Report

Analysis of Financial statement

Fauji Fertilizer & Engro Fertilizer
Submitted To:

Maam, Qurat-Ul-Ain Beenish

Submitted By:

Adnan Athar
(MB-13-45)
Shahid Hussain (MB-13-17)
Saddam Hussain (MB-13-67)
Arslan Saeed
(MB-13-44)

Institute of Management Sciences

INTRODUCTION
Page 1

Pakistan is an agricultural country, where agriculture is not only feeding a huge and even
increasing population but also is a backbone of Pakistan economy contributing about
23% to national economy. However, most of the agricultural practices are conventional
with less use of technology due to small land holdings, unawareness, and limited
resources of farmers. Imbalanced use of fertilizers is among major issues of Pakistan
agriculture decreasing crops yields and profit margin for famers. Awareness about the use
of nitrogen and phosphorus is enough and farmers are using according to their economic
resources, although not according to crop demand and soil analysis. Deficiency of
micronutrients such as zinc (Zn) and boron (B) has also been observed in different crops.
In aerobic rice cultivation B deficiency has been reported and application of B in these
conditions has decreased the sterility of rice panicles. Furthermore, micronutrient
deficiency in human diets has also emphasized the application of micronutrients for
biofortification of staple crops with special consideration for Zn and iron (Fe). Use of
micronutrients such as Zn and B have also been observed for selected crops since last
decade, but the use of potassium (K) is still neglected, although K is macronutrient and
more than 40% soils are considered K deficient.
Potassium is crucial for three important functions: enzyme activation, charge balance and
osmotic regulation in the higher plants. Potassium is the most abundant macronutrient in
most Pakistani soils. But the presence of a huge amount of K in the soil does not fulfill
plants requirements because a large amount of the K is fixed by clay minerals present in
these soils and is not available to achieve optimum plant growth. Inadequate K
fertilization is among the factors responsible for crop yield gaps in many parts of the
world, especially in developing countries. Potassium sorption on exchange sites and its
fixation depend on the physicochemical properties of the soil, as well as the type and
content of the clay minerals.
The major natural source of soil K is the weathering of K-containing minerals such as
micas and alkali feldspars, which contain 6-9 and 3.5-12% K, respectively. The age of
soil developed from such minerals determines the extent of weathering as well as the K
dynamics. While taking up K, plants reduce its concentration in the immediate vicinity of
roots, which releases K-ions from the minerals. High yielding crop genotypes and
Page 2

intensive use of agricultural land decreased the available K contents in the soil as
compared early eightys, because addition of K fertilizer to soils was negligible whereas
the removal was more which is very dangerous for sustainable agriculture in Pakistan.
Continuity of this negligence will lead to high input agriculture farming which will be
very tough to pursue due to poor resource farmers having small land holdings.
Comparing other important macronutrients N and P, K has different behavior in soil. N
and P are not majorly achieved from clay minerals rather external sources are utilized to
feed the plants in fields. Therefore, it is more critical for K to formulate correct K
fertilizer recommendations and get response from crops.

Use of Fertilizers in Pakistan:

After the green revolution of the 1960s, chemical fertilizer use was promoted in Pakistan,
as in many other parts of the world particularly in developing countries. Beginning with
the use of nitrogenous (N) fertilizer, phosphatic (P) fertilizer was introduced later in
1970s, with amounts increasing over time. Nitrogenous fertilizer use was significantly
higher due to better, quicker and more cost-effective crop responses at that time. A slow
and steady increase in P fertilizer use continued, up until the last few years (Fig. 1).
However, application of potash (K) has been discouragingly low in most of the crops
except potato where potash has been used for yield and quality produce. Imbalance
fertilization, especially macronutrients (NPK), is not only deteriorating natural resources
but also results in low economic returns.
Therefore it is of great importance to work on multiple fronts to promote the K
fertilization in Pakistan keeping in view all the aspects responsible for low K use in
Pakistan. Among others, poor farmers awareness contributes significantly to low K use
in Pakistan. To
Sometimes uses of K fertilizers do not give huge increase in crops yields; however role of
potassium in improving produce quality may increase the export potential of agricultural
commodities. Furthermore K effect under environmental stresses must be highlighted to
all the stakeholders including policy makers. Therefore there is a great need to aware the

Page 3

farmers, extension workers and policy makers about the significance of K fertilizers use
for food security future generations and quality produce combating the environmental
issues.
Precise recommendation of K is also required to attract the famers towards more
profitable agriculture. The release of K converts micas to secondary 2:1 clay minerals illite and then vermiculite. In such soils not only plant available K contents are reduced,
but applied K fertilizers are also more prone to be fixed by soil minerals and become
slowly available for plants. The fate of K fertilizer also depends on the age of the soil;
application of K fertilizer to soils containing illite and vermiculite clay minerals leads to
fixation of some of its fraction by soil particles. The fixed K may become available to
plants by its release from soil particles into soil solution when the concentration of K in
the soil falls, but in most cases this release is too slow to meet the plant-growth
requirements.

