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1

Company Profile
Fatima Group (History)
In 1988 a dynamic and radical person known as Mr. Mukhtar A. Sheikh had
conceptu...
2

Sugar. Fatima Sugar Mills Limited was incorporated as a public limited company in
1988. Current production capacity is ...
3

Landmark Events Fatima Fertilizers

Emerging History by Date

Company Incorporation and Gas Allocation.
December 2003 G...
4

MANAGEMENT AND
ORGANIZATION

Board of Directors
Mr. Arif Habib

-

Chairman

Mr. Fawad Ahmed Mukhtar

-

Chief Executiv...
5

Mr. Arif Hamid Dar

Company Secretary
Mr. Ausaf Ali Qureshi

Key Management
Mr. M. Abad Khan

-

Advisor to CEO

Mr. Qa...
6

General information

Registered Name:

Fatima Fertilizers (private) limited.

Status:

A private limited company having...
7

ORGANOGRAM
Board of
Directors

Audit Committee

HR & Remuneration
Committee

Chief Executive Officer

Dir Operations
Di...
8

Our Vision
To be a world class manufacturer of fertilizers and ancillary
products, with a focus on safety, quality and ...
9

Our Initiatives
Farmers Support
We know our long-term success is linked to the success of the thousands of farmers
who ...
10

Domestic Fertilizer Market 2012
a) The fertilizer market in 2012, exhibited a mixed trend.
b) The Nitrogen market cont...
11

g) Implementation of Clean Development Mechanism (CDM) project was completed.
The verification report is submitted to ...
12

Financial Statements
(For the year ending Dec 2012)

Balance Sheet (as at December 31, 2012)

(Rupees in thousands)

2...
13

Profit and Loss Account
for the year ended Dec 31, 2012
2102

2011

29,518,623

14,833,343

Cost of Sales

-12,252,427...
14

Pattern of Shareholding
for the year ended Dec 31, 2012

Categories of Shareholders

Shares
Held

Directors, Chief Exe...
15

Financial Analysis
Key Performance Indicators
2012

2011

PROFITABILITY
Gross profit

%

58.49

67.77

EBITDA

%

55.3...
16

Balance Sheet - Vertical Analysis
2012

2011
PKR

PKR
Non-Current Assets
Fixed Capital Expenditure
Deferred Tax Asset
...
17

Balance Sheet - Horizontal Analysis
2012
PKR

12’ vs 11’
Change

2011
PKR

67,579
85
11
67,676

-0.8%
107.3%
-0.7%

68...
18

Profit and Loss Account - Vertical Analysis
2012
PKR Million
Sales

2011
%

PKR Million

%

29,519

100%

14,833

100%...
19

Profitability Ratios
GP Margin.

Gross Profit / Sales

Calculation

2012

2011

17,266,196 / 29,518,623

10,092,382 / ...
Thousands

20

30,000
25,000
20,000

EBIT

15,000

Sales

10,000
5,000
0

2012

3.

Profit before Tax.

2011

EBT / Sales
...
Thousands

21

30,000
25,000
20,000

Net Profit Margin

15,000

Sales

10,000
5,000
0

2012

5.

2011

Return On Equity.

...
Thousands

22

80,000
70,000
60,000
50,000

Net Income

40,000

Total Assets

30,000
20,000
10,000
0
2012

2011

Liquidity...
23

= 0.21 Times

Interpretation.

= 0.52 Times

The Assets have decreased in year 2012, but on other hand the

increase i...
24

Thousands

0.63 times than 2011. The Business has expanded.

14,000
12,000
10,000
8,000

CGS

6,000

Inventory

4,000
...
25

Thousands

Assets.

80,000
70,000
60,000
50,000

Sales

40,000

Total Assets

30,000

20,000
10,000
0
2012

13.

A/R T...
26

Interpretation.

The Debts have decreased by 1.34% which shows that company

Thousands

is focusing on decreasing the ...
27

Interpretation.

Due to the focused orientation of the company the Debts have

Thousands

reduced by 10.39%. This show...
Thousands

28

7,000
6,000
5,000
4,000
3,000
2,000
1,000
0

2012
No of Shares

Report Compiled by Maj Raja Manzar & Maj Ra...
29

SWOT Analysis
1.

STRENGTHS
a)

Capital Intensive nature of the sector.

b)

The players operating in this sector are ...
30

k)

Too much centralization effects timely decision making.

l)

Unsatisfactory Product quality of urea.

m)

No prope...
31

NFC

ENGRO

25-26%
a)

FFC
48%

24-25%

In market the 50-kg bag of Fatima is sold at rs.330 while engro and dhc at
rs....
32

TREND ANALYSIS
Political Trend.
a)

Political trends are always in favor of this industry. The Government has provided...
33

f)

Ban on export of fertilizer is also imposed so that economic stability would be gain.

Social Trends:
a)

Although...
34

d)

Replacement of volumetric bagging machines at Port Karachi by weight baggers, to
ensure accuracy.

e)

Drafting an...
35

Demographical Trend:
a)

At present, eight children are born per minute in Pakistan, as Pakistan is developing
country...
36

Recommendations
1.

Strict quality control and monitoring should be there to prevent import of substandard products an...
37

Shares Information
Fatima Fertilizer Company Limited
PATTERN OF SHAREHOLDING AS AT DECEMBER 31, 2012
Category-Wise
Cat...
38

a. Local

223,593,997

10.65

787,012

0.04

Foreign Companies

30,330,361

1.44

Others

53,120,853

2.53

b. Foreign...
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Ratio Analysis - Fatima Fertilizer (MBA 2nd Semester, Financial Management)

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This is a project of Ratio Analysis uploaded for MBA 2nd Semester students. This is of Fatima Fertilizer, Pakistan. Hope will help you a lot. If any question feel free to mail me. Tk all.

