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Fauji Fertilizer Company Limited

Ansaria Jamshan (62)Hira Ramzan (67)Amir Ramzan (31)Khurram Altaf (120)Subhan Khan (25)

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Group Members

Agenda

• Purpose • Companies’ Background • Trend Analysis• Ratio Analysis• Conclusion

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Purpose

FFCL vs. Engro The purpose of our project is to perform financial analysis of Fauji Fertilizer Company Limited and compare its financial growth with Engro Chemical Pakistan Limited.Proposed Company: Fauji Fertilizer Company LimitedCompetitor: Engro Chemical Pakistan Limited

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Fauji Fertilizer Limited Company

With a vision to acquire self - sufficiency in fertilizer production in the country, FFC was incorporated in 1978 as a private limited company.

• The initial authorized capital of the company was 813.9 Million Rupees.•The present share capital of the company stands at Rs. 3.0 Billion. •FFC commenced commercial production of urea in 1982 with annual capacity of 570,000 metric tons.•Production capacity was enhanced by establishing a second plant in 1993 with annual capacity of 635,000 metric tons of urea.

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• This excellent performance was due to hard work and dedication of all employees and the progressive approach and support from the top management.• In the year 2002, FFC acquired ex Pak Saudi Fertilizers Limited (PSFL) Urea Plant situated at Mirpur Mathelo, District Ghotki from National Fertilizer Corporation (NFC) through privatisation process of the Government of Pakistan.• This acquisition at Rs. 8,151 million represents one of the largest industrial sector transactions in Pakistan

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Fauji Fertilizer Limited Company (Contd.)

Mission Statement

FFC is committed to play its leading role in industrial and agricultural advancement in Pakistan by providing quality fertilizers and allied services to its customers and given the passion to excel, take on fresh challenges, set new goals and take initiatives for development of profitable business ventures

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Engro Chemical Pakistan Limited

• The proposal was approved by the government in 1964• Subsequently in 1965, the Esso Pakistan Fertilizer Company Limited was incorporated, with 75% of the shares owned by Esso and 25% by the general public. • A full-fledged marketing organization was established which undertook agronomic programs to educate the farmers of Pakistan.• As the nation’s first fertilizer brand, Engro (then Esso) helped modernize traditional farming practices to boost farm yields, directly impacting the quality of life not only for farmers and their families, but for the community at large. • As a result of these efforts, consumption of fertilizers increased in Pakistan, paving the way for the Company’s branded urea called "Engro", an acronym for "Energy for Growth 8

Vision Statement

“ To be the premiere Pakistani enterprise with a global research, passionately pursuing value creation for all stakeholders.”

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Trend Analysis

Fauji Fertilizer Company LimitedFor Years 2007-2008

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Trend AnalysisTrend analysis ‘Income Statement’:Net Sales

Cost of Sales

Gross Profit

2006 2007 2008 06 vs. 07 %age 07 vs. 08 %age

29951 28429 30593 (1522) (5.08) 2164 7.612

2006 2007 2008 06 vs. 07 %age 07 vs. 08 %age

20242 18312 18235 (1930) (9.54) (77) (0.42)

2006 2007 2008 06 vs. 07 %age 07 vs. 08 %age

9709 10117 12358 408 4.21 2241 22.15

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Trend Analysis

Expenses

Net Income

2006 2007 2008 06 vs. 07 %age 07 vs. 08 %age

3984 3968 4260 (16) (0.04) 292 7.36

2006 2007 2008 06 vs. 07 %age 07 vs. 08 %age

6985 7815 10041 830 11.88 2226 20.48

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Trend Analysis-Graph

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Trend Analysis Trend Analysis ‘Balance Sheet’Plant & Equipment

Long Term Investments

Long Term Loans & Advances

2006 2007 2008 06 vs. 07 %age 07 vs. 08 %age

9608 10390 12731 782 8.1 2341 22.53

2006 2007 2008 06 vs. 07 %age 07 vs. 08 %age

6409 6325 7745 (84) (1.31) 1420 22.45

2006 2007 2008 06 vs. 07 %age 07 vs. 08 %age

77 143 163 66 85.43 20 14.23

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Trend Analysis-Graph

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Trend Analysis Revenue Reserve

Non Current Liabilities

Current Liabilities

2006 2007 2008 06 vs. 07 %age 07 vs. 08 %age

7862 7635 7190 (227) (2.88) (445) (3.49)