1. FAUJI FERTILIZER CORPORATION:

Fauji Fertilizer Company has been providing agricultural advisory services to the farming
community throughout Pakistan since 1981, to increase the agriculture production in
general and the farmers economic returns in particular. The organization in pursuit of its
national commitment and moral obligation maintains regular contact with farmers and
agricultural institutions to ensure constant and efficient transfer of latest technology. This
department is headed by senior manager (Agri Services). The department is providing
quality farm advisory services all over the country through its five farm advisory centers
and 14 regional offices. Each farm advisory centre has a team of four agricultural experts,
providing diverse advisory services through seminars, demonstration plots, field days,
farmer meetings, blitz meetings and farm visits. All the centers are fully equipped with
modern sophisticated computerized soil & water testing laboratories and high-tech
extension equipment.
Moreover, these also have plant tissue analysis laboratory at farm advisory centre,
Shahkot having Atomic Absorption Spectrophotometer and other analytical instruments

Page 4

to determine the macro and micronutrients concentrations in plants. Soil Testing is a

valuable tool to propagate appropriate and balanced use of chemical fertilizers and to
identify soil problems. Soil/water samples are collected from farmers fields and analyzed
in the laboratories. Fertilizer recommendations are developed on the basis of soil analysis
and recommendation reports are delivered to the growers for proper and balanced
fertilizer use. The soil and water testing and micronutrient analysis facility is offered free
of cost. Besides these five farm advisory centers, there are seventeen agri services
officers based at 14 regional offices working under this department spread all over the
country extending these services in their respective areas.
To further strengthen the advisory services and facilitate our farmers, the department also
publishes literature including crop, vegetable and orchard brochures, posters and
pamphlets containing latest information regarding production technologies of crops, and
orchards grown in Pakistan.

Farm Advisory Centers:

Fauji Fertilizer Company (FFC) is providing free of cost farm advisory services. There
are a total of 5 farm advisory Centre which are as follows;

FAC-Shahkot
FAC-Bahawalnagar
FAC-Mandi Bahaudin
FAC-Muzaffargarh
FAC-Sukkar

In conclusion FFC is very clear that farmers advisory services are very critical to improve
their economic returns, therefore a comprehensive advisory system is working in a much
disciplined way.

Page 5

VISION:
To be a leading national enterprise with global aspirations, effectively pursuing multiple
growth opportunities, maximizing returns to the stakeholders, remaining socially and
ethically responsible.

MISSION:
To provide our customers with premium quality products in a safe, reliable, efficient and
environmentally sound manner, deliver exceptional services and customer support,
maximizing

returns to the shareholders through core business and diversification,

providing a dynamic and challenging environment for our employees.

PRODUCT PORTFOLIO:
Urea Fertilizer FFC & FFBL:
Used in grain and cotton crops, at the time of last cultivation before planting. In irrigated
crops, urea can be applied dry to the soil. During summer, it is often spread just before rain to
minimize losses from vitalization process. Urea produced by FFBL is in Granular form,
being the only of its kind in Pakistan. Industrial Use Raw material in manufacture of plastics,
adhesives and industrial feedstock.
DAP Fertilizer FFC & FFBL:
Sona DAP is the most concentrated phosphatic fertilizer containing 46% P2O5 and 18%
Nitrogen. The solubility of DAP is more than 95%, which is highest among the
phosphatic fertilizers available in the country. Further, on account of its nitrogen content,
it temporarily increases the soil pH. Industrial Use Fire retardant used in commercial
firefighting products. Other uses are as metal finisher, yeast nutrient, nicotine enhancer in
cigarettes and sugar purifier.

Page 6

SOP Fertilizer FFC:

SOP is an important source of Potash, a quality nutrient for production of crops especially
fruits and vegetables. FFC SOP contains 50% K2O in addition to 18% sulphur, which is
an important nutrient especially for oil seed crops with an ameliorating effect on saltaffected soils. Potash is an important nutrient for activation of enzymes in the plant body
and helps increase sugar and starch contents in cultivation.
Potash improves the resistance of plants against pests, diseases and stresses like water /
frost injury etc.
Renewable Energy FFCEL:
The company has been incorporated to operate a 49.5 MW wind power generation
facility and its onward supply to Pakistans National Grid (NTDC).
Financial Services AKBL:
Operating through a network of 321 full service / sub branches with a Wholesale Bank
Branch in the Kingdom of Bahrain AKBL offers a wide range of banking activities
including commercial & corporate lending, trade businesses, Islamic, consumer,
agriculture & investment banking, equity trading and treasury operations. The Bank is
also engaged in the business of mutual funds and share brokerage, investment advisory
and related services through its subsidiary companies, Askari Investment Management
Limited and Askari Securities Limited.
The Bank also offers branchless banking service under the brand name Timepey. A
wide network of Timepey shops across Pakistan are fully equipped to handle day to day
needs of the customers including; money transfer, bill payment and mobile top-up etc.
Frozen Fruits & Vegetables FFF (formerly Al-Hamd Foods Limited):

Page 7

Construction work on the Individually Quick Freeze (IQF) Plant of Fauji Fresh n Freeze,
is progressing as per plan with scheduled inauguration during 2015.