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Ratio Analysis - Fatima Fertilizer (MBA 2nd Semester, Financial Management)

  1. 1. 1 Company Profile Fatima Group (History) In 1988 a dynamic and radical person known as Mr. Mukhtar A. Sheikh had conceptualized his revolutionary vision and laid the stone of a Multan based organization which commenced its business mainly in Sugar. In subsequent years the untiring, dedicated and missionary zeal & zest of the founders of group had woven the net of Companies into glorified galaxy of shining Stars and named it Fatima Group. The substantial Strategic benefits of vertical integration led him and his associates to consider venturing into the manufacturing field of Textile, Sugar, Fertilizers, Malaises, Trading, Mining, Power Generation, Air Line and Packing Material etc. Over the years and by the grace of all mighty Allah the Fatima Group of Companies now proudly stood unparallel and peerless leader in business groups of Pakistan. It ranks amongst the top Companies of Pakistan. The group has strong presence in most important business sectors of the region. It also has the distinction of being one of the largest players in each sector. Textile. Reliance Weaving Mills Ltd, the flagship company of the group was established in 1991. Its annual turnover for the year 2012 is approx Rs. 9 billion with the production facility of 35,520 spindles (two units) and 296 looms (two units). It is listed on Karachi & Lahore Stock Exchanges of Pakistan. Fertilizers. Fatima Fertilizers Ltd is the largest fertilizer complex in Pakistan with annual production capacity of 847,000 MT. It was put into operation in 1979. Under the privatization policy of Government of Pakistan, the management of the company was taken over by Fatima Group on July 14, 2005. Fatima Fertilizer Company Ltd was incorporated on 24 December 2003 as a Public Limited Company. Fatima Fertilizer is fully integrated fertilizer complex with annual production capacity (in MT for the year 2011) of Urea 500,000, CAN 420,000, NP 244,000, Nitric Acid 500,000 and Amonia 500,000. It is listed on all the Stock Exchanges of Pakistan. Report Compiled by Maj Raja Manzar & Maj Rana Shahzad
  2. 2. 2 Sugar. Fatima Sugar Mills Limited was incorporated as a public limited company in 1988. Current production capacity is 9,500 MT per day with net profit of Rs. 786 million for the year ended September 2011. Molasses. Reliance Commodities (Pvt) Limited is a private limited company incorporated in 1996 and deals in export of molasses, sugar, and other commodities. Company has earned net profit for the year ended June 30, 2011 of Rs. 862 million. Fatima Group of Companies. 1. Fatima Energy Limited. 2. Fatima Sugar Mills Limited. 3. Fazal Cloth Mills Limited. 4. Reliance Commodities (Private) Limited. 5. Reliance Weaving Mills Limited. 6. Pakistan Mining Company Limited. 7. Air One (Private) Limited. 8. Arif Habib Corporation. 9. Arif Habib Limited. 10. Arif Habib Investments Limited. 11. Arif Habib REIT Management Limited. 12. Arif Habib DMCC. 13. Aisha Steel Mills Limited. 14. Al-Abbas Cement Industries Limited. 15. Pakistan (Private) Equity Management Limited. 16. Rozgar Microfinance Bank Limited. 17. S.K.M. Lanka Holdings (Private) Limited. 18. Sweet Water Pakistan. 19. Dairies (Private) Limited. 20. Thatta Cement Company Limited. Report Compiled by Maj Raja Manzar & Maj Rana Shahzad
  3. 3. 3 Landmark Events Fatima Fertilizers Emerging History by Date Company Incorporation and Gas Allocation. December 2003 GSA Signing. September 2004 Ground Breaking Signing of. July 2005 Contracts Financial Closure. April 2006 Contracts Achieved. June - September 2006 Ammonia Furnace 1st Fire. November 2006 CAN Plant Production Initial. November 2009 Public Offering Ammonia. January 2010 Plant Production. March 2010 Urea Plant Production. April 2010 NA Plant Production. April 2011 NP Plant Production. July 2011 Declaration of Commercial Operations. May 2012 Conversion and Redemption of Preference Shares. Report Compiled by Maj Raja Manzar & Maj Rana Shahzad
  4. 4. 4 MANAGEMENT AND ORGANIZATION Board of Directors Mr. Arif Habib - Chairman Mr. Fawad Ahmed Mukhtar - Chief Executive Officer Mr. Fazal Ahmed Sheikh - Member Mr. Nasim Beg - Member Mr. Faisal Ahmed Mukhtar - Member Mr. Rehman Naseem - Member Mr. Abdus Samad - Member Mr. Muhammad Kashif Habib - Member Audit Committee - Mr. Nasim Beg - Chairman Mr. Fazal Ahmed Sheikh - Member Mr. Rehman Naseem - Member Mr. Muhammad Kashif Habib - Member Human Resource and Remuneration Committee Mr. Nasim Beg - Chairman Mr. Abdus Samad - Member Mr. Faisal Ahmed Mukhtar - Member Mr. Rehman Naseem - Member Chief Financial Oficer Report Compiled by Maj Raja Manzar & Maj Rana Shahzad
  5. 5. 5 Mr. Arif Hamid Dar Company Secretary Mr. Ausaf Ali Qureshi Key Management Mr. M. Abad Khan - Advisor to CEO Mr. Qadeer Ahmed Khan - Director Special Projects Mr. Muhammad Zahir - Director Marketing Mr. Haroon Waheed - Group Head of Human Resource Mr. Farrukh Iqbal Qureshi - General Manager Manufacturing Mr. Asad Murad - Head of Internal Audit Mr. Iftikhar Mahmood Baig - General Manager Business Development Mr. Fuad Imran Khan - Chief Information Officer Mr. Javed Akbar - Head of Procurement Brig (R) Muhammad Ali Asif Sirhindi - General Manager Administrative Services Mr. Muhammad Saleem Zafar - General Manager Projects - Advocates, 1-A/245, Tufail Road, Lahore Cantt. - Chartered Accountants, 23-C, Aziz Avenue, Canal Bank, Gulberg V, Lahore. Legal Advisors M/s. Chima & Ibrahim Auditors A. F. Ferguson & Co. Report Compiled by Maj Raja Manzar & Maj Rana Shahzad
