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Preface Practice is the only tool for bringing perfection in one’s work. “Theory without perfection is sterile”. Education is a mean for delivering knowledge and training is a way to bring that knowledge into action. That’s why Internship training is an integral part of MBA degree program. It was a great opportunity to practice and analyze all the learning of MBA from practical perspective. I have been given the assignment of doing internship in Fauji Fertilizer Company Ltd, Marketing Division, Lahore. During the internship period I went through various sections of the Marketing Division I have also tried my level best to obtain as accurate and precise data as possible, while keeping the corporate ethics in mind. And to present all, what I have learnt during my internship, in the following pages. I hope that this report will be a true representative of my efforts, hard work and will satisfy the purpose in true spirit for, which it was meant. INSTITUTE OF BUSINESS ADMINISTRATION (INTERNSHIP REPORT)

FFC Marketing Division

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Page 1: FFC Marketing Division

PrefacePractice is the only tool for bringing perfection in one’s work.

“Theory without perfection is sterile”. Education is a mean for delivering knowledge and training is a way to bring that knowledge into action.

That’s why Internship training is an integral part of MBA degree program. It was a great opportunity to practice and analyze all the learning of MBA from practical perspective.

I have been given the assignment of doing internship in Fauji

Fertilizer Company Ltd, Marketing Division, Lahore. During the internship

period I went through various sections of the Marketing Division

I have also tried my level best to obtain as accurate and precise data

as possible, while keeping the corporate ethics in mind. And to present all,

what I have learnt during my internship, in the following pages. I hope that

this report will be a true representative of my efforts, hard work and will

satisfy the purpose in true spirit for, which it was meant.

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Acknowledgement

“Knowledge is in the end based on acknowledgement. “ (Ludwig

Wittgenstein)

First of all thanks to Almighty Allah for enabling me to complete this task. I am thankful to my Teachers at IBA, PU.

For the achievement of th is goal many personal i t ies

have helped me out . I am highly indebted to Fauj i Fert i l i zer

Company l imited who a l lowed me for internship. I am also

very gratefu l to my superv isors Mr. Athar , Mr. Fa isa l Shezad,

Mr. Shehzad Anwar Butt , Mr .R iaz Ahmed Ghuman, Mr.Khal id

Javed, Mr.Maj Pasha, Mr. Inam ul lah, Mr. Ikram, Mr. Qamar, Mr.

Naeem, Mr.Hamid Abbas and a l l s taf f members in Market ing

Div is ion, who guided and helped me a lot throughout th is

internship durat ion.

Without thei r help my report would have been

incomplete.

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Dedication

I dedicate this humble effort to the Teacher of the universe (PBUH), by just mere reflection of whose teachings and insight the whole journey of progress of the entire humanity is made possible.

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Executive Summary:

FFC, which was established in 1978 as a private limited company, with a vision to acquire self -

sufficiency in fertilizer production for the nation. The company has excellent track record of

excellence and success. Today FFC has highest share in fertilizer market and is one of the top tax

payer of the country. The company has also majority stakes in his sister concern in FFBL.

During my 6 weeks internship I attribute the success of the company to some the following

factors.

One of the country’s most largest and efficient distribution network

Acquiring the best HR talent and further investment on their development

High degree of concerns for employees and community

Working with help of cutting edge technology

The Company is financial very sound, it is considered as blue chip company,

The Company has experienced and professional setup,

Highest share of the fertilizer market in the country, 46%,

Sales revenues are increasing every year

The Company has implemented a sound and effective Internal Control System,

Proper books of accounts are maintained as per statutory requirements,

Monthly trial balances are prepared at 4 different locations and consolidation job is

carried out at Head Office,

Finance/Accounting staff consists of highly qualified professionals,

The Accounting System of the company is designed and installed by a team of people

with many specialized talents,

Internal Audit Department is functioning efficiently and effectively

I have found that from its establishment in 1978, FFC has made unparallel success which is a

bench mark for all the entrepreneurs and companies of nation and its contribution in nation’s

economy and agriculture is really praiseworthy.

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Table of ContentsPART 1.........................................................................................................................................................2

INTRODUCTION OF FFC:..............................................................................................................................2

Marketing Division...................................................................................................................................3

NATURE OF THE COMPANY:....................................................................................................................4

Mission Statement...................................................................................................................................4

Corporate Vision......................................................................................................................................4

Quality Policy...........................................................................................................................................5

Nature of the Business................................................................................................................................6

Manufacturing.........................................................................................................................................6

Engineering..............................................................................................................................................7

Marketing................................................................................................................................................8

Subsidiaries companies of FFC...................................................................................................................10

Fauji Fertilizer Bin Qasim Limited..........................................................................................................10

FFC Energy Limited (FFCEL)....................................................................................................................12

FFC HISTORY..............................................................................................................................................14

SUCCESS STORY......................................................................................................................................15

Objectives of the company........................................................................................................................17

ISO-9002................................................................................................................................................18

ISO Certifications...................................................................................................................................19

Strategic Goals.......................................................................................................................................19

Core Values............................................................................................................................................19

Comparison with competitors...............................................................................................................21

An Overview of Sector in Pakistan.............................................................................................................22

Main Fertilizer Producer in Pakistan:.....................................................................................................22

SPOT ANALYSIS OF FERTILIZER SECTOR.....................................................................................................22

