FINANCIAL ANALYSIS OF FAUJI FERTILIZER COMPANY

Group 5
Presented To:

Asad Alam

Agenda
The

Fertilizer Industry

Agriculture
FFC
Ratio

Analysis

Future

Outlook

Fertilizer Industry
As

of Feb 2013, agriculture contributed 20.1 % to overall GDP

The

demand for fertilizer is directly related to agriculture growth

Urea

is the most used Fertilizer, followed by DAP

Installed

Capacity: 6.9 Million tonnes

Summary of Auditors Report

KPMG

Taseer Hadi and Company

Statement

of Compliance

Fair

Evaluation

IAS

and Company Ordinance 1984

Approval

by CEO and CFO

Holdings

by Director

Fauji Fertilizer Company

Incorporated
Head

in 1978

Office located in

Plants

located in

CEO
Chairman
Work

of the Board

Force of

Listed

on KSE in 1982

Share

price of Rs. 108.45

Earnings

per Share of Rs. 16.38 in 2012

Financial

Year 1st January 31st December

Category

Product Portfolio

Nitrogenous

Phosphatic

Potassic

Urea
Calcium Ammonium
Nitrate

Di-Ammonium Phosphate
Triple Super Phosphate

Usage

Grain and Cotton crops

Raw
material
in
production of plastics,
adhesives
and
feedstock

To increase soils pH
To speed ripening of fruits
Used in strong crops likes
Commercial
firefighting
tobacco
product
Manufacture of glass
Metal
finisher,
yeast
nutrient and sugar purifier

Production
Process

Produced from synthetic

ammonia and carbon
dioxide

Produced from ammonia

and phosphoric acid

Produced from potassium

chloride and sulfuric acid

Percentage
of use in
Pakistan

80 %

19 %

1%

Percentage
of FFC
Sales

93 %

6%

1%

Products

Sulphate of Potash

Business Model

FFC Urea Production & Sales

FFC Production vs Total Industry Production

Urea Sales & Market Share

44%

70%

2500

43%

60%

2450
42%

50%
41%
40%

2400

40%
000 Tonnes

30%

58%
49%

47%

49%

48%

Market Share Percentage

39%

2350

49%
38%

20%

2300
37%

10%

36%

2250

0%
2007

2008

2009

2010

2011

2012
Sona Urea Sales Quantity

Sona Urea Market Share

Urea Market and Prices

International vs Local Urea Prices 2012
(US $ per tonne)

Urea Market Supplies vs Demand

(Tonnes 000)
7000

600

550
6000
500

450

5000

400
4000
350

3000
2007

2008
Supplies

2009
Imports

2010

2011
Demand

2012

300
Jan

Feb

Mar

Apr

May

Local Price

Jun

Jul

Aug

Sep

International Price

Oct

Nov

Dec

DuPont Analysis

Rs. 20,840
m

28.04 %

x
34.21 %

1.22
Times

79.9 %

42.8 %

Rs. 26,096
m

Rs. 60,887

Rs. 53,483
m

Rs. 74,323
m

+
Rs. 60,887
m

+
Rs. 34,791
m
Rs. 26,096
m

Rs. 74,323
m

Rs. 30,955
m
Rs. 29,932
m
Rs. 26,818
m
Rs. 7,973
m

Types of Risk

SWOT
Well established
Uninterrupted
gas
distribution
supply
network
Marketofpresence
State
the art production plants
Well established
Market
presence distribution network
Solid financial position
Uninterrupted
gas supply
State of theand
Competent
art production
committed plants
human resources
Competent
Solid
financial
andposition
committed human resources

Accounting
Policy
PPE

Expenses

FFC

Fatima

Engro

1. Land and work-in-progress

have been stated at cost less
impairment losses.
2. Depreciation is charged on
straight lines bases.
3. For newly acquired assets,
depreciation is recorded in the
month of acquisition but not in
the month of disposal.
4. The cost of replacement of
any part of equipment is made
part of the carrying amount of
the asset if future economic
benefits are expected to flow
from it, while the replaced part
is derecognized from the
carrying amount by expensing
it out.