  6. 6. 6 General information Registered Name: Fatima Fertilizers (private) limited. Status: A private limited company having only two partners. Factory Location: Machi Ghot, Rahim Yar Khan, Pakistan Brand Name of KISAN Urea, KISAN Nitro phosphate & KISAN Calcium Products: Ammonium Nitrate. Main Products: Calcium Ammonium Nitrate, Nitro phosphate and Urea Intermediate products: Ammonia, Nitric Acid, Nitric Acid Crystals. Factory & Housing area 172 Acres and 130 Acres. Plants Started: Power Plant June 24, 1978 Nitric Acid plant Sep11, Ammonia plant Sep 27, 1978 1978 CAN plant Nov 26,1978 Urea plant Oct 01,1978 NP pant Jan12, 1979 Capacities: Ammonia Gas 313500 & CAN Nitric Acid 441600 & 450000 metric tons Urea 2400 metric tons Raw Material Natural Gas 52.5 M. Cubic feet (per Rock Phosphate 710 tons Requirements: day) (per day) Storage capacity: N-P(unbagged) 30000 TONS CAN (unbagged) 27000 Urea (bagged) 12000 tons TONS Imported Rock 30000 tons CAN (bagged) 5000 tons Bagging Facilities: 4500 tons per day Foreign Sources of ADNOC World Bank Finance: Asian Development Bank OPEC Special Fund City Corporation International Bank Report Compiled by Maj Raja Manzar & Maj Rana Shahzad
  7. 7. 7 ORGANOGRAM Board of Directors Audit Committee HR & Remuneration Committee Chief Executive Officer Dir Operations Dir Marketing Group Head of HR Cheif Financial Officer Company Secretary GM & Business Development Head of Internal Audit Head of Procurement Head of IT Dir Special Projects Dir Technology Report Compiled by Maj Raja Manzar & Maj Rana Shahzad
  8. 8. 8 Our Vision To be a world class manufacturer of fertilizers and ancillary products, with a focus on safety, quality and contribution to national economic growth and development. We will care for the environment and the communities we work in while continuing to create shareholders‘ value. Mission To be the preferred fertilizer company for farmers, business associates and suppliers through quality and service. To provide employees an exciting, enabling and supportive environment to excel in, be innovative, entrepreneurial in an ethical and safe working place based on meritocracy and equal opportunity. To be a responsible corporate citizen with a concern for the environment and the communities we deal with. Report Compiled by Maj Raja Manzar & Maj Rana Shahzad
  9. 9. 9 Our Initiatives Farmers Support We know our long-term success is linked to the success of the thousands of farmers who grow crops. That‘s why we work on-the-ground with farmers and educate them the proper use of fertilizers to help improve yields. Mission Statement Enhance farm productivity & profitability by improving farmer‘s knowledge & perception on balanced fertilizer use. Technical Services Team. Activities for the farming Community. Seminars. Farmers ‗meetings. Farm visits / individual contacts. Product demonstrations & Field days. Technical Literature. Biological Control Service. Soil Sample Analysis. Our CSR Initiatives Mukhtar A. Sheikh Memorial Welfare Hospital A Kidney and Psychiatric Hospital in Multan Total project cost of USD 23 million approximately. Free treatment to all workers of EOBI or ESSI. Report Compiled by Maj Raja Manzar & Maj Rana Shahzad
  10. 10. 10 Domestic Fertilizer Market 2012 a) The fertilizer market in 2012, exhibited a mixed trend. b) The Nitrogen market continued to decline for the third consecutive year. 2012 (2011) MT Mil National Effective National Capacity Production Demand 6.8 (5.9) 4.6 (5.5) 5.7 (6.7) 1.3 (1.0) 10 (10) 1.6 (1.2) Nitrogen Phosphate c) Urea off take further shrank by 12% in 2012 from 5.9 million tons to 5.2 million tons, due to lower acreage on BT cotton, higher prices of urea and weakening of cotton prices in midyear. d) Urea demand spurred by yearend following late announcement of support increase for wheat by the government. e) Phosphate market for DAP increased by 7% over the year primarily due to increased volumes in the first half of 2012 ~2013 Rabi season. f) International prices of fertilizer (DAP) stayed around USD 600 mark for most of the year. Operational Performance ~ 2012 a) Year 2012 was challenging but successful. b) Dehumidification Unit was successfully installed and commissioned at CAN Plant, enabling ~200 T/Day increase in plant throughput in humid summer season. c) Reliability of NP plant has considerably improved. d) As a result of major efforts, consistent improvement in HSE Performance was noticed. The yearend ‗Total Recordable Injury Rate (TRIR) was 0.22. e) Company has launched an ―Excellence plan‖ to achieve excellence in all areas of its operation f) The ‗Integrated Management System‘ (IMS) certification by third party auditors is planned by end 2013. Report Compiled by Maj Raja Manzar & Maj Rana Shahzad
  11. 11. 11 g) Implementation of Clean Development Mechanism (CDM) project was completed. The verification report is submitted to UNFCC and their certification is awaited. Ammonia Plant Revam for 1800 MT a) Revamp study for 1800 MT is now complete. b) Basic Engineering contract for 1800 MT is being awarded. Detail Engineering contractors are also being engaged in parallel. c) Revamp shall be executed in 2015. d) In view of very attractive payback, Waste gas boiler project at Ammonia Plant is being done ahead of Revamp study and targeted to complete by Mid of 2014. This project will boost company profits by lowering Fuel gas bill significantly. e) Numerous projects in hand to improve reliability and efficiency of the fertilizer complex, which shall be completed phase wise within next 2~3 years. Future Outlook The industry will continue to grapple with the issues like: a) Gas curtailment in the next year also. b) This is likely to result in expensive imports again. c) Capacity within the country continuously lying idle. d) Continued decline in usage of nitrogenous fertilizer, which will eventually reduce yields raising the specter of food insecurity. Earliest possible restoration of gas to the local industry will lead to: a) Reduction in prices. b) Foreign exchange saving along with reduced burden of subsidy. c) Enhanced usage of fertilizers to previous levels at least. d) Yield improvement to counter food insecurity. The Company with its unique product portfolio and the growing awareness of the Farming community is well placed to secure a strong foothold. The continuing marketing, channel, farmer services and logistics thrusts will drive differentiation and bolster our sales in 2013. Report Compiled by Maj Raja Manzar & Maj Rana Shahzad