FERTILIZER INDUSTRY’S PERFORMANCE................................................................................................22

DEMAND VS SUPPLY..............................................................................................................................23

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GAS SUPPLY...........................................................................................................................................23

Incentives Offered To Fertilizer Industry...............................................................................................24

PRODUCT WISE, DOMESTIC PRODUCTION................................................................................................25

Import of Fertilizers...................................................................................................................................26

MAJOR FERTILIZER PRODUCERS IN PAKISTAN...........................................................................................27

Engro Chemical Pakistan Limited...........................................................................................................27

ENGRO ASAHI POLYMER & CHEMICAL LIMITED (EAPCL).......................................................................28

DAWOOD HERCULES CHEMICALS LIMITED............................................................................................28

COMPETITORS ACTIVITIES.........................................................................................................................30

ECPL.......................................................................................................................................................30

DHCL......................................................................................................................................................31

NFML.....................................................................................................................................................32

Al-Hamd Chemicals................................................................................................................................32

Pak Arab Fertilizers................................................................................................................................32

Azgard....................................................................................................................................................33

Jaffer Brothers Limited..........................................................................................................................33

Private DAP Importers...........................................................................................................................33

Part II.........................................................................................................................................................35

COMPANY MANAGEMENT SYSTEM...........................................................................................................35

Structure of Marketing Division Lahore.....................................................................................................36

Company Information...............................................................................................................................37

Policy Formulation Process-Meetings........................................................................................................40

Meetings of the Board (At Corporate Head Office)...............................................................................40

Meetings (At Marketing Head Office)....................................................................................................41

MANAGERIAL PRACTICES,.........................................................................................................................42

Functions and Powers of Board of Directors:........................................................................................42

MANAGERIAL POLICIES..............................................................................................................................43

Audit Practices.......................................................................................................................................43

Policies for Attracting Deposits..............................................................................................................43

Policy Statement of Ethics & Business Practices....................................................................................43

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Human resource practices:........................................................................................................................44

Recruitment...........................................................................................................................................44

Hiring:....................................................................................................................................................44

Training:.................................................................................................................................................45

Job assessment......................................................................................................................................45

Factors to be considered judge the performance of the employees.....................................................46

Personal.................................................................................................................................................49

Employees Development:......................................................................................................................50

Pay Structure:........................................................................................................................................50

Major managerial policies, practices/styles...............................................................................................51

Marketing and Sales Policies.................................................................................................................51

Human Resource Policy.........................................................................................................................51

Financial Policies....................................................................................................................................51

Customer Relationship Policies..............................................................................................................52

Internal Department Policies.................................................................................................................52

POLICIES REGARDING EMPLOYEES AND DESIGNATION.........................................................................52

Facilities to Employees..........................................................................................................................52

GROWTH OPPORTUNITIES/ CAREER LADDER............................................................................................60

PROMOTION..........................................................................................................................................60

Job Satisfaction:.........................................................................................................................................60

Part 3.........................................................................................................................................................62

MANAGING THE ORGANIZATION..............................................................................................................62

MANAGERIAL STYLES.............................................................................................................................62

Organizational Culture:..........................................................................................................................62

Centralization/ Decentralization:...........................................................................................................62

Consultative & autocratic......................................................................................................................63

Employees Relationship.........................................................................................................................63

Decision Making....................................................................................................................................63

Planning.................................................................................................................................................64

Controlling.............................................................................................................................................64

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Innovation.............................................................................................................................................65

Communication.....................................................................................................................................65

IMPACT OF MANAGEMENT STYLES ON EMPLOYEES:......................................................................67

MORALE AND PRODUCTIVITY................................................................................................................67

Motivation.............................................................................................................................................67

Morale and productivity........................................................................................................................68

Promotion..............................................................................................................................................69

CRITICAL ANALYSIS OF ORGANIZATIONAL CULTURE AND MANAGEMENT STYLES....................................69

Part 4.........................................................................................................................................................71

Plant Sites and Production Facilities..........................................................................................................71

Production Facilities..............................................................................................................................71

Plants Goth Machhi...............................................................................................................................73

Plant Mirpur Mathelo............................................................................................................................74

Plant Fauji Fertilizer Bin Qasim Limited.................................................................................................75

Capacity Utilization................................................................................................................................76

Production/Sale at a glance...................................................................................................................80

Bottle neck problem at GOTH Machi:....................................................................................................82

Part 5.........................................................................................................................................................84

MARKETING MIX........................................................................................................................................84

FFC Product Mix........................................................................................................................................85

FFC PRODUCTS..........................................................................................................................................85

FFBL PRODUCTS (Marketed By FFC)......................................................................................................85

SONA UREA............................................................................................................................................85

SONA DAP..............................................................................................................................................86

FFC SOP..................................................................................................................................................87

Product strategies.................................................................................................................................88

PRICE.........................................................................................................................................................89

PRICING STRATEGIES.............................................................................................................................89

PLACEMENT...............................................................................................................................................90

Distribution............................................................................................................................................90

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Objectives..............................................................................................................................................90

Sales Promotion.........................................................................................................................................94

Marketing Services................................................................................................................................94

Means....................................................................................................................................................95

Media used at FFC for promotion..............................................................................................................95

Electronic Media....................................................................................................................................95

