200 9 Analysis of Financial Statements Final Report Sectorial Analysis of Fauji Fertilizers Submitted To: Sir Maqbool - Ur - Rehman Fauji

Fertilizers | Institute of Business Management I Fauji Fertilizers 12/29/2009

Acknowledgement The compilation of this report could not have been realized without the blessing s of Almighty Allah. We are highly indebted to quite a few people who have been there from the beginning till the completion of our research. Their undue suppor t has been the source of inspiration for us to complete it efficiently within ti me. We would deeply like to thank our teacher Mr. Maqbool – Ur - Rehman, Assistant Professor, Finance and Accounting, at I.o.B.M for his guidance during the proje ct. His excessive support has been the source of motivation to perform our best, regarding the report. Fauji Fertilizers | Appendix II

Contents Contents........................................................................ ............................................ III Company Profile................ ................................................................................ ......... 1 Mission Statement .................................................. ................................................2 Corporate Vision.............. ................................................................................ ........2 Manufacturing......................................................... ................................................ 2 Company Manufacturing Facilit ies...........................................................................3 Production Facilities........................................................... .....................................3 Production Efficiency.................... ...........................................................................4 Com pany Product Line............................................................... .................................5 Fertilizer SECTORAL OUTLOOK.................. .................................................................6 AGRICULTURE S ECTOR........................................................................... .................6 TYPES OF FERTILIZER.......................................... ....................................................7 GLOBAL SCENARIO........... ................................................................................ .......7 PRICING................................................................ ................................................... 9 International versus Local ................................................................................ .....10 DAP Prices.............................................................. ............................................... 11 DEMAND & SUPPLY.............. ................................................................................ ..12 TAXES...................................................................... .............................................. 14 Future Outlook Sales & growth. ................................................................................ 15 Company Financials........................................................... .......................................16 Balance Sheet......................... .............................................................................. 1 6 Income Statement.............................................................. ...................................17 Horizontal & Vertical Analysis............ .......................................................................18 Vertic al Analysis of Balance Sheet.................................................... ....................18 Vertical Analysis of Income Statement.................... ..............................................21 Horizontal Analysis of Balance Sheet....................................................................22 Hori zontal Analysis of Income Statement............................................. .................25 Component % age Analysis according to % age of Balance Sheet ........................27 Component % age Analysis according to % age of Income Statement.................30 Component Percentage Analysis according to Pakista ni Rupees of Balance Sheet ..................................................... ......................................................................... 32 Fauji Fertilizers | Appendix III

..... ..........73 Problems & their proposed sol utions with the firm..........39 SOLVENCY/LEVERAGE RATI O............................................................. 69 MARKET RATIO....71 Insight for Investors & Cr editors......44 PROFTABILITY RATIO... .................................................70 DuPont Return on Equity.......................79 Fauji Fertilizers | Appendix IV ...... ........................................................ ..... ..........................................................................................................................................6 2 ...........................................................................................72 Future Projections..... .............................................................................................52 External Ratio Analysis...........77 External Ratios for Industry Average................................................................ ......................64 PROFTABILITY RATIO...... ...58 SOLVENCY/LEVERAGE RATIO..................................................................................... ................... .................................................................................................... .. ................................................................................................................... ................................... 64 COVERAGE RATIO............................................................................. 63 ...................................74 Refere nces.......................... ..................... ..................................................................... .......... ...................... .................. .................................................47 MARKET RATIO............................................................................. ..........................................................................................35 LIQUIDI TY RATIO.............................54 LIQUIDITY RATIO....................................... .........................................................54 TURNOVER/EFFICIENCY RATIO..............................................................................................42 COVERAGE RATIO..........................................................................66 ................................. ............ 34 Internal Ratio Analysis.......... 77 Internal Ratios of the Company................................................... ............. ........................................................... ...76 Appendix.............. .....................................................................................................................Component Percentage Analysis according to Pakistani Rupees of Income Statement.......................................................................... ......................................................... ............................................... ..................................................................................... ..............................................................35 TURNOVER/EFFICIENCY RATIO........................

Fauji Fertilizers | Appendix V .

3. Additionally.9 Million Rupees. The pr esent share capital of the company stands at Rs. If the company would be able to continue its current stability and investments in profitable projects then the company would be able to increase its market share as well as Profitability.0 Billion stakes in the subsidiary Fauji Fertilizer Bin Qasim Limited (formerly FFC-Jordan Fertilizer Company Limited). This was a joint venture between Fauji Foun dation (a leading charitable trust in Pakistan) and Haldor Topsoe A/S of Denmark . 1. over the year which is one of the reason of high efficiency and profitability of FFC.000 metric tons of urea. With a vision to acquire self sufficiency in fertilizer production in the country. FFC was incorporated i n 1978 as a private limited company. The initial authorized capital of the company was 813. FFC commenced commercial produ ction of urea in 1982 with annual capacity of 570.0 Billion. FFC has Rs. • Through De-Bottle Necking (DBN) program. Leverage and Liquidity ratios related to FFC are also impro ving from past to present.000 metric tons per year. The new compan y Fauji Fertilizer Bin Qasim Limited (formerly FFC-Jordan Fertilizer Company Lim ited) Fauji Fertilizers | Company Profile 1 . All the profitabi lity ratios are also showing increasing trend on the back of increasing Sales as well as Gross profit which is because of good investments by the company in hig h yielding projects.000 metric tons.Company Profile The overall financial position of the company is stable. • FFC participated as a major shareholder in a new DAPS/Urea manufacturing complex with participation of major international/national institutions. • Production capacity was enhanced by establishing a second plant in 1993 with ann ual capacity of 635. the production capacity of the existing plant increased to 695.

000 metric tons of urea and 445. 8. • In the year 2002. Fauji Fertilizers | Appendix 2 . Mission Statement FFC is committed to play its leading role in industrial and agricultural advance ment in Pakistan by providing quality fertilizers and allied services to its cus tomers and given the passion to excel.500 metric tons of DA P. This acquisition at Rs. FFC acquired ex Pak Saudi Fertilizers Limited (PSFL) Urea Plan t situated at Mirpur Mathelo. Corporate Vision FFC vision for the 21st Century remains focused on harmonizing the Company with fresh challenges and encompasses diversification and embarking on ventures withi n and beyond the territorial limits of the Country in collaboration with leading business partners. • This excellent performance was due to hard work and dedication of all employees and the progressive approach and support from the top management. Goth M achhi is situated at a distance of 2 kms from the main Lahore-Karachi highway an d is adjacent to the main railway line.commenced commercial production with effect from January 01. The facility is designed to produce 551. 2000. set new goals a nd take initiatives for development of profitable business ventures. take on fresh challenges. Manufacturing The largest urea manufacturing facility of Pakistan consisting of two ammonia/ur ea units owned by FFC is built at Goth Machhi in district Rahim Yar Khan. District Ghotki from National Fertilizer Corporati on (NFC) through privatization process of the Government of Pakistan.151 million represents one of the largest industrial s ector transactions in Pakistan.

The two plants are based on natural gas from Mari Gas Fields and have an annual designed production capacity of 1.3 million tons of urea. Over the years, the pl ants have demonstrated an operational excellence which has become a reference fo r the engineering companies whose process technologies are used here. Delegation s from China, Middle East and Far East keep visiting the plant site for gaining firsthand knowledge before deciding to purchase a new plant. Company Manufacturing Facilities The Company has three plants and is a shareholder in FFBL. It markets the whole production of FFBL. PLANT-I Goth Machhi, Sadiqabad, Rahim Yar Khan PLANT-I Goth Machhi, Sadiqabad, Rahim Yar Khan PLANT-III Mirpur Mathelo PLANT-IV Fauji Fertil izer Bin Qasim Limited Production Facilities BASE UNIT-GOTH MACHHI (FFC-1) Start-up: June 1982 Design Capacity Ammonia: 330,0 00 Met/Year Urea: 570,000 Met/Year REVAMPED BASE UNIT Capacity Enhanced: 1992 Fauji Fertilizers | Appendix 3

New Capacity Ammonia: 403,000 Met/Year Urea: 695,000 Met/Year EXPANSION UNIT-GOT H MACHHI (FFC-2) Start up: 1993 Design Capacity Ammonia: 363,000 Met/Year Urea: 635,000 Met/Year MIRPUR MATHELO UNIT (FFC-3) (EX-PAKSAUDI FERTILIZER LTD.) Start up: Oct 1980 Acquition by FFC: 31 May, 2002 Merged with FFC: 1 July, 2002 Desig n Capacity Ammonia: 330,000 Met/Year Urea: 574,000 Met/Year Production Efficiency Both the plants have been consistently operating in excess of designed capacity reaching as high 115% for the Base Unit and 119% for the Expansion Unit as a res ult of high efficient operations, good maintenance and strong technical support. Fauji Fertilizers | Appendix 4

Company Product Line FFC is a leading manufacturing company with over 60% shares of urea manufacturin g and marketing in Pakistan. Urea, which represents 65% of total fertilizer cons umed and di-ammonium phosphate (DAP), which accounts for 18%, are the main types of fertilizer used in Pakistan, but there is a total of eight different fertili zer products which fall into three categories. Urea, along with calcium ammonium nitrate (CAN) and ammonium sulphate (AS) together make up almost three fourths of total fertilizer consumption and come under the nitrogenous category. Under t he phosphatic category which makes up about 27%, is DAP, triple super phosphate (TSP), single super phosphate (SSP) and nitro phosphate (NP). And under the last category, potassic is sulphate of potash which makes up only 1%. Since the soil in Pakistan generally tends to be deficient in nitrogen, urea is the most used fertilizer. DAP is used, as most phosphatic fertilizers are to counter the effec t of the acidic urea and maintain levels of fertility in the soil. • SONA Granular o It produces 13% of total production • SONA DAP o FFCL produces 31% of country’s demand. It is the sole producer of DAP. Fauji Fertilizers | Appendix 5

Growth in this area of Economy is vital for poverty alleviation. grazing. Fertilizers improve crop yield by removing the deficiency of chemical eleme nts taken from the soil by harvesting. chemical fe rtilizers play a vital role in boosting agricultural output. the fertilizer off-take can improve substanti ally. as about 66 percent of rural population is directly or indi rectly dependent on the agriculture sector for sustenance. leaching or erosion. better insecticides and more effective fungicides. With proper farmer education and increased awareness. Pakistan’s major source of foreign exchange earnings is the textile sector which also relies on agricul tural performance. This sector contributes 22% to the country s Gross Domestic Product (GDP) an d employs 43% of total labor force. Proper application of nutrients helps in efficient utilization of limited natural resources such as land and wa ter. Fauji Fertilizers | Appendix 6   . employment and export earnin gs. Fertilizer has a significant contribu tion in increasing crop yields and productivity. The major crops of Pakistan are wheat.Fertilizer SECTORAL OUTLOOK AGRICULTURE SECTOR The undeniable importance of the agriculture sector to the economy of Pakistan i s reflected in its contribution to national output. cotton. Nutrient application in suitable quantities can further improve farm produ ctivity. Coupled wit h improved seeds. thereby helping in eradicating poverty. which make up 7% of the country’s GDP. rice and sugar cane.

