ANALYSIS OF FERTILIZER INDUTRY OF PAKISTAN

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PAF KARACHI INSITITUTE OF ECNOMICS AND TECHNOLOGY, KARACHI PAKISTAN

Submitted by: MARYAM NISAR (BB-3-06-3416) SIDRA JAMAL (BB-3-06-3428) Course: ANALYSIS OF PAKISTANI INDUSTRY

Submitted to: Mr. QAZI SALMAN 2

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Table of Contents
PRODUCTS: ........................................................................................................................................6 Brands: ..............................................................................................................................................7 SIZE OF INDUSTRY...............................................................................................................................8 GEOGRAPHICAL LOCATION..................................................................................................................9 FACTORIES LOCATION ...............................................................................................................9 WAREHOUSES ..........................................................................................................................9 TOTAL PRODUCTION.........................................................................................................................10 TOTAL EMPLOYMENT .......................................................................................................................10 TOTAL EXPORT .................................................................................................................................10 NUMBER OF NEW PLANTS AND NUMBER OF PLANTS CLOSED DOWN..................................................10 TOTAL IMPORTS ...............................................................................................................................11 FIRST YEAR AFTER THE FORMATION OF INDUSTRY .............................................................................12 STATSUS OF THE INDUSTRY IN 1971 (EAST PAKISTAN SEPARATION) ....................................................12 IMPACT OF NATIONALIZATION ..........................................................................................................12 CHRONOLOGICAL HISTORY OF THE FERTILIZER SECTOR IN PAKISTAN ...................................................13 Fauji Fertilizer Company .....................................................................................16 Introduction: ..........................................................................................................................16 Engro Chemicals Pakistan LTD ...........................................................................................................19 Introduction ...........................................................................................................................19 Dawood Hercules Chemicals Limited..................................................................................................22 CRITERIA FOR SELETING THESE COMPANIES AS MAJOR PLAYERS .........................................................25 IMPACT ON THE INDUSTRY ...............................................................................................................25 TRADE ASSOCIATION ........................................................................................................................25 REGULATIONS OF OTHER INTERNATIONAL TREATIES ..........................................................................26 Page PAKISTANI INDUSTRY ........................................................................................................................27 OTHER COUNTRIES ..................................................................................Error! Bookmark not defined.

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ECOMONIC IMPACT OF WTO.............................................................................................................28 IMPACT ON PAKISTANI ECOMOMY ....................................................................................................28 ECOMONIC IMPACT OF WTO IN OTHER COUNTRIES ...........................................................................29 DIFFERENCE OF IMPACT....................................................................................................................29 INCENTIVES OFFERED .......................................................................................................................30 INCENTIVES OFFERED IN PAST ...........................................................................................................30 INCENTIVES THAT INDUSTRY ASKING FOR ..........................................................................................30 BENEFITS BY THE INDUSTRY ..............................................................................................................31 INCENTIVES OFFERED TO THE OTHER COUNTRIES...............................................................................31 PRODUCTION PROCESS OF FERTILIZERS .......................................................................................32 UREA MANUFACTURING PROCESS ...........................................................................................32 SINGLE SUPER PHOSPHATE MANUFACTURING PROCESS ...........................................................34 DETERMINANTS OF FIXED COSTS.......................................................................................................35 DETERMINANTS OF VARIABLE COSTS .................................................................................................35 PRICE LIST OF PRODUSTS ..................................................................................................................35 Engro Chemicals Company Ltd:................................................................................................35 Fauji Fertilizer Company Ltd. ...................................................................................................36 Dawood Hercules Company Ltd.: .............................................................................................36 Fatima Fertilizer Company Ltd.: .........................................................................................................36 PRICING MODEL ...............................................................................................................................37 ECONOMIC IMPACT ON THE INDUSTRY..............................................................................................38 HUMAN RESOURCE ISSUES IN INDUSTRY ...........................................................................................38 HURDLES IN MARKETING: .................................................................................................................38 FINANCING EASILY AVAILABLE...........................................................................................................39 IMPACT OF POLITICAL PARTIES ..........................................................................................................39 TRADE ISSUES RELATED TO FERTILIZER INDUSTRY...............................................................................39 PROPOSALS GIVEN BY PEOPLE OF FERTILIZER INDUSTRY .....................................................................40 OUR PROPOSALS ..............................................................................................................................41 HUMAN RESOURCE REQUIREMENTS OF FERTILIZER INDUSTRY............................................................41

SPECIFIC TRAINING INSTITUTIONS .....................................................................................................43 Supplier Power .................................................................................................................................44 PHOENIX

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SORT OF PEOPLE NEEDED..................................................................................................................42

Buyers Power ...................................................................................................................................45 Potential Entrants.............................................................................................................................45 Substitutes.......................................................................................................................................46 Rivalry..............................................................................................................................................46 MARKET ...........................................................................................................................................46 TREND ANALYSIS ..............................................................................................................................47 Political Trend:........................................................................................................................47 Economical Trend: ..................................................................................................................47 Social Trends: .........................................................................................................................48 Technological Trend:...............................................................................................................48 Legal Trend: ..........................................................................................................................48 Environmental Trend: ...........................................................................................................49 Demographical Trend:...........................................................................................................50 PORTERS FIVE FORCES MODEL .....................................................................................................50 Supplier Power .......................................................................................................................50 Buyers Power .........................................................................................................................50 Potential Entrants...................................................................................................................51 Substitutes .............................................................................................................................51 Rivalry....................................................................................................................................52 SWOT ANALYSIS .............................................................................................................................52 Strengths:...............................................................................................................................52 Weakness:..............................................................................................................................52 Opportunities: ........................................................................................................................53 Threats:..................................................................................................................................53 SWOT I MATRIX ............................................................................................................................54 SWOT i matrix.................................................................................................................................55 STRATGIC PLAN ................................................................................................................................56 Bibliography.....................................................................................................................................57

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PRODUCTS
1. 2. 3. 4. 5. 6. 7. 8. Urea, Di-Ammonium Phosphate (DAP Calcium Ammonium Nitrate (CAN) Ammonium Sulphate (AS) Single Super Phosphate (SSP) Nitro phosphate (NP) Sulphate of Potash Zinc Sulphate

1. Urea: More than 90% of the worlds production is destined for use as a nitrogen-release fertilizer. Urea has the highest nitrogen content of all solid nitrogenous fertilizers in common use (46.7%). 2. Di-Ammonium Phosphate (DAP): It contains 46% P2O5 and 18% N. it is water soluble. It is a good source of P fertilizer for all crops. Good source for problem soils. Overall, it suits to about 90% soil of the country. 3. Calcium Ammonium Nitrate (CAN): Calcium ammonium nitrate (CAN) contains 27 % N and 20 % of ground limestone. This has a rapid as well as permanent effect. The granulation of this fertilizer ensures a quick and exact dosing. Ammonium Sulphate (AS) (NH4)2 SO4, is an inorganic salt. It is used largely as an artificial fertilizer for alkaline soils. It lowers the pH balance of the soil, while contributing essential nitrogen for plant growth.
4.

Single Super Phosphate: Superphosphate is a fertilizer produced by the action of concentrated sulfuric acid powdered phosphate rock.
5.

on

6.