Radio......................................................................................................................................................96

CCTV......................................................................................................................................................96

Print Media............................................................................................................................................96

Road side Advertisement.......................................................................................................................97

Point of Purchase...................................................................................................................................97

Corporate Social Responsibility at FFC.......................................................................................................98

CSR Objectives.......................................................................................................................................98

Current CSR Interventions.....................................................................................................................99

Free Medical Camps..........................................................................................................................102

Flood Relief and Rehab...........................................................................................................................108

Relief to flood effectees in district Rahim Yar Khan and Ghotki....................................................108

Distribution of Dry Ration by FFC..................................................................................................108

Safety and Environment..........................................................................................................................110

Philosophy:..........................................................................................................................................110

Achievements:.....................................................................................................................................111

Program:..............................................................................................................................................111

FUTURE OUTLOOK...................................................................................................................................112

Part 6.......................................................................................................................................................115

Company Financial Analysis.....................................................................................................................115

Finance & Accounting System of FFC...................................................................................................115

Finance System of the Organization....................................................................................................116

Use of electronic data in decision making...........................................................................................116

Ratio Analyses.........................................................................................................................................118

1-Liquidity Ratios.................................................................................................................................118

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2- Financial Leverage Ratios....................................................................................................................120

3-Coverage Ratio.....................................................................................................................................123

4-Activity Ratios...................................................................................................................................124

5-Profitability Ratios............................................................................................................................127

6-Market Ratios...................................................................................................................................131

Ratios at Glance.......................................................................................................................................134

INDEX ANALYSIS......................................................................................................................................135

Comments...............................................................................................................................................137

COMMON SIZE ANALYSIS........................................................................................................................138

General Commentary on Financial condition......................................................................................140

Financial Industry Analysis.......................................................................................................................141

Comparison with Key Competitor (Engro Fertilizer Limited)...............................................................141

Part 7: Training........................................................................................................................................144

Distribution Department.........................................................................................................................144

Challenges:..........................................................................................................................................146

Plans:...................................................................................................................................................146

Procedure of assigning new dealership in FFC:....................................................................................146

Criteria for assigning new dealership in FFC:.......................................................................................147

Criteria used for setting sales target in FFC:........................................................................................147

Strategies used by FFC for achieving the sales target (At regional level):............................................147

Strategies used by FFC for brand positioning (At regional level):........................................................148

Objectives:...........................................................................................................................................148

Transportation Arrangements.............................................................................................................148

Warehousing Department.......................................................................................................................150

Functions of warehousing department...............................................................................................150

Types of warehouses...........................................................................................................................151

Objectives............................................................................................................................................155

Functions.............................................................................................................................................155

Other Department Activities................................................................................................................155

Finance Department................................................................................................................................157

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Order Processing System.....................................................................................................................158

Order Processing Through Road:.........................................................................................................158

GENERAL ACCOUNTING SYSTEM.........................................................................................................160

Functional Workflow...........................................................................................................................160

Disbursement:.....................................................................................................................................161

Sales Accounting..................................................................................................................................163

Objectives............................................................................................................................................163

SALES ACCOUNTING SYSTEM...............................................................................................................164

Bank guarantee.......................................................................................................................................164

Ways of collection...............................................................................................................................165

Sales Accounting (Workflow)...............................................................................................................166

Customer Order (CO)...........................................................................................................................166

Financial Instruments..........................................................................................................................166

Administration Department....................................................................................................................168

General Administration:......................................................................................................................169

Human Resource Department.................................................................................................................171

Functions.............................................................................................................................................172

Labor and Legal Affairs Department (LLA)...............................................................................................174

Procurement Department.......................................................................................................................175

GOALS..................................................................................................................................................175

FUNCTIONS..........................................................................................................................................175

PROCEDURES INVOLVED IN PROCUREMENT STEPS.............................................................................176

Advertisement and Sales Promotion Department...................................................................................177

Objectives............................................................................................................................................177

ADVERTISING & SALES PROMOTION TOOLS........................................................................................178

Corporate Social Responsibility Department (CSR)..................................................................................181

CSR Objectives.........................................................................................................................................181

Information technology (IT) Department................................................................................................184

OBJECTIVES OF IT UNITS......................................................................................................................184

SYSTEMS DEVELOPED BY I.T UNITS......................................................................................................184

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SAP Department......................................................................................................................................185

Modules acquired by FFC:...................................................................................................................186

Regional Office (LHR)...............................................................................................................................187

Activities..............................................................................................................................................188

Sales (NZ).................................................................................................................................................189

Total Regions 5..........................................................................................................................191

Functions of North zone......................................................................................................................191

PLANNING DEPARTMENT...................................................................................................................192

Planning department functions:..........................................................................................................192

Daily Reports.......................................................................................................................................194

Weekly / Fortnightly Reports...............................................................................................................195

Monthly, Quarterly & Annual Reports.................................................................................................195

Analysis of FFC (comparison to key Competitors with reference to DATA BOOK)...................................196

Pakistan Urea Off take Agency Wise .All amount in 000'mt....................................................................197

Pakistan Urea Market Participation (%)...................................................................................................198

DAP Consumption Pattern In Pakistan.....................................................................................................199

Company wise/ Provine wise Urea offtake (qty in 000'mt for 2009).......................................................200

