to increase production. Thus there is an increasing awareness that it is not enough to bring out a product in market; it must be marketed as well.

The motto/slogan of FFC is very easy which is FFC believes in selling a program rather than just products and will adopted a customer oriented strategy by marketing quality products backed by efficient and effective support services. Special emphasis will be paid on developing the market through practical and innovative farmer education. The company will provide agricultural experts, a year before the commencement of commercial production. This free of cost and on the spot service to the farmers will be provided in the form of crop demonstrations, field days, farmer meetings, group discussions and farm visits. Technical literature on important crops in regional languages will also distributed during these activities. In-addition free soil/ water testing through most modern laboratories will be provided and computerized recommendations will be given from five Farm Advisory Centers. The company pursues an innovative policy
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towards educating the farmers utilizing electronic, print and roadside advertising in Native Languages. FFC understands the collective responsibility towards achieving a greener earth and directs all its energies and efforts to achieve this. Seeing this it will hold seminars and workshops promoting the Green Revolution campaign going on in India with its Brand name Sona FFC considers diversification as a major factor behind corporate sustainability in the future economic/ business scenario. It will adapt to and benefit from all the related technological advancements possible in this field.

FORECASTING COST/REVENUE:
FFC and FFBL initially plan to start at the same prices as the prices prevalent in Indian industry.

The difference between the manufacturing price of urea by FFC in the current year and the import parity price in Indian industry is 286.518-64.822=221.696 US$ per metric ton. It can be called as the profit of FFC ceteris paribus. And in case of DAP it the difference is 797.318-114.447=682.871US$ per metric ton. It can be called as the profit of FFC ceteris paribus.
Out of 445,500 metric tones of DAP per annum FFC will export 70,000 metric tons to India hence the revenue generated through DAP per annum would be: 70000*682.871= 47,800,970 US $ Out of 1881000 metric tons of Urea per annum, FFC will export 309000 metric tons to India as to complete the total export figure of 379,000 metric tons of Urea and DAP both. Hence the revenue generated through export of Urea would be: 309000*221.696= 68,504,064 US $

DISCOUNT:
The maximum applied discount rate for a single contract is 1% of contract value (excluding VAT), following below discount levels: - From 10,000 tons or above: 0.5 % - From 20,000 tons or above: 0.75 % - From 30,000 tons or above: 1 % The discount will be deducted directly from contract price.

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BUSINESS EXPANSION PLAN FOR FAUJI FERTILIZER COMPANY LIMITED FOR VIETNAM
VIETNAM; GENERAL COUNTRY ANALYSIS:
POLITICAL SITUATION
Vietnam is a Single Party Communist State. There is more likely to be higher government control and less autonomy for the organization wanting to enter the Vietnamese market. There is a growing sense of grass-roots democracy in Vietnam. A slow but steady move towards a more open and transparent system based on the rule of law is expected, within the context of a one party state. The Vietnamese Government will continue to pursue a policy of gradual economic reform, covering state enterprise, banking, foreign trade and public administration. Implementation, however, will remain a challenge, potentially slowed by vested interests.

ECONOMIC SITUATION
Vietnam is a densely-populated developing country that in the last 30 years has had to recover from the ravages of war, the loss of financial support from the old Soviet Bloc, and the rigidities of a centrally-planned economy. Vietnamese authorities have reaffirmed their commitment to economic liberalization and international integration. They have moved to implement the structural reforms needed to modernize the economy and to produce more competitive export-driven industries. Vietnam joined the WTO in January 2007 following more than a decade-long negotiation process. WTO membership has provided Vietnam an anchor to the global market and reinforced the domestic economic reform process. Agriculture's share of economic output has continued to shrink from about 25% in 2000 to about 21% in 2009. Deep poverty has declined significantly and Vietnam is working to create jobs to meet the challenge of a labor force that is growing by more than one million people every year. The global recession has hurt Vietnam's export-oriented economy with GDP growing less than the 7% per annum average achieved during the last decade. In 2009 exports fell nearly 10% year-on-year, prompting the government to consider adjustments to tariffs to limit the trade deficit. The government has used stimulus spending, including a subsidized lending program, to help the economy through the global financial crisis, and foreign donors have pledged $8 billion in new development assistance for 2010. Domestic investment grew 16% while committed foreign direct investment fell 70%, a steep reduction after 5 years of growth. Nevertheless, the weaker economy, current account deficit, and subdued foreign investment environment means Vietnam's managed currency, the dong, faced downward pressure through 2009, leading the government to devalue it by more than 5% in December. Vietnam is a developing economy. To cater for the largest demographic, it is best to use a price leadership strategy rather than rely
27

on product differentiation. Sell a cheaper, and more basic product or service, rather than offer a premium quality or novelty product.