Nitro phosphate (NP) It provides 22% nitrogen, and 20% phosphorus. Nitrogen is a primary nutrient that really makes plants "grow. Phosphorus is a primary nutrient that encourages rooting, blooming and fruit production in plants. Sulphate of Potash: Potassium sulphate (K2SO4)) is a non-flammable white crystalline salt which is soluble in water. This chemical is commonly used in fertilizers, providing both potassium and sulphur.
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BRANDS
1. 2. 3. 4. 5. Engro Chemical Company Ltd Fauji Fertilizer Company Ltd. Dawood Hercules Fatima Fertilizer Company Ltd. National Fertilizer Corparation

1. FERTILIZER BY ENGRO CHEMICAL PAKISTAN LTD.

Nitrogenous Fertilizers:

Engro UREA is a trusted, high-grade fertilizer which is suitable for all crops on all types of soils. Engro Urea is an excellent source of Nitrogen for the vast majority of cultivated soils of Pakistan.

Phosphatic Fertilizers

Engro DAP: contains 46% P2O5 and 18% N. It is a good source of P fertilizer for all crops. It is an equally good source on problem soils. On an overall basis it suits to about 90% soils of the country. Engro Zorawar: is one of the highest grade phosphatic fertilizers. It is acidic in reaction more than 90% is water soluble. It is a beneficial fertilizer for all crops on all soils of Pakistan and produces excellent results on alkaline soils, due to its acidic Engro Phosphate: is brown colored mono ammonium phosphate with 11% nitrogen and 52% phosphorus. It is being marketed as relatively cheaper alternate of DAP.

Blended Fertilizers Engro Zarkhez: is homogenously granulated fertilizer which maximizes crop yield by providing balanced nutrition for a wide variety of crops through the uniform availability of Nitrogen, Phosphorous and Potassium. Fertilizers have low moisture content, high crush strength; 2mm-4mm granule size and free flowing nature attributes which ensure excellent handling and application characteristics. Engro NP: It provides 22% nitrogen, and 20% phosphorus. ECPL entered into NP business in 2005 to Primary focus area for ENP marketing is South Zone (Sind).
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Zingro: Zinc Sulphate, a highly effective, primarily targets Zinc deficiency in crops like Rice, Potato, Maize, Sugar cane, Wheat, Cotton, vegetables and fruits. Zingro
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Micro Nutrients:

increases crop yield and enhances crop appearance.

2. FUJI FERTILIZER COMPANY LTD.

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. Sona DAP: is the most concentrated phosphatic fertilizer containing 46% P 2O5 and 18% Nitrogen. It is the widely used phosphatic fertilizer in the world as well as Pakistan. The solubility of DAP is more than 95%. Its nitrogen to phosphoris ratio ( 1 : 2.5 ) makes it an ideal fertilizer, to meet the initial requirement of most of the crops. Sona SOP: This fertilizer is an important source of Potash, which is a quality nutrient for production of crops especially fruits and vegetables. Potash improves the resistance of the plants against pests, diseases and stresses like water .

3. Dawood Hercules Chemicals Limited.

Bubber Sher: The Company's principal activity is to produce urea fertilizer. The Company markets its urea under the brand name Bubber Sher.

4. Fatima Fertilizer Company Limited:

Nitro Phosphate Nitrogen Phosphorous Potassium Calcium Ammonium Nitrate Urea

5. National Fertilizer Corporation:

Calcium Ammonium Nitrate Nitro Phosphate Single Super Phosphate Zinc Sulphate

SIZE OF INDUSTRY
Number of Factories/Plants 14
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Number of Compaines

Tones in 000 FERTILIZER PRODUCTION

2007-8(July-March)

2006-7 2735.2

2005-6 2826

1846.9

GEOGRAPHICAL LOCATION
FACTORIES LOCATION
CITIES Bin Qasim Sheikhupura Sadiqabad, Rahim Yar Khan Multan Haripur Faisalabad Mirpur Mathelo, Dist Gotki Daudkhel NUMBER OF FACTORIES 2 1 2 1 2 1 1 1

WAREHOUSES
Mian Chunnu Faisalabad Khanewal D.G. Khan Dera Ismail Khan
Sukuar

Lahore Karachi Larkana Dadu Thatta Mirpur khs Nawabsha Multan Sheikupura

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TOTAL PRODUCTION
(IN THOUSAND TONS)

YEAR 1998-1999 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2007-2008 (JULY-MARCH) 2008-2009 (JULY-MARCH)

UREA 3521.7 3785.0 4005.1 4259.6 4401.9 4431.6 4606.4 4806.4 472.5 4924.9 3660.5 3652.4

SUPER PHOSPHATE 21.6 145.8 159.6 161.0 147.2 167.7 163.1 16.8 148.9 157.6 114.8 143.2

AMMOMIUM NITRATE 338.8 386.5 374.4 329.4 335.3 350.4 329.9 327.9 330.8 343.7 246.0 245.7

NITRO PHOSPHATE 265.0 261.3 282.5 305.7 304.9 363.5 338.9 356.6 325.8 329.7 218.4 218.4

AMMON I UM SULPHATE Source: NFDC

TOTAL EMPLOYMENT
o Direct employment: 31,000 people are directly employed in fertilizer sector. 4139 people /day o Indirectly employment: Agriculture is the mainstay of Pakistans economy. It accounts for 24 percent of the GDP and employs 48.4 percent of the total labor force.

TOTAL EXPORT
46 thousand tones of urea were exported in 2002/03.

Number of new plants opened Number of plants closed down

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NUMBER OF NEW PLANTS AND NUMBER OF PLANTS CLOSED DOWN

TOTAL IMPORTS

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FIRST YEAR AFTER THE FORMATION OF INDUSTRY

1971 Separation of East Pakistan

STATSUS OF THE INDUSTRY IN 1971 (EAST PAKISTAN SEPARATION)

The separation of East Pakistan was a huge disaster for the country. But it did not have so much adverse effects on the fertilizer industry. The reasons for not been affected was: The industry was not big at that particular time It had all its setup in the West Pakistan. But whatever the problem was, it was facing the financial crunch because, 80% of the wealth was in East Pakistan. This was one of the reasons that this industry could not grow. The other reason was low demand because the fertilizer which was being used mainly to fulfill needs was Organic Fertilizer. At that time, there was three main companies in this industry namely, Dawood Hercules (formed in 1968), national Gas & Fertilizer (1962) and Esson (current Engro, formed in 1965). Among them, Dawood Hercules faced some losses but in different industry products such as nationalization of their Dawood Petroleum Ltd.

IMPACT OF NATIONALIZATION
Although this industry was present at the time of nationalization, but this industry did not get nationalized because companies at that time neither were more in numbers, not big. this particular industry. Therefore, the nationalization process which started from 1972, could not have impact on

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CHRONOLOGICAL HISTORY OF THE FERTILIZER SECTOR IN PAKISTAN

1952 1957 1958 1959/60 1962 1965

1966/67 1973

1976 1978 1980 1982 1982 1985

1986 1989 1990 1991 1992 1993

Nitrogenous fertilizers were introduced in Pakistan. Lyallpur Chemicals and Fertilizers Limited (LCFL) is set up and designed to produce Single Super Phosphate (SSP). Pak American Fertilizer Limited (PAFL) is commissioned and designed to produce ammonium sulphate. phosphorus introduced in Pakistan National Gas Fertilizer Factory is set up producing Urea, Ammonium Nitrate, and Nitric Acid. Esso Pakistan Fertilizer Company Limited (EPFC) is incorporated and designed to produce urea 1968 Designed Capacity of PAFL is increased. Potassium introduced in Pakistan. National Fertilizer Development Corporation (NFDC) is established with an authorized share capital of 1000m. It's mandate is to manage the existing fertilizer factories and to establish additional factories. Capacity of LCFL is doubled. NGFF is renamed Pak Arab Fertilizers after 48% stake is acquired by Government of Abu Dhabi. Pak Saudi Fertilizer Company is established designed to produce urea. Pak China Fertilizers Limited (PCFL) goes into commercial production. It is designed to produce urea. Fauji Fertilizer is established. Hazara Phosphate Fertilizer Limited is incorporated and is designed to produce Granulated Single Super Phosphate Fertilizer. Government deregulates prices of nitrogenous fertilizers Fertilizer Policy is announced providing incentives for fresh investment in the sector. Esso (Exxon) announces its intentions to sell 75% of its holdings in EPFC. Engro Chemicals Pakistan Limited is formed. FFC was listed on Islamabad Stock Exchange. FFC once again came forward and put up another urea manufacturing facility at Goth Machhi to meet the growing demand. The new plant commenced commercial production FFC has been ranked 5th Best Company of the Karachi Stock Exchange(KSE).