  12. 12. 12 Financial Statements (For the year ending Dec 2012) Balance Sheet (as at December 31, 2012) (Rupees in thousands) 2012 EQUITY AND LIABILITIES, CAPITAL AND RESERVES Ordinary shares of Rs 10 each 21,000,000 Preference shares of Rs 10 each 4,000,000 Issued, subscribed and paid up share capital 21,000,000 Ordinary shares of Rs 10 each 1,790,000 Preference shares of Rs 10 each Share premium 6,160,354 28,950,354 Accumulated profit NON CURRENT LIABILITIES Long term finance 27,023,742 Dividend & markup payable to related parties 2,917,615 Deferred liabilities 4,841,255 34,782,612 CURRENT LIABILITIES Trade and other payables 4,996,727 Accrued finance cost 499,478 Short term finance - secured 2,690,246 Current portion of long term finance 4,085,379 Provision for taxation CONTINGENCIES & COMMITEMENTS 12,271,830 2011 21,000,000 4,000,000 20,000,000 4,000,000 790,000 3,264,865 28,054,865 34,457,218 2,217,219 1,807,018 38,481,455 4,650,956 1,890,932 3,032,833 236,207 9,810,928 76,004,796 Long term Investments Long term deposits CURRENT ASSETS Stores and spares Stock in trade Trade debtors Loans, advances, deposits, prepayments and other receivables Cash and bank balances Report Compiled by Maj Raja Manzar & Maj Rana Shahzad 65,882,892 33,881 1,662,461 67,579,234 85,190 11,361 67,675,785 66,827,913 1,287,735 68,115,648 5,481 68,121,129 3,230,805 2,507,927 138,480 1,930,679 1,215,014 195,840 1,467,655 984,144 8,329,011 1,045,225 3,839,361 8,226,119 76,004,796 ASSETS NON CURRENT ASSETS Property, plant and equipment Intangible assets Capital work in progress 76,347,248 76,347,248
  13. 13. 13 Profit and Loss Account for the year ended Dec 31, 2012 2102 2011 29,518,623 14,833,343 Cost of Sales -12,252,427 -4,740,961 Gross Profit 17,266,196 10,092,382 Distribution Cost -1,233,944 -337,946 -738,792 -417,225 15,293,460 9,337,211 -5,773,821 -3,063,055 -506,135 -320,398 9,013,504 5,953,758 67,033 133,810 9,080,537 6,087,568 -2,969,418 -1,970,593 6,111,119 2.86 4,116,975 1.90 Sales Administrative Expenses Finance Cost Other Operating Expenses Other operating Income Profit Before Tax Taxation Profit for the year Earnings per Share - Basic (in Rupees) Report Compiled by Maj Raja Manzar & Maj Rana Shahzad
  14. 14. 14 Pattern of Shareholding for the year ended Dec 31, 2012 Categories of Shareholders Shares Held Directors, Chief Executive Officer, and their spouse and minor children Associated Companies, undertakings and related parties 714,648,874 34.03 960,091,411 45.72 645,421 0.03 Public Sector Companies and Corporation 11,515,338 0.55 Banks, Development Financial Institutions, Non Banking Financial Institutions, Insurance Companies, Takaful, Modarabas and Pension Funds 87,932,669 4.19 Mutual Funds 17,334,064 0.83 223,593,997 10.65 787,012 0.04 Foreign Companies 30,330,361 1.44 Others 53,120,853 2.53 Executives % General Public Local Foreign Total Report Compiled by Maj Raja Manzar & Maj Rana Shahzad 2,100,000,000 100.00
  15. 15. 15 Financial Analysis Key Performance Indicators 2012 2011 PROFITABILITY Gross profit % 58.49 67.77 EBITDA % 55.35 66.48 Operating profit % 50.09 60.79 Profit before tax % 30.76 41.04 Net profit % 20.7 27.75 Return on equity % 21.11 14.67 Return on total assets % 8.04 5.39 Current ratio Times 0.68 0.84 Quick / Acid test ratio Times 0.47 0.71 Cash from operations to sales Times 0.24 0.5 Inventory turnover Times 6.58 3.64 Fixed assets turnover Times 0.43 0.22 Total assets turnover Times 0.39 0.2 52:48:00 57:43:00 Times 2.57 2.99 Rs 2.86 1.9 LIQUIDITY / ACTIVITY CAPITAL STRUCTURE Debt : Equity Interest cover Times INVESTMENT / MARKET Basic earnings per share Report Compiled by Maj Raja Manzar & Maj Rana Shahzad
  16. 16. 16 Balance Sheet - Vertical Analysis 2012 2011 PKR PKR Non-Current Assets Fixed Capital Expenditure Deferred Tax Asset Long Term Investments Long Term Deposits Total Non-Current Assets Current Assets Stores and Spares Stock-in-Trade Trade Debts Loans, Advances, Deposits and Prepayments Cash and Bank Balances Total Current Assets Total Assets Share Capital and Reserves Issued, Subscribed and Paid-up Capital Preference Shares Share Deposit Money for Ordinary Shares Hedging Reserve Share Premium Accumulated Profit / (loss) Total Share Capital and Reserves Non-Current Liabilities Long Term Finance Dividend and Markup Payable to Related Parties Deferred Liabilities Advance against Preference Shares Bills Payable Total Non-current Liabilities Current Liabilities Trade and Other Payables Accrued Finance Cost Short Term Finance Secured Current Portion of Long Term Loans Derivative Financial Instruments Provision for Taxation Total Current Liabilities Total Liabilities and Equity Report Compiled by Maj Raja Manzar & Maj Rana Shahzad % 67,579 85 11 67,676 88.91% 68,116 89.22% 0.11% 0.01% 89.04% 5 68,121 0.01% 89.23% 3,231 2,508 138 4.25% 3.30% 0.18% 1,931 1,215 196 2.53% 1.59% 0.26% 1,468 984 8,329 76,005 1.93% 1.29% 10.96% 100.00% 1,045 3,839 8,226 76,347 1.37% 5.03% 10.77% 100.00% 21,000 - 27.63% 20,000 4,000 26.20% 5.24% 1,790 6,160 28,950 2.36% 8.10% 38.09% 790 3,265 28,055 1.03% 4.28% 36.75% 27,024 35.56% 34,457 45.13% 2,918 4,841 34,783 3.84% 6.37% 2,217 1,807 2.90% 2.37% 45.76% 38,481 50.40% 4,997 499 2,690 4,085 6.57% 0.66% 3.54% 5.37% 4,651 1,891 6.09% 2.48% 3,033 3.97% 236 9,811 76,347 0.31% 12.85% 100.00% 12,272 76,005 16.15% 100.00% %