Europe.a. Despite. along with calcium ammonium nitrate (CAN) and ammonium s ulphate (AS) together make up almost three fourths of total fertilizer consumpti on and come under the nitrogenous category. urea is the most used fertilizer. with 2005 being the only exception. This has led to a widening gap between consumption and p roduction resulting in sharp increase in food prices in the global market. single super phosphate (SSP) and nitro phosphate (NP). Durin g 2007. and rice account for about 85% of the global grain harvest (in terms of weight). triple super phosphate (TSP). millet. but there is a total of eight different fertilizer products which fall into three categories. Under the phosphatic category which makes up about 27%. as m ost phosphatic fertilizers are to counter the effect of the acidic urea and main tain levels of fertility in the soil. DAP is used. India. potassic is sulpha te of potash which makes up only 1%. which represents 65% of total fertilizer consumed and di-ammonium phosphat e (DAP). wheat. With t he growing demand of food and rapid increase in demand for biofuels. China. grow another 21%.3bn tons. Urea. oats. Since the soil in Pakistan generally tends to be deficient in nitrogen. Fauji Fertilizers | Appendix 7 .2% p. total global production of grains was recorded at 2. up 4% YoY. is DAP. Corn. GLOBAL SCENARIO The world grain consumption has outpaced production in six of the last seven yea rs. And under the last category. the grain c onsumption growth has witnessed an increase of 2% in 2007 from the historical av erage rate of 1. in which production superseded supply du e to favorable weather in almost all the major grain producing countries. barley. and other les s common grains make up the rest.TYPES OF FERTILIZER Urea. including the former Soviet stat es. the increase in production the global commodity prices have climbed si gnificantly during the past twelve months on the back of rising demand from emer ging economies. are the main types of fertilizer used in Pakist an. and the United States alone acco unt for 46% of global grain production. while sorghum. which accounts for 18%.

a 200mn ton jump in the global coarse grain harvest was responsible for nearly all of the increase in the total grain harvest. Governments in developed countries have been encouraging the use of biofuels p rimarily due to (1) Increasing price of international crude oil and (2) Bio-fuel s are environment friendly. India and Brazil.5% was used in extracting biofuels which has resu lted in sharp increase in price of the commodity. Pak istan’s food grain production has witnessed a rising trend over the years register ing a 4-year CAGR (FY0206) of 5. Production of coarse gra ins a group that includes corn. barley. the use of which is being promoted in developed countries (mainly EU and USA) . Global cereal stocks were expected to stand at 318m n tons by the close of the 2007 season. Another major consumer of grains is the livestock sector. In comparison to the global scenario. a significant amount of global corn production was used in producing biofuel s. which accounted for approximately 627mn tons (27%) in the form of feed for the c attle. Fauji Fertilizers | Appendix 8 . about 255mn tons or 32. lowest since many years. a good measure of the global cushion against poor harvests and rising prices continues to decline. Demand of grains from this sector has grown rapidly over the past few yea rs on account of higher consumption of dairy products and meat by the developing countries especially China.7% on the back of good harvest of major crops (w heat & rice) which account for almost 84% of the total grain production of the c ountry. Brazil and the United States) to switc h to corn harvesting. During 20 07. sorghum.080mn tons in 2007. Higher corn prices prompted ma ny a farmers in various countries (China.In 2007. and other grains fed mainly to animals increased 10% from 985mn tons in 2006 to 1. The amount of grain stored by gov ernments. equivalent to about 14 percent of annual consumption. Out of a total of 784mn tons of corn harvested durin g 2007.

PRICING Local Arena Fauji Fertilizers | Appendix 9 .

to keep the urea prices within affordable limits of the farmers. rising from PKR 800 per bag at the start of the year to touch PKR 1. A 50kg bag of urea is s old at PKR 558-565 (prices were revised upwards in Dec’07) versus a price of appro ximately PKR 1000 per bag in the international market. Government heavily subsidizes feedstock prices in Pakistan. International versus Local Urea Prices Fauji Fertilizers | Appendix 10 .680 by Dec’07. DAP prices on the other h and have undergone a radical increase during 2007. due to record high phosphoric acid prices in the international market (a major raw material). Local prices of DAP are highly correlated with their global rates since over 70% of the commodi ty used in the country is imported.Urea prices have shown a positive trend over the last few years on the back of s tep-wise increase in feedstock gas prices. As a result. domestic DAP prices have surged during CY07. the primary raw-material for urea man ufacturing.

6%. On the other hand local urea prices have risen at a 4-year CAGR of 6.8% from FY03 to FY07.5% for the period FY07-FY11 . which are exp ected to rise at a next 4-year CAGR of 11% going forward. DAP Prices International DAP prices have risen sharply during 2007 (+143% YoY) on the back of rising demand for the phosphatic fertilizer for harvesting of crops used in p roduction of biofuels. Consequently we expect local urea prices to increase at a 4-year CAGR of 5. driven by its increased usage globally from 128mntpa in 2005 to 138mntpa i n 2007. GOP heavily subsidizes the feedstock gas prices in order to m ake available the fertilizer to the local farmers at an affordable cost.International urea prices have escalated at a healthy 4-year CAGR (FY03-07) of 1 9. Urea pr ices are primarily linked to the increase in feedstock gas prices. In the Fauji Fertilizers | Appendix 11 .

680 per bag at presen t. Di-ammonium phosphate (DAP). Since the local prices are highly correlated to global prices w e estimate DAP prices to increase at a 4-year CAGR (CY07-11E) of 6.35mn tons including urea. calcium Fauji Fertilizers | Appendix 12 .local market. the hefty rise in DAP prices has caused its off-take to drop significantly during the past few months with ma ny farmers reverting to the use of urea. Despite the PKR 470 per bag subsidy by the GOP. single super phosphate (SSP). price of DAP fertilizer too has followed suit and has gone up from PKR 873 per 50kg bag at the start of 2007 to around PKR 1. FFBL the only producer of DAP and cater s to only 31% of the DAP demand of Pakistan while the rest of the demand is met through imports. DEMAND & SUPPLY There are nine fertilizer plants in Pakistan with a total installed capacity of 4.3%.

increasing a wareness among the farming community and vast cultivable land. nitro phosphate (NP) and ammonium sulfate (AS). Fauji Fertilizers | Appendix 13 . we estimate deman d growth of fertilizers to average over 4% per annum over the next 4 years. During FY08. low per acre usage of fertilizers. The graph above shows the demand trend of both major fertilizers.5 bn for import of various fertilizers.7% respectively. The shortfall of approximately 1. which has increased at a 4-year CAGR (CY02-06) of 4.6% and 7.1mntpa is met through import o n which GOP provides subsidies. Total de mand of these fertilizers is estimated to grow at an average of 4% per annum in the medium term.ammonium nitrate (CAN). urea and DAP. the GOP allocated a sum of PKR 13. Gi ven the increase in crop prices.

compared to 11 percent for the public sector. Fauji Fertilizers | Appendix 14 .TAXES The government has privatized and deregulated fertilizer imports and prices. There is no government intervention. A dealer network of about 8 000 retailers exists in the country. Farmers have to pa y international prices for imported products. Fertilizer c ompanies select and train the dealers. fertilizer quality is monitor ed by the provincial governments. Provincial quotas were abolished. In 2001. apart from urea. provincial su pply organizations in the public sector abandoned and import controls were lifte d. The share of the private sector in fertilizer marketing is 89 percent. the two major fertilizer products consumed in the countr y. All imports are affected by the private sector. the government impos ed a 15 percent general sales tax on all fertilizer products. under ‘Fertilizer Acts’ promulgated by provinces. The private sector handles about 90 percent of the urea and 100 percent of the DAP. all subsidies on nitrogenous fertilizers were abolished followed by phosph ates in 1993 and potash in 1997. In 1986. Howe ver.

In the long term. Short term outlook appe ars encouraging with significant projections for strong demand for our fertilize rs. Customs duty of 5% was withdrawn from imported urea. Fauji Fertilizers | Appendix 15 . favorable climatic conditions and gas pricing. A similar wit hdrawal was done on imported DAP fertilizer last year this will not affect local manufacturers The medium to long term projected demand supply gap situation tog ether with commissioning of their BMR projects with enhanced urea production cap acities would further consolidate their market presence and allow improved retur ns to the Company and its stakeholders. The Economi c Coordination Committee (ECC) has directed Sui Northern Gas Pipelines Limited ( SNGPL) to market an additional 100 million cubic feet a day of natural gas from the Qadirpur gas field. close to both Engro and the FFC. the Company is committed to achieve sustained levels of op erations at demonstrated operating efficiencies through focus on their fundament al strengths.Future Outlook Sales & growth The future outlook of the fertilizer sector is very strong because of supportive government policies.

782 2.000 1.000 4.213 223.000 4. accrued & other liabilitie s Current portion of L.000 8.778.564.136.737.403 2.474 2.009.000 4.537 1.303 12.000 8.000 5.472 659.000 6.166 12.227 1.893 784.650 3.897 2.671.632 4.808 1.000 7.420.234 6.797 26.000.15 3 28.283.241.854 704.000.000 1.963 .516.325.801 12.414.815.561.46 8 9.90 8 5.703 160.327 1.083.722.727.409.up accrued Short term borrowings Creditors.297 1.390.418 12.606 10.105 74.474 1.05 7 3.000.219.618.294.98 8 27.297 8.602 743.106 11.151 63.564.396.144 2.831.849 6.963 1.972.430.934.180 1.014 3.504.868.492 1.980 681.570 2.443.694 7.892 50.867 86.129 142.742 160.910 8.440.918.000 981.28 1 9.90 7 5.569.776.821 329.920 125.202.000.778.166.836 1.141.926 134.000 7.934.883.803 81.381 2.592 28.04 5 5.193.22 5 1 .987.078 2.151 527.959 160.742 160.674 194.309 219.750 2.753 11.388.742 160.797. & SHE 2002 ( 000’ Rupees) 2003 (000’ Rupees) 2004 (000’ Rupees) 2005 (000’ Rupees) 2006 (000’ Rupees) 2 007 (000’ Rupees) 2008 (000’ Rupees) 3.730.49 0 1.545 3 .000 4.727 1.000 2.883.956.039 4.872.736.71 2 3.000.959 160.39 3 29.000 7.959 160.861.000 8.361 11.716 1.960 9.527.522.949.038. 14 4 9.285.435 2.829.233 2.218.355 74.641 31.501.765.079 7.000 7.686.233 100.250 2.993.736 1887325 1.635.373 630.214 2.000 897.000 4.673 9.972.137 128.008 917991 975.004 503.21 4 10.276 184.407.234 6.098 10.607.10 7 9.626.742.476.659.606.449.713 887.000 2.160.522.000.000.184.54 3 5.957 1.036 1.000 2.154.378.13 9 9.570 3.346.471 12.531.988 642.081 5.934.006 64.495 1.536 27.644 2.569.318 560.526 5.730.481 2.726 13.500 1.000 2269162 598.905 961.363.673.090 2. subscribed and f ully paid Capital reserve Reserve for issue of bonus shares Revenue reserves Tot al Shareholder’s Equity Redeemable Capital NON CURRENT LIABILITIES Long Term Liabi lities DEFERRED TAXATION CURRENT LIABILITIES Trade and other payables Interest a nd mark .400.000.000 769.430 3.895 5.431.407.87 6.742 160.401.749 12.000 2.T Fin Taxation Total Liabilities Total Liab.564.025.328 3.699 67.823.690.736 3.180.313.000 6.647 2 .382 76.077.333 2.Company Financials Balance Sheet 2001 (000’ Rupees) SHARE CAPITAL & RESERVES Share capital Issued.022.190.511 1.934.114.053 952.058.464 5.083 4.488 800.407.427 1.305.

881 1.234 7.Prop.813 1.369 161.524 3. spares and loose tools Stock in trade Trade debts 12.744.327 880.268 258.094 495.557 614.364 45.T Dep.569.929 2.298 Fauji Fertilizers | Appendix 16 .229. & Prep CURRENT ASSETS Stores.102 1.034.730.T LOANS & ADVANCES L.491.779 163. PLANT & Equip GOODWILL LONG TERM INVESTMENTS L.