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1994

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1996 1997

1998 1998 1998

1999

FFC-Jordan fertilizer company was formally listed with stock exchange in MAY. International Finance Corporation (ifc) Washington D.S signed an agreement to provide $ 18 million in loan to ENGRO fertilizer Pakistan ltd. FFC Jordan is established. It is the first company to locally manufacture Di ammonium phosphate (DAP) in the country. Engro in large part to investments made in the renovation of its plants in 1998, which increased production by 14%. FADINAP provided financial assistance to the National Fertilizer Development Centre (NFDC), Islamabad, Pakistan to study the impact of privatization and deregulation on fertilizer sector development in Pakistan. Manfred Jeebe, former Team Leader returned as consultant to FADINAP from 15 February to 30 April 1999, for a period of eleven weeks, to conduct desk-research and undertake missions to study the fertilizer marketing systems and related government policy in Pakistan and Nepal. Upon the request of the Fertilizer Unit, Ministry of Agriculture, Nepal, FADINAP Web site in-charge, Mr. Edgar Dante, and Research Assistant, Mr. Naripone Sivanunwong conducted a follow-up training in Kathmandu on the development of their national Web site from 18 to 22 July 1999. FFC commercial production commenced wef Jan 2000 FJFC DAP Plant brought to suspension due to accumulated loss of Rs. 6.5 Billion. Ministry of Industries and Production announced Fertilizer Policy 2001. Pak Saudi Fertilizer was purchased by FFC for a purchase price of PkR7.3bn rupees. A substantial decline in sales of Dawood Hercules ltd seen in first half of the year. FFC acquired Pak Saudi Fertilizer Ltd Urea Plant situated at Maripur. 46 thousand tones of urea were exported. FFC DAP Plant resumed production in Sep. FFC obtained the certification of occupational health and safety assessment series, OHSAS-18001:1999 Fatima Group and Arif Habib Group, incorporated in Dec 24 The Economic Coordination Committee decided to maintain the ban on export of urea. Pak Arab unit is in an advanced stage of privatization.
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1999 1999

2000 2000 2000 2001 2001 2001 2002 2002 2002 2003 2003 2003 2004 2004

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2004

2005

2005

2005

2006 2006 2006 2007 2007 2007 2008 2008 2008 2009 2009

2009

Dawood Hercules has the privilege of being the first fertilizer manufacturing company to obtain ISO-9001:2000 certification in Pakistan. July 14, Pak Arab Fertilizer was privatized at a cost of Rs14.125 billion under privatization policy of Government of Pakistan. Dawood Hercules Chemicals Limited (DHCL) and Sui Northern Gas Pipelines Limited (SNGPL) signed Gas Sale/Purchase Agreement revalidated for a period of next 4 years on, Sept 07 Dawood Hercules Chemicals Limited has been listed amongst the 25 companies for the Karachi Stock Exchange (KSE) Top Companies Award for 2005. FFBL is its accreditation of ISO certification, which was achieved in Mar 2006 for both the Head Office and Plant site. Engro announces Rs. 2.55 billion profit for Financial Year 06 . Engro Chemical wins prestigious Asian CSR Award. Engro Chemical listed among top 5 Notable COPs in Chemical Sector by United Nations Global Compact. FFBL successfully completed Ammonia Plant. Engro signed agreement with Descon Engineering Ltd for new Ammonia and Urea Complex. The industry provided a subsidy of Rs 100 billion to farmers for the nine months ended September 30. PIDC, Engro Chemicals to set up training center in Dharki . PIDC approves Rs 100m for technical training center. Engro reinforces commitment for improved HSE Management Recent award of electromechanical works for the revamp of Pak American Fertilizer Limited, Sikandarabad is yet another significant accomplishment by Descon. Kissan Support Service Limited (KSSL) has signed a Memorandum of Understanding MoU with Pak Arab Fertilizer to ensure timely availability of fertilisers, seeds, pesticides and other agriculture inputs to the farmers.

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Fauji Fertilizer Company

Introduction:
FFC was incorporated in 1978 as a PVT. Basically this was the joint venture between Fauji foundation and Haldor Topsoe of Denmark. The initial capital of the company was 813.9 Million Rupees. The present share capital of the company stands at Rs. 3.0 Billion. FFC has Rs. 1.0 Billion stakes in the subsidiary Fauji Fertilizer Bin Qasim Limited (formerly FFC-Jordan Fertilizer Company Limited).

Location of Office: Regional Offices:

Multan
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Rawalpindi

Lahore Sukkar Mirpur khas Nawabshah

Plant Location:
There are 3 plants of FFC in Pakistan 2 plants are located in Goth Machhi 1 plant in Mirpur Mathelo

Product Offered:

Sona Urea Sona DAP 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. Sona DAP: is the most concentrated phosphatic fertilizer containing 46% P 2O5 and 18% Nitrogen. It is the widely used phosphatic fertilizer in the world as well as Pakistan. it an ideal fertilizer, to meet the initial requirement of most of the crops. Sona SOP: This fertilizer is an important source of Potash, which is a quality nutrient for production of crops especially fruits and vegetables. Potash improves the resistance of the plants against pests, diseases and stresses like water.

http://zubairad.com/images/img_profile_03.gif

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http://www.ffc.com.pk/contents/framepages/ar_2008.pdf

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Engro Chemicals Pakistan LTD

Introduction :3
Engro Chemical Pakistan Limited is the second largest producer of Urea fertilizer in Pakistan. The company was incorporated in 1965 and was formerly Exxon Chemical Pakistan Limited until 1991, when Exxon decided to divest their fertilizer business on a global basis and sold off its equity of 75% shares in our company. The Employees of Engro, in partnership with leading international and local financial institutions bought out Exxons equity and the company was renamed as Engro Chemical Pakistan Limited. Engro is a public limited company listed on the Stock Exchanges of Karachi, Lahore and Islamabad.

www.engro.com

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Location of Head Office:

Regional Offices:4
Hyderabad Quetta Nawabshah Rahim Yar Khan D G Khan Multan Lahore Gurjanwala D I Khan

Products Offered

Engro urea Engro Zorawar Engro Phosphate Engro NP Zingro Engro DAP Engro Zarkhez

Factories:

Dharki, Sindh. Bin Qasim, Karachi

www.engro.pakissan.com www.engro.com/.../fer tilizers/index.php

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http://www.engro.com/pdf/engro_annual_report08_final 1.pdf

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Dawood Hercules Chemicals Limited.

