Page Project report 2011 Introduction to the fauji fertilizer company: FFC occupies a special niche in the industrial and agricultural development of the country with a successful track record of excellence business performance. The company moved from one high level of achievement to other establishing records year after year and is now ranked as a top tier player in the fertilizer industry with highest production capacity and market participation. During the year, FFC acquired 100% management control. Of PSFL, a wholly owned subsidiary of NFC, through competitive bidding on payment of RS.8.15 billion to the Privatization commission. With the integration of PSFL, which now stands dissolved and merged with FFC effective july1, 2002, pursuant to a scheme of amalgamation approved by the Honorable High Court of Sindh, the production capacity of our urea manufacturing facilities has more than tripled from 570 thousand tones p.a. in 1982 to almost 2 million tones p.a. in this short span
Transcript
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Introduction to the fauji fertilizer company:
FFC occupies a special niche in the industrial and agricultural development of the country with a
successful track record of excellence business performance. The company moved from one high level
of achievement to other establishing records year after year and is now ranked as a top tier player in the
fertilizer industry with highest production capacity and market participation.
During the year, FFC acquired 100% management control. Of PSFL, a wholly owned subsidiary of
NFC, through competitive bidding on payment of RS.8.15 billion to the Privatization commission.
With the integration of PSFL, which now stands dissolved and merged with FFC effective july1, 2002,
pursuant to a scheme of amalgamation approved by the Honorable High Court of Sindh, the production
capacity of our urea manufacturing facilities has more than tripled from 570 thousand tones p.a. in 1982
to almost 2 million tones p.a. in this short span of less than 25 years of existence. FFC now owns three
mega plants worth over 1 billion dollars in terms of replacement value, besides over 49% stake in
FJFC.
2002 was a difficult year and business conditions were challenging because of the economic fall out of
the recent regional crisis. Uncertain economic and weather conditions, high natural gas prices, global
product oversupply, falling international urea prices and weak domestic demand contributed to an
extremely difficult operation environment during the year which created a downward pressure on prices
and margins.
These adverse factors are continuing since past few years and have created intense competition for the
industry players; however, once again our diversification has paid dividends and strategies
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implemented over the years allowed the company to maintain solid financial foundation throughout this
prolonged downturn.
With a vision to acquire self - sufficiency in fertilizer production in the country, FFC was incorporated
in 1978 as a private limited company. This was a joint venture between Fauji Foundation (a leading
charitable trust in Pakistan) and Haldor Topsoe A/S of Denmark.
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. Additionally, FFC has Rs. 1.0 Billion stakes in the subsidiary
Fauji Fertilizer Bin Qasim Limited (formerly FFC-Jordan Fertilizer Company Limited).
FFC commenced commercial production of urea in 1982 with annual capacity of 570,000 metric tons.
Through De-Bottle Necking (DBN) program, the production capacity of the existing plant increased to
695,000 metric tons per year. Production capacity was enhanced by establishing a second plant in 1993
with annual capacity of 635,000 metric tons of urea. FFC participated as major shareholders in a new
DAP/Urea manufacturing complex with participation of major international/national institutions. The
new company Fauji Fertilizer Bin Qasim Limited (formerly FFC-Jordan Fertilizer Company Limited)
commenced commercial production with effect from January 01, 2000. The facility is designed to
produce 551,000 metric tons of urea and 445,500 metric tons of DAP. 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
privatization process of the Government of Pakistan. This acquisition at Rs. 8,151 million represents
one of the largest industrial sector transactions in Pakistan
Recently Fauji Fertilizers Company offered the highest bid of Rs 8.151 billion for the Pak-Saudi
Fertilizers Limited here on Saturday. Second highest bidder was the Dawood Hercules that offered Rs
3.78 billion while the lowest bid of Rs 3.602 billion was received from Engro Chemicals. In simple
words Fauji Fertilizers Company offered Rs 4.50 billion rupees more than
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Engro and Rs 4.371 billion more than Dawood Hercules in bidding for Pak-Saudi Company. Sealed
bids for the privatization of Pak-Saudi Fertilizer Company were opened by journalists on the request of
Privatization Minister in the presence of bidders, senior government officials and private sector
representatives. Three companies, Fauji Fertilizers, Engro Chemical and Dawood Hercules filed bids
for the said company. Fauji Fertilizers offered Rs 135.85 for each share of the Pak-Saudi Company,
Dawood Hercules offered Rs 70 per share, while Engro Chemical offered Rs 66.70 for a share. Seeing a
far high difference in the price offered by Fauji Fertilizers, the other two bidders did not take interest in
contesting privatization of the said company and wished a good luck for FFC.