SOCIO CULTURAL SITUATION

The Culture of Vietnam, an agricultural civilization based on the cultivation of wet rice, is one of the oldest in East Asia; the ancient Bronze age Dong Son culture is considered to be one of its most important progenitors. Due to the long-term Chinese influence on its civilization, in terms of politics, government and Confucian social and moral ethics, Vietnam is considered to be part of the East Asian Cultural Sphere. Following independence from China in the 10th century, Vietnam began a southward expansion that saw the annexation of territories formerly belonging to the Champa civilization (now Central Vietnam) and parts of the Khmer empire (today southern Vietnam), which resulted in minor regional variances in Vietnam's culture due to exposure to these different groups. During French colonial period, Vietnamese culture received merchant influences from the Europeans, including the spread of Catholicism and the adoption of Latin alphabetto this day, Vietnam is the only non-island nation of Indochina which uses the Latin alphabet to write the national language. In the socialist era, the cultural life of Vietnam has been deeply influenced by governmentcontrolled media and the cultural influences of socialist programs. For many decades, foreign cultural influences were shunned and emphasis placed on appreciating and sharing the culture of communist nations such as the Soviet Union, China, Cuba and others. Since the 1990s, Vietnam has seen a greater re-exposure to Asian, European and American culture and media. Some elements generally considered to be characteristic of Vietnamese culture include ancestor veneration, respect for community and family values, handicrafts and manual labour, and devotion to study. Important symbols present in Vietnamese culture include dragons, turtles, lotuses and bamboo. For a foreign organization, there are bound to be language barriers (most obvious factor). Ensure that the labels on the packaging is in Vietnamese if you're selling a product. Vietnam is also predominantly Buddhist (85% of the population). It is better to offer a product or service that respects the local values and culture, and is compatible.

TECHNOLOGICAL SITUATION
The access and use of information and telecommunication technology (ICT) is considered essential for the development of the Vietnamese society, both from an economic and social viewpoint. ICT is growing at a fast rate in Vietnam but statistical indicators to measure this development are falling behind. Current indicators are few and compiled on an ad-hoc basis. In agriculture field there is lack of updated technology and technical skills to apply to the working field. By failing to invest in research and development, Vietnamese companies are missing out on new technologies and falling behind in the rapidly changing global marketplace, officials say. Technology development in Vietnam has been hindered by several factors, including an
28

unskilled labor force, low capital and a fledgling market economy. Many foreign manufactures only consider Vietnam a place to assemble products where they can benefit from cheap labor and preferential investment policies. As a result, they rarely transfer technology to factories in Vietnam.

REASON FOR CHOOSING VIETNAM:

Most obvious reason was similarity between GDP-per capita of Pakistan and Vietnam, additionally we found from macroeconomic data that fertilizers are major import of Vietnam. Generally speaking, Vietnam is considered a politically and socially stable country. Vietnam seldom faces religious issues and race conflict in comparison with other ASEAN countries such as Indonesia, Philippines and China. Vietnam has achieved high GDP growth rate and has maintained political and macro-economic. Renewal policies have gained enormous support and the transition to a market economy is still underway. In the context of recent terrorism-related events, Vietnam is regarded a safe investment destination. Following are the other major reasons: Vietnam, firstly, is a young country with abundant human resource, aspiration and a vision to attract investments. Vietnam has large amount of real estate, extremely favorable location for production, export activities, especially the proximity to the sea would be an advantage for storage and transportation. It is not easy for other countries to have this favorable location of land. Secondly, Sembcorp (which owns, develops, markets and manages landmark integrated townships and industrial parks in Vietnam, China and Indonesia) has been accompanying Vietnam in developing this field of business. Investment of Sembcorp in Vietnam itself has been the trustful certificate for other businesses to believe in Vietnam. Moreover, the partners will invest in Vietnam on the lands developed by Sembcorp and Vietnamese partners. They therefore have the advantages of infrastructure, human resources and a good location for developing businesses.

