Financial Management Report

Company: Fatima Fertilizer

Student Names
Minahil Shaheen - 24919
Anas Waqar – 24337
Aashar Samejo - 22350
Zaid Ali – 24261

Submitted to: Dr. Kiran Jameel

Company’s Overview

The Fatima Fertilizer Company Limited was incorporated on December 24, 2003, as a joint
venture between two major business groups in Pakistan namely, Fatima Group and Arif Habib
Group, with its head office located in Lahore.
Three units of the Company are situated across the province of Punjab at three different strategic
locations namely Mukhtar Garh, Sadiqabad (Sadiqabad Plant), Khanewal Road, Multan (Multan
Plant), and 28-KM Sheikhupura Road, Chichoki Mallian (Sheikhupura Plant).
The fertilizer complex is a fully integrated production facility, capable of producing two
intermediate products, i.e., Ammonia and Nitric Acid and four final products which are Urea,
Calcium Ammonium Nitrate (CAN), Nitro Phosphate (NP) and Nitrogen Phosphorous Potassium
(NPK) at Sadiqabad, Rahim Yar Khan.
The Complex has a 56MW captive power plant in addition to off-sites and utilities. The Complex
has been allocated 110 MMCFD of gas from the dedicated Mari Gas fields.
Foundation stone was laid on April 26, 2006 by the then Prime Minister of Pakistan. The
construction of the Complex commenced in March 2007 and is housed on 950 acres of land. The
Complex, when completed, is designed to produce:
 500,000 Metric Tons of Urea per Annum
 420,000 Metric Tons of Calcium Ammonium Nitrate (CAN) per Annum
 360,000 Metric Tons of Nitro Phosphate (NP) per Annum
The Complex, during its construction phase engaged over 4,000 engineers and technicians from
Pakistan, China, USA, Japan and Europe.
The Complex provides modern housing for its employees with all necessary facilities. This
includes a school for children of employees and the local community, a medical center and sports
facilities.
The Company is listed on Pakistan Stock Exchange, through a successful initial public offering
(IPO) in February 2010. 200 million ordinary shares were offered to the public bringing the issued
Share Capital from 1,800 million to 2,000 million shares.

Vision
“To be a world class manufacturer of fertilizer and ancillary products, with a focus on safety,
quality and positive contribution to national economic growth and development. We will care for
the environment and the communities we work in while continuing to create shareholders' value.”

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Mission
 To be the preferred fertilizer company for farmers, business associates and suppliers by
providing quality products and services.
 To provide employees with an exciting, enabling and supportive environment to excel in,
be innovative, entrepreneurial in an ethical and safe working place based on meritocracy
and equal opportunity.
 To be a responsible corporate citizen with a concern for the environment and the
communities we deal with.

Corporate values
These are the values that Fatima Fertilizer Company Limited epitomizes, and are reflected in all
their transactions and interactions. Congruence to these values has been a part of their business
strategy. They are bound in the very fabric of their organization, shaped by organizational
processes, procedures and practices
 Integrity: Their actions are driven by honesty, ethics, fairness and transparency.
 Innovation: They encourage creativity and recognize new ideas.
 Teamwork: They work collectively towards a common goal.
 Health, Safety, Environment & CSR: They care for their people and the communities
around them.
 Customer Focus: They believe in listening to their customers and delivering value in their
products and services.
 Excellence: They strive to excel in everything they do.
 Valuing People: They value people as their greatest resource.

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Past Five Years Data
INCOME STATEMENT
2021 2020 2019 2018 2017
(Rupees in Thousands)

Sales 112,488,420 71,267,316 74,964,214 51,309,994 37,611,818

Cost of Sales (69,403,976) (42,472,530) (47,065,331) (25,639,375) (17,275,276)

Gross Profit 43,084,444 28,794,786 27,898,883 25,670,619 20,336,542

Distribution Cost (5,048,813) (3,890,808) (3,800,064) (3,684,686) (3,481,882)

Administrative Expense (3,899,598) (3,368,500) (2,778,727) (2,316,965) (1,533,619)

Other Operating
Expense (4,676,977) (1,677,558) (1,480,466) (1,708,069) (913,370)

Operating cost (13,625,388) (8,936,866) (8,059,257) (7,709,720) (5,928,871)

Finance Cost (2,006,559) (3,469,303) (3,760,909) (1,822,902) (2,198,268)

27,452,497 16,388,617 16,078,717 16,137,997 12,209,403

Other Income 1,210,189 1,810,074 1,089,749 603,101 526,866

Other Gains / Losses: (477,245) 517269 - - -

Share of (loss) / profit
from associates (348) 26,795 24,687 49,211 -
Other income,
profit/loss 732,596 2,354,138 1,114,436 652,312 526,866

Profit before tax 28,185,093 18,742,755 17,193,153 16,790,309 12,736,269

Taxation (9,710,827) (5,468,064) (5,123,471) (4,876,754) (2,160,256)