Nature of the Business:
The company is a public company incorporated in Pakistan under the Companies Act, 1913, (now the
Companies Ordinance, 1984 and its shares are quoted on the stock exchanges in Pakistan. The principal
activity of the company is manufacturing, purchasing and marketing of fertilizer, including investment
in other fertilizer manufacturing operations. Now FFC is proposed for steel sector also. FFC is in the
progress of setting up a Wind Power Project with an estimated investment of US $ 130 Million at
Jhimpir Distt. Thatta, Sindh with an installed capacity of 50 Mega Watts for onward supply to national
Transmission & Dispatch Company (NTDC).
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Fauji fertilizer company history:
During the mid 70's the Government of Pakistan expressed the desire that Fauji Foundation should look
into the possibility of establishing a urea manufacturing plant to fill the projected gap in demand and
indigenous production. The shortfall was being met through imports at a high cost in foreign exchange.
The project was sanctioned by the Government of Pakistan on 17th December, 1977.
FFC was incorporated on May 8, 1978.
Based Unit at Goth Machhi commenced commercial production in June 1982 with annual designed
capacity of 570 thousand tones urea.
Based Unit up-graded in April 1992 to produce 695 thousand tones annually.
Expansion Unit at Goth Machhi commenced commercial production in March 1993 with designed
capacity of 635 thousand Tonnes.
FJFC founded in November 1993 with initial contribution of Rs. 1 billion. The company’s investment
in FJFC now stands at over RS 4 billion.
PSFL acquired on May 31,202 and merged with FFC on July 1, 2002. Situated at Mirpur Mathelo the
plant has annual designed production capacity of 574 thousand tones.
The aggregate designed production capacity of FFC is three plants now stand at almost 2 million
tones annually.
Since inception to 2002, FFC has produced and marketed 21million tones of urea. In terms of import
substitution this has resulted in national savings of well over 3 billion dollars in foreign exchange.
Since inception the company has sold/marketed almost 28 million tones of fertilizers.
FFC is the only company providing Mobile Farm Extension Services at the farmers, door-step since
1986.
FFC was the first company in fertilizer Sector to achieve in 2002 the highest ever.
FFC was the first company in Fertilizer sector to achieve ISO 9002 certification in 1997.
FFC has been placed amongst the list of top 25 companies of PAKISAN BY KSE for eight years
consecutively, topping the list in 1997.
21.5 million Man-hours of operation without injury were achieved in 2003, the highest ever.
The company’s annual Reports have been adjudged as one of the best reports in the Chemical sector
twice by joint committee of ICAP/ICMAP.
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Brand name
The Company annually produces 2.05 million metric tons of
urea, marketed under the brand name of “Sona Urea”.
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\Products
Product Lines
FFC PRODUCTS
SONA UREA (Prilled)
IMPORTED UREA FFC
UREA FINES
DAP – FFC
SOP
TSP (Triple Super Phosphate)– FFC
SONA BORON (BORAX)
FFBL PRODUCTS (Marketed By FFC)
SONA UREA (Granular)
IMPORTED UREA FFBL
SONA DAP
Objective of the company:
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The broad objectives of the company are:
To play a vital role in agricultural development of the country.
To provide the quality products.
To be environment-friendly organization.
To sustain its role as market leader in urea production and marketing.
To deliver exclusive values and services to the shareholders and customers through its strategies.
To place great value on social responsibilities and welfare.
To develop a culture based on principles of honesty, integrity, fairness and respect.
To create the agricultural awareness in farmers through media and training.
To provide farmers technical services through technical services department free of cost.
To hire and retain satisfied workforce.
To set high standards for production and sale and achieve these objectives.
To promote education in the farmers community by awarding merit scholarships.
To help upgrade the capability of fertilizer research, extension and marketing personnel in the transfer
of fertilizer technology.
To provide a neutral common platform to resolve contentious issues in fertilizer sector.
ISO-9002 Certification:
Another major landmark for Fauji Fertilizer Company is ISO-9002 certification for its manufacturing
division 1st Goth Machhi. Quality in all areas has been a hallmark of the Company right from the
beginning and our product “SONA UREA” has already established its rightful place in the market.
Therefore to bring their system in line with internationally recognized quality standards, they decided to
go for ISO-9002 certification. To achieve a total quality management system, FFC surpassed the
requirement of ISO-9002 standards by including all support services like Admission, personnel,
Finance Hospital, Schools and Management Club etc. also in the certification scope. They selected
Bureau of VERITAS quality international (BVQI), England, a leading certification agency as our
registrar. BVQI is honored by various accreditation authorities of the world. Quality management
system of FFC got ISO certified in its first attempt during November 1997 with the honor of being the
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1st Fertilizer Plant in Pakistan. Since then they have not looked back. They have passed all surveillance
audits with commendable remarks from their registrar.