Introduction:7
between Dawood Group of Industries and Hercules Inc. USA. It was the first private sector venture in Pakistan to receive a loan from the World Bank and was the largest ammonia/urea plant in country at that time. Initially the plant's capacity was 345,000 metric tons of urea per annum. The plant was revamped in 1989 / 1991 to enhance the capacity to 445,500 metric tons of urea p er annum. Also, it made the manufacturing facilities more energy efficient and environment friendly.
Dawood Hercules Chemicals Limited was incorporat ed as a public limited co mpany on 17 th April 1968, as a joint v enture

www.dawoodhercules.com/

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HeadOffice Location:8

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Dawood Hercules has the privilege of becoming the first fertilizer manufacturing company to obtain ISO-9000:2000 certification. Dawood Hercules also won numerous safety and excellence awards.

Empress Road, Lahore

Factory Loaction:
Chichoki Mallia, Shkhupura

Product Offered:
Bubber Sher: The Company's principal activity is to produce urea fertilizer. The Company markets its urea under the brand name Bubber Sher.
9 10

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www.dawoodhercules.com/contact.html http://www.dawoodhercules.com/images/agronimics.jpg 10 http://static.panoramio.com/photos/original/14967593.jpg

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http://www.dawoodhercules.com/reports/annual%20report%2008.pdf

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CRITERIA FOR SELETING THESE COMPANIES AS MAJOR PLAYERS

As the graph shows the market share of all the players of the industry, it is clearly shown that major players of the industry are ENGRO and FFC. And this is the reason for selecting these companies as the major players.

IMPACT ON THE INDUSTRY

Since these (ENGRO, FFC) are the major players of this industry, they enjoy as the price setter in the industry. They have so much influence on the other players and they are also a barrier to the new entrants. The new comers will not have to face intense competition but huge competitors like these.

TRADE ASSOCIATION
In this particular industry, there is no local trade association in the country. The country is the member of the International Fertilizer Association (IFA). Pakistan trade Union defense campaign (PTUDC) which works for safeguarding the rights of the workers.

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REGULATIONS OF OTHER INTERNATIONAL TREATIES

International Fertilizer Association:12
IFA developed a series of 12 principles for use in fertilizer operations globally. 1. All members shall demonstrate leadership and management commitment with regards to safety, security, health and environmental issues in fertilizer production, distribution and sales. 2. All members shall attempt for zero harm and adverse environmental impact whilst maintaining a healthy work place for all employees and contractual staff. 3. All members shall ensure that safety, security, health and environment issues are integrated into their corporate policy and receive the highest importance and priority. 4. All members shall ensure adequate financial and human resources for continual improvement of safety, security, health and the environment performance. 5. All members shall comply with local safety, security, health and environmental laws and strive to embrace international laws and best practices as much as possible. 6. All members shall establish and improve their safety, security, health and environmental performance through annual objectives, targets or key performance indicators. 7. All members shall establish adequate procedures and controls to ensure that safety, security, health and environment are not put at risk at any time or in any form. 8. All members shall ensure that all employees and contractual staff have the right competence and are adequately trained and informed about safety, security, health and environment related to their specific activities, and shall encourage the participation of employees and contractual staff for further improvements. 9. All members shall adhere to the principles of hazard and risk assessment in evaluating all their activities to ensure that safety, security, health and environment standards are continually enhanced. 10. All members shall strive to subscribe to safety, security, health and environment management systems that will be subjected to internal and external auditing. 11. All members shall voluntarily share information with regards to experiences and lessons related to safety, health and the environment with all employees and

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http://www.fertilizer.org/i fa/Home-Pa ge/SUSTAINABILITY/Sa fety-Heal th-Envi ronment-Principles

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contractual staff, and with other IFA members, unless under legal constraints or if the information is of proprietary nature. 12. All members shall strive to continually promote safety, security, health and environmental matters to enhance the social responsibility and accountability of the global fertilizer industry.

PAKISTANI INDUSTRY
Pakistani industry coped up with these international requirements by doing several measures/actions:13 Organizations fulfill all applicable laws and regulations relating to Health and Safety measures. Providing necessary awareness and training programs in order to fulfill necessary requirements. Evaluating the impact on Health, Safety, and Environment whenever implementing any new process or any modification in existing process. Occasionally evaluating all facilities like plants, environments to improve the implementation of the policy more effectively and to find out whether all the requirements are fulfilling or not. Companies are also obtaining ISO Certifications, so that anyone whenever wants, check their standards of management.

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http://www.dawoodhercules.com/policy_eng.html

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ECOMONIC IMPACT OF WTO

The impact of WTO will be discussed by the considering the contract GATT article VI:

Article VI14 Anti-dumping Duties

1. The contracting parties recognize that dumping, by which products of one country are introduced into the commerce of another country at less than the normal value of the products, is to be condemned if it causes or threatens material injury to an established industry in the territory of a contracting party or materially retards the establishment of a domestic industry. For the purposes of this Article, a product is to be considered as being introduced into the commerce of an importing country at less than its normal value, if the price of the product exported from one country to another (a) Is less than the comparable price, in the ordinary course of trade, for the like product when destined for consumption in the exporting country, or, (b) In the absence of such domestic price, is less than either (i) The highest comparable price for the like product for export to any third country in the ordinary course of trade, or (ii) The cost of production of the product in the country of origin plus a reasonable addition for selling cost and profit. 2. In order to offset or prevent dumping, a contracting party may levy on any dumped product an anti dumping duty not greater in amount than the margin of dumping in respect of such product.

IMPACT ON PAKISTANI ECOMOMY15

The dumping of foreign fertilizer has hindered the growth of the local industry and resulted in decline in its net margins and profitability. Engro Chemical's net Income in the first quarter of 1999 (January to March) eroded by 46 per cent to Rs.247 million, as against Rs.454 million during the corresponding period a year earlier. The company sold 175,000 tones urea during the quarter, as against 202,000 tones sold in the same period last year.

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http://www.wto.org/english/docs_e/legal _e/ga tt47_e.pdf

http://findarticles.com/p/articles/mi_hb092/is_8_30/ai_n28754170/

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The sales revenue amounted to Rs. 1.643 billion as against Rs. 1.721 billion of the corresponding periods a year ago. The drop in sales was due to imported urea. Excess supply of urea in the international market and the absence of any anti-dumping duties have made Pakistan a target for dumping by the producers in certain countries. According to market sources there is no custom duty or other tariff barriers against import of fertilizer and anyone is free to import. As a consequence, certain countries whenever facing problem in selling urea in international market, they finding more convenient to dump their products in Pakistan. In the present situation the fertilizer industry is falling under the pressure of declining prices and cost push pressures. The industry has been requesting the Government to impose antidumping or regulatory duty. The fertilizer producers, while being supportive of the deregulated and free market mechanisms, are seeking protection against dumping, which causes unfair competition. This article not only saved the local industry of the country, as well as gave them chance to grow.

ECOMONIC IMPACT OF WTO IN OTHER COUNTRIES

Dumping problem is not only affecting the Pakistani industry but to all over the world. Those countries that are not imposing tariff barriers and custom duty are facing this problem. China, India and other European Countries were also affecting but their Government protects them from this situation by imposing anti-dumping and high tariff duties.

DIFFERENCE OF IMPACT
high import which will destroy local industry.
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and high custom duty against import, all the countries would face the same problem i.e.

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There would be no difference as far as the impact is concern. By not imposing tariff barriers

INCENTIVES OFFERED
The Government has provided following incentives under Fertilizer Policy, 2001, to encourage fertilizer production in the country: To fulfill local demand of fertilizers at affordable prices, the Government is providing subsidy on production and import of fertilizers. Investors will be allowed to relocate second hand plant, equipment and machinery, with the same concession/exemption as applicable to new plants. The Government is providing concessionary feed stock gas to the fertilizer plants for production of urea. Import by manufacturers of Rock Phosphate and Phosphorous of fertilizer free of customs duty. Tax relaxation has also been offered by the Government. Export benefit to suppliers of capital goods for new/modernization projects of fertilizer. Gas price has been fixed for 10 years for new investments. Gas for balancing, modernization, replacement expansion for existing plants has been filed for 7 years.