PRELIMINARY ANALYSIS:
MACROECONOMIC DATA
Gross Product GDP (PPP) Domestic 2009 Country comparison to the world 42 ---

$256.5 billion

GDP(official exchange $93.16 billion rate)

29

GDP(real growth rate) GDP-per capita(PPP) GDP-agriculture GDP-industry GDP-services

5.3% $2,900 21.3% 40% 38.8%

26 167 -------

Industries

Exportcommodities marine products rice coffee rubber tea garments shoes crude oil

Export-Partners Importcommodities US 21.43% Japan 11.44% China 7.27% Australia 4.43% Germany 4.27% machinery equipment petroleum products fertilizer steel products raw cotton grain cement motorcycles

ImportPartners and China 16.42% Singapore 9.61% Japan 8.96% Taiwan 8.23% South 7.72% Korea

garments shoes machinebuilding mining coal steel cement food processing chemical fertilizer Glass, paper Tires, oil

Thailand 6.41% Hong 4.45% US 4.27% Kong

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DEMOGRAPHIC DATA
POPULATION: 89,571,130 (July 2010 est.)country comparison to the world: 13 AGE STRUCTURE: 0-14 years: 26.1% (male 12,069,408/female 11,033,738) 15-64 years: 68.3% (male 30,149,986/female 30,392,043) 65 years and over: 5.6% (male 1,892,505/female 3,039,078) (2010 est.) POPULATION GROWTH RATE: 1.096% (2010 est.)country comparison to the world: 117 URBANIZATION: Urban population: 28% of total population (2008) Rate of urbanization: 3.1% annual rate of change (2005-10 est.)

IN-DEPTH SCREENING
MARKET PROFILE MARKET SEGMENTATION:
Geography is a key factor in segmenting Vietnams market. This includes not only the regional segmentation of North-Central-South, but also the segmentation of urban versus rural markets. Vietnam is roughly separated into three economic regions surrounding core urban centers: the South centered on Ho Chi Minh City, the North based in Hanoi, and the Center focused on Da Nang. The main distinctions among these regions are consumer purchasing ability, brand awareness and recognition. Vietnam's per capita GDP stands at around $1,024, while unofficial estimates put HCMC's and Hanois per capita GDP at well over triple the national average. The actual disparity is probably even greater, as certain income elements that are not well captured in official statistics (such as remittances from overseas relatives and private sector activity) are centered more in the South. Currently, consumer purchases are strongest in Ho Chi Minh City (and the contiguous provinces of Binh Duong, Dong Nai, and Ba Ria-Vung Tau), where there is a concentrated and growing population of consumers with disposable income. Consumers in the South also tend to exhibit a greater degree of brand awareness than do consumers in the North and Central regions, although this is changing. This is principally due to extensive contact with Westerners prior to 1975 and the influence of returning overseas Vietnamese. These defining factors have had an impact on market demand disparities, market entry strategies, product-line segmentation and marketing mix. For many consumer goods companies, the first marketing
31

goal is to penetrate Ho Chi Minh City; as well over half of all Vietnamese purchases of foreign consumer goods take place in this area. By contrast, companies that sell products related to Vietnams infrastructure development (energy, environment, aviation, telecommunications, etc.) frequently focus selling efforts in Hanoi, which is headquarters to most state owned enterprises (SOEs), the multilateral development banks (Asian Development Bank and World Bank) and other development organizations offering official development assistance (ODA). Even with Vietnams rapid transition to a more consumer-based society, SOEs still control roughly 37 percent of the economy and account for a significant portion of overall imports on a total value basis.

FERTILIZER MARKET SIZE, CONSUMPTION PATTERNS, AND GROWTH

On the demand side, fertilizer consumption in Vietnam has risen sharply in recent years as strong agricultural commodity prices and strong support policies to agriculture give farmers more incentives to gain greater profit by more production and higher yield. Rice production uses the highest application of fertilizers. Of the three yearly crops, that of the winter/spring season is the largest, when the use of fertilizers is always higher than during the other seasons. Geographically, the Mekong River Delta and southeastern region, accounting for 65.4 percent of total land used for agricultural production, is Vietnams biggest fertilizer market. According to Vietnam Fertilizer Association (VFA), Vietnam needs about 8.9 million tones of fertilizers this year, almost double the volume used five years ago. Last year, the country consumed 8.3 million tones of fertilizers.