Since 21 February, 2001 Quality Management system of FFC now stands recertified (ISO 9002) by
BVQI after successful completion of initial certification period of 3 year
SAFTY AWARDS
The effectiveness of the safety program is reflected by the various awards won from National Safety
Council (USA) since 1982. The company has received 15 awards of honor.
Two special safety awards on outstanding performance were given to FFC in 1989 / 1993 by the
council for constantly achieving outstanding performance in the field of safety. FFC also has the honor
of achieving all time best 16.49 Million man-hours without lost time injury as of 31 December 2001,
which is the all time best.
ISO Certifications
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Sr. No Certification Name Brief Description of Certifications
1 ISO-9001:2008 Quality Management System
2 ISO 14001:2004 Environmental Management System
3
OHSAS 18001:2007
Occupational Health & Safety Assessment Series
QUALITY POLICY:
Fauji Fertilizer Company Limited is committed to attaining excellence in all areas of its operations.
They continue to strive for improvement through coordinated efforts, feedback, and training and
employee motivation. They are determined to ensure customer satisfaction, Company’s productivity &
profitability, occupational health, safety and care for their environment and continue playing their role
in the industrial and agricultural development of Pakistan
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SAFETY AND HEALTH POLICY:
At FFC, we are committed to maintain a safe and healthy environment having the same significance as
productivity. They inculcate safety culture by specific training, incentives, and effective control, to
ensure a safe and healthy working environment. They resolve to attain the highest standards of safety
and health through consistent improvements in on-the-job and off-the-job safety and in the working
conditions.
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Environment policy
Fauji Fertilizer Company Limited is committed to achieve environmental protection through
compliance with all the applicable laws and regulations. An active pollution prevention program is
followed with efforts for continual improvement in the environmental aspects related to plant
operations.
BOARF OF DIRECTORS
DIRECTORS NOMINATED BY
Dr. Haldor Topsoe Fauji Foundation
Mr. Qaiser Javed Fauji Foundation
Mr. Tariq Iqbal Khan National Investment Trust (NIT)
Dr. Nadeem Inayat Fauji Foundation
Mr. Istaqbal Mehdi Pak Kuwait Investment Company
Brig. Arif Rasul Qureshi (Retired) Fauji Foundation
Maj. Gen Muhammad Tahir(Retired) Fauji Foundation
Brig. Rahat Khan (Retired) Fauji Foundation
Mr. Shahid Aziz Siddiqui State Life Insurance
Mr. Shahid Anwar Khan National Bank of Pakistan
Mr. Khizar Hayat Khan Government of Pakistan
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CHAIRMAN
Lt. Gen. Hamid Rab Nawaz, HI (M) (Retired)
CHIEFEXECUTIVE AND MANAGING DIRECTOR
Lt. Gen. Malik Arif Hayat, HI(M) (Retired)
CHIEF FINANCIAL OFFICER
Syed Shahid Husain
COMPANY’s SECRETARY
Brig. Khalid Kibriya (Retired)
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FFC ORGANIZATIONAL CHART
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Departments
HUMAN RESOURCE DEPARTMENT
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The FFC Management, acknowledging the importance of human resources has always placed
personnel management at the top of its priority list. The Human Resources Department, therefore, right
from the inception of the Company has played a vital role in steering the Company through all its
phases, operations and progress.
The functions of Human Resources Department vis-à-vis personnel management and human
resources development are going side by side and it is due to the progressive approach and dynamic
philosophy of the management that Personnel Management remains abreast with the latest style of
management ensuring high level of motivation and satisfaction of the work force under varied
situations. Personnel policies are kept updated and are periodically modified to respond to the latest
socio-economic changes and market trends of the country.
Hiring quality manpower, keeping them happy, satisfied and motivated are the pillars of the
Human Resources Department; justice, fair play and merit oriented treatment are some of the
ingredients of processing cases by the Human Resources Department.
For Human Resource development, another aspect which receives its due share is training.
The employees are exposed to various kinds of cross training, technical courses, management courses,
workshops and seminars both at home and abroad. At Plant site, the Company has a Technical Training
Centre, which is unique, and the only centre in Asia having a true replica of the Plant for providing
realistic training as far as possible, to the employees.
Employees' welfare has all along received due consideration by the Management. A number of
agreements have been signed with CBA Workers Union, resulting in handsome remuneration packages
to employees. The company, since its inception, has undertaken five salary revisions for Management
employees, to remain amongst the top paying organizations of the country. It is due to the sheer
sincerity, welfare oriented policies and concern for every single employee that there has never been any
strike, lock out or go slow in FFC.
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FINANCE DEPARTMENT
Marketing division has its own Finance department which deals with the financial matters of all
concerned departments of the divisions as well as all the zonal, regional and area offices. All the 5 farm
advisory centers are also in contact with it. It approves all the budgets and expenses and is monitored
by the General Manager Marketing. It follows the financial strategies made by the Head office but the
price is set in the marketing division. All the data is compiled, analyzed and sent to the head office on
daily basis. This department is headed by the General Manager (Finance) of marketing division.