2006 2007 2008 06 vs. 07 %age 07 vs. 08 %age

1194 2671 5378 1477 123.72 2707 101.34

2006 2007 2008 06 vs. 07 %age 07 vs. 08 %age

10884 11476 11824 592 5.44 348 3.03

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Trend Analysis -Graph

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Component AnalysisComponent analysis ‘Income Statement’

Year 2008

Net Sales =30593Cost of Sales % = 59.6Gross Profit % = 40.4Expenses % = 13.92Other incomes % = 6.35Net Income % = 32.82

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Component Analysis

Component analysis ‘Income Statement’ Year 2007

Net Sales =28429Cost of Sales % = 64.41Gross Profit % = 35.59Expenses % = 13.93Other incomes % = 5.86Net Income % = 27.49

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Component Analysis

Component analysis ‘Income Statement’ Year 2007

Net Sales =28429Cost of Sales % = 64.41Gross Profit % = 35.59Expenses % = 13.93Other incomes % = 5.86Net Income % = 27.49

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Component Analysis-Graph

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Component Analysis Year 2008Total Assets=31919Property & plant equipment % = 39.88Long Term Investment % = 24.26Current assets % = 30.42

Year 2007Total Assets=29241Property & plant equipment % = 35.53Long Term Investment % = 21.63Current assets % = 36.97

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Component Analysis-Graph

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Component Analysis Year 2008Total Capital & Liabilities=31919Revenue Reserve % = 22.53Non Current Liabilities % = 16.85Current Liabilities % = 37.04

Year 2007Total Capital & Liabilities=11476Revenue Reserve % = 26.11Non Current Liabilities % = 9.14Current Liabilities % = 39.25

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Component Analysis-Graph

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Ratio Analysis

FFCL Vs. EngroComparison has been done for

year 2007

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Ratio Analysis Table

Ratio FFCL EngroCurrent Ratio 0.942 2.97Quick Ratio 0.68 2.32Working Capital -664,958 10,420,660Receivable Turnover Rates 18.42 14.78Inventory Turnover Rates 6 5.322Debt Ratio 0.56 0.59Gross Profit Ratio 35.59 21.22Net Profit Ratio 18.86 13.6Earnings per Share 10.86 16.50627

Ratio Analysis Graph

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Ratio Analysis-Conclusion

Current Ratio:FFCL: 0.942Engro: 2.97

Quick Ratio:FFCL: 0.68Engro: 2.32

We can very well see that the short-term debt paying ability of FFCL is very low as compared to Engro, which is not a good sign. They neither enough current assets nor enough quick assets.

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Ratio Analysis-ConclusionWorking Capital:

FFCL: -664,958 Engro: 10,420,660

The working capital of FFCL is negative which means that they have more total liabilities than total assets, which is again not a good sign.

Receivable Turnover Rate:FFCL: 18.42 Engro: 14.78

This ratio indicates that how often receivables are collected; in this case FFCL’s performance is better as they collect it around 18 times in a year as compared to around 15 times of Engro.

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Ratio Analysis-Conclusion

Inventory Turnover Rates:FFCL: 6 Engro: 5.322

This ratio tells that how quickly inventory sells. In this case again FFCL is doing a bit better than Engro.

Debt Ratio:FFCL: 0.56 Engro: 0.59

This ratio tells the amount of assets financed by the creditors. Both companies have almost the same ratio.

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Ratio Analysis-ConclusionGross Profit Rate:

FFCL: 35.59 Engro: 21.22

This ratio tells the profitability of company’s products. So as we can see that the above ratios clearly tell that FFCL is getting more profit than Engro.

Net Profit Ratio:FFCL: 18.86 Engro: 13.6

This ratio tells about management’s ability to control costs. So here FFCL is again higher than Engro, which means they have a better control over the costs of products.

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Ratio Analysis-Conclusion

Earnings per Share:FFCL: 10.86 Engro: 16.506

This term tells the net income applicable to each share of common stock. So here Engro is giving better income per share than FFCL.

Return on Assets:FFCL: 0.183 Engro: 0.082118

It measures the productivity of assets; regardless that how they are produced. In this matter FFCL is doing quiet better than Engro.

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Ratio Analysis-Conclusion

Return on Equity:FFCL: 0.421 Engro: 0.2

This tells the rate of net income earned on the stockholder’s equity in the business. In this case FFCL is doing quiet better than Engro.

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Conclusion

From Ratio Analysis, we have concluded that profitability of Fauji Fertilizer Company is better as compared to Engro Chemical Pakistan limited.

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Thank You!

Questions………!

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