Profit for the year 18,474,266 13,274,691 12,069,682 11,913,555 10,576,013

Earnings per share -

basic and diluted
(Rupees) 8.80 6.32 5.75 5.67 5.04

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 BALANCE SHEET
EQUITY AND LIABILITIES
2021 2020 2019 2018 2017
(Rupees in Thousands)
CAPITAL AND RESERVES

Authorized share capital 27,000,100 27,000,100 27,100,000 25,000,000 25,000,000

Issued, subscribed and paid up
share capital 21,000,000 21,000,000 21,000,000 21,000,000 21,000,000

Reserves 79,263,440 66,102,656 57,008,298 48,594,972 32,741,792

Total Equity 100,263,440 87,102,656 78,008,298 69,594,972 53,741,792

LIABILITIES
NON CURRENT LIABILITIES

Long term finances 5,172,276 3,114,067 6,253,636 8,376,578 10,774,286

Lease liabilities 1,437,025 1,901,472 278,630

Deferred liabilities 23,522,297 24,115,708 19,942,553 18,609,478 15,763,775

Deferred government grant - 61,440 - - -

Long term deposits 175,104 110,370 61,267 57,183 51,269

Total Non Current Liabilities 30,306,702 29,303,057 26,536,086 27,043,239 26,589,330

CURRENT LIABILITIES

Trade and other payables 38,469,330 22,871,117 26,483,859 18,069,248 11,459,546

Income tax payable 4,968,065 -

Accrued finance cost 307,184 450,579 836,743 306,253 167,823

Short term finances - secured 6,465,772 11,443,557 16,264,983 5,494,802 1,725,938

Unpaid dividend 1,738,864 - 571,301

Unclaimed dividend 44,951 40,853 189,950 68,832

Current portion of: 6,225,085 7,630,942

- Long term finances 1,892,328 5,803,222 5652048

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- Lease liabilities 375,273 480,323

- Deferred government grant 61,440 61,526

Total Current Liabilities 54,323,207 41,151,177 50,571,921 31,570,077 19,005,355

Total Liabilities 84,629,909 70,454,234 77,108,007 58,613,316 45,594,685

Total Equity and Liabilities 184,893,349 157,556,890 155,116,305 128,208,288 99,336,477

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 ASSETS
2021 2020 2019 2018 2017
(Rupees in Thousands)
NON CURRENT ASSETS

Property, plant and equipment 105,422,464 104,937,733 100,720,660 91,718,705 72,989,957

Intangible assets 3,608,877 5,991,019 5,973,548 5,978,747 38,196

Investment property 775,339 756,189 627,573 0

109,806,680 111,684,941 107,321,781 97,697,452 73,028,153

Long term investments 795,511 201,641 174,846 145,802 2,238,400

Long term loan to an
associated company 1,999,333 2,999,000 2,999,000 1,999,333 2,999,000
Long term advances and
deposits 518,424 113,679 81,763 254,820 114,217

3,313,268 3,314,320 3,255,609 2,399,955 5,351,617

Total Non Current Assets 113,119,948 114,999,261 110,577,390 100,097,407 78,379,770

CURRENT ASSETS

Stores and spares 11,565,833 8,273,834 7,713,456 5,833,825 4,745,061

Stock in trade 18,331,781 13,530,945 11,517,911 6,099,971 3,813,626

Trade debts 9,654,308 4,450,476 7,206,970 2,564,524 1,796,351

Short term loans 6,999,723 3,241,723 3,241,723 3,241,723 3,966,888

Advances, deposits,
prepayments and other
receivables 15,635,845 8,675,690 13,813,982 9,030,134 5,626,723

Advance income tax - 1,305,337

Short term investments 2,242,710 2,523,862 530,134 623,273 198,113

Cash and bank balances 7,343,201 555,762 514,739 717,431 809,945

Total Current Assets 71,773,401 42,557,629 44,538,915 28,110,881 20,956,707

Total Assets 184,893,349 157,556,890 155,116,305 128,208,288 99,336,477

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Forecasting
Assumption
Assumptions
Sales growth 25%
Cost to sale ratio constant
Tax rate 40%
Dividend growth 30%

Share outstanding 2,100,000

Cash to sales Ratio constant
Long term finances No change
Lease liabilities No change
Deferred liabilities No change
Deferred government grant No change
Long term deposits No change
Trade and other payables to
sales ratio constant
Income tax payable 0
Accrued finance cost to sales
ratio constant
Short term finances - secured No change
Unpaid dividend 0
Unclaimed dividend No change
- Long term finances No change
- Lease liabilities No change
- Deferred government grant No change

AFN
Long term investment 50%
Shares 50%

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 FATIMA FERTILIZER COMPANY LIMITED
INCOME STATEMENT
Forecasting of 2022
First Pass Second Pass
Calculation ADD