SUMMERY (FFC)
BALANCE SHEET as at December 31, 2014
Rupees(000)
EQUITY AND LIABILITIES

2014

2013

2012

2011

2010

EQUITY:
Share capital

12,722,38

12,722,382

12,722,382

8,481,588

6,785,271

Capital reserves
Revenue reserves

2
160,000
12,483,58

160,000
12,258,373

160,000
12,877,129

160,000
14,029,206

973,083
9,522,587

Surplus on re-measurement of

5
303,564

10,508

7,695

10,258

25,669,53

25,151,263

25,767,206

22,681,052

17,280,941

2,500,000
4,574,028
7,074,028

4,280,000
4,078,369
8,358,369

3,870,000
3,915,259
7,785,259

2,703,750
3,623,060
6,326,810

7,708,608
7,671,871
15,380,479

CURRENT LIABILITIES
Trade and other payables

37,904,43

21,854,125

16,125,589

12,329,68

17,481,446

Interest and mark-up accrued

Short term borrowings
Current portion of long term

4
30,117
11,602,443
1,780,000

22,098
7,000,000
1,460,000

24,921
4,990,000
1,433,750

79,826
8,735,650
1,615,655

294,063
11,293,144
1,967,877

2,501,109
53,818,10

3,983,215
34,319,438

4,542,926
27,117,186

3,762,236
26,523,054

648,201
3,663,165

TOTAL EQUITY AND

3
86,561,66

67,829,070

60,669,651

55,530,916

74,016,862

LIABILITIES

investments available for sale to

fair value
1
NON - CURRENT LIABILITIES
Long term borrowings
Deferred liabilities

borrowings
Taxation

Page 8

Asset:
NON - CURRENT ASSETS:
Property, plant and equipment
Intangible assets
Long term investments
Long term loans and advances
Long term deposits and

20,093,898
1,611,204
28,134,520
823,188
15,624

18,444,188
1,651,592
20,662,532
740,408
2,654

17,818,755
1,678,639
9,511,865
700,786
5,111

17,050,951
1,569,234
8,659,073
605,883
9,370

30,971,029
1,569,234
5,503,123
455,328
97,351

50,678,434

41,501,374

29,715,156

27,894,511

38,288,132

3,314,823
981,750
822,460
1,058,754
26,376
1,072,461
27,432,837
1,173,767
35,883,228

3,244,645
301,957
700,541
921,460
37,225
799,922
18,960,295
1,361,651
26,327,696

3,098,938
442,139
3,611,476
677,977
35,670
588,667
18,750,996
3,748,632
30,954,495

2,447,452
636,923
86,669
431,582
53,852
891,673
21,794,480
1,293,774
27,636,405

4,235,495
1,482,387
1,187,941
557,575
64,170
856,429
13,270,581
14,074,152
35,728,730

86,561,662

67,829,070

60,669,651

55,530,916

74,016,862

prepayments
CURRENT ASSETS :
Stores, spares and loose tools
Stock in trade
Trade debts
Loans and advances
Deposits and prepayments
Other receivables
Short term investments
Cash and bank balances

TOTAL ASSETS

Page 9

FFC
PROFIT AND LOSS ACCOUNT
for the year ended December 31, 2014
Rupees(000)
Sales
Cost of sales
GROSS PROFIT
Distribution cost
Finance cost
Other expenses
Other income
Share in profit of equity
accounted investments
NET PROFIT BEFORE
TAXATION
Provision for taxation
NET PROFIT AFTER
TAXATION
Earnings per share

2014
81,240,187
50,136,749
31,103,438
6,431,667
24,671,771
848,940
2,302,937
21,519,894
4,720,866

2013
74,480,611
39,948,572
34,532,039
6,167,280
28,364,759
756,215
2,557,937
25,050,607
4,367,941

2012
122,251,581
74,774,403
47,477,178
9,224,547
38,252,631
2,691,660
3,251,369
32,309,602
2,429,728
71,576

2011
111,111,913
56,625,023
54,486,890
7,731,516
46,755,374
1,824,471
3,831,447
41,099,456
3,228,875
409,077

2010
88,154,698
55,103,948
33,050,750
7,286,329
25,764,421
2,001,355
2,086,563
21,676,503
1,635,389
193,430

26,240,760

29,418,548

34,810,906

44,737,408

23,505,322

8,070,000
18,170,760

9,284,000
20,134,548

12,317,707
22,493,199

16,096,233
28,641,175

8,456,139
15,049,183

14.28

15.83

Page 10

FFC
FINANCIAL ANALYSIS
2014

2013

2012

2011

2010

Profitability Ratios
Gross profit ratio

38.29

46.36

48.47

62.20

43.60

Net Profit to Sales

22.37

27.03

28.07

40.73

24.58

EBITDA margin to sales

35.61

42.74

44.99

63.64

41.43

Return on equity (Profit After tax)

70.79

80.05

80.96

99.17

71.40

Return on equity (Profit Before tax)

Return on assets

102.22 116.97 120.51 146.23 105.59

20.99

29.68

34.38

40.50

25.61

Liquidity Ratios
Current ratio

Times

0.67

0.77

1.14

1.04

0.86

Quick / Acid test ratio

Times

0.59

0.66

1.01

0.93

0.73

Cash to Current liabilities

Times

0.28

0.38

0.61

0.38

0.32

Inventory turnover ratio

Times

148

188

152

162

283

Total assets turnover ratio

Times

0.94

1.10

1.23

0.99

1.04

Fixed assets turnover ratio

Times

4.04

4.04

4.15

3.24

2.82

14.28

15.83

16.40

17.68

8.67

8.20

7.07

7.14

8.46

14.52

11.99

13.77

12.29

16.51

14.24

9:91

15:85

13:87

10:90

20:80

Activity / Turnover Ratios

Investment / Market Ratios

Earnings per Share (EPS) and Diluted EPS Rs.
Price Earning ratio
Dividend yield ratio