109.897.782 6.362.680 9.041.279 1.055.117.793 7.429.199 325.098.166.865 9.7 86.481.48 0 2.000 4.252 1.797 5.496 2004 (000’ Rupees) 21.785 668.851.464.49 256.457.652 6.482.619.213 496.474 20 08 (000’ Rupees) 30.282 933.350.025.571 9.10 7 Total Assets 722.708.558 10.897 501.000 3.327 6.39 493 .421 11.712 12.371 895.241.792.798 1.26 256.819 6.044 2.474 2005 (000’ Rupees) 25.612 845.100 3.844 4.11 7 6.496 2003 (000’ Rupees) 21.668.647.073.073 4.11 493.413 4.999 626.692 12.229 9.000 5.814.418.494 5.868 1.894.144 9.452 28.474 2006 (000’ Rupees) 29.096 457.896 4.563 931.360.457 1.311.664 1.083 3.587 27.358 9.219.157.520 3.806 18.205 7.725 372. 647 8.172.679 2.52 5 10.449.382.69 9 10.214.931 .219.407 2.144.270.62 9 13.582 1.572.13 9 1.597.623.725.044 8.525.408 26.927.349.774.811.22 5 1068419 2.786.845 1.850 1.87 3 20. of Shares Outst anding 11.46 8 671.384 13.41 4 6.241 735.381 1.034.834.509 12.270 27.004.473.000 6.114 2.14 4 647619 2.03 0 13.454.477.139 4.525 1.271 390.31 9 7.5 09 1.830 9.083 13.543 695.993.516.333.953 2.12 1 16.57 7 28.102.43 5 29.140 520.098.377 1.430.712 1.022.499 783.511.839.474 2007 (000’ Rupees) 28.65 3 7.744 2.659 275.317.726.792 3.325 1.443.942.930.636.838 488.21 4 1.148 8.37 1.766.790.358.00 5 18.208 6.170 5.950.985.234.000 10.746.200.000 4.955 7.953 10.206 4.169.963 Income Statement 2001 (000’ Rupees) Sales Cost of sales GROSS PROFIT Distribution cost Operating Pr ofit Finance cost Other expenses Other income NET PROFIT BEFORE TAXATION Provisi on for taxation NET PROFIT AFTER TAXATION Earnings per share No.665.592.689.819 5.000 3.113 11.687 70 3.98 256.972.709.144 2.982.86 493.746.96 1.698.762 6.727.949 560.660.28 1 1.474 Fauji Fertilizers | Appendix 17 . Other Short term investments Cash and bank balances 1.33 6 9.766.061.616 5.421 1.709 6.677. 701.027.027.099.405.00 0 4.259.511 31.331 5.19 4 9.345 3.452.103.195.336 2.055.310 1.22 493.764.Loans & advances Dep.918.71 4 9.242. 922 4.439.496 2002 (000’ Rupees) 16.000 3. 869.748 1.149.123 2.92 493.565.203.

88% 9.12 % 13.48% 10.17 10.33% 5.46 % 0.00 100.73% 4.03 10.78 % 0.88 % 0.89 % 0.35% 8.61% 33.78 31.99 31.55 44 .63 % 10.58 % 17.76% 4.10 % 16. subscribed and fully paid Ca pital reserve Reserve for issue of bonus shares Revenue reserves Total Sharehold er’s Equity Redeemable Capital 2002 2003 2004 2005 2006 2007 2008 21.53 % 38.27% 12.50 % 17.56% 9.66 % 47.57% 28.49% 29.00 100.up accrued Short term borrowing s Creditors.42% 0.00 100.05 % 0.04 9.59% 8.26% 2.82 % 43.50 % 68.74 % 16.23 % 17.55% 26.47% 1. accrued & other liabilities Current portion of L.38% 3.44% 23.Horizontal & Vertical Analysis Vertical Analysis of Balance Sheet 2001 SHARE CAPITAL & RESERVES Share capital Issued.65 % 9.58% % % 3.36 % 1.60% 3.11% 0.19% 2.55% 3.73% 14.00% 0.02 % 9.59% 32.33 % 11.15% 48.68 % 0.00 100.66 % 15.54 % 38.00 100.68 % 0.32 % 42.T Fin Taxation 1.63% 10.63% 3.35 % 11.14% 8.92 % % 11.00 % % % % % % % 2.38 39.11 % 43.99 % 0.10% 22.51% 0.25 % % % % % % % 100.62% 5.58% 6.28% 0.00 % Fauji Fertilizers | Appendix 18 .58% 28.62% 18.00 % 31.52 % 9.04 % 100.15 % 0.49 % NON CURRENT LIABILITIES Long Term Liabilities DEFERRED TAXATION CURRENT LIABILIT IES Trade and other payables Interest and mark .50% 22.27% 4.35 % 0.68 39.49% 16.00% 5.26% 4.61% 9.73 % 18.97% 4.60% 0.81 33.23 % 17.57% 37.85 % 7.00 100.21% 2.85 % 9.81% 4.56% 25.29% 8.53 % 15.77% 3.23% 3.76% Total L & SHE 0.25 % 11.50% 3.47 % 18.08% 19.45% 8.06 % 46.

The long t erm liabilities also started increasing from year to year and till 2008 it almos t doubles from the previous years. The reduction was around 20 to 30 percent. In the year 2001 and 2002 we see th e redeemable capital which vanished in the upcoming years which tells us the sto ry that the company position is getting good and strong after year 2002 that the y were not in the need of urgent funds by issuing some temporary shares. accrued & other liabilities was just seen in th e year 2001 and 2002 after which company completely get rid of this liability. The short term borrowing was also been seen but the y did not increased that much as the trade and other payables and remained consi stent over the years. The number of shares iss ued till 2004 was same after which they increased. Let see how they progressed in perspect ive of all their Assets and liabilities over the years. The company after 2004 raised some share capital to raise fund as their value was Going Up.As we know that FFC is a leading manufacturing company with over 60% shares of u rea manufacturing and marketing in Pakistan. The tra de and other payables increased by a huge amount in percentage from year 2004 wh ich tells the company increased the liabilities in greater proportion of percent age over the last six years. T he taxation amount was quiet high as around 30 to 40 percent all of the years be ing analyzed. Fauji Fertilizers | Appendix 19 . The amount of deferred taxation also was bein g reduced which seems that the company started paying off their deferred tax ins tead to defer it to the next upcoming years. Although the shar eholder’s equity section was increasing but it was reducing in percentage as compa red to the assets section. Creditors.

73% 33.73% 8.89% 5.94% 5. 48 % 100.93 % 17.80 % 100.78 % 4.32% 1.79% 9.12% 40. spares and loose tools Stock in trade Trade debts Loans & advances Dep.03% 3.47% 3.63 % 0.The current liability section was around 30 to 40 percent which tells that the c ompany is been paying most of their liabilities in the one year’s period for the l ast eight years.18% 0.60 % 100.92% 24.T Dep.23% 0.72% 23.30% 7.0 0% 2008 39.46% 6.79 % 7.50% 5.35 % 4.50% 6.09% 6.26 % 0. Prop.53 % 5.88 % 4.81% 1.49% 0. Fauji Fertilizers | Appendix 20 .57 % 6.91% 6.20% 5.83% 5.03 % 5.88% 21.51% 0.63% 11.25% 0. Other Short term investments Cash and bank balances 2001 10.54% 21.83 % 0.23% 0.28 % 5.23% 2.72 % 6.13 % 0.67 % 16.29 % 0.37% 21.80% 4.32% 2.01% 7. 30 % 100.T LOANS & ADVANCES L.62% 36.01% 6.00% 9.80 % 0.28% 0.99% 36.01% 8.0 0% Total Assets Since the company position starts getting better from year 2002 the Fixed assets section increased in huge amount which tells us that the company really investe d In the buying of the fixed assets for much better capacity and storage so they can improve and increase their production.46% 5.06% 25.0 0% 2006 35.97% 2.02 % 0.73% 21.68% 10.92% 26.75% 2.97% 3.01% 8.38% 8.16% 8.24% 4.25 % 69.57% 1.20% 2. 97 % 100.0 0% 2003 33.32% 2. & Prep CURRENT ASSETS Stores.92% 30.74% 32.0 0% 2004 34.0 0% 2005 32.00 % 2.89% 2.53% 0.54% 17.0 0% 2007 35.55% 4.0 0% 2002 33.76 % 100.40% 6.51% 0.37 % 0.39 % 100.27 % 3.34% 26. PLANT & Equip GOODWILL LONG TERM INVESTMENTS L. 42 % 100.92% 35.

0 0% 53.58 % 4.83 % 100.51% 27.81 % 8.43 % 8.27 % 2.63 % 5.37 % 2.0 0% 59.24 % 1. Vertical Analysis of Income Statement 2001 Sales Cost of sales GROSS PROFIT Distribution cost Operating Profit Finance cost Other expenses 2002 2003 2004 2005 2006 2007 2008 Other income NET PROFIT BEFORE TAXATION 100.21% 23.08 % 2.10 % 46.29 % 35.93% 26.71 % 9. spares and loose tools and sto ck in trade were almost just enough as much they needed.0 0% 65.12 % 4.0 0% 64.67% 2.78 % 8.0 0% 67.40 % 8.16 % 4.53% 38.66 % 5.0 0% 62.67% 24.02 % 100. The curre nt assets section as it is clear that the stores.48% 2.42 % 9.31% 26.35% 32.14 % 34.90 % 8.02 % 1.67% 28. The current assets section was in the greater proportion as c ompared to rest of assets that how well the company not in the long term but als o in short term is keeping it better in the market and improved their position o ver the last few years.68% 31.31 % 100.0 0% 60.46% 19.68 % 100. The company also made a lot of percentage in short term investment which tells how much the company is in i nvesting in short term projects to raise more money and this amount was much bet ter in percentage.44 % 100.97% 21.40% 29.58 % 32.86 % 8.67 % 2.77% 2.17% 23.17% 23.30% 3.72% 31.0 0% 64.98% 2.49 % 21 100.60 % 40.96% 24.32% 21.41 % 35.27% 2.28% 2.The company position as it start getting better and better from year 2002 they a lso invested lot of their money in the long term investments which tells how bet ter the company is and how much better they are improving financially.09 % 3.59 % 8.46% 22.80% 26.57 % 37.86% 41.86% 27.47% 2.47 % 6.26% 32.65% 28. It seems that the compa ny is utilizing their inventory as much they needed.32 % 100.82 % Fauji Fertilizers | Appendix .40 % 1.06 % 2.22 % 39.44% 29.

09% 19.74 % 10.39 % 100.00 % 100.63% 18.39 % 100.00 % 100.48 % 8.98% 19.52 % 18.86 % 11. subscribed and fully paid Ca pital reserve 2002 2003 2004 2005 2006 2007 2008 100.33 % As we seen the company’s strengthens from year 2002 it improved in all kinds of se ction.39 % 100.94 % 26.67 % 192.00 % 100.00 % 100. If we talk about their sales are increasing a lot year after years.Provision for taxation NET PROFIT AFTER TAXATION 14.00 % 100.84% 15. The company maintained its distribution cost over a ll the past years which were around 8 to 9 percent.00 % 100. Horizontal Analysis of Balance Sheet 2001 SHARE CAPITAL & RESERVES Share capital Issued.00 % 166.49 % 21.31 % 8.67 % 192.39 % 100.22 % 7.00 % 166. As the company improved in i ncreasing sales and decreasing their cost of sales and maintain their distributi on cost they also made a healthier operating profit over the last few years.00 % 100.00 % 22 166.95 % 9. The company also improved year after year in the gross profit sectio n as well which better tells the company how much they improved over the past fe w years and the big reason for that in not only better sales but also a decline in cost of sales percentage.49% 14.67 % 192. So because all these reason the company improved in maintain their before tax and a fter tax profit to a much better position.00 % 100.00 % 100.00 % 166.67 % 192.00 % 100.04 % 9.00 % 115. So be cause of this the cost of goods sold also increased in much greater amount but i n the year 2008 they not only increased their sales but also reduced the cost of sales expense by around 5 percent which is quiet good for future sales growth t he profits.00 % Fauji Fertilizers | Appendix .