There are two segment of the finance department which is given as follows:
1. General Accounting
2. Sales Accounting
General Accounting
Headed by the Senior Executive (General Accounting), It handles all general record keeping
responsibilities of marketing division from distribution of salaries to disbursement of medical bills. It
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also handles responsibility of maintaining necessary funds and transferring excess funds to head office.
T he following activities are performed by the general accounting section:
1. Payroll of permanent and temporary staff employees
2. Deduction of income tax from payroll and deposition in govt. treasury.
3. Forwarding detailed of provident fund contribution of permanent employees to head office.
4. Reimbursement of regional imprested/distribution imprested.
5. Forwarding of L/C opening request to head office for import of fertilizer.
6. Processing of export related documents.
7. Deduction of income tax from various supplies and deposit into government treasury.
8. Maintenance of books of account including fixed assets ,supplies , employees etc
9. Payment of telephone , electricity and medical bill
10. Payment in respect of bags and line for imported fertilizers
11. Clearing and forwarding charges in respect of import of fertilizer
12. Payments
13. Documentation
14. Financial reporting
15. Travel expenses
16. Bank reconciliation
17. Different schedules
18. Preparation of Annual Business Plan (ABP)
19. Imports and exports
20. Coordination with internal and external audit.
Sales Accounting
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It is the most important function of finance department. It maintains dealer’s accounts and record all
sales made. It tracks all activities right from customer order to making of an invoice and delivery to the
customer
The following activities are performed by the sales accounting section:
21. Processing of bank Guarantees for secured credit sales
22. Monitoring of unsecured credit sales to fauji sugar mills/forms
23. Preparation of pricing and discount structure for various fertilizers
24. Receiving data from plants for warehouse shipment
25. Recording of stock movement reports
26. Overall reconciliation of stock movement with intimation of head office
27. Follow up receivables for sale through rail
28. Recording of stocks receives from FFBL for sale on their behalf
29. Sending the information regarding dealers balance to field force for recovery of receivables
on various accounts .
Manufacturing Department:
The largest urea manufacturing facility of Pakistan consisting of two ammonia/urea units owned by
FFC, is built at Goth Machhi in district Rahim Yar Khan.Goth Machhi is situated at a distance of 2 kms
from the main Lahore-Karachi highway and is adjacent to the main railway line.
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 plants have demonstrated an operational excellence which has become a reference
for the engineering companies whose process technologies are used here. Delegations from China,
Middle East and Far East keep visiting the plant site for gaining first hand knowledge before deciding
to purchase a new plant.
Engineering:
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After the successful start-up of the first plant in mid 1982, a group of selected engineers was assigned
to Technology Division-TD (then called CED) Head Office with the objective of providing engineering
and technical backup to the plant operations.
Additional responsibilities that are assigned to TD, include monitoring plant performance, development
of new projects, handling capital investment projects, advising management on technical matters and
development of a technological base along with consultancy functions.
Since 1982, TD has made tremendous progress in the field of Plant Engineering, Project Management,
Project Feasibilities and Project Development.
The development of TD was equally supported by the FFC management which has recognized the need
to promote research and technological development activities.
TD is manned by a team of highly trained project engineers, process engineers and IT specialists.
Nearly half of the strength is located at the plant to provide on-the-spot assistance to the manufacturing
units besides feeding vital plant data to the Head Office for immediate processing.
TD is equipped with latest computing facilities along with engineering software from world famous
engineering designer M/s Haldor Topsoe of Denmark and other technical software purchased from the
engineering companies as well as in-house developed software related to engineering and other general
purpose need of the company. This technology enables TD to undertake detailed process/engineering
design related assignments and to provide most valuable assistance to other departments within the
company.
TD most significant contributions to date have been successful project management of FFC Project 1
debottlenecking, FFC Plant Expansion Project 2 and the Fauji Fertilizer Bin Qasim (formerly FJFC)
Project. TD's role in all projects starts from the conceptual stage and concludes at the successful
commissioning and handing over of the project to the Operation Group. The success achieved so far by
TD proves that FFC now possesses requisite in-house capabilities to ensure successful completion of
large scale projects within allocated budgets and assigned project schedules.
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Fauji Fertilizer Company Limited
BALANCE SHEET
AS ON DECEMBER 31
L I A B I L I T I E S &
E Q U I T Y 2,006 2,007 2,008 2,009 2,010
Share Capital 4,934,742 4,934,742 4,934,742 6,785,271 6,785,271
Capital Reserve 160,000 160,000 160,000 160,000 160,000