Times
%

Debt to Equity ratio

Page 11

Summery Of Balance Sheet And Profit and loss (FFC)

2014

2013

2012

2011

2010

Summary of Balance Sheet

Share capital

12,722

12,722

12,722

8,482

12,429

13,045

14,199

25,151

25,767

22,681

4,280

3,870

2,704

29,431

29,637

25,385

4,078

3,915

3,623

18,444

17,819

17,051

41,501

29,716

27,895

(7,992)

3,836

1,114

5,298

7,830

14,603

74,481

74,323

55,221

34,532

36,023

34,349

28,365

30,469

29,977

6,785
Reserves

12,948
8,662

Shareholders funds / Equity

25,670
15,447

Long term borrowings

2,500
3,819

Capital employed

28,170
19,266

Deferred liabilities

4,574
3,807

Property, plant & equipment

20,094
15,934

Long term assets

50,679
25,837

Net current assets / Working capital

(17,935)
(2,764)

Liquid funds (net)

2,117
7,830

Summary of Profit & Loss

Sales

81,240
44,874

Gross profit

31,103
19,564

Operating profit

24,672
15,620

Page 12

Profit before tax

26,241

29,419

31,052

33,166

20,135

20,860

22,492

16,310
Profit after tax

18,171
11,029

EPS - Basic & Diluted

16.40

17.68

14.28

8.67

Page 13

15.83

FFC
Horizontal Analysis (B/S)
Assets
Non-Current assets:Property plant and Equipment
Intangible assets
Long term Investment
Long term loans and advances
Long term Advances and pre-payments
Current Assets:Store Spares and lose tools
Stock in trade
Trade debts
Loans advances
Deposits and pre-payments
Other Receivables
Short term investment
Cash and bank balance
Total Assets
Equity And Liabilities
Share Capital
Capital Reserve
Revenue Reserve
Total Equity
Liabilities
Noncurrent Liabilities
Long term Borrowings
Deferred Taxation
Current liabilities
Trade and other payables
Accrued interest
Short term borrowing
Current Portion Of Long term Borrowings
Taxation
Total Liabilities
Total Liabilities & Equity

2014

2013

2012

2011

26.11
2.68
257.50
80.88
77.77
96.50

15.75
5.29
200.75
62.64
-66.67
60.63

11.83
7.01
20.86
54.46
6.17
15.01

7.01
10.03
33.19
7.96

35.86
360.21
129.6
251.8
-48
73.4
128.28
-1.26
108.34
101.03

33
95.81
174.11
-6
27.83
189.64
57.74
14.55
52.87
57.52

27
108.49
908.66
101.78
-28
-4.69
56
215.30
79.72
40.89

0.29
200.47
-75.7
28.57
10
44.34
81.31
8.83
60.47
28.96

87.50
50.14
66.18

87.50
44.31
62.82

87.50
51.19
66.81

25.01
65.13
46.83

-345
20.14
7.24

12.07
28.13
9.59

1.34
2.84
2.08

-29.2
-4.83
-17.03

320.08
-78.26
105.69
1.19
-27
169.26
101.03

124.20
-84
24.09
-17
16.29
71.71
57.50

77.54
-81.89
-11.54
-18.48
32.20
35.67
40.89

36.65
-42.03
54.87
-8.13
9.81
32.71
28.96

FFC
Vertical Analysis (B/S)
Share Capital

2014
%
14.70

2013
%
18.76

2012
%
20.97

2011
%
15.27

2010
%
15.76

Capital reserve
Revenue Reserve

0.18
14.77

0.24
18.09

0.26
21.24

0.29
25.28

0.37
19.74

Total equity
Non-current liabilities
Long term borrowings
Deferred liabilities

29.66

37.08

42.47

40.84

35.87

6.31
6.01

6.38
6.45

4.87
6.52

2.89
5.28

Page 14

8.87
8.84

Current liabilities
Trade and other payables

8.17

Interest and mark - up accrued

Short term borrowings

43.79
0.03

Current portion of long term borro

13.40

wings
Taxation
Total Liabilities & Equity

2.06
100.00

12.32

12.83

11.39

17.71

26.58
0.04

22.20
0.14

20.95
0.32

10.32

8.22

15.73

13.10

2.15
100.00

2.36
100.00

2.91
100.00

4.09
100.00

32.22
0.03

Property, plant & equipment

23.21

27.19

29.37

30.69

37.00

Intangible assets
Long term investments

1.86
32.50

2.44
30.46

2.77
15.68

2.83
15.59

3.64
18.28

1.16
0.01

1.09
0.02

1.06
0.02

26.64

0.29

(18.59)

Long term Loans & advances

Long term deposits & prepayment
s
Current Assets
Stores, spares and loose tools

0.95
0.02

1.09
0.00

2.16

4.71

Stock in trade
Trade debts

225.17
17.26

(31.67)
(80.59)

(30.61)
4,050.57

200.47
(75.70)

47.22
39. 30

Loans and advances

Deposits and prepayments
Other receivables
Short term investments

14.98
(44.68)
35.70
44.69

35.84
30.56
34.13
1.12

56.94
(34.55)
(33.97)
(13.97)

28.57
10.00
44.34
81.31

158.46
31.58
(15.80)
77.60

Cash and bank balances

TOTAL ASSETS

(13.80)
27.62

(63.67)

189.72
11.80

8.83
9.25

(69.11)
28.96

11.69

FFC
HORIZONTAL AND VERTICAL ANALYSIS

PROFIT AND LOSS ACCOUNT.