33 % 100.61 % 181.00 % 100.22 % 249.99 % 84.98 % 106.54 % 201.13 % 350.0 0% 100.21% 243.12% 176.00 % 573.3 0% 2798.67 % 61.25 % 100.46 % 203.03 % 2402.92 % 262.20 % 180.51 % 79.62 % 102.0 0% 100.0 0% 100.67 % 133.00 % 100.14 % 89.68 % 337.45 % 392.98 % 313.88 % 314.73 % 248. accrued & other al Liabilities Total Liab.0 5% 523.26 % 168.61 % 112.01 % 136.12 % 100.40 % 284.8 6% 875.45 % 833.89 % 77.32% 147.51 % 213.74% 284.24 % 2791.28 % 680.59 % 78.16 % 216.68 % .40 % 2.36 % 112.up accrued Short term borrowing liabilities Current portion of L.95% 253.17 % 228.23 % 182.11 % 78.61 % 601.50 % 76.9 1% 116.00 % 131.13 % 275.35 % 78.00 % 371.57 % 566.4 1% 2827.30 % NON CURRENT LIABILITIES Long IES Trade and other payables s Creditors.71 % 1.13 % 1193.00 % 284.47% 231. spares and loose tools Stock in trade 100.T Dep.50 % 0.32 % 3127.00 % 100.94% Prop.38% 450.40% 129.82 % 121.24 % 94.2 3% 2748.00 % 118.00 % 100.94 % 1.70 % 261.31 % 140.25 % 601.99 % 113.40 % 130.39 % 208.95% 257.16% 375.10 % 268.8 4% 757.00 % 12.0 0% 100.0 0% 100.53% 223.24 % 2786.0 0% 423.32 % 629.12 % 93.44 % 438.53% 203.27 % 129.08 % 62.35 % 303.62 % 109.54 % 167.5 6% 158.10 % 110.40 % 108.40 % 84.43 % 148.0 0% 100.01 % 129.00 % 100. & Prep CURRENT ASSETS Stores.59 % 196.2 9% 755.46 % 2932.49 % 1281.13 % 194.0 0% 100.64 % 419.45 % 185.11 % 129.59 % 623. PLANT & Equip GOODWILL LONG TERM INVESTMENTS L.81 % 598.35 % 247.11 % 389.93 % 116.T LOANS & ADVANCES L.0 0% 100.27 % 2. & Term Liabilities DEFERRED TAXATION CURRENT LIABILIT Interest and mark .7 8% 778.59 % 208.95% 310.0 0% 100.25 % 189.00 % 100.16 % 142.T Fin Taxation Tot SHE 100.87 % 359.01 % 533.Reserve for issue of bonus shares Revenue reserves Total Shareholder’s Equity Rede emable Capital 100.79 % 100.00 % 140.83 % 209.

84 % 104.137.64 % 23 246.48 % 35.21 % 91.78 % 42.20 % 110.68% 175.09 % 155.01% Fauji Fertilizers | Appendix .11 % 195.90 % 140.23% 179.

28 % 56. The fixed assets section increased by a very greater proportion in percentage as the company’s position started getting better from year 2002 unt il now.00 % 100.15 % 63.82 % 71.50% 100. total liabilities and SHE section increased in much greater perce ntage from year 2002 and until now which tells how much the company increased th eir liabilities.63 % 203.0 0% 100.93 % 83. The total shareholder equity section increased from year 20 02 because from year 2002 the company position was becoming better in all perspe ctive.23 % 41.00 % 100.79% 91. subscribed and fully paid sec tion also increased.54% 122.34% 144.98 % 189. The percentage increase in the fixed assets was very huge which tells ho w much the company has invested to buy more fixed assets to increase their produ ction and sales. The company’s noncurrent liabilities increased in huge amount from year 200 7 and in year 2008.94% 70.61 % 109.50% 166. So overall the taxation. Because of this the company’s issued. The Long Term Liabilities and deferred taxation also increas ed by a huge amount in percentage over the last two to three years as compared t o last eight years. The trade and other payable section also increased by a huge amount especially from year 2004 so the company increased most of their liabili ties in this section.14 % 104.06 % 80.Trade debts Loans & advances Dep.18% 59.23 % 74.62 % 228.51% 98.45% 96.00 % 100.60 % 194.0 0% 100.68 % 161.92 % 65.81 % 159.50 % 201.19 % 196.63% 117.93 % 209.59 % 213.97 % 81.24 % 51.04% 99.16 % 94.25 % 74.0 0% 159.24 % 59.36 % 65.22 % 153.46% 110. The company also increased the short term borrowing amount by a much greater percentage from year 2005 until now which tells the company r eally increased most of their liabilities in this particular section.45 % The company increased their share capital in the year 2005 and it is still the s ame until now. Other Short term investments Cash and bank bal ances Total Current Assets Total Assets 100.51 % 46. Fauji Fertilizers | Appendix 24 .32 % 195.

00 % 100.61 % 118.21 % 125.83 % 96.55 % 215.43 % 160.00 % 100.78 % 98.61 % 144.The company also invested a lot in the long term investments from year 2002 whic h was also by a greater proportion which tells how much the company is trying to make money from greater long term projects.30 % 145.47 % 87.31 % 286.03 % 103.34 % 130.00 % 100.86 % 135.42 % 203.46 % 156.90 % 231.09 % 158.73 % 99.00 % 140.80 % 140.00 % 100.91 % 98.23 % 144.73 % 151.65 % 257.82 % 142.45 % 255.21 % 117.00 % 100.98 % 146.42 % 182.49 % 181.82 % 156.86 % 249.88 % 131.53 % 131. Horizontal Analysis of Income Statement 2001 Sales Cost of sales GROSS PROFIT Distribution cost Operating Profit Finance cost Other expenses 2002 2003 2004 2005 2006 2007 2008 Other income NET PROFIT BEFORE TAXATION Provision for taxation NET PROFIT AFTER TAXATION 100.47 % 129.48 % 206.48 % 161.00 % 100.84 % 132.94 % 201.14 % 172.48 % 143.71 % 237.97 % 182.24 % 189.94 % 122.11 % 119.00 % 100.01 % 113.64 % 167.50 % 137.32 % 118.77 % 43.00 % 100.44 % 152.51 % 146.34 % 255. So over the last seven years we see how much the FFC has improved in perspective of all kinds of noncurrent and especially current assets and how better they ar e managing it.15 % 175.41 % 156.93 % 175.75 % 252.53 % 242.76 % 268.90 % 261.14 % 73.00 % 100.61 % 216.74 % 135.96 % 318.88 % 118.09 % 188.75 % 127.98 % 212.08 % 98.66 % 95.61 % 229.26 % 287.62 % 113.26 % 124.35 % 205.03 % 236.64 % 139.00 % 100.67 % As we know the FFC’S position started getting stronger and stronger from year 2002 they improved in almost all kinds of sections in which they can earn profit inc rease their sales and Fauji Fertilizers | Appendix 25 .08 % 210. The company also made lot of short term investments over the last 7 years as well just like long term investments.00 % 100.59 % 219.07 % 196.80 % 180.09 % 167.03 % 172.

This progress tells us also one more thing that the company will really earn a lot of profit with in creased sales the future as well. short term investments and long term investment and huge amount of loans. Other expense also rose with the increase in t he sales and as compared to the country’s condition this up and down will continue in upcoming years so the company should be aware of it and should have primitiv e measures for it. Other income also rose which tells how better they are managi ng in almost neglecting the increase in other expense means that although the ot her expense also rose but the other income is playing a big role in order to dec reases its effects so the overall before tax and after tax profit should be good .make more money by every ways by buying assets. Since the company bought lot of fixed assets that definitely have improved their production capacity and this was defi nitely due to much bigger demand and supply. Due to all the steps take n by the company to reduce their expenses with the increase in the sales that co mpany also made a huge amount of operating profit which better tells the company’s position that how better they are getting year after year. So the company really improved in m uch greater proportion in increasing their sales from year 2002 and continued th eir progress until now. Fauji Fertilizers | Appendix 26 . As the increase in the sales we know the cost of sales a lso increased so the amount of cost of sales was also quiet high but the company did make some efforts in year 2008 to reduce its cost of sales in order to make much more profit. Since the increase in sales much in greater proportion as com pare to cost of sales the company’s gross profit also rose year after year. With a ll the increase in the sales and cost of sales the distribution cost also rose w ith greater proportion as compare to last eight years.

45% 7.75% -5.00 % 166.9 1% 16.00 % 100.02% 4.00 % 100. The FFC’s net profit after taxation also rose to much greater proportion over all the last eight years but raised much in year 2008 as compare to the las t few years due to the increased demand and supply.0 0% 473.00 100.00 % 100.00 % 100.00 100.25% 35.00 100.3 4% 2.63% 6.The before tax profit was also high year after year from year 2002 and still ris ing over the last eight years.00 100.00 % 100.70% 15.00 % 100.60% 9.87 % 6.36% 44.67 100.00 % % 100.14% 2.68 % 0.25 % 123.99 % 15.00 % 100.00 % 100.55 % .00 % 100.80 % -0.00 % 100.33% 0.0 0% 100.83% 3.45 % 101.0 0% 100.7 7% 1.97% 1.88% 1. Component % age Analysis according to % age of Balance Sheet 2001 SHARE CAPITAL & RESERVES Share capital Issued.6 0% 4. subscribed and fully paid Ca pital reserve Reserve for issue of bonus shares Revenue reserves Total Sharehold er’s Equity Redeemable Capital 2002 2003 2004 2005 2006 2007 2008 100.30 100.00 % % 100.71 % 265.56% 378.00 % % 100.61% 12.00 % 18.25% 21.00 % % 100.0 0% 100.00 % % 167.00 % % 100.19% 7. The taxation amount also rose especially in the y ear 2008 due to the increased taxes but the company’s good progress is not affecte d by it.00 % 115.67 % 38.00 % 100.32 % 3027.6 0% 65.89% 15.49% NON CURRENT LIABILITIES Long Term Liabilities DEFERRED TAXATION CURRENT LIABILIT IES Trade and other payables 100.21% 40.

07% Fauji Fertilizers | Appendix 27 .3.

16% Total L & SHE 100.61% 23.14% 7.60 % 5.70% 11.up accrued Short term borrowings Creditors. spares and loose tools Stock in trade Trade debts Loans & advances Dep.32% 0.54 % 101.62% 100.98 % 3.98 % 7.68% 59.07% 27.49 Fauji Fertilizers | Appendix . Other Short term investments Cash and bank balances 0.62% 2.07% 4. & Prep CURRENT ASSETS Stores.54 % 79.98% 2404.01% 60.00 % 100.16% 116.85 % 71.9 5% 81.14% 0.80 % 3.0 0% 100.23% 7.99 % 15.21 % 10.20 % 3.36% 3.00 % 221.00% 33.69% 13.01 % 59.30 % 7.13% -1.00% 1.34 % 9.83 % 136. accrued & other liabilities Current portion of L.64 % 100.92 % 26.59% 52.03% 9.57% 5.39% 67.75% 107.14% 4.71 % 53.63% 8.33% 97 .33 % 35.17 % 80.41 % 38.T Fin Taxation 100.80% 18.56% 117.88 % 37.T LOANS & ADVANCES L.00 % 184.52 % 0.7 3 % 15.59 % 523. PLANT & Equip GOODWILL LONG TERM INVESTMENTS L.00% 96.44 % 14.68 % 5.89% 3.00 % 100.0 0% 100.61 % 12.00 % 100.00% 22.43 % 3.49 % 2.23 % 0.T Dep.29 % 81.0 0% Prop.24% 8.45 % 85.98 % 2.00 % 100.07% -4.10 % 10.59 % 30.29 % 13.60% 27.31% 86.99% 5.44% 6.51% 20.00 % 100.85% 0.00 % 100.50% 0.25% 5.35% 32.48% 5.23 % 28.56% 18.22% 70.9 6% 64.86% 16.23% 25.00 % 100.26% 0.02 % 45.00 31.00 % 100.43 % 28 22.Interest and mark .46% 2.88% 5.39 % 21.22 % 2.98 % 100.00 % 100.04% -5.61% 6.0 0% 100.41 % 42.00 % 323.18 % 24.72% 155.53 % 35.35 % 2.58% 4.0 0% 100.12 % 23.94 % 39.85% 82.17 % 5.75 % 27.44 % 9.22 % 66.83 % 24.