INCENTIVES OFFERED IN PAST

All these incentives mentioned above are being offered from the beginning.

INCENTIVES THAT INDUSTRY ASKING FOR

Industry is asking for the following incentives: Subsidy on the production. Tax relaxation Custom free import of raw material and machinery. Low prices of Natural gas.
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 Grantee of gas supply for both Fuel and Feeds.

BENEFITS BY THE INDUSTRY

The major benefit that industry is providing is the Employment, as with increase in plants of the industry all the related network is also expanding like increase in warehouses, transportation and so. This will increase employment. Companies also participating in social welfare activities. For example in education, helping earth quake victims, supporting infrastructure and in health sector.16

INCENTIVES COUNTRIES
SRI LANKA17

OFFERED

TO

THE

OTHER

Special fertilizer subsidy for small tea estate owners in Sri Lanka Sri Lanka government has decided to activate the fertilizer subsidiary for tea small holders proposed in this year's budget. Plantations Minister D.M Jayaratna said the decision was taken during a special meeting held last evening at the Presidential Secretariat with the officials of Agriculture Ministry and fertilizer companies. Under the subsidy a 50 kilogram fertilizer bag will be sold at Rs. 1,000 for the small tea estate owners from today, the Plantation Ministry announced.

NEPAL18
Some of the incentives that can be expected are Rs 1.5 billion subsidies for chemical fertilizer. 50 percent capital grants to import machinery for fertilizer industry. Concessionary tax policy.
16

http://engro.com/corporate_responsibility/index.php

17http://www.colombopage.com/archive_09/January1570550RA.html

18

http://www.myrepublica.com/portal/printable_news.php?news_id=8799

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 Continuation of interest subsidy to small farmers.

INDONESIA 19
During the presentation of the draft 2010 budget earlier this month, the government announced it would slash the amount it would pay for fertilizer subsidies by 35 percent next year to only Rp 11.3 trillion.

CONCULSION:
So, by looking at other countries, it can be said that the incentives being offered in these countries and our country dont have much of a difference. They are almost same, in all the mentioned countries and our country the subsidy is being provided in one way or other.

PRODUCTION PROCESS OF FERTILIZERS

We have selected these two products for production process: Urea Single Super Phosphate

UREA MANUFACTURING PROCESS 20

Urea is produced from ammonia and carbon dioxide in two equilibrium reactions: 2NH3 + CO2 NH2COONH4
Ammonium carbonate

NH2COONH4

NH2CONH2 + H2O
Urea

Step 1 - Synthesis
A mixture of compressed CO2 and ammonia at 240 bars is reacted to form ammonium carbonate. This is an exothermic reaction, and heat is recovered by a boiler which reduces steam. If the mixture remains in the reactor long enough, the second reaction takes place: ammonium carbonate splits into water and urea.

Step 2 - Purification
19http://thejakartaglobe.com/business/indonesia-moving-too-far-too-fast-on-fertilizer-subsidies-farmers/324933

20

http://www.scribd.com/doc/18793009/Ammonia -and-Urea Production1?from_email_04_friend_send=1&emid=2238566

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The major impurities in the mixture at this stage are water from the urea production reaction and unconsumed reactants (ammonia, carbon dioxide and ammonium carbonate). The unconsumed reactants are removed in three stages3. Firstly, the pressure is reduced from 240 to 17 bars and the solution is heated, which causes the ammonium carbonate to decompose to ammonia and carbon dioxide: NH2COONH4 2NH3 + CO2

At the same time, some of the ammonia and carbon dioxide flash off. The pressure is then reduced to 2.0 bar and finally to -0.35 bar, with more ammonia and carbon dioxide being lost at each stage. By the time the mixture is at -0.35 bar a solution of urea dissolved in water and free of other impurities remains. At each stage the unconsumed reactants are absorbed into a water solution which is recycled to the secondary reactor. The excess ammonia is purified and used as feedstock to the primary reactor.

Step 3 - Concentration
75% of the urea solution is heated under vacuum, which evaporates off some of the water, increasing the urea concentration from 68% w/w to 80% w/w. At this stage some urea crystals also form. The solution is then heated from 80 to 110oC to re dissolve these crystals prior to evaporation. In the evaporation stage molten urea (99% w/w) is produced at 140oC. The remaining 25% of the 68% w/w urea solution is processed under vacuum at 135oC in a two series evaporator-separator arrangement.

Step 4 - Granulation
Urea is sold for fertilizer as 2 - 4 mm diameter granules. These granules are formed by spraying molten urea onto seed granules which are supported on a bed of air. This occurs in a granulator which receives the seed granules at one end and discha rges enlarged granules at the other as molten urea is sprayed through nozzles. Dry, cool granules are
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classified using screens. Oversized granules are crushed and combined with undersized ones for use as seed. All dust and air from the granulator is removed by a fan into a dust scrubber, which removes the urea with a water solution then discharges the air to the atmosphere. The final product is cooled in air, weighed and conveyed to bulk storage ready for sale.

SINGLE SUPER PHOSPHATE MANUFACTURING PROCESS 21

Single Super Phosphate, is manufactured in the fertilizer industry by the reaction of the sulfuric acid with the phosphorous penta oxide. Solid sulfur, S(s), is burned in air to form sulfur dioxide gas, SO 2 S(s) + O2 (g) SO2 (g)

The mixture of sulfur dioxide and air is heated to 450 oC and subjected to a pressure of 101.3 - 202.6 kPa (1 -2 atmospheres) in the presence of a vanadium catalyst (vanadium (V) oxide) to produce sulfur trioxide, SO3 (g), with a yield of 98%. 2SO2(g) + O2 (g) 2SO3(g)

Sulfur trioxide, SO3 (g) is dissolved in 98% sulfuric acid, H 2SO4, to produce disulfuric acid, also known as fuming sulfuric acid or oleum, H 2S2O7. SO3 (g) + H2SO4 H2S2O7

Water is added to the disulphuric acid, H 2S2O7, to produce dilute sulfuric acid, H2SO4 H2S2O7 (l) + H2O (l) 2H2SO4(l)

Sulfuric acid is added to the ground/crushed phosphate rock. Phosphoric content is kept at 16-21% for which phosphoric Penta oxide is used (P 2O5).

21

http://www.patelenterprises.net/ssp-fertilizer-manufacturing-plant.html

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SSP production involves mixing the sulfuric acid and the rock in a reactor followed by discharging the reaction mixture on to a slow moving conveyor in a den. It is cured for 4 to 6 weeks before bagging and shipping.

DETERMINANTS OF FIXED COSTS

Salaries & Wages Deprecation Allocated Costs Taxes

DETERMINANTS OF VARIABLE COSTS

Gas as Feed Stock Gas as Fuel Canal Water Chemicals Catalyst Maintenances of Stores Packing Materials Containers Contract Labors Electricity Duty Other Expanses (Allocated)

PRICE LIST OF PRODUSTS

Engro Chemicals Company Ltd:22

Products Zorawar

Prices

22

http://engro.pakissan.com/engropk/fertilizer.rates/index.shtml PHOENIX

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1858/Bag

Zingro Danedar Zarkheez Green Engro Urea Zarkheez Blue Zarkheez Tobacco

455/Bag 1880/Bag 750/Bag 1730/Bag 1735/Bag

Fauji Fertilizer Company Ltd.