  17. 17. 17 Balance Sheet - Horizontal Analysis 2012 PKR 12’ vs 11’ Change 2011 PKR 67,579 85 11 67,676 -0.8% 107.3% -0.7% 68,116 3,231 2,508 138 1,468 984 8,329 67.3% 106.4% -29.3% 40.4% -74.4% 1.3% 1,931 1,215 196 1,045 3,839 8,226 Total Assets 76,005 -0.4% 76,347 Share Capital and Reserves Issued, Subscribed and Paid-up Capital Preference Shares Share Deposit Money for Ordinary Shares Hedging Reserve Share Premium Accumulated Profit / (loss) Total Share Capital and Reserves 21,000 1,790 6,160 28,950 5.0% -100.0% 20,000 4,000 126.6% 88.7% 3.2% 790 3,265 28,055 Non-Current Liabilities Long Term Finance Dividend and Markup Payable to Related Parties Deferred Liabilities Advance against Preference Shares Bills Payable Total Non-current Liabilities 27,024 2,918 4,841 34,783 -21.6% 31.6% 167.9% ---9.6% 34,457 2,217 1,807 4,997 499 2,690 4,085 7.4% -73.6% 34.7% 4,651 1,891 12,272 76,005 -100.0% 25.1% -0.4% 236 9,811 76,347 Non-Current Assets Fixed Capital Expenditure Deferred Tax Asset Long Term Investments Long Term Deposits Total Non-Current Assets Current Assets Stores and Spares Stock-in-Trade Trade Debts Loans, Advances, Deposits and Prepayments Cash and Bank Balances Total Current Assets Current Liabilities Trade and Other Payables Accrued Finance Cost Short Term Finance Secured Current Portion of Long Term Loans Derivative Financial Instruments Provision for Taxation Total Current Liabilities Total Liabilities and Equity Report Compiled by Maj Raja Manzar & Maj Rana Shahzad 5 68,121 38,481 3,033
  18. 18. 18 Profit and Loss Account - Vertical Analysis 2012 PKR Million Sales 2011 % PKR Million % 29,519 100% 14,833 100% Cost of sales -12,252 -42% -4,741 -32% Gross Profit 17,266 58% 10,092 68% Distribution cost -1,234 -4% -338 -2% -739 -417 15,293 -3% 52% 9,337 -3% 63% -5,774 -20% -3,063 -21% -506 9,013 -2% -2% 31% -320 5,954 40% 67 0.20% 134 0.90% 9,081 31% 6,088 41% -2,969 -10% -1,971 -13% 6,111 21% 4,117 28% Administrative expenses Finance cost Other operating expenses Other operating income Profit Before Tax Taxation Profit for the year Profit and Loss Account - Horizontal Analysis 2012 2011 PKR Million Change PKR Million Sales 29,519 99% 14,833 Cost of sales -12,252 158% -4,741 Gross Profit 17,266 71% 10,092 -1,234 265% -338 -739 77% -417 Distribution cost Administrative expenses 15,293 64% 9,337 Other operating expenses Other operating income Profit Before Tax -5,774 88% -3,063 -506 58% -320 9,013 Finance cost 51% 5,954 67 50% 134 9,081 49% 6,088 Taxation -2,969 51% -1,971 Profit for the year 6,111 48% 4,117 Report Compiled by Maj Raja Manzar & Maj Rana Shahzad
  19. 19. 19 Profitability Ratios GP Margin. Gross Profit / Sales Calculation 2012 2011 17,266,196 / 29,518,623 10,092,382 / 14,833,343 = 58.49%. 1. = 68.04% Interpretation. The Decrease in GP Margin is less comparing to year 2011 Thousands indicates that Financial Costs have increased. 30,000 25,000 20,000 Gross Profit 15,000 Sales 10,000 5,000 0 2012 2. Operating Profit. Calculation 2011 EBIT (fin cost + EBT) / Sales 2011 14,854,358 / 29,518,623 9,150,623 / 14,833,343 = 50.32%. Interpretation. 2012 = 61.69% The Decrease of 10% in Operating profit is due to increase in Finance Cost and other expenses. Report Compiled by Maj Raja Manzar & Maj Rana Shahzad
  20. 20. Thousands 20 30,000 25,000 20,000 EBIT 15,000 Sales 10,000 5,000 0 2012 3. Profit before Tax. 2011 EBT / Sales Calculation 2011 9,080,537 / 29,518,623 6,087,568 / 14,833,343 = 30.76%. Interpretation. 2012 = 41.04% The Decrease in Profit before tax comparing to Sales shows that Thousands the financial Cost and Operating Expenses have increased more than year 2011. 30,000 25,000 20,000 Gross Profit 15,000 Sales 10,000 5,000 0 2012 4. Net Profit Margin. Calculation 2011 Net profit after tax / Net Sales 2011 6,111,119/ 29,518,623 4,116,975 / 14,833,343 = 20.70%. Interpretation. 2012 = 27.75% The Decrease of 10% in Operating profit is due to increase in Finance Cost. Report Compiled by Maj Raja Manzar & Maj Rana Shahzad
  21. 21. Thousands 21 30,000 25,000 20,000 Net Profit Margin 15,000 Sales 10,000 5,000 0 2012 5. 2011 Return On Equity. Net Income / Total Equity Calculation 2012 6,111,119/ 28,950,354 4,116,975/ 28,054,865 = 21.11%. Interpretation. 2011 = 14.67% There is no major increase/ change in the Equity but the Net Thousands Income has increased by 7%. 30,000 25,000 20,000 Net Income 15,000 Total Equity 10,000 5,000 0 2012 6. Return On Total Assets. Calculation 2011 Net Income / Total Assets 2012 2011 6,111,119 / 76,004,796 4,117,000 / 76,347,000 = 8.04% = 5.39% Interpretation. The Decrease of 10% in Operating profit is due to increase in Finance Cost and other expenses. Report Compiled by Maj Raja Manzar & Maj Rana Shahzad
  22. 22. Thousands 22 80,000 70,000 60,000 50,000 Net Income 40,000 Total Assets 30,000 20,000 10,000 0 2012 2011 Liquidity/Activity Ratios 7. Current Ratios. Current Assets / Current Liabilities Calculation 2012 8,329,011 / 12,271,830 8,226,119 / 9,810,928 = 0.68 Times. Interpretation. 2011 = 0.84 Times. The Liabilities have decreased by 1.6 Times than the last year. A Thousands Good sign of company as they have increased their Assets and reduced the liabilities. 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 Current Assets Current Liabilities 2012 8. Quick Ratios. 2011 Current Assets —Inventory / Current Liabilities Calculation 2012 2011 [8329011 – (3230805 + 2507927)] / [8226119 – (1930679 + 1215014)] / 12,271,830 9,810,928 Report Compiled by Maj Raja Manzar & Maj Rana Shahzad