1. Land and work-in-progress

have been stated at cost less
impairment losses.
2. Depreciation is charged on
straight lines bases.
3. For newly acquired assets,
depreciation is recorded in the
month of acquisition but not in
the month of disposal.
4. The cost of replacement of
any part of equipment is made
part of the carrying amount of
the asset if future economic
benefits are expected to flow
from it, while the replaced part
is derecognized from the
carrying amount by expensing
it out.

1. Land and work-in-progress

have been stated at cost less
impairment losses.
2. Depreciation is charged on
straight lines bases.
3. For newly acquired assets,
depreciation is recorded in the
month of acquisition but not in
the month of disposal.
4. The cost of replacement of any
part of equipment is made part of
the carrying amount of the asset
if future economic benefits are
expected to flow from it, while the
replaced part is derecognized
from the carrying amount by
expensing it out.

Recorded when incurred

Recorded when incurred

Recorded when incurred

ccounting
olicy

FFC

Fatima

Engro

vestments

1.Investments in subsidies,
associates and jointly
controlled entities are initially
recognized at cost.
2.Investments available for
sale are initially recognized at
cost and then subsequently
measured at fair value.
3. Investments acquired for
selling are classified as held
for trading and recognized at
fair value with profits and
losses recognized directly in P
& L.

1.Investments in subsidies,
associates and jointly
controlled entities are initially
recognized at cost.
2.Investments available for
sale are initially recognized at
cost and then subsequently
measured at fair value.
3. Investments acquired for
selling are classified as held
for trading and recognized at
fair value with profits and
losses recognized directly in P
& L.

1.Investments in subsidie
associates and jointly
controlled entities are init
recognized at cost.
2.Investments availabl
sale are initially recogniz
cost and then subsequent
measured at fair value.
3. Investments acquire
selling are classified as h
for trading and recognize
fair value with profits and
losses recognized directly
& L.

ventories
tock in
ade)

Stocks are recognized at lower

of cost and net realizable
value.
Raw Material cost determined
at weighted average purchase
cost.
WIP and Finished Goods at

Stocks are recognized at lower

of cost and net realizable value.
Raw Material cost determined
at weighted average purchase
cost.
WIP and Finished Goods at
weighted average purchase

Stocks are recognized at

of cost and net realizable
value.
Raw Material cost determ
at weighted average purc
cost.
WIP and Finished Goods a

Accountin
g Policy

FFC

Fatima

Engro

Revenue
Recognition

Sales revenue is
recognized when goods are
dispatched and significant
risks and rewards are
transferred to the
customer.
Revenue from the sale of
goods is measured at the
fair value received or
receivable net of trade
discounts and returns. FOB
Shipping.

Sales revenue is
recognized when goods are
dispatched and significant
risks and rewards are
transferred to the
customer.
Revenue from the sale of
goods is measured at the
fair value received or
receivable net of trade
discounts and returns.
FOB Shipping

Sales revenue is recognized

when goods are dispatched
and significant risks and
rewards are transferred to
the customer.
Revenue from the sale of
goods is measured at the
fair value received or
receivable net of trade
discounts and returns.
FOB Shipping.

Goodwill &
Intangibles

Goodwill is recorded in
excess of the purchase
consideration over the fair
value of assets less
liabilities and thereafter
tested for impairment on
an annual basis.
The value in use
calculations are based on
cash flow projections.

Goodwill is recorded in
excess of the purchase
consideration over the fair
value of assets less
liabilities and thereafter
tested for impairment on
an annual basis.
The value in use
calculations are based on
cash flow projections.

Goodwill is recorded in
excess of the purchase
consideration over the fair
value of assets less
liabilities and thereafter
tested for impairment on an
annual basis.
The value in use
calculations are based on
cash flow projections.