Products Sona Urea Sona DAP

Prices 525/bag 1050/bag

Dawood Hercules Company Ltd.:

Products

Prices

Bubber Sher

710-880/bag

Fatima Fertilizer Company Ltd.:

Calcium Ammonium Nitrate (CAN)

450/Bag

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Products

Prices

Nitro-phosphate (NP) Urea

810/bag 710/bag

PRICING MODEL
Price = f (Governmental Policies + Monetary Policies + Inflation + Availability of Feed & Fuel Gas)
Where, Governmental Policies = Ban on Export, Anti-Dumping Duty Monetary Policies = Subsidy, No Custom Duty on Import of Equipments & Raw Material. Inflation = Increases in Gas Prices, Transportation Cost because of increase in Fuel Price. Availability of Feed & Fuel Gas = Continuous Supply of Natural Gas for both fuel and feed.

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ECONOMIC IMPACT ON THE INDUSTRY

The economy of the country does have considerable impact on the fertilizer industry in the following ways: The cost of this industry is quite high which is very difficult for the economy of the country to support especially in current circumstances. Natural Gas is the main requirement of this industry and it is very difficult to fulfill that. Recently the government has announced the cut in the supply of the Natural Gas in the shape of load shedding. When there is a boom in the agriculture sector of the economy, the demand of the fertilizers also gets increased which puts positive effects on the industry .

HUMAN RESOURCE ISSUES IN INDUSTRY

There would not be any of such issues in the industry as the educated human resource is easily available and for further enhancement in performance training should be conducted in companies both technical and interpersonal.

HURDLES IN MARKETING:
Weak competition or shortages may lead to price gouging and/or product adulteration. Rigid and slow reaction to market changes. New entrants discouraged. Uneducated target market because of this marketing is difficult. Prices are not same in all over Pakistan. Ineffective distribution process.

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FINANCING EASILY AVAILABLE

Financing is easily available in this sector. The government is willing to develop this sector so that it would fulfill the requirements. Recently, two plants are opening; one is of Fatima Fertilizer and one of Engro Ammonia Plant. In project of Engro Ammonia Plant there is total investment of $1billion is needed, for which it has signed a syndicate loan of Rs 18.3 billion.

IMPACT OF POLITICAL PARTIES

As in Pakistan, there is a culture that all of the work related to Government would be easier only when you have good relationship with these parties. Fertilizer Industry has too much concern with the Government for availability of Natural Gas and Water, subsidy, anti-dumping duty, and custom free import and so on. All these factors have considerable effect on the profitability of the companies and without political parties help, companies will not be able to get these benefits. In the industry, all companies have very good and stable relation with the political parties and therefore enjoy benefits which they want to. So, we can say that the impact of political parties is positive on this industry.

TRADE ISSUES RELATED TO FERTILIZER INDUSTRY

1. Agreement is being made that the market forces will be allowed to work, in the case of fertilizer imports. 2. To stop dumping in fertilizer industry the WTO regulation related to anti dumping must be applied in the industry for the industry benefit.

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producing private importers pay 5% of the value on the imported fertilizer.

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3. In case of import the fertilizer producing companies are exempted where as the non

4. The introduction of General Sales Tax on fertilizers should be carefully considered since it would have serious implications on price relations. 5. Market information and monitoring by the National Fertilizer Development Centre should be strengthened to serve as a real information center for the fertilizer sector.

PROPOSALS GIVEN BY PEOPLE OF FERTILIZER INDUSTRY

The first point in proposal was about career development of employees People working in one section or department from years are still with the same knowledge and style of doing job.

There should be proper career planning of employee which results in better and improved output for the organization.

Some employees are working in the same department or section since they are appointed. Employees should be transferred with in departments so there is job variety that develops their interests, update their information and improve their performance.

Due to high rate of unemployment in the country people join those jobs which are against their interest so proper analysis should be done and explore those employee which can do better what they are currently doing in the organization

Management should take necessary action in implementing the safety organization.

rules in the

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OUR PROPOSALS
Strict quality control and monitoring should be there to prevent import of sub-standard products.

The problem of logistics should be looked into. Transportation through railway (being cheaper), especially during peak seasons should be made available.

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.

HUMAN RESOURCE REQUIREMENTS OF FERTILIZER INDUSTRY

Hiring quality manpower, keeping them happy, satisfied and motivated are the pillars of the Human Resources Department; justice, fair play and merit oriented treatment are some of the ingredients of processing cases by the Human Resources Department. For Human Resource development, another aspect which receives its due share is training. The employees are exposed to various kinds of cross training, technical cou rses, management courses, workshops and seminars both at home and abroad. Employees' welfare has all along received due consideration by the Management

Handling cases relating to following subjects

Employment/appointment of non management employees. Temporary / contract /daily wages according to authorization. Promotion of non management employees

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Leaves (annual, causal, special, sick) are managed for all employees.

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Pay and allowances of non management employees.

House/rent allowances advances.

House building loans.

SORT OF PEOPLE NEEDED

1. PLANNING ENGINEER :23

JOB TITLE: Planning Engineer JOB DESCRIPTION: Should have strong technical, analytical and problem solving capabilities. And consist of the ability to achieve excellent performance in individual and team environment. JOB SPECIFICATION: 5-8 years experience required.

2. CORPORATE LAWTER:
JOB TITLE: Corporate Lawyer JOB DESCRIPTION: The lawyer should have the potential to handle civil and corporate law matters independently. Be Creative and self-motivated and excellent interpersonal skills. JOB SPECIFICATION: Minimum 5 year experience required.

3. MANAGER PUBLIC AFFAIRS

JOB TITLE:24

Manager Public Affairs

JOB DESCRIPTION:

23

http://www.careerjet.com.pk/job/2639b323ea9699708429fbfa634117f6.html

24

http://www.careerjet.com.pk/job/807ebea9118d2e079fea51b0d50c01a9.html

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Should have strong leadership skills nd have ability to plan and coordinate with internal and external stakeholders. Excellent communication skills and Event Management experience. JOB SPECIFICATION: Energetic and experienced individual required. 4. MILLRIGTHS TECHNICIANS JOB TITLE: Millrights Technician JOB DESCRIPTION: Hands on maintenance experience of centrifugal compressors/pumps reciprocating pumps and turbines. Should have good knowledge, of frequently used material at fertilizer plants. Skills in diagnostic and troubleshooting of machine problems through vibration analysis are essential.

SPECIFIC TRAINING INSTITUTIONS

Following training institutions are available: 1. NFC Institute of Engineering and Technological Training 2. Technical Training Center (TTC)

1. NFC INSTITUTE OF ENGINEERING AND TECHNOLOGY TRAINING The NFC Institute of Engineering and Technological Training is the training center of the National Fertilizer Corporation of Pakistan. It is a small engineering college established to meet the requirement of trained manpower for chemical process industry, especially in the fertilizer sector. a Training Centre was established in 1985.

It trains: Engineers Supervisors Operators and Technicians

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Managers

2. TECHNICAL TRAINING CENTER 25 Technical Training Center (TTC) lies in its expert faculty having rich plant operation and maintenance experience, functional pilot plants, well equipped shops for practice and access to FFC operating plants for real life demonstration. This institution conducts following programs: Training of engineers & technicians customized to Clients specific needs. Fertilizer Technology Course for fresh engineers. Professional Management Curses. Apprenticeship Programs for operators & technicians. Skill Improvement Programs for operators & technicians in the areas of Plant Operations, Maintenance & Safety.