But this particular section is still increasing. The fixed a sset portion of the company also rose from year 2002 which was vey vast of aroun d a 523 percent increase and later on it increased at a slow proportion in perce ntage.72 % 6. There was variation in the long term liabilities and deferred taxation but th e long term liability rose by a drastic percentage especially in the year 2008 a s compared to deferred taxation which rose only by a very fewer percentage. Hence the company increas ed it in the year 2002 and 2003 by 19 and 10 percent respectively but since the company’s position was getting better and better year after year this revenue rese rve declined a lot and still declining as the company is not relying on this par ticular item. The short term borrowings rose drastically in the year 2005 but later on they declin ed in the last two years.07% 2.85% % 18.83 % 10. The total Liability and SHE also rose drastically in t he year 2002 but after that it increased at very smaller percentage.08% 3.59 % 3.43 % 8.83 % 3.58% 16.5 percent in year 2007 and 2008 respectivel y.60% 30.55% -3. Fauji Fertilizers | Appendix 29 .36% 42.0 0% 16. The firm’s short term and long term investment rose also over the last eight years or so.0 0% Total Assets 100.19 % 9.19% 5. But the long ter m investment rose very much I the year 2002 which was almost around a 184 percen t increase and the short term investment rose very much in the year 2005 which w as almost around a 108 percent increase.97 % 10.16% The revenue reserve is that part of profit that has not been given to the shareh older but retained in the business for further growth.50% 101.% 100. The shareholder’s equity section did rise all the years but in the l ast two years it declined by 2 and 3.84 % 7.59% 14.

00 % 100.33 % 2005 21.88% 1.95% 31. Component % age Analysis according to % age of Income Statement 2001 Sales Cost of sales GROSS PROFIT Distribution cost 100.00 % 100.42% 22.17 % 3.69 % 16.82 % 42.88 % 18.97% 7.33% 2007 5.37 % 14.58 % 40.06 % 1.15 % 10.09 % 58.62 % 34.5 1 % 3.13% 2.31% 4.00 % 100.33 % 25. 18 % 24.00 % 100.00 % 100.28 % 21.57% 11.59% 10.49% 53.4 1% 32.75 % % 100.84 % 3. So overall the firm’s total assets rose over the last eight years bu t they raised much in the year 2002 by around 102 percent which tells that from year 2002 the firm’s position was getting very strong in Pakistan.21 % 10.39 % 14.The firm’s Stock in trade and Trade debts also declined by a huge percent in the y ear 2008 which was around 60 and 70 percent respectively.49 % 43.51 % 15.09% 1.30 % 41.31 % 35.85% 12.94 % 10.96 % 7.00 13.03% 22.04% 3.65 % 1.47% 15.66 % 28.00 142.62 % 2003 25.34% 4.00 % 100.78 % 17.61% 0.63 % 30 2008 7.56 % 104.22 % 10.18% 1.07% Other income NET PROFIT BEFORE TAXATION Provision for taxation NET PROFIT AFTER TAXATION Fauji Fertilizers | Appendix .53 % 9.53 % 27.14 % 23.32 % 28.38% 5.00 % 100.56 % 6.23 % 12.76 % 17.00 % 2002 40.31% 2004 0. 39 % 22.81 % 15.53 % % 100.71 % 54.54 % 23.86 % 1.71% 15.18 % 11.54% 4.82% 26.59 % 11.14% 26.21% 11.31 % 2006 17.9 8 % 5.00 % 100.08% 9.88 % 4.31 % 0.00 % 27.83 % 11.21 % 18. This tells how better the company is managing their inventory and their decline in the account receiva bles section.03 % 3.1 7% 5.71 % Finance cost Other expenses 100.

Since the firm’s did well in reducing most of their expense and increased sales the company did very well especially in order make a before tax profit much high as compare d to the after tax profit. The other expense rose all over the years but the com pany did well I order that this particular item do not increase much and effect their profitability and so far over the last eight years or so they did well in order to keep it just enough that does not affect their profitability. Also with the increase in sales the cost of sales also rise but the company did really well in reducing their co st of sales by almost 10 percent in the year 2007 and around 1 percent in year 2 008 which tells that the company is really making efforts in order to increase t heir sales and reduce their cost of sales in order to increase the gross profit for the longer term and so far they have been successful. The company did well in maintaining as well as increasing t heir operating profit over all the last eight years and this tells us that the c ompany is measuring such steps in order to increase the profitability of the com pany. Since the firm is making more profit especially in th e year 2008which was very tough for Fauji Fertilizers | Appendix 31 .The firm’s position is quiet visible which we can measure from its sales which is rising year after year especially from year 2002 which was 40 percent and contin uing to increase over the last few years or so. The firm’s distribution cost also rose a lot but the company did very well especially in the year 2004 a nd year 2007 in which they reduced their distributing cost but since in the year 2008 it rose much due to rising oil prices and the deterioration of the economy of Pakistan which affected every organization in Pakistan but the company still did well in order to cope such challenges and did not let such kind of cost dis turbs their profits. The finance cost also rose too much all of the years since they really hav e taken lot of loans from the creditors but overall this did not affected them t hat much because in the last few years the short term investments income overcom e such costs so the overall effect of this cost was negligible especially since the last five years or so.

accrued & other liabilities Current portion of L.all the organization in Pakistan but they did still very well although the taxat ion amount in the year 2008 was quiet high around 44 percent but still made a he avy profit which was a very good thing because the year 2008 was not much that g ood for most of the organization but they maintained their journey of increased sales and profits and the reduction in most of the expense like cost of sales. d istribution expenses etc.T Fin Taxation Total Liabilities Total Liab.up accrued Shor t term borrowings Creditors. & SHE 128248 32061 9 74233 (41656 4) (22215 4) (21317 0) (64605 0) (35005 6) (94667 6) 461275 0 906698 7411 (27118 77) 52395 202612 7 178935 0 50391 (13900 09) 178398 10140 (27081) 258889 7 126800 4 414840 448877 484886 6 141939 19 (28723 33) (26068 54) 156434 1 268387 213261 (77636 1) 240496 3 (38183 7) 816121 375335 6 200603 2 . Component Percentage Analysis according to Pakistani Rupees of Balance Sheet 2002 126142 5 123442 5 128348 1 (22386 7) 260400 0 2003 75965 5 78665 5 (49891 1 ) 2004 (55004) 772195 2005 (13965 83) 146001 2006 515635 515635 2007 (22649 8) ( 22649 8) 147750 0 2008 (444832 ) (444832 ) 270696 4 Revenue reserves Total Shareholder’s Equity NON CURRENT LIABILITIES Long Term Liabilities DEFERRED TAXATION 208383 3 (18873 25) 212672 (16800 0) (11500 0) (6000) (5000) (32474) 68369 CURRENT LIABILITIES Trade and other payables Interest and mark .

(99999 8) (10881 2) (17421 65) (10188 58) 135173 7500 592405 181093 3 32 (279464 ) 465255 347248 267774 9 Fauji Fertilizers | Appendix

Prop, PLANT & Equip GOODWILL LONG TERM INVESTMENTS L.T LOANS & ADVANCES L.T Dep. & Prep CURRENT ASSETS Stores, spares and loose tools Stock in trade Trade debts Loans & advances Dep. Other Short term investments Cash and bank balances 798924 7 198769 4 458652 8 4768 (33386) (37993 7) (10461 5) 5259 13783 (2984) 44179 (10461 5) (13174 52) 3408 (12201 9) 40329 (46211 7) (46864 5) 24277 236461 2 (77831 8) 720138 (77636 1) 4011 (10461 5) 292307 (2783) (57) 423230 (10461 5) 351376 12102 (961) 782533 234032 3 (84253) 66135 (330) 141965 0 20320 (620) 388816 16481 520595 43319 (93446 5) (37567 8) (34093 2) 141939 19 68607 50489 47548 8 (42080 0) (59143 4) (60532 ) (47818 2) (94667 6) 427009 341292 (74802 3) 50813 162979 5 116283 181716 9 200603 2 47735 392433 301714 849414 (37424 02) 451116 (16999 90) (10188 58) 205935 (31006 9) 761175 88222 574814 (27322 9) 104684 8 181093 3 626280 (384742 ) (122667 3) (182553 ) 483899 (418135 ) (110192 4) 267774 9 Total Assets If we talk about the component percent analysis to dollar of balance sheet we se e the revenue reserve section which declined a lot especially in the year 2004, 2005, 2007 and 2008. As we know that the revenue reserve is that part of profit that has not been given to the shareholder but retained in the business for furt her growth. But since the company started getting better in the early 90’s they st arted declining this particular item since they did not feel of keeping this par ticular item. The total shareholder’s equity section also declined a lot especiall y in the year 2007 and year 2008 which was mostly due to the decline in the reve nue reserve portion so this tells that the company was totally shifting mostly t owards the debts side as compared to equity portion of the balance sheet. Fauji Fertilizers | Appendix 33

The deferred taxation amount also declined to very big figures especially from y ear 2002 till 2007 which tells that company started paying mostly instead of def erring it on the next coming years or so. Overall the total liabilities and SHE section increased most of the year except year 2003, 2004 and year 2006. The ass et portion especially the fixed assets increased a lot which tells that the comp any really invested a lot in order to get machineries properties in order to exp and their business with the increasing demand and supply of the country. There w as also a lot of long term and short term investment being made by the company i n most of the last eight years in order to make more profit and for the betterme nt of the organization. There was a lot decline in the Cash and bank balances se ction probably due to the company investing in the long term and short term proj ects in order to make more profits. Overall the company’s assets rose very much es pecially in the last two year mean year 2007 and 2008 by almost 1,810,933,000 an d 2,677,749,000 Pakistani rupees respectively. Component Percentage Analysis according to Pakistani Rupees of Income Statement 2002 480428 5 374650 1 105778 4 435658 622126 392942 105553 2003 424793 0 359220 2 655728 393373 262355 (147375 ) (7867) 2004 (7599) (543666 ) 536067 (84518) 62 0585 (147889 ) 72288 2005 445409 1 322506 1 122903 0 604556 624474 (46950) 66325 2006 446975 2 385948 0 610272 375574 234698 175242 108512 2007 (152186 8) (1930 66 9) 408801 (327989) 736790 202371 109996 34 2008 2163801 (76833) 2240634 24977 8 1990856 (8241) 50320 Sales Cost of sales GROSS PROFIT Distribution cost Operating Profit Finance cost Other expenses Fauji Fertilizers | Appendix

9 0 2007 0.04 200 3 1. Internal Ratio Analysis LIQUIDITY RATIO CURRENT RATIO 200 1 2. The cost of sales also rose much is amount but as we see that in year 2007 and 2008 the company did really well in order to reduce the amount with a very great er proportion. The company really made a very good operating profit which in some of th e years line 2003.94 35 2008 0.0 3 2004 1.3 4 2002 1.Other income NET PROFIT BEFORE TAXATION Provision for taxation NET PROFIT AFTER TAXATION 123631 (277922 ) (154291 ) (24000) (130291 ) 417597 (326509 ) 91088 20000 71088 696186 476349 117253 5 313000 859535 605099 506193 111129 2 218000 893292 (49056) (180136 ) (229192 ) 32000 (261192 ) 424423 405386 829809 105000 724809 1948777 277353 2226130 1062000 1164130 If we see the income statement percentage analysis to dollars amount we see that how much the sales amount rose over the last few year or so especially the most sales rose in the year 2003. 2004. 2005 and 2008 the finance cost was also less which tell s that the company was getting rid from most of their liabilities and wanted to stand on their own. Since there was an increase in sales mostly and a reduction in th e cost of sales the gross profit rose to vast proportion especially over the las t year. 2005.09 2005 0. Especially in the year 2008 w e know how much this difficult year was that for every organization in Pakistan. 2006 and 2008. Overall the company enjoyed lot of profits as compared to ex pense and the company did all the last eight years or so.91 200 6 0.82 Fauji Fertilizers | Appendix .