COMPETITION:
At present, there are almost 300 domestic fertilizer producers and 20 representative offices abroad. Among these, some producers have accounted large proportion of fertilizer market share and lead the market in several fertilizer products. However, local fertilizer producers are facing with serve competition from imported products and their reputation is affected by counterfeit products produced by small facilities. Nitrogenous fertilizer, phosphate and NPK are produced largely by domestic fertilizer companies. Big nitrogenous fertilizer producers in Vietnam are the Ha Bac Nitrogenous Fertilizer Plant with the annual capacity of 175,000 tonnes of urea and the Phu My Fertilizer Plant with an annual capacity of 740,000 tonnes of urea. Their capacity meets a half of domestic demand. Big phosphate producers besides nitrogenous fertilizer producers, big phosphate producers include Lam Thao Fertilizers and Chemicals Joint Stock Company (annual capacity of 880 thousand tonnes), Van Dien Fused Magnesium Phosphat Fertilizer Joint Stock Company (capacity of 300,000 tonnes per year), and Ninh Binh Phosphate Fertilizer Joint Stock Company (capacity of 300,000 tonnes per annum). All the major
32

fertilizer producers are members of the Vietnam National Chemical Group. Their capacity satisfies a majority of domestic demand. NPK fertilizer producers in addition, there are many NPK fertilizer producers that meet domestic demand and provide some exports to Laos and Cambodia. Examples are the Binh Dien Fertilizer Company, Japan Vietnam Fertilizer Company and Baconco Fertilizer Company. State-owned enterprises Investment in fertilizer plants requires a large amount of capital and well qualified human resources, therefore, state-owned enterprises occupy most of domestic fertilizer market. There are few private fertilizer producers in the domestic market and they mainly invest in NPK production which requires small amounts capital and modest technology. Proportion of top 10 fertilizer importers to Vietnam: Vietnam still heavily relies on imports to satisfy the domestic demand of 9-10 million tones per year while local production only meet 60 percent of its demand. It is estimated to import 3.3 million tones of fertilizers in 2010. According to The Ministry of Agriculture and Rural Development (MARD), fertilizer demand in agriculture was 8.9-9.1 million tones in 2010 whereas the local fertilizer production only meets 5.6 million tones of that figure. According to official statistics by General Department of Vietnam Customs, in September 2010, Vietnam imported fertilizer from 25 markets, down 1 market from August 2010.Vietnam imported fertilizer from 10 big markets, including China, Indonesia, Japan, Canada, Singapore, the Philippines, Taiwan, South Korea, Russia and Malaysia) with the total volume of 230.66 thousand tons, worth US$ 74.4 million, accounting for 99.25% in volume and 97.31% in value, up from 95.1% in volume and 93.3% in value of August 2010. At present, a large amount of import fertilizer comes from China because of cheaper price and ease of import. As a result, local fertilizer products are facing severe competition with Chinese products. PVFCCo has reached remarkable achievements in safe factory running, effective operation performance contributing in stabilizing urea price in domestic market. Management, operation and maintenance teams are increasingly active in undertaking their own tasks to ensure the factory operating at full capacity and international standard quality products. With international standard quality products, reasonable prices and stable supply, from the very first year, Dam Phu My (Phu My Fertilizer) product brand not only exceeds their revenue and profit target but also becomes market leader (with biggest market shares) in domestic fertilizer market in supplying 1,000,000 tons of urea/ year, which is equivalent of 50% of domestic urea demand (including Dam Phu My and imported goods). Brand name "Dam Phu My" has been confirmed as the leading in the fertilizer industry in Vietnam.

IMPORT TARIFFS
Vietnam currently has four categories of tariff rates: (1) normal trade relations (NTR) /most favored nation (MFN) rates that apply to all WTO Member countries; (2) Common Effective Preferential Tariff rates that apply to imports from ASEAN countries; (3) preferential tariff rates applied under Vietnams FTAs; third, special
33

preferential rates apply to goods imported from countries that have exchanged special preferential tariff agreements with Vietnam, e.g., free trade and customs union agreements and agreements to facilitate border trade, such as the Common Effective Preferential Tariffs implementing the ASEAN Free Trade Area6. (4) General tariff rates (50 percent higher than NTR/MFN) that apply to all other countries.