Share Holding Pattern of FFC:..................................................................................................................201

Gross Margins with respect to industry:..................................................................................................202

Comparison With Engro (Key Competitor)..............................................................................................203

STRATEGY FORMULATION FRAMEWORK................................................................................................205

STAGE: 1..................................................................................................................................................206

INPUT STAGE...........................................................................................................................................206

Internal Factor Evaluation (IFE) Matrix....................................................................................................207

EXTERNAL FACTOR EVALUTATION (EFE) MATRIX....................................................................................209

COMPETITIVE PROFILE MATRIX (CPM):...............................................................................................210

INTERPRETATIONS:..............................................................................................................................210

STAGE: 2..................................................................................................................................................211

Matching Stage....................................................................................................................................211

SWOT MATRIX.........................................................................................................................................212

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SPACE MATRIX.........................................................................................................................................214

Conclusion...........................................................................................................................................214

Interpretation......................................................................................................................................215

The Boston Consulting Group (BCG) Matrix:...........................................................................................216

Interpretation:.....................................................................................................................................218

The Internal – External (IE) Matrix..........................................................................................................219

Interpretations....................................................................................................................................219

GRAND STRATEGY MATRIX......................................................................................................................220

FFC is located in the first quadrant of the matrix are in excellent strategic position and the market growth is high..................................................................................................................................220

DECISION STAGE......................................................................................................................................222

The Quantitative Strategic Planning Matrix: (QSPM)...............................................................................223

Interpretation:.....................................................................................................................................224

PORTERS’ FIVE FORCES MODEL...............................................................................................................225

Supplier Power....................................................................................................................................225

Buyers Power.......................................................................................................................................225

Potential Entrants................................................................................................................................225

Suitability of Alternatives: Imported fertilizer is as suitable as the industry products.........................226

Rivalry..................................................................................................................................................226

Problems and Recommendations............................................................................................................227

Marketing Division: Department wise Problems and Recommended Solutions..................................227

General recommendations......................................................................................................................230

Conclusion:..............................................................................................................................................231

References & Sources Used.....................................................................................................................233

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Part ONE

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PART 1

INTRODUCTION OF FFC:

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 share capital of the company was 813.9 Million Rupees. The present share capital of

the company stands above Rs. 8.48 Billion. Additionally, FFC has more than Rs. 8.3 Billion as

long term investments which include stakes in the subsidiaries FFBL, FFCEL and associate

FCCL.

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 a major shareholder 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 with an annual capacity of 551,000

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metric tons of urea and 445,500 metric tons of DAP, revamped to 670,000 metric tons

of DAP.

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. It has annual

production capacity of 574,000 metric tons urea which has been revamped to 718,000

metric tons urea in 2009.

This acquisition at Rs. 8,151 million represented the largest industrial sector

transactions in Pakistan at that time.

Marketing DivisionFFC Marketing Division was established in July

1978. It is responsible for all the marketing

operations including planning, sales, distribution

and warehousing, advertising and sales promotion,

finance, IT, administration and technical/farm

agronomic services. The company markets its own

prilled urea and the entire production of granular

urea and DAP produced by Fauji Fertilizer Bin

Qasim Ltd. under the brand name of "Sona". In

addition, the company also market imported

nitrogenous, phosphatic, potassic fertilizers and

micro-nutrients. FFC is the only fertilizer company

which operates all over the country with an extensive network of field warehouses and dealer

network.

Presently FFC market over 3.8 million tons of all fertilizers per annum with 62% urea market

share and 42% DAP market share. Today, Sona is the most popular and premium fertilizer brand

in the country and is widely accepted by the farming community. The Marketing Division has a

well organized, trained and experienced team which is fully capable of handling and profitably

selling large volumes of fertilizers in different market situations.

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NATURE OF THE COMPANY: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.

Mission Statement

Corporate Vision

INSTITUTE OF BUSINESS ADMINISTRATION (INTERNSHIP REPORT)

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.

FFC's vision for the 21st Century remains focused on harmonizing the Company with fresh challenges and

encompasses diversification and embarking on ventures within and beyond the territorial limits of the Country

in collaboration with leading business partners.

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Quality Policy

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Nature of the Business

Manufacturing

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.

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Nature Of the Business

Maunfacturing Engineering Marketing

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Engineering

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

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ensure successful completion of large scale projects within allocated budgets and assigned

project schedules.

Marketing

Marketing Division, setup in July, 1978 is responsible for all marketing operations including

planning, distribution, sales, farm advisory services, field warehousing, finance and

administration. With the commencement of commercial production in June 1982, the company

started marketing its urea under the brand name "Sona".

The company markets not only Sona urea but also imported nitrogen, phosphate and potash

based fertilizers.

The Company is also marketing half a million tonnes of sona urea granular manufactured by

Fauji Fertilizer Bin Qasim (formerly FFC - Jordan Fertilizer Co. Ltd). When FFC came into the

market with its production in June 1982, the other manufacturers namely Engro, Dawood

Hercules and National Fertilizer Corporation were already well established in the market. The

brands of Engro (Engro) and Dawood Hercules (Babber Sher) were considered premium brands

in Sindh and Central Punjab respectively. FFC had to face very tough competition from the

beginning. This competition coupled with the huge surplus of urea in the domestic market posed

a great challenge to the company in the initial years. FFC not only met the challenge by

capturing the desired market share but in the process, enhanced the brand image of its product

Sona urea which has become the number one brand. During the period 1983 to 1986 when a

large urea surplus existed in the country, FFC pioneered urea exports which not only helped in

stabilizing domestic urea but also earned valuable foreign exchange for the country.