07 5. 12 0. The biggest reason is that the company started the company st arted increasing more liabilities and the reduction in assets was mostly due to cash and cash balances.7 0 32. The reasons for this ar e that the current liabilities increased in much greater proportion as compared to current assets.97 1. 14 0. 97 Current Ratio: The current ratio deteriorated from the last four years.8 8 26.4 9 150.49 24. Quick Ratio: Fauji Fertilizers | Appendix 36 .86 1. trade debts and stock in trade.3 4 11.4 6 22.8 1 0.9 5 0.07 9.90 22. 55 0.89 0. 91 0. 15 89. 18 72.08 161. 56 18. 72 17.8 1 115.1 9 1.4 4 6.1 2 12. 76 0. 59 0.04 30. 24 89.06 1.92 5.45 12.17 119.QUICK RATIO CASH FLOW LIQUIDITY RATIO AVERAGE COLLECTION PERIOD AVERAGE INVENTOR Y DAYS PAYABLE DAYS 2.80 1.7 8 102. 82 35. 43 1.

Fauji Fertilizers | Appendix 37 . This tells how much the firm is better in managing their cash and cash equival ents in managing against their current liabilities so overall the last eight yea rs the company did very well in not only maintaining their cash against the comp any’s current liabilities.The quick ratio as it is clear from the ratios over the last eight years which t ells that the company was really quiet good in managing their cash but it is not very good but they maintained it over the last six years or so. Cash Flow Liqui dity Ratio: As we know this ratio is the best ratio for the measure of liquidity of the firm .

Average Collection Period: The company was very good articular reason for this an increase in sales. One particular reason for this one was the reduction the inventory and an increase in cost of sales. The hich phenomenal thing for ry Days: in drastic improvement in this particular ratio. One p one was the reduction the net account receivables and company’s receivables collection came to almost 6 days w any organization to improve that much. The Fauji Fertilizers | Appendix 38 . Average Invento The company was very superior in extreme improvement in this particular ratio as well.

62 29.79 2.11 60.77 0.0 3 20.60 0.34 2.24 5.08 3.94 10.15 2.40 0.69 70.90 2006 31.04 2.36 16.80 RECEIVABLE TURNOVER INVENTORY TURNOVER PAYABLE TURNOVER FIXED ASSET TURNOVER TOT AL ASSET TURNOVER 2005 38.03 3.12 1.26 7. TURNOVER/EFFICIENCY RATIO TURNOVER/EFFICIENCY RATIO 2001 2002 2003 2004 13.08 2.97 2008 61.29 0.93 1.50 28.15 21.company’s inventory came to 5 days which is also a dream to achieve as well becaus e we usually do not see such improvement.74 0.86 0.96 Fauji Fertilizers | Appendix 39 .43 2.03 4.09 2007 16.61 11.98 11.49 3.65 3. Payable Days: The payable days rose too much which tells that the company increased their paya bles as compared to cost of sales which was declining a little bit since the las t two years.77 0. The company was not good in managing their payables that much as co mpared to other two ratios like average inventory days and average collection pe riod.21 14.23 2.57 4.

This tells how much better the company has improved in managing their receivables into cash. This also tell s that the company is very good in receivables collection.Receivables Turnover: The receivables improved phenomenally by almost 45 times in a year which was a v ery big improvement as compared to last eight years. Inventory Turnover: The same was with the inventory turnover which also improved severely just like the receivables collection. This tells how much better the company has improved in managing their efficient Fauji Fertilizers | Appendix 40 . It is an important in dicator of a company’s financial and operational performance.

Payabl e Turnover: The payable turnover declined a lot as compared to other two turnover ratios. Fixed Asset Turnover: Fauji Fertilizers | Appendix 41 .management of inventory. This also ensures that the company is very good in mana ging their inventory as much as been required according the requirements. It is not good for long term as compared to their position and the way they are go ing this ratio also should be improved so they can better improve this ratio as well.

The fixed asset turnover was just fine which tells that the company is just fine in managing their fixed assets. SOLVENCY/LEVERAGE RATIO DEBT RATIO LTD TO CAPITALIZATION DEBT TO EQUITY SOLVENCY/LEVERAGE RATIO 2001 200 2 2003 2004 2005 2006 2007 32% 62% 58% 54% 56% 53% 56% 2% 11% 6% 19% 7% 8% 17% 4 7% 162% 136% 115% 129% 112% 130% 2008 62% 30% 160% Fauji Fertilizers | Appendix 42 . The big reason for this that this ratio did not increased that much is due to that the company from the last few years was incr easing their fixed asset portion as compared to sales. Total Asset Turnover: The total asset turnover was just good which tells that how better the company i s efficient in the management of all their assets as compared to sales. The reas on for this was because of the increased in both the things one is the sales and the other are the total assets but the total assets increased in much percentag e as compared to sales. So the company still was good in managing their assets as compared to sales.

LTD to Capitalization: This ratio also rose from the last few six years which tells the company increas ed the long term debts in permanent financing of the firm.Debt Ratio: This tells how better the company the how better the company is good in order to pay off their loan in times. Debt implies risk but the company still did very well overall the past few years. This tells that the company increased their debt as compared to total assets. Fauji Fertilizers | Appendix 43 . The percentage increased in a percentage in as com pared from the last five years.

23 Fauji Fertilizers | Appendix . There were two reasons for that one is the increase in debt and the other was the decrease in equity.Debt to Equity: The capital structure of the firm tells us that it is more debt financed as comp ared to equity financed.3 6 20.2 0 2005 20.81 10.7 7.67 13.9 5 25.8 8 2008 13.40 13.8 9 -0.5 0 6.6 6 44 TIMES INTEREST EARNED FIXED CHARGE COVERAGE RATIO CASH COVERAGE 2006 13.93 11.07 12. 43 2004 16.79 5.3 9 3 3.9 4 8.74 17.89 9.3 1 24. COVERAGE RATIO COVERAGE RATIO 2001 2002 2003 16.6 4 18.89 2007 10.8 1 7.

61 1. This tells that the c ompany was covering their interest expense almost 14 times in a year which is go od.CASH FLOW ADEQUACY RATIO Times Interest Earned: 0. Fixed Charge Coverage Ratio: Fauji Fertilizers | Appendix 45 .71 3. The reason for the increase was mostly due to the increase in operating prof it as compared to interest expense.69 0.06 0.56 0.72 The times interest earned increased in the last few years.02 -0.50 2.

The fixed charge coverage ratio tells how better the company is good in managing the interest expense from the cash flow from operations. The company improved very much too almost 17 times to pay the interest paid by the company. This ratio increased n ot only because of the increase in cash generated from operations but also becau se of the reduction in interest expense. So this tells that the company’s ability of the firm to cover its interest payment on taxes by cash improved ver y much. Cash Coverage: The cash coverage was also very good. Fauji Fertilizers | Appendix 46 .

Cash Flow Adequacy Ratio: The cash flow adequacy ratio was just satisfactory as which tells that the compa ny was just not able to pay dividends. capital expenditure and debt repayments f rom the cash generated by their operations. PROFTABILITY RATIO Fauji Fertilizers | Appendix 47 .

78 34.56 % 18.24 % 39. The biggest reason for this was mostly due to the increased profit as c ompared to the increase in sales.33% 26.59 % 27.31 % 28.02 % 19.53 % % 26.15 % 28 .72 % 32. Fauji Fertilizers | Appendix 48 .32% 35.22 % 24.36 % 23.43 % 31.08 % 18.38 % 2007 35.95 % 9.29 % 20.90 % 38.24 % 15.80 % 42.57 % 23.11 % 26.40 % 19.86 37.11% 30.48 % -1.40% 31.91 % GPM: PROFTABILITY RATIO 2002 2003 2004 39.65 % 2006 32.02 % 32.67% 21.04 % 36.33 % 2008 40.37 % 26.08 % 2005 35.86 % 20.14 % % 29.36% The company’s GPM rose to much greater percentage year after year over the last si x years.06 % 14.33 % 33.GPM OPM NPM CASH FLOW MARGIN ROE ROA 2001 46.71 % 26.78 % 25.64% 27.09 % 18. The most reason is mostly due to that the most of the expense reduced over the last two years.74 % 15.69% 53.42 % 23.

OPM: The operating profit also rose to much greater percentage over the last six year s. The major reason for this was mostly due to the amplified profit as compared to the increase in sales. The most reason for this is same which is mostly due t o that the most of the expense reduced over the last two to three years. NPM: Fauji Fertilizers | Appendix 49 .

So overal l the company did very well in managing and improving their almost all their pro fits by a much better percentage. The sales were increasing in much proportion as compa red to cash flow generated from operations so this ratio does not seems to be in creasing that much as compared to other ratios. Fauji Fertilizers | Appendix 50 .The net profit margin also rose over the past few years. Cash Flow Margin: This particular ratio also improved especially over the last two years or so and this trend is continuing. The reason for this is mostly because of reduction in cost of sales and distribution expense.

One reason was same as the increase in net income over th e last four years or so and also a decline in the shareholder’s equity section. Ro e measures a firm s efficiency at generating profits from every unit of sharehol ders equity. The company’s ROE shows how well a company uses investment funds to generate earnings growth.ROE: This particular ratio also increased to a much greater portion as with the other profitability ratios. ROA: Fauji Fertilizers | Appendix 51     .

39 7.63 81% 2007 10.26 9.44 8. and is compared with companies in the same industry.11 7.24 108% EPS: Fauji Fertilizers | Appendix 52 .92 9. MARKET RATIO MARKET RATIO 2001 2002 2003 12.63 94% 2005 9.11 112% 2008 13.48 8.98 12.22 14.81 76% 71% 72% EPS DPS DIVIDEND PAYOUT 2004 8.49 11. Return on assets is an indicator of how profitable a compa ny is before leverage.84 99% 2006 9.This ratio also improved over all the past years but not that much because of th e increase in total assets and the operating profit did not rose that much as th e total assets. This ratio is a useful number for comparing competing companies in the same industry.86 12.

Earnings per share (EPS) are the earnings returned on the initial investment amo unt. Fauji Fertilizers | Appendix 53 . DPS: Dividends Per share also rose to very greater proportion in percentage over the last three years but this is a good improvement especially after year 2003 from which the dividend percentage rose. The EPS as it is clear from the above chart that this ratio improved over t he last five years or so and still continuing as far seen the position of the co mpany.

08 0.90 1.94 2.72 1.12 54 2008 0.70 1.34 1.04 0.99 0.91 0.59 1.49 1.09 0.04 1.06 2.07 1.62 2.28 2.97 0.72 2007 0.01 1.19 0.80 1.09 2.15 1.81 0.89 1.86 1.88 11.92 Fauji Fertilizers | Appendix .88 1.49 22. The trend from the chart seems to be reasonable and the in vestors will be happy from the company so as the management of the company becau se year after year they have been earning profits and increasing every year.34 0.44 2005 0.09 2. External Ratio Analysis LIQUIDITY RATIO LIQUIDITY RATIO 2001 2002 2003 2.90 1.94 2.91 1.46 32.27 0.56 CURRENT RATIO Sectorial Average QUICK RATIO Sectorial Average CASH FLOW LIQUIDIT Y RATIO Sectorial Average AVERAGE COLLECTION PERIOD 2004 1.82 30.81 1.90 1.67 1.45 2.67 1.09 5.03 1.50 9.45 2006 0.82 1.07 1.95 1.Dividend Payout: The dividend payout ratio also raised much from year 2003 and until now it was s till rising which tells how much better the company is giving their Dividend ove r earnings per share.76 24.71 26.

97 89.28 5.75 115.18 31.55 64.81 53.43 84.89 102.17 8 14.97 12.71 12.76 6.1 2 95.51 1 17.7 6 89.83 72.08 17.83 1 21.59 67.54 18.1 4 58.21 17.74 8 4.49 32.Sectorial Average AVERAGE INVENTORY DAYS Sectorial Average PAYABLE DAYS Sectoria l Average 25.08 119.45 161.73 150. Fauji Fertilizers | Appendix 55 .15 23.17 48.20 3 32.04 4 If we compare the liquidity ratio of this company with the fertilizer sector we see that the current ratio during the last six years is been 50 percent of the s ector which means that the company is way behind the industry average.33 9 40.78 35.64 7 26.73 22.37 35.9 1 83.77 89.9 7 72.24 38.