TRADE BARRIERS
Vietnam has eliminated and has committed to not reintroducing any quantitative restrictions on imports or other non-tariff measures, such as quotas, bans, permits, prior authorization requirements, licensing requirements, or other restrictions having the same effect, which would not be consistent with the WTO Agreement. Import prohibitions: Vietnam currently prohibits the commercial importation of the following products: arms and ammunition; explosives (not including industrial explosives); military equipment and facilities; narcotics; certain toxic chemicals; "depraved and reactionary" cultural products; firecrackers; certain children's toys; second-hand consumer goods; right-hand drive motor vehicles; used spare parts for vehicles; asbestos materials under the amphibole group; specialized encryption devices and software not destined for mass market consumption; polluting waste and scrap; and refrigerating equipment using chlorofluorocarbons. Quantitative restrictions and non-automatic licensing: Salt, tobacco, eggs, and sugar are under a tariff-rate quota regime, according to the 2006 Commercial Law. Separate regulations apply to exports of rice, imports of petroleum and fuel, and imports of cigarettes and cigars. Special authority regulation: The importation of certain categories of goods is limited to state-trading enterprises, and others are subject to automatic or non-automatic import licensing. Since August 2008, Vietnam has subjected a number of imports to an automatic licensing process that can sometimes cause bureaucratic delays to importation. The list includes the following items: 1) Essential oils and resinoids; perfumery, cosmetic or toilet preparations; 2) Plastics and articles thereof; 3) Ceramic products; 4) Glass and glassware; 5) Articles of iron or steel; 6) Aluminum and articles thereof; 7) Nuclear reactors, boilers, machinery and mechanical appliances, and parts thereof; and 8) Electrical machinery and equipment, sound recorders, television image and sound recorders, and parts and accessories of such articles. Foreign exchange system: Foreign investors can purchase foreign currency at authorized banks to finance current and capital transactions as well as other permitted transactions. Residents and non-residents can open and maintain foreign exchange accounts, and foreign investors are allowed to transfer abroad profits and other legal income. Vietnam does not require documenting the discharge of tax obligations when purchasing, remitting or carrying foreign currency overseas in the fulfillment of currency transactions.
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Foreign investors and foreign invested businesses are required to use Vietnamese currency (Dong) in most regular business activities and portfolio investments, except where specifically authorized, such as in tourism-related businesses like hotels and airlines. Customs: Vietnam implemented the WTO Customs Valuation Agreement through the 2006 Customs Law, and through related implementing regulations. The Customs Law makes the use of transaction value applicable to all imports and provides for a full application of the computed value and deductive methods. Subsequent regulations have been issued relating to customs procedures and inspection, post-clearance audits, and valuation of imported goods. These changes have significantly improved customs valuation in Vietnam. The application of the WTO Customs Valuation Agreement principles has not been uniform, and importers complain about the low level of automation of Vietnams customs system. Taxes: Vietnam applies a value-added tax on goods and services in a number of categories listed in the Law on Value Added Tax, and related implementing regulations. Certain goods in Vietnam are also subject to an excise tax, levied in accordance with the Law on Excise Tax, which was revised in late 2008 to eliminate the discriminatory application of excise taxes. The revisions will harmonize the tax rates on imported and domestic beer and distilled spirits (at 50 percent for over 20 percent alcohol content, and 20 percent for under 20 percent alcohol content), effective 1 January 2010. Automatic licensing: The GVN introduced an automatic import licensing system in August 2008, which was renewed in January 2009. The list includes selective 8-digit items of 8 chapters, mostly aimed at consumer goods. Licenses must be issued within five days and are indefinite. Trading rights: Import rights are granted for all products except for a limited number reserved for state trading enterprises and those subject to a phase-in period for importation by foreign firms. Vietnam has reserved the right of importation for state trading entities for the following categories: cigars and cigarettes; crude oil; newspapers, journals and periodicals; and recorded media for sound or pictures (with certain exclusions). Starting in January 2009, foreign firms and individuals are now allowed to import pharmaceuticals; motion picture films; unused postage, printed cards and calendars; certain printed matter; machinery for typesetting and print machinery (excluding ink-jet printers); and certain transmission apparatus for radiotelephony (excluding mobile phones and consumer cameras). Foreign individuals and enterprises will be given the right to export rice no later than January 1, 2011.

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MARKETING PLAN FOR VIETNAMESE FERTILIZER MARKET

EXECUTIVE SUMMARY
Fauji Fertilizer Company Limited is focused on growth opportunities and continues to aggressively explore ways of improving profitability and minimizing business risks emanating from economic, market, and climatic conditions. However, in view of shortage of gas in the Country and upcoming urea plants, further expansion and growth opportunities in production of urea by the Company are limited. Nevertheless, FFC shall continue to pursue their remaining expansion and diversification projects, prepare for strong demand anticipated over at least the next five years, and remain committed towards development of the energy sector and other allied agro-based ventures. This business plan is being written to set a rational framework for growth to maximize profit potential. Successful realization of this plan will attract more potential customers from target segments to the company and bring substantial profits for the growth of the company. Fauji Fertilizer will position itself as a differentiated producer of the highest-quality fertilizers in Vietnam. Fauji Fertilizer should follow the penetration growth strategy in Vietnamese fertilizer market to help achieve its survival goal fueled by profitability. The keys to success are: 1. Establishing and maintaining working relationships and contractual agreements with Vietnamese Trading agents, fertilizer distributors, wholesalers and retailers. 2. Bringing the production facility to maximum production within two years of operation. 3. Increasing the profit margin with the use of improved technology in the production facility. 4. Effectively communicating to current and potential customers, through targeted efforts, our position as a differentiated producer of the highest-quality fertilizer in the region.