  23. 23. 23 = 0.21 Times Interpretation. = 0.52 Times The Assets have decreased in year 2012, but on other hand the increase in liabilities indicate that the company has good business in year 2012. The Thousands increase in Inventory also shows increase in the production. 15,000 10,000 Current Assets 5,000 Inventory Current Liabilities 0 2012 9. Cash Ratio. 2011 Cash / Current Liabilities Calculation 2011 984,144 / 12,271,830 3,839,361/ 9,810,928 = 0.08 Times Interpretation. 2012 = 0.39 Times The Decrease in Cash reflects that more money has been Thousands invested in the business and the production has increased. 14,000 12,000 10,000 8,000 Cash 6,000 Current Liabilities 4,000 2,000 0 2012 10. 2011 Inventory Turn Over. CGS / Inventory Calculation 2012 2011 12,252,427 / 5,738,732 4,740,961/ 3,145,693 = 2.14 Times = 1.51 Times Interpretation. The Increase in CGS indicates that the production is more by Report Compiled by Maj Raja Manzar & Maj Rana Shahzad
  24. 24. 24 Thousands 0.63 times than 2011. The Business has expanded. 14,000 12,000 10,000 8,000 CGS 6,000 Inventory 4,000 2,000 0 2012 11. 2011 Fixed Asset Turn Over. Calculation Sales/Fixed Assets 2011 29,518,623 / 67,675,785 14,833,343 / 68,121,129 = 0.44 Times Interpretation. 2012 = 0.22 Times There is very marginal change in the Fixed Assets but the Sales Thousands has doubled in year 2012. 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 Sales Fixed Assets 2012 2011 12. Total Asset Turn Over. Calculation Sales/Total Assets 2011 29,518,623 / 76,004,796 14,833,343 / 76,347,248 = 0.39 Times Interpretation. 2012 = 0.19 Times Sales have doubled and there is marginal increase in the Total Report Compiled by Maj Raja Manzar & Maj Rana Shahzad
  25. 25. 25 Thousands Assets. 80,000 70,000 60,000 50,000 Sales 40,000 Total Assets 30,000 20,000 10,000 0 2012 13. A/R Turnover. 2011 Sales/ Acct Receivables Calculation 2012 Interpretation. 2011 29,518,623 / 138,480,000 14,833,343 / 195,840,000 = 0.21 Times = 0.08 Times Sales have increased and on the other hand there is substantial change of 0.13 times in the A/R. This shows that Credit Sales have decreased and Cash Thousands Sales have increased. 200,000 150,000 Sales 100,000 A/R 50,000 0 2012 2011 Capital Structure ratios 14. Debt To Total Assets. Calculation Total Debt / Total Assets 2012 2011 47,054,442 / 76,004,796 = 61.91%. 48,292,383 / 76,347,248 = 63.25 %. Report Compiled by Maj Raja Manzar & Maj Rana Shahzad
  26. 26. 26 Interpretation. The Debts have decreased by 1.34% which shows that company Thousands is focusing on decreasing the debts. 80,000 70,000 60,000 50,000 40,000 Total Debt 30,000 Total Assets 20,000 10,000 0 2012 15. 2011 Interest Coverage Ratio. Calculation EBIT / Interest Liabilities 2012 14,854,358 / 5,773,821 = 2.57 Times EBT + Fin Cost = EBIT Interpretation. 2011 9,150,623 / 3,063,055 = 2.99 Times The Interest Liabilities and EBIT have increased due to substantial Increase in the production and overall business. Thousands 14,854 15,000 9,151 10,000 5,774 5,000 3,063 0 2012 2011 EBIT 16. Interest Liabilities Debt To Equity. Debt : Equity Calculation 2012 47,054,442 / 28,950,354 2011 48,292,383 / 28,054,865 = 162.53 % = 172.14% Report Compiled by Maj Raja Manzar & Maj Rana Shahzad
  27. 27. 27 Interpretation. Due to the focused orientation of the company the Debts have Thousands reduced by 10.39%. This shows a Positive trend in the company‘s future. 60,000 50,000 40,000 30,000 20,000 10,000 0 2012 2011 Debt Equity Investment/ Market Ratio 17. Basic Earnings Per Share Ratio. Calculation Net Income / No Of Shares 2011 6,111,119 / 2,100,000 4,116,975 / 2,100,000 = Rs 2.91 Interpretation. 2012 = Rs 1.96 The Profit on Share has increased by Rs 0.95 per Share. This shows a Positive trend in the Company and the production and sales comparing to last year have increased manifolds. Report Compiled by Maj Raja Manzar & Maj Rana Shahzad
  28. 28. Thousands 28 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 2012 No of Shares Report Compiled by Maj Raja Manzar & Maj Rana Shahzad 2011 Net Income
  29. 29. 29 SWOT Analysis 1. STRENGTHS a) Capital Intensive nature of the sector. b) The players operating in this sector are financially strong. c) All the fertilizer plants are producing at more than 100 percent installed capacity of utilization. d) Govt supports in the form of subsidy. e) Cheap labor. f) Heavy demand. g) Well established distribution sector. h) An agro based economy. i) Broad range of main and mid products. j) Central location of plant. k) Broad production range. l) Monopoly in Calcium Ammonium Nitrate & Nitro Phosphate production Support from Ministry. m) 2. Experience in production and marketing of product. WEAKNESSES a) Low capacity as compared to demand (demand supply gap). b) Due to existence of black market and heavy demand farmers had to pay above the stated price. c) Technological backwardness and Lack of local resources. d) Urea made by Fatima is of more powdered form as compared to the urea made by FFC and other urea producers. e) Obsolete plant with high operating cost. f) Govt. compellations especially for the pricing policy. g) Monetary sensitiveness to foreign exchange exposure. h) Dependence on imported feed stock suppliers and special repair/ maintenance facilities. i) Environmental problem & proximity to urban area. j) Limitation in achieving NITROPHOSPHATE specifications. Report Compiled by Maj Raja Manzar & Maj Rana Shahzad product quality, design