Sales 25% growth 140,610,525 140,610,525

Cost of Sales 62% of sales 87,178,526 87,178,526

Gross Profit 53,432,000 53,432,000

Operating cost 12% of sales 16,873,263 16,873,263

Finance Cost 2,006,559 5,767,516 7,774,075

34,552,178 28,784,661

Other income, profit/loss Constant 732,596 732,596

Profit before tax (EBT) 35,284,774 29,517,257

Taxation 40% of EBT 14,113,909 11,806,903

Profit for the year 21,170,864 17,710,354

Earnings per share - basic and

diluted (Rupees) 10.08 8.4

Number of shares 2,100,000 1,441,879 3,541,879

DPS 30% grow 4.55 4.55

Dividend paid 9,555,000 16,115,550

Retain Earning 11,615,864 1,594,805

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 FATIMA FERTILIZER COMPANY LIMITED
BALANCE SHEET
EQUITY AND LIABILITIES
Forecasting of 2022
Calculation First Pass ADD Second Pass
CAPITAL AND RESERVES

Authorized share capital Constant 27,000,100 1,441,879 28,441,979

Issued, subscribed and paid up share capital Constant 21,000,000 14,418,791 35,418,791

Reserves 90,879,304 1,594,805 80,858,245

Total Equity 111,879,304 116,277,035

LIABILITIES
NON CURRENT LIABILITIES

Long term finances Constant 5,172,276 14,418,791 19,591,067

Lease liabilities Constant 1,437,025 1,437,025

Deferred liabilities Constant 23,522,297 23,522,297

Deferred government grant 0 - -

Long term deposits Constant 175,104 175,104

Total Non-Current Liabilities 30,306,702 44,725,493

CURRENT LIABILITIES

Trade and other payables 34% of sales 47,807,579 47,807,579

Income tax payable 0 - -

Accrued finance cost 0.0027 379,648 379,648

Short term finances - secured Constant 6,465,772 6,465,772

Unpaid dividend 0 - -

Unclaimed dividend Constant 44,951 44,951

Current portion of: -

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- Long term finances Constant 1,892,328 1,892,328

- Lease liabilities Constant 375,273 375,273

- Deferred government grant Constant 61,440 61,440

Total Current Liabilities 57,026,991 57,026,991

Total Liabilities 87,333,693 101,752,483

Total Equity and Liabilities 199,212,997 218,029,519

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 Asset
Forecasting of 2022
Calculation First Pass Second Pass
NON CURRENT ASSETS
Property, plant and equipment 0.94 132,173,894 132,173,894
Intangible assets Constant 3,608,877 3,608,877
Investment property 0.0069 970,213 970,213
136,752,983 136,752,983
-
Long term investments Constant 795,511 795,511
Long term loan to an associated company Constant 1,999,333 1,999,333
Long term advances and deposits Constant 518,424 518,424
3,313,268 3,313,268
Total Non Current Assets 140,066,251 140,066,251

CURRENT ASSETS
Stores and spares 0.10 14,061,053 14,061,053
Stock in trade 0.16 22,497,684 22,497,684
Trade debts 0.09 12,654,947 12,654,947
Short term loans Constant 6,999,723 6,999,723
Advances, deposits, prepayments and
other receivables 0.14 19,685,474 19,685,474
Advance income tax 0 - -
Short term investments Constant 2,242,710 2,242,710
Cash and bank balances 0.07 9,842,737 9,842,737
Total Current Assets 87,984,327 87,984,327

Total Assets 228,050,578 228,050,578

Additional Fund Needed 28,837,581

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 Additional Fund Needed

AFN Ratio Amount Interest Rate/ Share price Interest Amount/ No. of share

Long Term Finance 50% 14,418,791 40% 5,767,516

Shares 50% 14,418,791 Rs 10 each share 1,441,879

Total PKR 28,837581 funded is needed to support the sales growth of 25% in the coming year.
The capital structure assume is
 50% from Long Term Finance
 50% from shares

The 50% of Funds are taken by borrowing long term loan of PRK 14,418,791 on which 40%
interest as to be paid, for one year the interest is PKR 5,767,516/-
Remaining 50% of funds are taken by issuing shares at price Rs 10 per share. The company will
issue 1,441,897 share which will gather the capital of Rs. 14,418,791/- in total.

Conclusion

With the assumption of 25% sales growth, we forecasted sales of 140,610,525 in 2022 1st pass
and 140,610,525 in second pass. The Gross profit increased from year 2021 to 2022 by 10,347,556
which is a good performance sign. Tax rate was assumed to be 40% of EBT in 2022, making profit
for the year in first pass to be 21,170,864 and 17,710,354 in second pass which was higher than
2021. The forecasting done indicates a good performance of company in terms of Profit and Sales.
The liabilities of the company also decreased from 2020 to 2021 but in 2022 the liability has
increased to 101,752,483 in second pass. Total assets in 2022 are 228,050,578 which is greater
than 2021. The additional fund taken is 28,837,581 divided into long term finance and shares
equally.

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