2014

2013

2012

2011

Sale

81.04

65.98

65.62

23.06

Cost of sale

98.09

57.84

51.32

-17.53

Gross profit

58.98

76.51

84.13

75.57

Distrbution Cost

63.05

56.36

40.82

10.85

57.95

81.59

95.06

91.91

Finanace Cost

-21.89

-34.55

-8.09

-27.69

Other Expense

67.37

85.9

95.20

92.95

Page 15

63.56

90.4

103.57

101.69

Other Income

49.73

38.53

35.36

110.28

Net profit Before Tax

60.88

80.37

90.39

103.35

Tax

52.81

75.34

92.99

102.12

Net Profit After Tax

64.76

82.56

89.14

103.94

Vertical Analysis:2014

2013

2012

2011

2010

Sale

100

100

100

100

100

Cost of sale

61.71

53.64

51.53

37.80

56.40

Gross profit

38.29

46.36

48.47

62.20

43.60

Distrbution Cost

7.92

8.28

7.47

7.92

8.79

30.37

38.08

41

54.29

34.81

Finanace Cost

1.05

1.02

1.34

1.42

2.42

Other Expense

2.83

3.43

3.61

4.81

3.07

26.49

33.63

36.04

48.05

29.32

Other Income

5.81

5.86

5.74

12.01

7.03

Net profit Before Tax

32.30

39.50

41.78

60.06

36.35

Tax

9.93

12.46

13.71

19.33

11.77

Net Profit After Tax

22.37

27.03

28.07

40.73

24.58

2. ENGRO FERTILIZERS:
ENGRO chemical Pakistan limited is the second largest producer of urea fertilizer in
Pakistan and the company was incorporated in 1965. ENGRO is a public limited
company listed on the stock exchanges of Karachi, Lahore and Islamabad. The company
has gone from strength to strength, reflected in its consistent and enviable financial
performance, growth of core fertilizer business and successful business diversification
into fields. Its performance and outlook is following the declared vision.
To be the premier Pakistani enterprise with a global reach, passionately pursuing value
creation for all stake holders

Mission Statement:
Page 16

To help farmers maximize their farm produce by providing quality plant nutrients

and technical services upon which they can depend.

To create wealth by building new businesses based on company and country
strengths Petrochemicals, Information Technology, Infrastructure and other
Agricultural sectors.

ENGRO Fertilizers Limited is one of the leading fertilizer manufacturer and marketer in
Pakistan and has been in this business for the past forty years. ENGRO Fertilizers
Limited has successfully developed a loyal customer base all across Pakistan, not only by
providing farmer community with quality fertilizer but also through extensive market
development activities. Following is the list of primary and secondary fertilizers that we
market.

Engro Urea
Engro DAP
Engro Zorawar
Engro Zarkhez (contains N, P and K)
Zingro (Zinc)

ENGRO holds a vast nationwide production and marketing infrastructure and produces
leading fertilizer brands optimized for local cultivation needs and demand. ENGRO
Fertilizers Limited enjoys loyal customer base across Pakistan owing to its trusted
fertilizer brands and continual farmer assistance in training and education. Agri Services
is core business driver.
As the nations first branded fertilizer manufacturer, the Company helped modernize
traditional farming practices and boost farm yields, directly impacting the quality of life
for farmers and their families, and for the nation at large. Farmer education programs
increased consumption of fertilizers in Pakistan, paving way for Companys branded urea
called Engro an acronym for Energy for Growth.
Our story begins with one companys enterprising decision to strive ahead and invest
when another had bowed out. In 1957, Pak Stanvac an Esso/Mobil joint venture
stumbled upon vast deposits rich in natural gas in Mari while pursuing viable oil
exploration in Sind. With Pak Stanvac focused exclusively on oil exploration, the
Page 17