SITUATIONAL ANALYSIS OVERVIEW

Vietnam, the worlds second-biggest rice exporter, still heavily relies on imports to satisfy its demand of fertilizers. Statistics released by the General Statistic Office (GSO) showed that the country imported 4.31 million tonnes of fertilizers in 2009, worth US$ 1.35 billion, increasing by 41.88 percent year- on-year in volume but falling by 8.42 percent year-on-year in value, as companies boosted imports when the global fertilizer price dropped due to economic downturn. Vietnams fertilizer imports continue to grow. In the first two months of this year, Vietnam
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imported 726 thousand tonnes of fertilizers, worth US$ 223 million. This figured represents an increase of 20.3 percent and 16.6 percent year-on-year in volume and value, respectively. Of Vietnams imported fertilizers last year, urea import volume was estimated at 1.39 million tonnes, worth US$ 404 million, increasing by 96.32 percent year-on-year in volume and 41.26 percent year-on-year in value. China, provided about 1.95 million tonnes of fertilizers, worth approximately US$ 595 million, making it Vietnams biggest supplier and accounting for 45 percent of imports. Other major exporters are Russia (395 thousand tonnes, worth US$ 109 million), Korea (348 thousand tonnes, worth US$ 72 million), Philippine (294 thousand ton, worth US$ 115 million). With the exception of some phosphate-based products (i.e. SSP, FMP), Vietnams local production can meet only half of the countrys demand. Some fertilizers, such as DAP, SA, and potash production, must be imported because Vietnamese companies are currently unable to produce them. An inspection in 2009 conducted by the Cultivation Department, under the Ministry of Agriculture and Rural Development (MARD), showed that many locally produced fertilizers were below standard. 40 percent of 201 fertilizer samples nationwide failed to meet quality standards. 34 of the fertilizers tested were not properly labeled. The local fertilizer market, which consists of more than 500 local and international fertilizers producers, is saturated with counterfeit and low quality products. Accordingly, of the 60,000 quality and intellectual property violations discovered last year, 25-30 percent of the cases involved fertilizer. Thus by no means imported fertilizers have great market potential.

COMPANY:
Fauji Fertilizers Companys overview is given in the beginning.

CUSTOMERS:
In Vietnam, Fauji Fertilizers major customers would include farmers and the Vietnamese Government.

COMPETITION:
Overview of competition in Vietnamese market for FFC is already mentioned in In-depth screening.

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SWOT ANALYSIS:
STRENGTHS:
FFCs strengths have been mentioned in the beginning while giving companys introduction.

WEAKNESSES:
FFCs weaknesses have been mentioned in the beginning while giving companys introduction.

OPPORTUNITIES:
Vietnam, the worlds second-biggest rice exporter, heavily relies on imports to satisfy its demand of fertilizers, so it would be favorable for FFC to export in the market. As Vietnamese companies are currently unable to produce DAP, SA, and potash so there is potential in the market for FFC to introduce its Sona DAP and Sona SOP to the market later. The ability to increase the profit margin through the leveraging of technology.

THREATS:
Future/potential competition from a large corporation like PVFCCo who is market leader and is planning to increase its production capacity As Pakistan is not member of ASEAN so costs associated with international trade would be higher for FFC in Vietnam as compared to other importers from ASEAN countries. Because agricultural products are produced mainly for export in the south, farmers tend to focus on quality and choose fertilizers with strong brand names, so there are great chances that south market would be reluctant to try new brand. In the north, by contrast, farmers have less interest in quality, making pricing the most competitive criteria in selecting fertilizers, due to which FFC would face tough price competition.

MARKETING OBJECTIVES
Maintain positive, steady growth each quarter. Experience an increase in new customers who are turned into long-term customers. Decrease the customer acquisition costs by 6% per year.

FINANCIAL OBJECTIVES
Increase the profit margin by 1% every two quarters. Holding spending, as a percentage of sales, at a specific level.
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 Decrease the overhead fixed costs as a percentage of sales.