Liquidity Ratios
Current Ratio

Acid-Test Ratio

1.20

1.2

1.00

0.80

0.8

0.60

0.6

0.40

0.4

0.20

0.2

0.00

2012

2011
FFC

Fatima

2010
Engro

2012

2011
FFC

Fatima

2010
Engro

Efficiency Ratios

Activity Ratios
250,000

Net Sales Per

Day

200,000

150,000

100,000

50,000

2012
FFC
Fatima

2011
Engro

2010

Solvency Ratio

Times Interest Earned

Profitability Ratios

Profitability Ratios

Profitability Ratios

Vertical Analysis (Assets)

NON-CURRENT
ASSETS
Property Plant and
equipment
17,818,755
Intangible assets
1,678,639
Long term
investements
9,511,865
Long termloand and
advancements
700,786
Long term deposits and
prepeayments
222,313
Total Non-current
assets
29,932,358

CURRENTS ASSETS
Stores, spares and
loose tools
Stock in trade
Trade debts
Loan and advances
Deposits and
prepayments
Other receivables
Short term
investments
Cash and balances
Total Current Assets

18,750,996
3,748,632
30,954,495

Total Assets

60,886,853

2012

2011

2010

29% 17,050,951
3%
1,569,234

31% 15,933,588
3%
1,569,234

37%
4%

16%

16%

18%

8,659,073

7,870,027

1%

605,883

1%

455,328

1%

0%

9,370

0%

9,037

0%

50% 25,837,214

60%

49% 27,894,511

3,098,938
442,139
3,611,476
677,977

5%
1%
6%
1%

2,447,452
636,923
86,669
431,582

4%
1%
0%
1%

2,440,201
211,720
357,956
336,269

6%
0%
1%
1%

35,670
588,667

0%
1%

53,852
891,673

0%
2%

50,188
617,664

0%
1%

31% 21,794,480
6%
1,293,774
51% 27,636,405
100%

55,530,916

39% 12,020,581
2%
1,189,063
50% 17,223,642
100%

43,060,856

28%
3%
40%
100%

Vertical Analysis (Assets)

2012

2011

2010

EQUITY AND
LIABILITIES
EQUITY
Share capital
Capital Reserves
Revenue Reserves
Total Equity

NON - CURRENT
LIABILITIES
Long term borrowings
Deffered liabilities
Total Non-current
liabilities

CURRENT
LIABILITIES
Trade and other
payables
Interest and markup
accrued
Short term borrowings
Current portion of long
term borrowings
Taxation
Total current
liabilities
CONTINGENCIES
AND COMMITMENTS

12,722,382
160,000
13,213,667
26,096,049

21%
8,481,588
0%
160,000
22% 14,428,636
43% 23,070,224

15%
6,785,271
0%
160,000
26%
8,502,276
42% 15,447,547

16%
0%
20%
36%

3,870,000
4,103,315

6%
7%

2,703,750
3,832,614

5%
7%

3,819,405
3,806,795

9%
9%

7,973,315

13%

6,536,364

12%

7,626,200

18%

26% 11,730,961

21%

9,023,052

21%

137,968
5,640,420

0%
13%

15,836,879
24,921
4,990,000

0%
8%

79,826
8,735,650

0%
16%

1,433,750
4,531,939

2%
7%

1,615,655
3,762,236

3%
7%

26,817,489

60,886,853

44% 25,924,328

100%

55,530,916

1,759,405
3,426,264

4%
8%

47% 19,987,109

46%

100%

43,060,856

100%

Vertical Analysis (Income

Statement)

Current Outlook

Horizontal Analysis (Balance

Sheet)

Accounts Receivables

Horizontal Analysis (Balance

Sheet)

1.20
1.00

FFC Profitability Ratios

0.80
0.60
0.40
0.20
0.00

2012

2011

2010