discovery shifted the impetus to Esso which decided to invest on the massive industrial
potential of Mari gas field. Esso proposed establishment of a giant urea plant in Daharki,
about ten miles from the Mari gas fields, which would use natural gas produced as its
primary raw material to turn out urea fertilizer. Talks with the Government of Pakistan
bore fruit in 1964, and an agreement was signed allowing Esso to set up a urea plant with
an annual capacity of 173,000 tons. Esso brought in state-of-the-art design; commercially
tried facilities; and a highly distinguished pool of technical expertise to ensure a smooth
start up. Total investment made was US$ 46M the single largest foreign investment in
Pakistan to date then. The plant started production on 4 December 1968 a few months
late and with less than 10 % over run on the original budget. To boost sales, a full-fledged
marketing organization was established which undertook agronomic programs to educate
farmers of Pakistan.
As the nations first branded fertilizer manufacturer, the Company helped modernize
traditional farming practices and boost farm yields, directly impacting the quality of life
for farmers and their families, and for the nation at large. Farmer education programs
increased consumption of fertilizers in Pakistan, paving way for Companys branded urea
called Engro an acronym for Energy for Growth.
In 1978, Esso became Exxon as part of an international name change. The Company was,
therefore, renamed Exxon Chemical Pakistan Limited.
In 1991, Exxon decided to divest its fertilizer business on a global basis. The employees
of Exxon Chemical Pakistan Limited in partnership with leading international and local
financial institutions bought out Exxons 75% equity. This was, and perhaps still is, the
most successful employee buy-out in Pakistans corporate history. Renamed Engro
Chemical Pakistan Limited, the Company went from strength to strength with its
consistent financial performance; growth of its core fertilizer business; and diversification
into other enterprises.
A major plant capacity upgrade at Daharki coincided with the employee led buy-out in
1991. Engro also relocated fertilizer manufacturing plants from the UK and US to its
Daharki plant site an international first. As years followed, Engro Chemical Pakistan

Page 18

Limited started venturing into other sectors namely: foods, energy, chemical storage and
handling, trading, industrial automation and petrochemicals.
By 2009, Engro was fast growing and had already diversified its business portfolio in as
many as seven different industries. The continual expansions and diversifications in
Companys enterprises necessitated a broad restructuring in Engro Chemical Pakistan
Ltd. which subsequently demerged to form a new Engro subsidiary Engro Fertilizers
Limited.
After the necessary legal procedures and approvals, the Sindh High Court sanctioned the
demerger on December 9, 2009. The demerger became effective from January 1, 2010.
Subsequently, all fertilizer business assets and liabilities have been transferred to Engro
Fertilizers
Limited against the issue of shares to the parent company Engro Corp.

Page 19

Engro Fertilizer
Summary Balance Sheet
&
Profit & Loss Statement of
Summary of Balance Sheet

2014

2013

2012

2011

2010

Share capital

13183

12,228

10,728

10,728

10,728

Reserv

21295

12,84

15,070

7,889

2,912

Shareholders funds / Equity

34478

25,069

15,798

18,616

13,640

Long term borrowings

36091

55,896

51,482

59,398

64,160

Capital employed

78481

83,889

82,176

88,001

86,452

Deferred liabilities

5227

4,655

3,381

4,521

2,581

Property,plant & equipment

74963

79,315

82,878

86,332

84,370

Long term assets

75175

79,562

83,124

86,540

84,631

Current assets

36297

30,366

14,381

14,337

13,423

Sales

61425

50,129

30,626

31,353

19,017

Gross profit

22603

22,12

19,861

16,733

8,910

Operating profit

18521

17,054

6,752

14,521

6,556

Profit before tax

11895

8,384

(3,952)

6,877

5,207

Profit/(loss) after tax

8208

5,497

(2,935)

4,588

3,730

EBITDA

23278

22,010

11,741

17,673

7,365

Summary of Profit and Loss

Page 20

Engro Fertilizer
FINANCIAL ANALYSIS
2014

2013

2012

2011

2010

Profitability Ratios
Gross profit ratio

38.8

44.13

32.20

53.37

48.85

Net Profit to Sales

13.36

10.97

(9.58)

14.63

19.61

EBITDA margin to sales

37.89

46.30

38.34

56.37

38.73

Operating leverage ratio

Times

1.11

3.73

4.12

1.00

Return on equity

27.57

26.90

(17.o5) 28.4527.34

Liquidity Ratios
Current ratio

Times

1.02

1.34

0.55

0.81

0.83

Quick / Acid test ratio

Times

0.86

1.09

1.32

0.47

0.58

Cash to Current liabilities

Times

0.12

0.2

0..09

0.03

0.11

Inventory turnover ratio

Times

31.28

18.25

11.78

10.70

11.28

Debtors turnover ratio

Times

10

248

14

Total assets turnover ratio

Times

55.1

46

31

31

19

Times

81.9

63

37

36

23

4.66

4.66

4.05

70

81

89

Activity / Turnover Ratios

Fixed assets turnover ratio

73

540

Investment / Market Ratios

Earnings per Share (EPS) and Diluted EPS Rs.

Debt to Equity ratio

6.29

56

Page 21

3.29

84

Engro Fertilizer

HORIZONTAL ANALYSIS (B/S)

Assets
Non-Current assets:Property plant and Equipment
Intangible assets
Long term loans and advances
Current Assets:Store Spares and lose tools
Stock in trade
Trade debts
Deferred employee compensation exp.
Derivative Financial instruments
Loans advances and prepayments
Other Receivables
Taxes recoverable
Short term investment
Cash and bank balance
Total Assets
Equity And Liabilities
Share Capital
Share premium
Employee share option
Hedging Reserve
Unappropriated Profit
Total Equity
Liabilities
Noncurrent Liabilities
Borrowings
Subordinated Loan from holding companies
Derivative financial Instruments
Deferred liabilities
Employee Housing Subsidy
Retirement and other service benefit obligation
Current liabilities
Trade and other payables
Accrued interest
Borrowings
Other services benefit obligation
Short term borrowing
Derivative financial Instruments
Total Liabilities