The Government of Pakistan deregulated the trade and prices of phosphatic fertilizers on 21

August 1993. Subsequent to this decision FFC started import of these fertilizers and as a result

timely supplies were arranged. Farmers were thus provided with quality product in bags with

guaranteed correct weight and this brought about a very positive qualitative change in the

phosphatic fertilizer business in the country. The Marketing Division now has the necessary

expertise to handle fertilizer imports and exports.

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FFC believes in selling a programme rather than just a product. For this, the company has

adopted a customer oriented strategy, marketing quality products backed by efficient and

effective support services with emphasis on developing the market through practical and

innovative farmer education.

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Subsidiaries companies of FFC

Fauji Fertilizer Bin Qasim Limited

FFC Energy Limited

Fauji Fertilizer Bin Qasim Limited

Fauji Fertilizer Bin Qasim Limited is a US$ 461 Million Project, one of the largest in private

sector in Pakistan, producing both DAP and Granular Urea for the first time in the country. The

project is sponsored by the largest and well known industrial group of Faujis and Jordan

Phosphate Mines Company.

Joint Venture

Office Cherifien des Phosphates (OCP) Group of Morocco and Fauji Group including Fauji

Foundation, Fauji Fertilizer Company Limited and Fauji Fertilizer Bin Qasim Limited, have

entered into a Joint Venture Company in Morocco named “Pakistan Maroc Phosphore S.A” with

equity of 800 Million Moroccan Dirhams. The proposed project is planned to be located at Jorf

Lasfar , Morocco , where OCP already has a large chemical complex. This Project will produce

375,000 MT Phosphoric Acid per year by consuming 1,300,000 MT Phosphate Rock and

370,000 MT Granular Sulfur. It is not a grass root project and will utilize basic infrastructure and

ancillary facilities already present at Jorf Lsafar Site. The cost of the project is estimated at US$

203 Million and is likely to start commercial production by early 2007. It will meet total

requirement of phosphoric acid for the DAP production in FFBL plant at Bin Qasim.

Fauji Fertilizer Bin Qasim Limited at a glance

FFBL has the distinction of producing 13% of urea and 31% of Di-Ammonia Phosphate

of the country's total requirement.

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Termination agreement with Jordan Phosphate Mines Company Limited (JPMC) was

signed on 24/06/2007, with the same JPMC is no more a partner or equity holder in the

Company.

A long term agreement for the Supply of Phosphoric Acid between Maroc Phosphore

S.A, a wholly owned subsidy of Office Cherifien Des Phosphates, Morocco was signed

on July 21, 2007.

DAP Plant recommenced its production on September 22, 2007 and supply of DAP in the

market started thereto.

Products of FFBL SONA GRANNULAR

SONA DAP

Sona Granular

FFBL produces 13% of total production

SONA DAP

FFBL produces 31% of country’s demand. It is the sole producer of DAP

Fauji Fertilizer Bin-Qasim Limited (FFBL) has its plant in Karachi at port qasim. It has contract

with Fauji Fertilizer Company Limited (FFCL) for the distribution and marketing of its products

in Pakistan. It has two main products; Sona Urea (Granular) and DAP. FFBL exports its products

and imports the products when needed in fertilizer market. It has also setup for the distribution of

its products through Pakistan Railway (PR).

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FFC Energy Limited (FFCEL)

FFCEL, a separate wholly owned company, has been incorporated in November 2009 to develop

the wind power project with estimated investment of US$ 130 million. This project is being

installed at Jhimpir, Distt. Thatta, Sindh with capacity to produce 50 MW electricity for onward

supply to National Transmission & Dispatch Company (NTDC) to cater for energy needs of the

Country.

Engineering, Procurement &

Commissioning contract has been

negotiated and initialed with the selected

bidder Nordex, Germany and Operation

& Maintenance contract is under

negotiation. The Energy Purchase

Agreement and Implementation

Agreement have been negotiated with

NTDC and Alternate Energy

Development Board respectively.

Applications for generation license and

tariff petition are under preparation. Final

Term Sheet for financing of the project has been received from consortium of local banks for

review and acceptance. The financial close is expected to be achieved by June 2010 while the

construction, testing and commissioning phase is projected to take 16 months after the financial

close. The project is scheduled to commence commercial production by end of 2011.

FFCEL is a fully owned subsidiary of Fauji Fertiliser Company Limited (FFC), while Nordex

AG is a leading manufacturer of Wind Turbines in the world. Founder and Chief Sales Officer of

Nordex Carsten Pedersen and Lieutenant General Malik Arif Hayat (Retd) CE & MD, FFC &

FFCEL exchanged the contract documents, a press release issued here said.

FFC has further planned to develop and establish more renewable energy projects in Pakistan to

contribute towards fulfilling Pakistan’s electricity needs through captive renewable resources. To

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that end, FFC has already obtained Letter of Intent (LOI) of additional 100 MW Wind Power

Projects from AEDB.