Supplier Power
In this industry supplier has a high bargaining power, as most of them are Foreign Groups. Concentration is low. They act as separate groups competing for the same project. High Switching cost because it is difficult to contract with other groups and deal with them. No threat of forward integration.

25

http://www.paktechsearch.com/ffc_page4.asp

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Buyers Power
Although Buyers are large in numbers and purchases a large quantity as well, but buyers do not have a bargaining power. There is no forum available that protects them, and this group is not educated enough to fight for their rights. All what has happened, is done by the Government. There are two substitute products available, Imported Fertilizer and Bio-Fertilizer. Production of bio-fertilizer is almost over and imported fertilizer is available at the same price because of anti-dumping duty and Government regulations for the prices of fertilizer for particular seasons are fixed. Switching cost is low but does not have significant effect due to fixed prices.

Potential Entrants
There are number of barriers to entry such, as capital requirements, government policies, reputation of existing firms and ecological surveys. Huge capital requirement is one of the greatest barriers for entry. Government Policies and regulation are also act as barriers; because Natural Gas which is the main raw material of the industry, and the prices and supply of it is completely depend upon the Government. As before government was charging feed gas at lower rate and Fuel gas at higher rate. But now they are being charged at the same rate. Government does not easily give permission for manufacturing plant due to shortage of Natural gas and harmful environmental effects, this also act as a barrier. Massive Ecological surveys must be done before companies can begin production. Brand reputation of existing companies is also one of the barriers because customers do not easily get ready to switch.

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Substitutes
There are two substitute available 1. Imported Fertilizer 2. Bio-Fertilizer Suitability of Alternatives: imported fertilizer is as suitable as the industry products are. Bio-fertilizer is more suitable to use then the industry products, as it has no harmful environmental effects, cheap to produce and it also enhance the fertility of the soil. Whereas our product reduces the natural fertility, but its production is almost over. Therefore industry does not have a threat of substitutes. Switching costs is low.

Rivalry
Fixed Costs are too high, which is not easily possible to tolerate. It reduces the competition. Industry is at maturity stage so; competition on the basis of growth is low. Prices are fixed for every season so no competition on the basis of pricing behavior. Competition is only on the basis of Quality.

MARKET
The target market of the industry can be divided in to two parts:

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1. Farmers 2. Land owners

TREND ANALYSIS
Political Trend:
Political trends are always in favor of this industry. The Government has provided following incentives under Fertilizer Policy, 2001, to encourage fertilizer production in the country: To fulfill local demand of fertilizers at affordable prices, the Government is providing subsidy on production and import of fertilizers. Investors will be allowed to relocate second hand plant, equipment and machinery, with the same concession/exemption as applicable to new plants. The Government is providing concessionary feed stock gas to the fertilizer plants for production of urea. Import by manufacturers of Rock Phosphate and Phosphorous of fertilizer free of customs duty. Tax relaxation has also been offered by the Government. Export benefit to suppliers of capital goods for new/modernization projects of fertilizer. Gas price has been fixed for 10 years for new investments. Gas for balancing, modernization, replacement expansion for existing plants has been filed for 7 years.

Economical Trend:
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 Gover nment always gives support to the fertilizer industry. Import by manufacturers of Rock Phosphate and Phosphorous of fertilizer free of customs duty.

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Tax relaxation has been offered in order to attract new entrants.

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

Social Trends:
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 an old usage and farmers dont prefer to use it against artificial fertilizer.

Technological Trend:
To meet the demand of fertilizers in the country through indigenous production, self-reliance in design engineering and execution of fertilizer projects is very crucial. 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. 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. 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).

These legal trends are being practicing:

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 Strengthening the Fertilizer Review Committee.

Rationalization of quotas to private marketing organizations. Setting up of transport sub-agencies. Replacement of volumetric bagging machines at Port Karachi by weight baggers, to ensure accuracy. Drafting and enactment of fertilizer legislation to provide a legal framework within which marketing agencies and dealers should operate in a privatized system. Pursuing low-cost storage options in high consumption areas, and purchasing offseason at a discount. Postponing widespread custom blending until inland bulk handling is practiced.

Environmental Trend: 26
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 under ground water, rivers, lakes and coastal waters. 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. 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 plants and soils affect human health. Further the oxides of nitrogen have been reported to adversely affect the ozone layer. The oxides of nitrogen cause respiratory diseases like asthma, lung cancer and bronchitis.
26

http://www.pakissan.com/english/issues/fertilizers.and.environmental.pollution.shtml

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 Cadmium accumulation in agricultural products is also an important problem of pollution. Cadmium exposures result in kidney damage, bone deformities, and cardiovascular problems.

Demographical Trend:
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.

PORTERS FIVE FORCES MODEL

Supplier Power
In this industry supplier has a high bargaining power, as most of them are Foreign Groups. Concentration is low. They act as separate groups competing for the same project. High Switching cost because it is difficult to contract with other groups and deal with them. No threat of forward integration .

Buyers Power
Although Buyers are large in numbers and purchases a large quantity as well, but buyers do not have a bargaining power. There is no forum available that protects them, and this group is not educated enough to fight for their rights. All what has happened, is done by the Government. There are two substitute products available, Imported Fertilizer and Bio-Fertilizer. Production of bio-fertilizer is almost over and imported fertilizer is available at the prices of fertilizer for particular seasons are fixed. Switching cost is low but does not have significant effect due to fixed prices.
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same price because of anti-dumping duty and Government regulations for the

Potential Entrants
There are number of barriers to entry such, as capital requirements, government policies, reputation of existing firms and ecological surveys. Huge capital requirement is one of the greatest barriers for entry. Government Policies and regulation are also act as barriers; because Natural Gas which is the main raw material of the industry, and the prices and supply of it is completely depend upon the Government. As before government was charging feed gas at lower rate and Fuel gas at higher rate. But now they are being charged at the same rate. Government does not easily give permission for manufacturing plant due to shortage of Natural gas and harmful environmental effects, this also act as a barrier. Massive Ecological surveys must be done before companies can begin production. Brand reputation of existing companies is also one of the barriers because customers do not easily get ready to switch.

Substitutes
There are two substitute available 3. Imported Fertilizer 4. Bio-Fertilizer Suitability of Alternatives: imported fertilizer is as suitable as the industry products are. Bio-fertilizer is more suitable to use then the industry products, as it has no harmful environmental effects, cheap to produce and it also enhance the fertility of the soil. Whereas our product reduces the natural fertility, but its production is almost over. Therefore industry does not have a threat of substitutes. Switching costs is low.

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Rivalry
Fixed Costs are too high, which is not easily possible to tolerate. It reduces the competition. Industry is at maturity stage so; competition on the basis of growth is low. Prices are fixed for every season so no competition on the basis of pricing behavior. Competition is only on the basis of Quality.

SWOT ANALYSIS
Strengths:
The players operating in this sector are financially strong and they can start production of new product line. Adding some new unit can enhance the production capacity of the plants. All the fertilizer plants are producing at more than 100 per cent installed capacity of utilization. Demand is heavy because, being an agriculture country and due to increasing awareness about the balanced use of fertilizer, demand for the fertilizer will increase. Industry has well distribution centers. Fertilizer industry peruses an innovative education oriented advertising policy utilizing electronic/ print media and road side advertisement. All companies in the industry have developed a well planned network field warehouses to ensure that fertilizers are available to the farmers uninterrupted.