2014

2013

2012

2011

-11.15
-20.8
-16.07

-5.9
26.6
-7.38

-1.76
8.72
-25

2.32%
-9.69
-34.8

38.97
22.87
114.4
-100
-100
-83.44
-74
-100
922.6
128.15

28.8
54.24
114.7
-100
4233
76
-74
-68.5
636.4
142.8

21.07
88.28
196
-100
-66.66
-84.86
-43.5
12.99
7.5
33.38
-0.56

24.1
104
-59.4
-100
68.6
-11.9
78.5
-89.2
-23.8
112.5
2.9

22.88
204.54
-100
95.49
411.87
152.77

13.98
-100
83.3
191.76
84

-100
63.47
44.35
158.2

-1.7
43.9
123
36.5

-42.4
-100
-99.93
102.5
-100
109.25

-15.58
100
44.16
80.35
-100
92.59

-22.6
100
-53.1
30.9
-100
83.3

-10
100
-48.7
75.2
-94.5
61.1

525.7
-30.3

360.5
-25.32

103.45
-9.7

31.8
5.3

-8.5
104.7
-100
61.96

-66.2
109.52
-100
-68.35
39.87

72.16
90.47
3.09
-15.89
61.92

15.4
57.1
-99.6
-36.8
9.1

Engro Fertilizer
Page 22

Vertical Analyses of Balance Sheet

Assets
Property plant Equipment
Intangible assets
Long loans & Advances
Store spares & Loose tools
Stock in trade
Trade Debts
Deferred Employees Compensation Expanse
Derivative financial instruments
Loan, Advances, Deposits & repayments
Other receivables
Tax recoverable
Short term investments
Cash & bank balances
Liabilities
Equity
Share Capital
Share Premium
Employee share options
Advance against issue of share
Hedging of reserve
Re measurement of post-Employment benefit
Unappropriated profit
NON Current Liabilities
Borrowing
Subordinated loan From Holding Companies
Derivative financial Instruments
Deferred Liabilities
Service Benefit Obligation
Employee housing Subsidy
Current Liabilities
Trade & Other Payables
Accrued Interest
Tax Payable
Current Portion of :
-Borrowings
-Service Benefit Obligation
Short term borrowing
Derivative Financial Instruments

2010

2011

2012

2013

2014

86.04%
0.15%
0.113%
3.45%
0.913%
0.36%
0.0037%
0.0026
2.66%
0.109%
1.80%
2.5%
1.87%
100%

85.58%
0.133%
0.07%
4.172%
1.81%
0.142%
0
0.182%
1.398%
0.190%
1.85%
3.86%
0.58%
100%

85%
0.165%
0.085%
4.21%
1.73%
1.07%
0
0.00055%
0.40%
0.065%
2.05%
2.7%
2.55%
100%

75.15%
0.12%
0.099%
3.97%
1.25%
0.68%
0
0.118%
0.57%
0.025%
0.506%
16.42%
4.0555
100%

67.24%
0.106%
0.084%
4.22%
0.987%
0.68%
0
0
0.388%
0.024%
0
23%
3.75%
100%

11%
0.011%
0.059%
0
(0.50)%
0
3.80%

10.16%
0.011%
0.05%
0
(0.49)
0
8.24%

11%
0.01%
0
0
(0.33)
0
5.52%

11.1%
0.010%

11.82%
2.02%

1.92%
(0.13)
(0.01)
9.9%

0
(0.035)
(0.012)
71.12%

3.80%
63.9%
1.52%
1.08%
0.055%
0.35%

56%
2.97%
0.54%
4.48%
0.086%
0.018%

50%
3.07%
0.51%
3.46%
0.1%
0

48.1%
2.72%
1.39%
4.23%
0.094%

77.23%
0
0.0060
4.69%
0.10%

4%
2.02%
0

5.10%
2.06%
0

8.16%
1.83%
0

16.38%
1.34%
0

22%
1.22%
0.60%

8.82%

9.90%

15.27%

2.66%

7.09%

0.02%
0.99%
0.68%

0.03%
3.74%
0.42%

0.04
1.02%
0.58

0.039

0.388%

0.19%

0.98%

Engro Fertilizer
Horizontal Analyses of Profit & Loss Account
Years
Net Sale

2014

2013

2012

2011

222.98

163.5

61.04%

64.9%

Page 23

Cost of Sales
Gross Profit
Selling & admin Expenses
Admin Expenses
Other Operating expenses
Other Income
Operating Profit Or loss
Finance cost
Profit & loss Before Taxation

284

173.06

105.4

44.6

155.95

148.2

10.79

87.8

157.15

103.3

44.75

30

36.15

5.99

2.8

(3.2)

155.42

299.2

(21.3)

12.8

434.7

141.26

(11.45)

154.1

182.46

160

2.95

121.5

390.37

541.7

686.4

465.8

128.48

61.04

(175.9)

32.1

163.34

95.59

(168.9)

55.1

120

47.37

(178.6)

23

Taxation
Profit & loss after Taxation

Page 24

Engro Fertilizer
Vertical Analysis: Profit and loss Account
Years
Net Sale
Cost of Sales
Gross Profit
Selling & admin Expenses
Admin Expenses
Other Operating expenses
Other Income
Operating Profit Or loss
Finance cost
Profit & loss Before Taxation

