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Published by: api-3838342 on Oct 18, 2008
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SC SECURITIES (PVT) LTD.
Corporate Member: Karachi Stock Exchange (Guarantee) Ltd.
Corporate Office: 706, 7th Floor, Business Plaza, Mumtaz Hasan Road, Off. I.I. Chundrigar Road, Karachi. Tel:111-111-721
Stock Exchange Office: 441, 4th Floor, Karachi Stock Exchange Building, Stock Exchange Road, Karachi.
Email:research@scsecurities.net
FAUJI FERTILIZER BIN QASIM LIMITED
INTRODUCTION Fauji Fertilizer Bin Qasim Limited is a public company,

incorporated in Pakistan under the Companies Ordinance and its shares are quoted on the Karachi, Lahore and Islamabad stock exchanges.

The company is involved in manufacturing purchasing and marketing of fertilizers and it commenced its commercial production from January 1 2000. The company is a subsidiary of Fauji Fertilizer Company Limited.

EARNINGS
REVIEW

Fauji Fertilizer Bin Qasim limited has shown tremendous performance during the time period January to June 2005. Sales have almost doubled compared to the same period last year and the company made a gross profit of Rs. 2008 million. This is 94% higher than the same period last year.

This was achieved through the higher production of ammonia, granular urea, and DAP. FFBL is the only manufacturer of DAP fertilizer in Pakistan with annual production capacity of 0.445 million metric tons.

The increased production was mainly due to the shifting of turnaround which was normally carried out in January each year due to gas curtailment, to later part of the year 2005 in order to reduce the expected shortfall of urea during Rabi Season 2004-5.

Increase in other expenses of Rs. 40 million is mainly on account of provision for workers\u2019 profit participation fund due to increase in accounting profit of the Company for the half year. Finance costs have increased by Rs 68 million during the period mainly due to higher utilization of short term facilities and interest rates thereon. This increase is more than offset by an efficient management of the Company\u2019s funds.

During the period, the Company earned profit after taxation of Rs 1326 million compared to profit (after tax) of Rs 833 million in same period last year. Earnings per share have increased by 233%, to Re 1.42 from Re 0.91.

The board of directors also announced an interim Cash Dividend
for the six months ended 30th June 2005 of Rs. 1.25 per share.
Government
Impact

It has advantage over other fertilizer companies because Government is providing a significant subsidy to FFBL. GOP has committed to pay Rs5,000m over a period of seven years in lieu of non-implementation of fertilizer policy, 1989. Of which 2,600m is left that will be received in two installments of Rs 700m each during the years 2005 and 2006 and two installments of Rs 600m each during the years 2007 and 2008.

Gas supplied to FFBL is also at subsidized rate and this subsidy
will continue till FY2009.

Of the compensation received from Government of Pakistan that is 700m, the net of tax figure is 455m. In the latest quarter of June 30, 2005 FFBL showed a PAT of 951m out of which 455m came from GOP compensation i.e. 48% of the total PAT.

Expansion
Activities

The company has started a BMRE project of Ammonia plant to increase its production capacity and efficiency. This increase in ammonia capacity will help in meeting the requirement of the granular urea and DAP plants. Expansion activities are taking place at the site and additional ammonia production will start from the end of 2006. This project has been financed from the company resources.

As a result of this project the ammonia production will increase by 300tpd by Dec 2006 with an estimated cost of Rs 3.25bn. This will increase the urea manufacturing capacity of the company by 14.3 percent and DAP manufacturing capacity by 34.8 percent.

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