  30. 30. 30 k) Too much centralization effects timely decision making. l) Unsatisfactory Product quality of urea. m) No proper sales promotion. n) Placement and number of warehouses. o) Lack of long term planning, decisions are made keeping in view the short-term benefits. p) q) 3. Lack of financial budgets for implementation at decisions. Too much cost consciousness that affects the long run impact and profits. OPPORTUNITIES a) As the demand is high compared to supply, fertilizer sector has an opportunity to expand capacity to fulfill the local demand. b) Export. c) Introduction of BT crops. d) Improvement in product quality. e) Expansion of plants to meet the demand more efficiently. f) Proper sales promotion. g) Proper placement or warehouses. h) Delegation of authority so that decisions can be made at the spot without any delay. i) Long term profits or benefits should be preferred over short-term profits. Quality should be improved gradually with the results and trends in market. 4. THREATS a) Scarce water resources. b) Load-shedding of gas. c) Hike in fuel prices. d) Taxes. e) Removal of subsidy. f) Rising global prices of fertilizer products. g) Government intervenes to stabilize the prices. h) Low product quality of competitive product (urea) is a major threat i) Major competitors are FFC, ENGRO CHEMICALS and DHC. j) Market share threat for Urea. Report Compiled by Maj Raja Manzar & Maj Rana Shahzad
  31. 31. 31 NFC ENGRO 25-26% a) FFC 48% 24-25% In market the 50-kg bag of Fatima is sold at rs.330 while engro and dhc at rs.360sell that bag but even they are more effective. b) Fatima Fertilizer is giving almost negligible incentives to the customers while ffc and engro are running efficient promotional schemes to attract the customer. c) Fatima Fertilizer is also lagging behind in providing the product at the right time and place customer has to wait 3 to 4 days to load be second truck while at the warehouses of ffc and engro-chemical customer immediately gets the product- so the placement of warehouses is a threat. Neml has 6 warehouses in Multan region while fec has 16 warehouses in that region. d) The packaging of ffc is also better than Fatima. e) Imported fertilizers are also a threat to local industry selling at rs.310 in the market for a 50kg bag. Report Compiled by Maj Raja Manzar & Maj Rana Shahzad
  32. 32. 32 TREND ANALYSIS Political Trend. a) Political trends are always in favor of this industry. The Government has provided incentives under Fertilizer Policy, 2001, to encourage fertilizer production in the country. b) To fulfill local demand of fertilizers at affordable prices, the Government is providing subsidy on production and import of fertilizers. c) Investors will be allowed to relocate second hand plant, equipment and machinery, with the same concession/ exemption as applicable to new plants. d) The Government is providing concessionary feed stock gas to the fertilizer plants for production of urea. e) Import of Rock Phosphate and Phosphorous by manufacturers of fertilizer is free of customs duty. f) Tax relaxation has also been offered by the Government. g) Export benefit to suppliers of capital goods for new/ modernization projects of fertilizer. h) Gas price has been fixed for 10 years for new investments. i) Gas for balancing, modernization, replacement expansion for existing plants has been filed for 7 years. Economical Trend: a) One of the main sectors of economy is Agricultural as it contributes 22% to the GDP and without Fertilizer industry this sector would not able to work. Due to that Government always gives support to the fertilizer industry. b) Import by manufacturers of Rock Phosphate and Phosphorous of fertilizer Free of customs duty. c) Tax relaxation has been offered in order to attract new entrants d) Export benefit to suppliers of capital goods for new/modernization projects of fertilizer. To reduce the dependence on imported fertilizers by enhancing the local production capacity. e) The Government is providing subsidy on production and import of fertilizers. A massive subsidy of Rs. 27 billion in the supply of urea and DAP in 2009. Report Compiled by Maj Raja Manzar & Maj Rana Shahzad
  33. 33. 33 f) Ban on export of fertilizer is also imposed so that economic stability would be gain. Social Trends: a) Although the adverse effects of this industry is very high because of the improper handling of the waste. Due to this, many diseases like asthma, kidney diseases, hepatitis etc... are caused. Still, the usage of the fertilizers cannot be stopped because it gives farmers so much ease in terms of saving time and actually, using it. Making bio fertilizer has now become Old usage and farmers don‘t prefer to use it against artificial fertilizer. Technological Trend: a) To meet the demand of fertilizers in the country through indigenous production, selfreliance in design engineering and execution of fertilizer projects is very crucial. This requires a strong indigenous technological base in planning, development of b) This requires a strong indigenous technological base in planning, development of process know-how, detailed engineering and expertise in project management and execution of projects. c) The fertilizer plant operators have now fully absorbed and assimilated the latest technological developments, incorporating environmental friendly process technologies, and are in a position to operate and maintain the plants at their optimum levels and on international standards in terms of capacity utilization, specific energy consumption & pollution standards. The average performance of gas-based plants in the country today is amongst the best in the world. d) The fertilizer industry is also carrying out de-bottlenecking and energy saving scheme in their existing plants and to enhance the capacity and reduce the specific energy consumption per ton of product. Companies are also planning to convert to Liquefied Natural Gas (LNG). Legal Trend: a) Strengthening the Fertilizer Review Committee. b) Rationalization of quotas to private marketing organizations. c) Setting up of transport sub-agencies. Report Compiled by Maj Raja Manzar & Maj Rana Shahzad