Fauji Fertilizers | Appendix 56 . As far the position of the company the management should also take some s teps to match the industry average so they can lead in every term in Pakistan.But this is not only with the current ratio the past performance of quick ratio is also the same its trend was also 50 percent during the last six years or so. So both the current ratio and the quick ratio seem to lag behind the industry av erage. From the cash flow liquidity ratio we can say that the company did very well spe cially over in the year 2008 to match with the industry average. The company did well to at least come towards the industry level. Since this rati o cash flow liquidity ratio is the best measure of the liquidity of the company.

In the early 90’s the company was good but later on the company lag behind the industry average by more than 50 percent which is not goo d especially over the last two years. But in the average inventory days the company lags behinds very much as compared to the industry average. Fauji Fertilizers | Appendix 57 .The average collection period also seems to be very good of the FFC’s which from t he graph is visible that the company is meeting the industry average and also co mpeting which is very good for the organization which tells that the company is very good in receivables collection.

94 38. TURNOVER/EFFICIENCY RATIO TURNOVER/EFFICIENCY RATIO 2001 2002 2003 2004 2005 13.98 11.21 14.6 11.50 23.1 RECEIVABLE TURNOVER Sectorial Average 2006 31.00 11.69 88.76 Fauji Fertilizers | Appendix .15 39.33 2007 16.67 58 2008 61.28 17.3 23.6 1 2 16.In the payable days the company led from the front and from the above chart it i s clear that the company was way better than the industry average which is very good.97 33. So after watching all the liquidity ratios performance the company was fin e overall in which they performed well with the industry average but they should try to improve their current and quick ratio as well since there ratios tells h ow much risky the company is but company position is so good that they should no t be doing things like because they are already leading.

97 0.03 11.08 7.80 0.72 3.INVENTORY TURNOVER Sectorial Average PAYABLE TURNOVER Sectorial Average FIXED AS SET TURNOVER Sectorial Average TOTAL ASSET TURNOVER Sectorial Average 6 10.84 20.75 7 21.7409 0.51 3.12 2.26 7.2 3 15.69 12.20 60.74 2.04 14.15 9.37 28.03 29.3 6 10.62 5 16.77 0.6 8 2.17 2.09 0.33 2.44 70.65 23.12 10.16 3.79 2.48 0.1 8 4.03 3.18 2.43 7.53 02 0.60 0.90 0.02 9.73 1.86 0.05 1.11 16.5513 5.49 14.77 2.96 0.63 0.57 4.56 2.36 7.84 2.29 3.24 13.34 2.5428 From the receivable turnover it is clear that over the last eight years the comp any performed very well to meet the industry average which is god for the compan y as they led and matched the industry average most of the time.41 0.08 2. Fauji Fertilizers | Appendix 59 .40 2.6263 5 29.93 4.5792 0.25 0.

The company should make some efficient steps in order to better maintain thei r inventory as well as come at least to the industry average because the ratios like inventory turnover should be better and should meet the industry average. The company led from the front and from the above chart it is clear that the c ompany was way better than the industry average which is very good. Fauji Fertilizers | Appendix 60 .The inventory turnover for the company from the last four years was not that goo d. The payable turnover of the company was good as compared to the industry average .

The total asset turnover of the company was a bit higher as compared to the indu stry average. That is a good achievement to at least maintain from several years to the indus try average.This particular ratio was meeting the industry average over the last 7 years whi ch tells how better and efficient is the company is managing their fixed assets. So after seeing the turnover ratios we can conclude that the compa ny mostly did very well in not only meeting the industry average but also mainta ining from couple of years which is not good Fauji Fertilizers | Appendix 61 .

This tells that the company increased their debt as compared to total assets. The percentage increased in a percentage in as comp ared from the last five years. SOLVENCY/LEVERAGE RATIO SOLVENCY/LEVERAGE RATIO 2001 2002 2003 2004 32% 62% 58% 54% 27% 54% 53% 52% 2% 1 1% 6% 19% 13% 30% 25% 25% 47% 162% 136% 115% 92% 136% 110% 91% DEBT RATIO Sectorial Average LTD TO CAPITALIZATION Sectorial Average DEBT TO EQU ITY Sectorial Average 2005 56% 50% 7% 21% 129% 92% 2006 53% 51% 8% 17% 112% 79% 2007 56% 55% 17% 33% 130% 122% 2008 62% 58% 30% 36% 160% 129% The debt ratio of the company seems to meet the industry average and fractionall y over the industry average.especially in Pakistan to show some consistent performance as far as the economy and condition of Pakistan from some two to three years. Fauji Fertilizers | Appendix 62 . But the industry average is almost the same as the FFC’s so it seems that the company is meeting the average industry.

This tells the company increased the long term debts in pe rmanent financing of the firm but they kept this ratio a bit less than the indus try average.The LTD to capitalization of the company is less than the industry average over the last eight years. Fauji Fertilizers | Appendix 63 .

06 0.53 11.95 13.02 1.36 15.92 11.25 2008 13.31 8.50 0.69 0.93 4.71 0.40 8. COVERAGE RATIO COVERAGE RATIO 2001 2002 16.29 0.43 3.31 13.70 7.67 7.79 4.50 1.07 23.22 8.2 5 64 TIMES INTEREST EARNED Sectorial Average FIXED CHARGE COVERAGE RATIO Sectorial Av erage CASH FLOW ADEQUACY RATIO Sectorial Average 2007 10.89 27. 76 1.58 20.94 6.89 7.53 3.81 20.22 Fauji Fertilizers | Appendix .The debt to equity show the capital structure of the company which is more debt financed than equity financed and the company was bit forward as compared to the industry average over the last seven years.05 2006 13.77 -0.56 18.72 1.16 5.93 6.23 2.56 0.61 1.30 0.12 2003 10.52 2005 20.74 7.96 -0.25 0.76 2004 16.64 11.

As compared to the ind ustry average they are quiet competent as they are meeting the industry average. The fixed charge coverage ratio tells how better the company is good in managing the interest expense from the cash flow from operations.The time interest earned of the company is way better than the industry average. Fauji Fertilizers | Appendix 65 . This tells that the company was covering their interest expense almost better t han the industry average which is very good for the company to not only matching industry requirements but also exceeding their levels.

53% 18.9 1% 18.59% 33.69% 3.16% 30.96% 21.87% -1.02% 15.64% 36.84% 19.85% 21.49% 12.48% 24.02% 15.85% 26.69% 22.53% 20.49% 32.04% 21.11% 19.71% 31.90% 31.65% 19.10% 38. The cash flow adequacy ratio was just satisfactory as which tells that the c ompany was just not able to pay dividends.02% 23.54% 18.37% 17.86% 35.24% 22.42% 30.29% 32.36% 17.17% 26.43% 33.67% 27.86% 37.43% 31.65% 23.57% 12.40% 23.32% 6.90% 30.39% 24.08% 25.88% 28.33% 22.81% 12.72% 9.74% 2.38% 28% 2007 35.24% 19.06% 29.The cash flow adequacy ratio of the company was comparable to the industry avera ge. PROFTABILITY RATIO PROFTABILITY RATIO 2002 2003 2004 39.22% 34.07% 42.40% 34.53% 23.88% 39.42% 53.33 % 37% 2008 40.07% 24.11% 13.86% 20.78% 15.68% 30.15% 9.34% 27.56% 27. capital expenditure and debt repaymen ts from the cash generated by their operations.53% 26.39% 28.78% 21.31% 14.08% 24% 24% 25% GPM Sectorial Average OPM Sectorial Average NPM Sectorial Average CASH FLOW MARG IN Sectorial Average ROE Sectorial Average ROA Sectorial Average 2001 46.90% 26.14% 23.91% 18% 2005 35.30% 23.0 9% 26.25% 15.78% 34.95% 19.65 % 33% 2006 32.19% 33.36% 29% Fauji Fertilizers | Appendix 66 .80% 14.33% 12.64% 31.86% 63.30% 25.

The operating profit also rose to much greater percentage over the last six years. Fauji Fertilizers | Appendix 67 . The operating profit was also high This tells that all the year the company was ahead of the industry average and enjoying profit every year more than the indus try average.The company’s GPM rose to much greater percentage year after year over the last si x years. This tells that all the year the company was ahead of the industry aver age and enjoying profit every year more than the industry average.

The reason for this is mostly bec ause of reduction in cost of sales and distribution expense. So overall the comp any did very well in managing and improving their almost all their profits by a much better percentage. Fauji Fertilizers | Appendix 68 .The net profit margin also rose over the past few years more than the industry a verage except year 2007 in which the industry made more use of it but overall th e industry was inconsistent in performance and maintaining their NPM. The net pr ofit margin also rose over the past few years.

This particular ratio also improved especially over the last two years or so and this trend is continuing and it is still better mostly all over the years if co mpared to the industry average. The company also led all the last eight years from the fr ont and really exceeded the industry average by quiet a big margin which is not easy to do when your competitors are not that bad. This particular ratio also increased to a much greater portion as with the other profitability ratios. Fauji Fertilizers | Appendix 69 .

24% EPS Sectorial Average DIVIDEND PAYOUT Sectorial Average 2001 12.04% 2006 9.48% 2005 9.82% 2007 10.67 81% 61.99% 2008 13.92 28.49 11.36 71% 72% 94% 85.87 18.22 31.25 99% 64.86 51.26 8.58 108% 43.ROA also kept and maintained the industry average which was good for the company which showed how consistent they were in meeting and mostly exceeding in mainta ining the profitability of the company as compared to the industry during the la st eight years or so.29% 64. MARKET RATIO MARKET RATIO 2002 2003 2004 11. E arnings per share (EPS) are the earnings returned on the initial investment amou nt.14 112% 44. The EPS as it is clear from the above chart that this ratio improved over th e last five years or so and still continuing as far seen the position of the com pany.46 76% 82.11 14. Fauji Fertilizers | Appendix 70 .94 % 65.98 12.39 24.37% EPS of the company was not that good as compared to the industry average which t ells that they were not earnings on returned on the initial investment amount.36 17.

I/EBT EBT/EBIT EBIT/Sales N.I/Sales Sales/Avg.A/Avg. T.96 71 ROE N.The dividend payout ratio also quiet high over all the years as compared to the industry average.80 Solvency N.56% Fauji Fertilizers | Appendix . The dividend payout ratio also raised much from year 2004 and until now it was still rising which tells how much better the company is giving their Dividend over earnings per share. S.9 3 38.64 0.A 15.T.09% 26.31% 0.21% 14.64 1.I/Avg.09 0. T.E 33.57 0. S. DuPont Return on Equity Five Component Disaggregation Profitability Turnover Taxes Financing Operations N.A 200 1 200 0.72% 28.59% Avg.74% 18.22 1.E 2.37% 31.I/Avg. The trend from the chart seems to be rea sonable and the investors will be happy from the company so as the management of the company because year after year they have been earning profits and increasi ng every year.

I/EBT column over the last eight years remained consistent and the same was with the EBT/EBIT section and we did not see much bigger changes in this column as well.29% 32.16 2.A/Avg. The N. with some sectors being comp letely inactive. T.67% 14.84% 16.08% 31.00 1. Most sectors of the economy proved disappointing for shareholders. totals asse ts section we saw changes but they also became to better position during the las t few years.00 11.40% 23.66 0. Avg. Insight for Investors & Creditors Looking at Pakistan s corporate earnings over the past year and the story they t ell for the future leaves investors with a lot left to hope for.48% 18. S.04 26.I/Sales this section was sound a s well as it is clear from the above table that overall the last eight years the company did well in maintaining it as well.92% 21.33% 0.95% 19. We see t he N. Although the Sales/Avg.68 0.00 1. however.86% 21.57% 39.21 2.02% 26.02 1.40 2.66 0. The re turn on equity (ROE) ratio is a measure of the rate of return to stockholders.11% The Du Pont identity breaks down Return on Equity five distinct elements.I/Avg.78% 42.34% 2. Amidst such a market. F rom the above table it is clear from the above DuPont analysis that over the pas t few years the return on equity section of the company rose very much.64 0.23 2.11% 53.78 0.E we also see that there was no p roblem in these two columns as well they were consistent and became better and b etter over the last two years especially.24% 27. T.69 0.93 1.04% 19.07 1.76 0.07 1.06% 29.49 27.22% 15. If we now talk about EBIT/Sales and N.90 1. the Fauji Fertilizers | Appendix 72   .2 200 3 200 4 200 5 200 6 200 7 200 8 0.65 0.35% 14.A.59% 18.00 1.36% 35. So the DuPont analysis of this company tells us the company is very good in all kinds of distinct elements and this te lls how better the company is.18 2.92% 17.