Lahmeyer International (LI) as Consultant The Government of Pakistan has clearly articulated its support for the development of

renewable energies. Due to the fact that the use of wind energy is actually the most economical

one among the renewable energy production techniques, the focus is on supporting the

development of wind farms.

Fauji Fertilizer Company (FFC), one of the largest companies in Pakistan, is entering the wind

energy market by developing a 50 MW wind farm. To prove the feasibility of the chosen site,

FFC has engaged Lahmeyer International (LI) as Consultant. LI is elaborating the feasibility

study, supervising the wind measurements initiated by FFC and preparing conceptual design of

wind farm.

Within the range of this report, the environmental aspects of the Jhimpir project site are updated

and elaborated. One main outcome of the study is the result that FFC Wind Power Project has no

adverse impact on the environmental and social life of Jhimpir, Sindh. Instead it will be utilizing

the wind potential of that unutilized barren land for electricity generation through renewable

resources, thus helping in improving the environment.

Environmental Impact AssessmentThe Jhimpir site area for FFC Wind Farm is selected by Alternative Energy Development Board,

GoP in consultation with Government of Sindh for wind farming. The land is totally un-

inhabited and there is no issue of loss of habitat and resettlement. The Jhimpir site area for FFC

Wind Farm is a barren land with only a few self growing stunted bushes covering small portions

of the land. The land is rocky and has a very deep water table of around 115 m (350 feet), so

possibility of vegetation in that area is unlikely.

There is no wild life sanctuary, protected area, wild life park or known habitat of any kind,

especially there is no endangered specie is found in the region, mainly due to scarcity of water.

There is no irrigation / drinking water network (canal, lake, pond, etc) in FFC wind farm and the

ground water also is very deep approx. at 115 m (350 feet) depth. So there is no threat of any loss

of habitat due to development of FFC Wind Farm.

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FFC HISTORY

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 1,2006. 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 2006, 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 contributed Rs. 42 billion to the national exchequer in

the form of taxes and government levies.

The company earned a net profit after tax of over Rs. 3 billion for the fifth time since

inception, including 2006.

The company was the highest tax payer in the corporate Sector ub 1993/1994.

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.

21.5 million Man-hours of operation without injury were achieved in 2007, 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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The Company was listed on Karachi and Lahore Stock Exchanges in 1991 and on

Islamabad Stock Exchange in 1992. Company employees were also allotted shares for

motivation and promoting a sense of participation. Based on related criteria of Karachi

Stock Exchange, primarily quantum of dividend payout, FFC has been placed in the list

of top 25 companies of Pakistan consecutively for seven years since 1994, topping the list

in 1997.

FFC has many landmarks to its credit. Since commencement of its commercial

production in mid June 1982 till December 2000, the Company has sold 22.89 million

tons of fertilizers. This includes 17.79 million tons of Sona urea and 0.52 million tons

Sona DAP in the domestic market and 0.39 million tons urea exports to China, Iran,

Philippines, India, Bangladesh, Sri Lanka, Thailand and Tanzania. The remaining 4.19

million tons include imported fertilizers i.e. urea, DAP, NP, etc. Presently, it is marketing

over 2 million tons of fertilizers annually and holds 44% share of the urea market. It has

saved the country around US $ 3 billion through import substitution and contributed

almost Rs. 30 billion to the Government by way of taxes, levies, custom duties, excise

duty/ surcharge on gas purchases besides providing employment to hundreds of

individuals.

SUCCESS STORY

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 a major shareholder in a new DAPS/Urea manufacturing complex

with participation of major international/national institutions. The new company Fauji

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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 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.

Announcing price offers by the private sector, Minister for Privatization Altaf Saleem

declared the Fauji Fertilizers Company as the highest bidder that intends to buy 100

percent shares.

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Objectives of the company

Build leadership in Plant performance

Expand sales

Create new businesses

Maintain operational efficiency to achieve synergies

Economize on costs by eliminating duplication of resources

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 make FFC and FFBL production profitably all over the country

Imports to round out product slate

Conduct business in clean/ethical manner and on private corporate sector professional

lines

Augment profitability for sustained economic growth

Outperform the Industry

Maintain strong brand and favorable company image

Build a strong marketing team by developing people to sustain efforts into the future

Drive land productivity through balanced fertilizer application

Continue efforts for market development

To play a vital role in agricultural development of the country

To provide the quality products

To set high standards for production and sale and achieve these objectives

To be environment-friendly organization

To promote education in the farmers community by awarding merit scholarships.

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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.

Our flexible and dynamic corporate strategy strives for enhancing customer satisfaction by

adding value over the long run. We aim at creating value for the stakeholders by maintaining and

improving our competitive position in the market. This is achieved by focusing on our

‘sustainable competitive advantage’ that is derived by continuously assembling and exploiting an

appropriate combination of resources and capabilities in response to the changing market

conditions. Our organizational culture is one of our most fundamental competitive advantages.

We have built and preserve an innovation-adept culture, a culture that promotes transparency and

accountability through honesty, integrity and diligence in our dealing with employees,

customers, financial markets, Government, regulatory authorities, and all the other stakeholders.

We consider diversification of our product line as a major factor behind corporate sustainability

in the ever changing market scenario. Diversification in business line is also being considered.

Our unique corporate strategy gets aligned with the resource allocation system and flows down

to the operational levels, thus ensuring its implementation at all levels along with the

achievement of the intended results.