Weakness:
Due to the existence of black market and heavy demand, farmers have to pay above then the stated price. Demand is more and capacity of plants to produce fertilizers is less. Fertilizer sector is backward in technology and also lack in resources. villages, so they dont exactly know the balanced use of fertilizer. Low advertising campaigns as growers and farmers are not educated and lives in

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Opportunities:
If the quality is good customer will buy your product. By improving the quality of products, industry can attract more customers and can retain customers by satisfying their needs. There is no quota restriction by WTO since 2005, so there are more chances of export. Availability of gas from Iran can increase the production of plants and industry c an fulfill the demands. Government is giving support to fertilizer sector As demand is high comparing to supply, fertilizer sector has an opportunity to expand the capacity to fulfill the local demand. As Pakistan is an agricultural country and farmers are getting awareness about the balanced use of fertilizer, demand of fertilizer has increased.

Threats:
As natural gas is the main raw material, load shedding of natural gas is big threat. Imported fertilizer is available at cheap prices than local fertilizer. Unstable political condition in the country is also a big threat to fertilizer industry. Prices of fuel and gas have increased enormously. Global prices of fertilizer products are also increasing which is causing increase in fertilizer prices in the country. Bio fertilizer is the main threat to the industry because it is cheap and also environment friendly. Government policies are not consistent regarding fertilizer industry.

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SWOT I MATRIX
Strengths: S1: The players operating in this sector are financially strong. S2: GoP supports in the form of subsidy. S3: Cheap labor. S4: Heavy demand. S5: An agro based economy. Weaknesses: W1: Low capacity as compared to demand (demand supply Gap). W2: Due to existence of black market and heavy demand Farmers had to pay above the stated price. W3: Technological backwardness: Lack of local resources. 3. Opportunities: O1: As the demand is high compared to supply, fertilizer sector has an opportunity to expand capacity to fulfill the local demand. O2: Export. O3: Introduction of BT crops. 4. Threats: T1: Scarce water resources. T2: Load-shedding of gas. T3: Hike in fuel prices. T4: Taxes. T5: Removal of subsidy. T6: Rising global prices of fertilizer products. T7: Government intervenes to stabilize the prices.

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SWOT i matrix
Opportunities S1 O1 Strengths Players financially strong demand is high expand capacity S2 T5 Subsidy by Gop-removal of subsidy, S4 T7 heavy demand-Gop stabilizes the prices, S5 T1 Agro based economy-scarce water resource W1 O1 , Demand/supply gapdemand is high expand capacity W1 T2 Demand/supply gap-load shedding of gas W1 T3 Demand/supply gap-hike in fuel prices W2 T6 Black market high prices to farmers-rise in global prices of fertilizer W2 T5 Black market high prices to farmers-Removal of subsidy W2 T7 Black market high prices to farmers-government fixed the fertilizer prices Threats

Weaknesses

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STRATGIC PLAN
Load shedding of gas is the biggest problem because gas is the most important component used in fertilizer industry both as stock and as fuel so this creates the problem the fertilizer industry should demand for availability of gas. The government should check the prices at which the farmers ar e getting fertilizer they should make a platform for farmers where they can come up with such problems. A list of fertilizer prices should be provided by the government to the local shops so that the farmers are aware of the prices which the government has set and are save from black market.

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BIBLIOGRAPHY
http://www.engro.com/product_portfolio/fertilizers/index.php http://www.ffcsona.net.pk/products.htm http://www.ffbl.com.pk/urea.htm http://www.dawoodhercules.com/agro.html http://www.nfc.gov.pk/ http://engro.pakissan.com/engropk/engro.directory/mul.whouse.shtml http://www.statpak.gov.pk/depts/fbs/statistics/manufacturing_industry/cmi_200 1.html http://www.nfdc.gov.pk/Web-Page%20Updating/imports.htm Economic Survey of Pakistan http://www.ffc.com.pk/contents/manfacturing.htm http://www.fatima-group.com/fertilizers_pakarab_company_profile.html http://www.engro.com/media_center/press_releases/pdf/2nd_hse_seminar.pdf http://www.privatisation.gov.pk/industry/Pakarab-new.htm http://www.dawoodhercules.com/accomplishments.html http://www.pakistaneconomist.com/issue2002/issue27/market3.htm http://www.nation.com.pk/daily/august-2006/7/bnews8.php http://www.pakistan.gov.pk/divisions/food-division/media/asp_05-06_tbl81.pdf http://www.fadinap.org/newsprj/newsprj98_1_3.htm http://www.parc.gov.pk/potash.html

http://www.fadinap.org/NEWSPRJ/newsprj99_2_1.html
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www.brecorder.com.pk

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www.pakistaneconomist.com

http://www.fadinap.org/NEWSPRJ/newsprj99_3_2.html http://www.dawn.com/2003/03/24/ebr11.htm http://202.83.164.26/wps/portal/Moipsi/!ut/p/c0/04_SB8K8xLLM9MSSzPy8xBz9 CP0os_hQN68AZ3dnIwML82BTAyNXTz9jE0NfQwNLE_2CbEdFACM6vXU!/ http://engro.com/corporate_responsibility/index.php http://thejakartaglobe.com/business/indonesia-moving-too-far-too-fast-onfertilizer-subsidies-farmers/324933 http://www.myrepublica.com/portal/printable_news.php?news_id=8799 http://www.colombopage.com/archive_09/January1570550RA.html http://www.scribd.com/doc/18793009/Ammonia-and-Urea Production1?from_email_04_friend_send=1&emid=2238566 http://www.patelenterprises.net/ssp-fertilizer-manufacturing-plant.html http://zubairad.com/images/img_profile_03.gif www.engro.pakissan.com www.dawoodhercules.com/ www.dawoodhercules.com/contact.html www.engro.com/.../fertilizers/index.php http://static.panoramio.com/photos/original/14967593.jpg http://www.dawoodhercules.com/images/agronimics.jpg http://engro.pakissan.com/weblinks/index.shtml http://www.wto.org/english/docs_e/legal_e/gatt47_e.pdf http://findarticles.com/p/articles/mi_hb092/is_8_30/ai_n28754170/ http://www.fertilizer.org/ifa/Home-Page/SUSTAINABILITY/Safety-Healthhttp://www.ffc.com.pk/contents/framepages/ar_2008.pdf http://www.dawoodhercules.com/policy_eng.html http://www.engro.com/pdf/engro_annual_report08_final1.pdf
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Environment-Principles

http://www.dawoodhercules.com/reports/annual%20report%2008.pdf http://www.pakissan.com/english/issues/fertilizers.and.environmental.pollution.s html http://www.pakistaneconomist.com/issue2001/issue29/etc5.htm http://www.dawn.com/2003/03/24/ebr11.htm http://202.83.164.26/wps/portal/Moipsi/!ut/p/c0/04_SB8K8xLLM9MSSzPy8xBz9 CP0os_hQN68AZ3dnIwML82BTAyNXTz9jE0NfQwNLE_2CbEdFACM6vXU!/ http://www.parc.gov.pk/data/CatPak/cataction.asp?NAV=320&Title=ul&Author=& corporateAuthor=&Publisher=&PublicationDate=&subjectheadings= http://www.pid.gov.pk/press10-05-09.htm http://www.paktechsearch.com/ffc_page4.asp http://www.jobs-in-pakistan.dearlinks.com/articles/1491/1/FINANCEEXECUTIVE---Fauji-Fertilizer-Company---Karachi/Page1.html http://www.jobs-in-pakistan.dearlinks.com/articles/1491/1/FINANCEEXECUTIVE---Fauji-Fertilizer-Company---Karachi/Page1.html

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