MARKETING MIX
PRODUCT OFFERED:
To test new market and seeing high demand for urea, FFC will introduce only one product which is as follows: Sone Urea: most widely used fertilizer in the country. Fertilizer is 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.

PLACE:
According to current Vietnamese regulations, unless a foreign company has an investment license permitting it to distribute its own goods in Vietnam, a company must appoint an authorized agent or distributor. AGENTS: A Vietnamese agent sells a foreign suppliers goods in Vietnam for commission. In this case, the sale will be transacted between Fauji Fertilizers and a local buyer in Vietnam while the Vietnamese agent will perform the following responsibilities: market intelligence, identifying sales leads, pursuit of sales leads, sales promotions, sales closing, product warranty and after-sales services, etc. The specific responsibilities of a Vietnamese agent will depend on the agency agreement between the agent and the FFC Product would be placed in the regions; Mekong River Delta and southeastern region, Southern region, and Northern region. (detail is in target market)

PROMOTION:
Product Information: Fauji Fertilizers in Vietnam will utilize trade fairs, product seminars, product demonstrations, and point-of-sales materials, as well as print and broadcast advertising. The aim is not only to promote our merchandise, but also to educate both sellers and end-users. It may be necessary to educate the buyer as to the features and benefits of the product. Detailed product information in the Vietnamese language should be provided to agents and distributors.

PRICING:
The overriding factor in pricing for the Vietnam market is the low level of per capita income. While consumers want quality and understand that quality comes at a premium, most buying decisions are highly price-sensitive. Imported products generally must incorporate the following elements into the pricing structure:
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Import agent fees (typically 1 to 2 percent of the invoice) Customs duty. Value-added tax (VAT) in the range of 5 to 10 percent is levied on the landed cost when the goods change title

INDUSTRY PRICES:
The urea fertilizer is sold at between VND8,500-VND9,000 per kilo, increasing VND500VND1,000 from last week of September, 2010. The wholesale price of urea fertilizer produced at the Phu My factory was VND8,800 per kilo, an increase of VND2,200 over earlier this month. Urea fertilizer imported from China, Indonesia also increased in price and is selling at VND8,500. Formula used: -Sona Urea is priced in accordance with a formula which is as follows: - P= (FOB+ F+C) (100% r) 1,05. P: Selling Price of Sona Urea FOB + F: FOB Price and Freight of imported urea. C: Custom Clearance Fees. r: Adjustment factor ranging from 1% to 5%. Payment: - Payment at delivery. - The Company may apply other payment methods such as deferred payment with bank guarantee, payment in installment etc. Discount: Trading discount: The maximum applied discount rate for a single contract is 1% of contract value (excluding VAT), following below discount levels: - From 10,000 tons or above: 0.5 % - From 20,000 tons or above: 0.75 % - From 30,000 tons or above: 1 % The discount will be deducted directly from contract price. Annual Consumption Premium: This premium is determined at the rate of 1% and granted to the Companys Agents that have annual sales over the volume they committed beforehand. The sales volume that is granted a trading discount remains valid to annual consumption premium calculating purposes. The premium is paid to the agents by discounting the last cargo contract value in selling year or the nearest contract in the first quarter of the following year.
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The Company reserves the right to adjust this policy accordingly subject to the market changes and any adjustment will be advised to the customers timely. Determined Price: Based on industry average price of urea and considering its expected costs, FFC determines its price to be US$425.6/tone.

TARGET MARKET
Our target market is segmented on the basis of geographic distribution; which is as follows: Mekong River Delta and southeastern region: Geographically, the Mekong River Delta and southeastern region, accounting for 65.4 percent of total land used for agricultural production, is Vietnams biggest fertilizer market. Southern region: Because agricultural products are produced mainly for export in the south, farmers tend to focus on quality and choose fertilizers with strong brand names. Northern region: In the north, by contrast, farmers have less interest in quality, making pricing the most competitive criteria in selecting fertilizers. Consequently, counterfeit and low quality fertilizers are more popular in the north than in the south.

POSITIONING IN VIETNAM
Fauji Fertilizers will position itself as the high-end fertilizer importer in Vietnam. Fauji Fertilizer will only sell the highest quality fertilizers, recognizing that market heavily relies on imported fertilizers to satisfy its demand. Fauji Fertilizers will leverage its competitive edges to achieve the desired positioning.