ISO-9002

Another major landmark for Fauji Fertilizer Company is ISO-9002 certification for its

manufacturing division at 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 our system in line with internationally recognized quality standards, we

decided to go for ISO-9002 certification.

To achieve a total quality management system, we surpassed the requirement of ISO-9002

standards by including all support services like Administration, Personnel, Finance, Hospital,

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Schools and Management Club etc. also in the certification scope.We 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 1st Fertilizer Plant in Pakistan. Since then we have not looked back.

We have passed all surveillance audits with commendable remarks from our 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 years.

ISO Certifications Sr. No Certification Name Brief Description of Certifications

1 ISO-9001:2000 Quality Management System

2 ISO 14001:1996 Environmental Management System

3 OHSAS 18001:1999 Occupational Health & Safety Assessment

Series

 

 Strategic Goals Drive land productivity through balanced fertilizer application

Build leadership in Plant performance

Expand sales

Create new businesses

Maintain operational efficiency to achieve synergies

Economize on costs by eliminating duplication of resources

Augment profitability for sustained

Core Values FFC seeks uncompromising integrity through each individual’s effort towards quality product

for its customers and sizable contribution to the national exchequer. Business success of FFC is

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dependent on trusting relationships. The reputation is founded on the integrity of the Company’s

personnel and our commitment to the principles of:

• Honesty in communicating within the Company and with our business partners, suppliers and

customers, while at the same time protecting the Company’s confidential information and trade

secrets.

• Excellence in providing high-quality products and services to customers.

• Consistency is always there in words and deeds.

• Compassion in relationships with employee of FFCs and the communities affected by the

business.

• Fairness to the fellow employees, stakeholders, business partners, customers and suppliers

through adherence to all applicable laws, regulations and policies and a high standard of FFC.

 

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Comparison with competitors

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An Overview of Sector in PakistanPakistan is an agricultural economy. The importance of fertilizer in agrarian economy is above

abroad. It has population of over 150 millions, land of 796096 km square and Population with

agricultural profession 70 %.

Main Fertilizer Producer in Pakistan:

1. Fauji Fertilizer Company (FFC)

2. Fauji Fertilizer Bin Qasim (Pvt) Ltd.  (FFBL)

3. National Fertilizer Corporation of Pakistan (Pvt) Ltd.

4. Dawood Hercules (DH)

Market Share

Fauji 46%

Engro 20%

Dawood 10%

Others 10%

SPOT ANALYSIS OF FERTILIZER SECTOR

FERTILIZER INDUSTRY’S PERFORMANCEThree leading manufacturers of urea in the country have released their accounts for the first half

of 2005. It was encouraging to note that urea off-take during these six months increased by 18

per cent as compared to the corresponding period last year. But, according to the manufactures,

the demand has flattened out gradually. Still the off-take was comparable with the consumption

in the pervious two years. Indigenous production of urea has improved requiring lesser import of

the commodity. The demand for phosphatic fertilizer took a quantum leap registering a 16 per

cent increase.

Various types of fertilizers are used in the country but urea remains the commodity with in the

largest demand sector. The urea market is dominantly shared by three manufacturers namely,

Fauji Fertilizer Company Limited, Dawood Hercules Chemicals Limited, Engro Chemical

Pakistan Limited. All the three are listed at the Karachi Stock Exchange. Fauji has the largest

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production capacity and contributed 46 per cent of the total sale in 1997 followed by Engro 20

per cent and Dawood 11 per cent. The other manufacturer controlling any significant market

share is Pak Saudi Fertilizer. FFC-Jordan Fertilizer Company Limited is a joint venture between

Fauji Fertilizer Company and a Jordanian company.

DEMAND VS SUPPLY The demand for urea has been increasing consistently and significantly. This is due to two

factors: the government of Pakistan (GoP) besides offering various incentives to the fertilizer

manufacturers to keep the cost of production low also extending soft term loans to growers for

the purchase of various inputs. The manufacturers have been able to take the fullest advantage of

the GoP policies and have expanded the production capacities over the years. This, on the one

hand, has helped the country in achieving self sufficiency in the production of urea and, on the

other hand, has reduced the foreign exchange expenditure on import of the product.

Consumption of urea is seasonal. In the past, during the peak consumption period, some

unscrupulous elements used to indulge in black marketing of the commodity. However, with the

enhanced availability of indigenously produced urea and an elaborate dealer’s network the

manufacturers have been able to minimize such incidence.

GAS SUPPLY One of the factors responsible for phenomenal increase in the indigenous production of urea is

the policy of the government regarding supply of gas (feedstock) at concessional rate. The policy

has benefited the country.

When the first urea manufacturing plant was established in the country in 1967 by Exxon

Chemical, its installed capacity was only 148,000 tonnes per annum. The policy has encouraged

establishment of new units and expansion of installed capacities by the manufacturers. The total

installed capacity in the country now exceeds 3.2 million tonnes. This capacity will be further

increased by one million tonnes by the end of this year when the current expansion by ECPL and

FFC-Jordan starts commercial production.