The government is likely to keep input costs low for some time to com e because local manufacturers are determined to pass on all such increases to co nsumers. Sri Lanka and Thailand are also not too far away. This will preserve the industry s growth. A particularly bright spot for the sector is the ca pacity for the export of fertilizer. if investors are worried about over-supply in the next few years. So it is probably fair to conclude that the industry has sound fundamentals and significa nt potential for the future. Bangladesh. Future Projections FFC has progressed remarkably from its inception in 1978 till to date.fertilizer sector has shown stable and consistent results. This Performance record is considered unparalleled in the cou ntry and matches high standards anywhere in the world. Th is sector has offered excellent shareholder returns and demand is still on the r ise as manufacturers expand aggressively to accommodate this increase. the entry barriers for new firms have already been discussed. and other markets such as Iran. At Fauji Fertilizers | Appendix 73     . expansion and move towards se lf-sufficiency. both India and China are the world s largest urea importe rs. Each of these have incur red an investment of Over 300 million US$ amounting to one of the largest invest ments in Pakistan. with the key players performing extremely well in terms of profitability and being spurred on by raci ng demand. Three pro jects in a Span of less than 20 years have been set up.

face serious logistic problems. This include availability of trucks and railway wagons. FFC’s vision for the 21st century looks for diversifi cation and establishing projects beyond the territorial limits of the country in collaboration with world famous international industrial holdings. Engro.this point in time. the company is preparing to harmonize itself with new centur y. the company is confident to take on the new challenges. The list of different projects that are being evaluated at present are: • • • • • • • Oil Refinery Paper ill Project Software Development House Off-Shore Fertilizer Complex Mineral Acid Production Petrochemical refurbish of existing FFC facilities Problems & their proposed solutions with the firm During the peak demand period the three urea manufacturers. Building on the foundations of the last 20 years. heavy traffic and frequent traffic jams on National Highway as a ll these units are located within a radius of Fauji Fertilizers | Appendix 74 . Fauji and Pak Saudi.

The company should try to increase their capa city by adding more units. There are new competitors in the industry. Having a strong financial position company can start producti on of the new product line. Availability of natural gas from Iran can help setting up a new Urea plant in that vicinity and thus meeting the demand of Urea in the count ry at cheap Rates. Future fertilizer demand the company’s position is so better that th ey should try to add more units as the company is financially very strong. The company should focus on this particular problem because if this one is improved the company will imp rove more financially. There is a phenomenal increase in the prices of basic feedsto ck’s. The manufacturers have been demanding. Having a strong financial position comp any can start production of the new product line. Adding some ne w unit can enhance the production capacity of the plants. Due to rising demand the company is im porting urea instead of producing.100 kilometers. Size of the compan y is very large which produces administrative problems. No availability of railway wag ons. for a long time. Compa ny is having strong dealer network all Fauji Fertilizers | Appendix 75 . The company should take some steps with the government in order to improve their distribution and reduce their expense more as they are doing it without it . If FFC decides for the export of Urea it can earn mu ch better revenues. Company is in a positi on to set up a new plant in the country. There is a difficult coexistence between public and private fertilizer produ cer/importer. Adding some new unit can enhance the production capac ity of the plants. of the g overnment to expand the roads but the problem still persists. Of this problem there is no such solution because since there is a lot of gl obal disorder going all over the world this particular effect will be solved lat er. There is an unstable use of fertilizer.

ffc.pk Fauji Fertilizers | Appendix 76 .pk/contents/annualrep.htm http://www.com.google.FFC has d eveloped a well planned network of 170 field warehouses to ensure that fertilize rs is available to the farmers uninterrupted.over country that helps in proper availability even in far-flung areas.com. References http://www.

http://en.com.pk/market-data/history_by_da te.20 http://www.kse.com/ Appendix Internal Ratios of the Company Fauji Fertilizers | Appendix 77 .sbp.brecorder.org.pk/ http://www.php?id=1&sid=1.org/wiki/EPS http://www.wikipedia.

78 .90 0.93 11. 09 26.81 10.23 2.97 2008 61.64 18.40 13.21 14.06 2007 10.17 119.78 18.42 % 23.15 2.86 1.89 -0.95 1.12 2006 0.90 39.53 16.69 2008 13.81 0.77 0.08 2.91 2008 0.57 4.66 2.31 14.07 5.82 30.09 2007 16.23 0.06 1.04 1.90 22.26 7.91 0.08 89.36 16.69 70.24 % 39.43 % % % % 38.59 2007 0.94 8.61 12.97 RECEIVABLE TURNOVER INVENTORY TURNOVER PAYABLE TURNOVER FIXED ASSET TURNOVER TOT AL ASSET TURNOVER 2005 38.34 11.86 0.49 3.81 115.24 5.46 32.94 0.24 22.02 2006 13.06 29.03 4.76 TURNOVER/EFFICIENCY RATIO 2001 2002 2003 2004 13.29 32.34 1.15 21.94 1 0.12 12.60 0.72 GPM OPM NPM CASH FLOW MARGIN ROE PROFTABILITY RATIO 2001 2002 2003 2004 46. 80 SOLVENCY/LEVERAGE RATIO 2001 2002 2003 2004 32% 62% 58% 54% 2% 11% 6% 19% 47% 162% 136% 115% COVERAGE RATIO 2001 2002 2003 2004 16.56 9.93 1.88 0.96 DEBT RATIO LTD TO CAPITALIZATION DEBT TO EQUITY 2005 56% 7% 129% 2006 53% 8% 112% 2007 56% 17% 130% 2008 62% 30% 160% TIMES INTEREST EARNED FIXED CHARGE COVERAGE RATIO CASH COVERAGE CASH FLOW ADEQUA CY RATIO 2005 20.04 0.81 0.70 1.50 2005 0.40 % 19.39 1.14 89.78 34.49 150.44 35.61 11.95 25.19 0.03 20.98 11.80 1.34 2.79 2.72 17.55 102.32% 35.48 % -1.02 % % % 33.74 18.45 12.CURRENT RATIO QUICK RATIO CASH FLOW LIQUIDITY RATIO AVERAGE COLLECTION PERIOD AV ERAGE INVENTORY DAYS PAYABLE DAYS LIQUIDITY RATIO 2001 2002 2003 2004 2.86 37.36 6.89 -0.03 3.18 72.71 24.09 2.40 0.89 0.56 24.04 % % % % 15.56 27.77 0.33 28.62 29.67 7 .70 7.15 9.20 3.24 % 15.82 0.43 0.95 19.04 2.03 1.50 28.92 5.64% 36.31 13.08 3.12 1.37 31.15 6.36 2006 32.72 28.4 3 161.07 9.11 60.88 1.74 17.97 0.49 26.07 3.57 2005 35.43 2.22 % 24.71 % 26.79 5.65 3.02 % % % % 26.89 20.74 0.29 0.90 2006 31.

86 % 20.59 % 27.67% 21.69% 53.40% 31.80 % 42.33% 26.2007 35.08 % 18.11% Fauji Fertilizers | Appendix .11 78 2008 40.

53 % % 20.22 14.63 81% 2007 10.33 % 30.26 9.ROA % 32.11 112% 2008 13.24 108% External Ratios for Industry Average 2001 LIQUIDITY Fauji Fertilizers | Appendix 79 2002 2003 2004 2005 2006 2007 2008 .84 99% 2006 9.65 % % 25.39 7.08 % % 23.11 7.44 8.38 % % 26.98 12.49 11.63 94% 2005 9.86 12.91 % % 18.48 8.36% EPS DPS DIVIDEND PAYOUT MARKET RATIO 2001 2002 2003 12.14 % % 23.81 76% 71% 72% 2004 8.92 9.

41 0.88 0.56 % 53.68 7.74 23.33 2.97 64.63 0.05 0.75 83.73 35.51 1.81 1.54 88.45 89.18% 109.91 1.50 17.83 % 24.42 % 55.62 1.28 48.18 1.67 1.72 2.54 23.36% COVERAGE Times Interest Earned Cash Coverage Ratio Fixed Charge Coverage Ratio C ash Flow Adequacy Ratio PROFTABILITY Gross Profit Margin Operating Margin Net Pr ofit Margin Cash Flow Margin Return On Asset Return On Equity Cash Return On Ass et 20.09 1.12 2.75 % 58.25% 36.18 7.04 16.76 23.16% 129.49% 33.49 21.59 1.27 1.94 2.88 14.20 2.43 % 49.97 29.89 % 79.15 2.09 4.53 11.67 26.71 53.00% 30.76 39.15 15.28 16.51 2.01 1.77 84.20 9.83 67.73 2.33 13.63 33.73 95.69 2.99 1.48 % 16.17% 25.55 27.86 % 92.00 11.36 10.01% 135.90 1.33 % 51.07 % 54.25 0.28 25.84 0.83 2.63 23.16 23.45 1.65 2.44 12.58 17.76 32.02 3.47% 121.37 38.48 0.21 31.75 1.67 14.76 .36 4.71 40.84 7.76 17.89 58.79 % 51.56 2.09 1.18 0.34 2.28 % 12.08 0.88 % 92.Current Ratio Quick Ratio Cash Flow Liquidity Ratio Average Collection Period Av erage Inventory Days Average Payable Days TURNOVER/EFFICIENCY Receivables Turnov er Inventory Turnover Payable Turnover Fixed Asset Turnover Total Asset Turnover SOLVENCY/LEVERAGE Debt Ratio Long Term Debt To Capitalization Debt To Equity Ra tio 1.72 10.16 14.85 % 20.08 72.31 23.76 % 91.37 9.17 0.97 32.

20% -2.30% 80 34.16% 21.30% 19.10 1.96 0.89% Fauji Fertilizers | Appendix .29 5.12 11.52 1.50 4.43 % 22.39% 15.36% 31.10 % 17.42% 13.22 30.02 % 24.88 % 12.85% 21.92 7.39% 30.53 % 2.91 % 24.25 14.30 486.81% 24.49% 24.65% 12.39 % 21.56 13.90% 27.98% 33.77 4.19 % 9.17% 36.22 8.57 0.67 0.53 27.25 4.23 11.50% 7.07% 19.50% 33.53 % 22.54% 63.05 7.86% 15.07 % 19.88% 31.96% 12.43 14.65 % 33.62 % 8.34% 25.30% 8.36 1.25 6.69% 24.10% 10.52 11.86% 14.64% 23.44 % 8.53 % 23.31% 30.88 % 17.68% 29.49% 17.93 8.87 % 6.61 1.78% 22.24 0.84 % 34.90% 3.76 15.30 % 28.25% 12.71 % 8.5.58 13.85 % 23.29 % 8.

86 43.67 8.68% 31.58 4.04 % 5.46 4.60 64.29% 7.36 10.60% Fauji Fertilizers | Appendix 81 .48 % 12.36 9.58 44.82 % 16.37% 3.01% 24.MARKET Earnings Per Share Price to Earning Dividend Payout Dividend Yield 11.24 % 29.87 7.10% 17.99% 1.46 64.00 85.25 8.69 61.97 % 28.94% 7.19 % 51.30% 18.75 % 14.12 82.24 65.14 7.

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