  34. 34. 34 d) Replacement of volumetric bagging machines at Port Karachi by weight baggers, to ensure accuracy. e) Drafting and enactment of fertilizer legislation to provide a legal framework within which marketing agencies and dealers should operate in a privatized system. f) Pursuing low-cost storage options in high consumption areas, and purchasing offseason at a discount. g) Postponing widespread custom blending until inland bulk handling is practiced. Environmental Trend: a) Chemical fertilizer in the form of salts, when added to soils gets converted into ionic forms after dissolving in the soil solution. They are relatively safer than pesticides which exhibit toxic properties on living systems. However, all the quantities of fertilizers applied to the soil are not fully utilized by plants. About 50 per cent of fertilizers applied to crops are left behind as residues. Though, inorganic fertilizers are not directly toxic to man and other life forms, they have been found to upset the existing ecological balance. The nutrients escape from the fields and are found in excessive quantities in underground water, rivers, lakes and coastal waters. b) Fertilizers can become a source of pollution when they are used in excess. Among the three macro (N-P-K) fertilizers being used at present, only potassium fertilizer is not yet considered a source of environmental pollution. The other substances like nitrogen (urea or calcium ammonium nitrate) and phosphorus (DAP or MAP) fertilizers, if used unreasonably, can cause environmental pollution and mainly through increase of nitrate in agricultural products, drinking water, entropication of water sources and increase of cadmium. c) Another hazard associated with excessive use of nitrogenous fertilizers is the gaseous loss of nitrogen, into the atmosphere. High doses of carbon dioxide and ammonia that escape into the atmosphere both from fertilizer manufacturing plant sand soils affect human health. Further the oxides of nitrogen have been reported to adversely affect the ozone layer. d) The oxides of nitrogen cause respiratory diseases like asthma, lung cancer and bronchitis. e) Cadmium accumulation in agricultural products is also an important problem of pollution. Cadmium exposures result in kidney damage, bone deformities, and cardiovascular problems. Report Compiled by Maj Raja Manzar & Maj Rana Shahzad
  35. 35. 35 Demographical Trend: a) At present, eight children are born per minute in Pakistan, as Pakistan is developing country, with limited ability to feed their growing populations or import food. Application of chemical fertilizer to soil systems for increasing production and maintaining soil fertility has been essential to increasing food production and will be essential in future. Report Compiled by Maj Raja Manzar & Maj Rana Shahzad
  36. 36. 36 Recommendations 1. Strict quality control and monitoring should be there to prevent import of substandard products and to curb adulteration and other malpractices prevailing in this sector. 2. The problem of logistics should be looked into. Transportation through railway (being cheaper) especially during peak seasons should be made available. 3. There is a need to educate the farmers on balanced fertilizer use so as to neutralize the adverse impacts of constant use of nitrogenous fertilizers. 4. Fatima fertilizers are giving almost negligible incentives to the customers while FFC and ENGRO are running efficient promotional schemes to attract the customer. Fatima Fertilizers should give more incentives to the customers. 5. Fatima fertilizers should develop more ware houses to early provision of fertilizers to the customers. 6. The packaging should be improved to compete with the other companies in the field. 7. The staff should be decreased to avoid unnecessary extra expenditures on Pay and allowances. 8. Short and bare minimum documentation should be made to provide easiness and comfort to the customers. 9. Career development programs of the employees should be increased to give motivation and keep the interest of the employees. 10. Some employees are working in the same department or section since they are appointed. Employees should be transferred within departments so that the job variety develops their interests, update their information and versatility in their performance. 11. There should be delegation of authority up to certain extent that enables managers to take timely decisions at the spot with confidence and get more involved and responsible for the job and in turn their efficiency will increase. 12. Due to high rate of unemployment in the country workers join those jobs which are against their interest and not according to their calibers. So proper analysis should be done and explores that employee which can do better what they are currently doing in the organization. 13. There is no strict means to force employees to take safety measures and show safety rules. Management should take necessary action in implementing the safety rules in the organization. Report Compiled by Maj Raja Manzar & Maj Rana Shahzad
  37. 37. 37 Shares Information Fatima Fertilizer Company Limited PATTERN OF SHAREHOLDING AS AT DECEMBER 31, 2012 Category-Wise Categories of Share holders Shares Held % Directors, Chief Executive Officer, Spouses and minor children 714,648,874 34.03 Associated Companies, undertakings and related parties 960,091,411 45.72 645,421 0.03 Public Sector Companies and Corporation 11,515,338 0.55 Banks, Development Financial Institutions, Non Banking 87,932,669 4.19 17,334,064 0.83 Executives Financial Institutions, Insurance Companies, Takaful, Modarabas and Pension Funds Mutual Funds General Public Report Compiled by Maj Raja Manzar & Maj Rana Shahzad
  38. 38. 38 a. Local 223,593,997 10.65 787,012 0.04 Foreign Companies 30,330,361 1.44 Others 53,120,853 2.53 b. Foreign Total Ordinary Shares Report Compiled by Maj Raja Manzar & Maj Rana Shahzad 2,100,000,000 100.00

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