GENERAL MARKETING STRATEGIES

The single objective is to position Fauji Fertilizers as the premier fertilizer importer whose quality is always counted on. The marketing strategy will seek to first create customer awareness regarding the products offered, then develop the customer base, and finally work toward building customer loyalty. The message that Fauji Fertilizers seeks to communicate is that its name is synonymous with the highest-quality fertilizer available. This message will be communicated through a variety of methods. The first method will be the use of printed sales material. The material will detail all of the different products that Fauji Fertilizers sells. Another method of communication is through the development of strategic relationships with buyers and sellers of Fauji Fertilizers products. Fauji Fertilizers recognizes that developing close, communicative relationships with its clients is very important to maintaining a high quality, sustainable business.
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Fauji Fertilizers will also use advertisements, placed in industry journals to increase brand awareness. The last method of communication is the use of a website. The use of the website will allow interested parties from around the world to view a wealth of information regarding Fauji Fertilizers, its products, their production methods, and other information. The website is a fairly rich, comprehensive resource that is accessible at all times during the day.

MARKETING ORGANIZATION:
Advertising remains heavily regulated by the Vietnamese Government. In principle, only companies licensed in Vietnam may place advertisements, keeping this thing in mind FFC would hire domestic ad agency for marketing activities.

REVIEW AND CONTROL:

The purpose of S&S's marketing plan is to serve as a guide for the organization. The following areas will be monitored to gauge performance: Revenue: monthly and annual, results compared to planned sales. Expenses: monthly and annual, results compared to planned expenses. Customer satisfaction, to generate repeat purchases and referrals. Research and developments costs relative to sales.

SALES FORECAST:

Based on FFCs FSA it would choose its competition and would be forecasting its 1 st years sale to be somewhat equal to its competitions 1st years sales. FFCs FSA: FFC has got its FSA in terms of its urea production facilities and is the market leader in Pakistani fertilizer industry with 48% market share. Choosing competition: In Vietnamese fertilizer market FFC chooses PVFCCo with such a production facility which satisfies roughly 40% of the total urea domestic demand, and is market leader.

1st years sale: In 2005 PVFCCo urea (Phu My Fertilizer) sales, were $ 123,540,076.50, based on this FFC also forecasts its sales to be $ 120,000,000 Calculating for industry sales: Following formula can be used to estimate urea industry sales: Industry sales of urea = (total urea supply*urea price/tone) = (945500*US$425.6)
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= $ 402,404,800 Calculating for market share: Projected Market Share = Company urea sales/ Total sales of urea in industry = 120,000,000/402,404,800 = 0.298 = 29.8%

PROFIT CALCULATIONS:
Sona Urea production costs are expected to range between $80 to $200/ton as FFC is doing direct exports so including shipment and tariff costs, the range goes up to $250 to $350/ton whereas FFC has determined selling price for its urea to be $425.6/ton. Profit = Selling Price Production cost Putting values into the formula: Profit = $(425.6 350) = $75.6/ton

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REFERENCES:
http://www.austrade.gov.au/Agribusiness-to-Vietnam/default.aspx http://vietnambusiness.asia/fertilizer-prices-rise-due-to-external-effects/ https://www.cia.gov/library/publications/the-world-factbook/geos/vm.html http://vietnambusiness.asia/local-fertilizer-prices-top-vnd14000kg/ www.buyusa.gov/vietnam/en/315.pdf http://www.ffc.com.pk/contents/aboutffc.htm http://www.dscl.com/Business_Agree_urea.aspx?PID=24 http://fert.nic.in/fertcompanies/webcomp.asp http://www.sbp.org.pk/publications/pak-india-trade/Chap_4.pdf http://www.nationmaster.com/country/in-india http://www.economywatch.com/indian-fertilizer-industry/ http://125.19.12.220/applications/brihaspat.nsf/c4b4ba92c39a5fb665256a81003ad343/04cc9417470f1 02f65256aa3004042b5/$FILE/doc_5.pdf http://www.slideshare.net/jeffry6666/emerging-opportunities-in-fertilizer-market-published-inchemical-weekly http://www.faidelhi.org/general/Notification%20NBS-jan-11.pdf http://www.sbp.org.pk/publications/pak-india-trade/Chap_2.pdf http://www.sdpi.org/tkn/Quantifying%20Informal%20Trade%20Between%20Pakistan%20and%20India. pdf http://internationalbusiness.wikia.com/wiki/Pakistan_Trade_Barriers_with_India http://www.igisecurities.com.pk/pdf/Pakistan_Fertilizer_Sector_Review.pdf http://www.nrel.gov/vehiclesandfuels/apbf/pdfs/jackson-15.pdf

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