2014

2013

2012

2011

2010

100%

100%

100%

100%

100%

83.20

55.9

67.8

46.6

53.2

36.80

44.1

32.2

53.4

46.8

7.21

8.2

7.2

9.1

1.3

1.2

1.9

1.8

2.1

4.1

1.3

1.9

2.7

2.2

1.2

3.7

2.4

30.2

34

22

46.2

34.4

10.8

17.3

34.9

24.4

7.1

19.4

16.7

-12.9

21.8

27.3

5.8

-3.3

7.3

7.8

13.4

10.9

-9.6

14.5

19.5

Taxation
Profit & loss after Taxation

Comparison:

Page 25

EPS
20.00

15.00

10.00

5.00

0.00
Year 2010

Year 2011

Year 2012

Year 2013

Year 2014

-5.00
EPS EF

EPS FFC

Current Ratio
1.60
1.40
1.20
1.00
0.80
0.60
0.40
0.20
0.00
2010

2011

2012
C.R EF

2013
C.R FFC

Page 26

2014

Quick Ratio
1.40
1.20
1.00
0.80
0.60
0.40
0.20
0.00
2010

2011

2012
Q.R EF

2013

2014

Q.R FFC

FFC Current ratio for 2013 decreased by 0.37 2014 depicted a minimal decrease of 0.10 times as
compared with 2013 due to increase in trade creditors.
EF The sharp increase in Quick ratio in 2013 is due to the EF drastic investments in bank balances & Short
term investment.

Page 27

Cash ratio
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
2014

2013

2012
FFC

2011

2010

2011

2010

EF

Net Profit to Sale Ratio

50
40
30
20
10
0
2014

2013

2012

-10
-20
FFC

EF

Page 28

Net Profit to Sale Ratio

50
40
30
20
10
0
2014

2013

2012

2011

2010

-10
-20
FFC

EF

Inventory Turnover Ratio

140.00
120.00
100.00
80.00
60.00
40.00
20.00
0.00
Year 2010

Year 2011

Year 2012
ITO EF

Year 2013

Year 2014

ITO FFC

FFC The Drastic change in Inventory turnover ratio indicate that the management is not
able to percept the change in sale or purchase actually.

Page 29

EF The steady improvement in inventory turnover indicate the true perception about sale
or purchase of raw material.
FATO
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
Year 2010

Year 2011

Year 2012
FFC

Year 2013

Year 2014

EF

Total Assets Turnover

1.40
1.20
1.00
0.80
0.60
0.40
0.20
0.00
Year 2010

Year 2011

Year 2012
TATO EF

Year 2013
TATO FFC

Page 30

Year 2014

FFC The assets inventory turnover ratio is greater than the company average because of
company have better inventory management system and good collection period.

EF has steady increase in managing the inventory and indicate that the company is
moving towards good collection method.

Debt ratio
100.00%
90.00%
80.00%
70.00%
60.00%
50.00%
40.00%
30.00%
20.00%
10.00%
0.00%
Year 2010

Year 2011

Year 2012
Debt.R EF

Year 2013

Year 2014

Debt.R FFC

Gross Profit Margin

70.00%
60.00%
50.00%
40.00%
30.00%
20.00%
10.00%
0.00%
year 2010

year 2011

year 2012
GP.M EF

GP.M FFc

Page 31

year 2013

year 2014

Rise in cost of sales owing to increased raw material cost and GIDC resulted in a
reduction in gross and net profit margins for 2014, depicting a decrease of 8% and
5%respectively from last year. Consequently, return on equity (post tax) and capital
employed were also lower by 9% and 4%respectively in comparison with
2013.Excluding exceptional performances in2011 and 2012, profitability ratios of the
Company were in concurrence with overall performance during the 6 years.

Operating Profit margin

120.00%
100.00%
80.00%
60.00%
40.00%
20.00%
0.00%
Year 2010

Year 2011

Year 2012
OP.M EF

OP.M FFC

Page 32

Year 2013

Year 2014

Net Profit Margin

50.00%
40.00%
30.00%
20.00%
10.00%
0.00%
Year 2010

Year 2011

Year 2012

Year 2013

Year 2014

-10.00%
-20.00%
NP.M EF

NP.M FFC

Rise in cost of sales owing to increased raw material cost and GIDC resulted in a
reduction in gross and net profit margins for 2014, depicting a decrease of 8% and
5%respectively from last year. Consequently, return on equity (post tax) and capital
employed were also lower by 9% and 4%respectively in comparison with
2013.Excluding exceptional performances in2011 and 2012, profitability ratios of the
Company were in concurrence with overall performance during the 6 years.

Page 33

ROE
50.00%
40.00%
30.00%
20.00%
10.00%
0.00%
Year 2010

Year 2011

Year 2012

Year 2013

Year 2014

-10.00%
ROA EF

ROA FFC

Book Value Per share

30
25
20
15
10
5
0
2014

2013

2012
FFC

2011
EF

Page 34

2010

Leverage ratio
4
3.5
3
2.5
2
1.5
1
0.5
0
2014

2013

2012
FFC

2011
EF

Page 35

2010