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However, some of the analysts believe that the advantage of supply of gas at concessional rates

to fertilizer manufacturers is not being passed on to the farmers. In their views, at present the

international prices of urea are lower than its domestic price. And therefore, they suggest that

efforts should be made by the manufacturers to lower urea price. The manufacturers do not agree

with this. They say that they have been importing expensive urea in the past and selling at lower

prices – virtually subsidising urea sale — a responsibility of the government. Therefore, if the

price of urea has declined in the international market, they should not be asked to lower the

domestic price. In their views, it is a temporary phase as there is an over supply situation in the

global markets. At this time the GOP must protect the local industry.

Incentives Offered To Fertilizer IndustryThe Government has provided following incentives under Fertilizer Policy, 2001, to encourage

fertilizer production in the country:

To fulfill local demand of fertilizers at affordable prices, the Government is providing

subsidy on production and import of fertilizers.

Investors will be allowed to relocate second hand plant, equipment and machinery, with

the same concession/exemption as applicable to new plants.

The Government is providing concessionary feed stock gas to the fertilizer plants for

production of urea.

Import by manufacturers of Rock Phosphate and Phosphorous of fertilizer free of

customs duty.

Tax relaxation has also been offered by the Government.

Export benefit to suppliers of capital goods for new/modernization projects of fertilizer.

Gas price has been fixed for 10 years for new investments.

Gas for balancing, modernization, replacement expansion for existing plants has been

filed for 7 years.

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PRODUCT WISE, DOMESTIC PRODUCTIONProduct Wise, Domestic Production Of Fertilizer (000 Tons)

Company Wise Product 1997-98 1998-

99

1999-

2000

2000-012001-

02

2002-03

Urea

Dawood Hercules 385 412 436 376 398 425

Engro 663 772 818 781 872 888

NFC Pak-Saudi 618 625 603 605 517 613

NFC Pak-China 27 97 73 0 0 0

NFC Pak-Arab 92 97 102 110 99 102

NFC Pak-American 0 125 200 234 301 290

FFC 1,499 1423 1736 1,877 2,073 2,703

Sub Total 3,284 3,551 3,968 3,983 4,260 4,407

DAP

Sona FFC 0 46 298 325 67 0

CAN

NFC PAK-ARAB 315 339 386 374 329 335

AS

NFC PAK-American 0.5 0 0 0 0 0

NP

NFC PAK-ARAB 293 284 261 285 306 305

SSP

NFC LC&FL J.Wala 0 4 73 78 78 75

NFC Hazara Fert. 0 17 73 81 84 72

Sub Total 0 21 146 160 162 147

N:P:K 1 1 1 2 63 75

TOTAL 3,894 4,242 5,060 5,128 5,187 5,269

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Import of FertilizersImport of Fertilizers 

                                                    000 Tons

Product 1999-00 2000-01 2001-02 2002-03

Urea 114 86 0 0

AS 21 15 32 17

DAP 819 773 919 1,124

NP 122 47 26 30

TSP 15 0 0 9

SSP 22 0 0 0

SOP 11 0 20 16

10:15:20 5 15 5 0

MOP 12 22 11 0

Total 1,141 958 1,013 1,223

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MAJOR FERTILIZER PRODUCERS IN PAKISTAN

Engro Chemical Pakistan LimitedEngro Chemical Pakistan Limited, formally known as Exxon Chemical Pakistan, was

established in 1967 with an installed capacity to produce 147,000 tons of urea annually. The

Company has already expanded the urea production capacity to 750,000 tons per annum. After

the completion of current expansion programme, the annual production capacity will be

enhanced to 850,000 tons per annum besides improving plant energy efficiency and

strengthening the environment conservation measures. The delay in manufacture and shipment of

some critical equipment by an overseas supplier has delayed completion of project from March

2004 to last quarter of the year. The project cost due to the change in scope and delayed

commissioning has increased from US$ 59 million to US$ 72 million. However, according to the

Company sources, the project economics remain unchanged due to enhancement in gas

utilization efficiency.

Engro Chemical Pakistan Limited is the second largest producer of Urea fertilizer in

Pakistan. The company was incorporated in1965 and was formerly Exxon Chemical

Pakistan Limited until 1991, when Exxon decided to divest their fertilizer business o a global basis

and sold off its equity of 75% shares in our company.

The Employees of Engro, in partnership with leading international and local financial institutions

bought out Exxon’s equity and the company was renamed as Engro Chemical Pakistan Limited.

Engro is a public limited company listed on the Stock Exchanges of Karachi, Lahore and

Islamabad.

Location of Head Office: Clifton Karachi

Regional Offices: Hyderabad

Quetta

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Nawabshah

RahimYarKhan

DG.Khan

Multan

Lahore

Gurjanwala

D I Khan

Products Offered Engro urea

Engro Zorawar

EngroPhosphate

EngroNP

Zingro

Engro DAP

Engro Zarkhez

Factories: Dharki, Sindh.

Bin Qasim, Karachi

ENGRO ASAHI POLYMER & CHEMICAL LIMITED (EAPCL)Engro Asahi Polymer & Chemical Limited (EAPCL) is a joint venture of ECPL with Asahi

Glass and Mitsubishi Corporation of Japan for the production of PVC resin. The project is also

being built at Port Qasim. It will have a capacity to produce 100,000 tonnes of resin annually.

The project cost is estimated around Rs. 4 billion.

DAWOOD HERCULES CHEMICALS LIMITEDDawood Hercules Chemicals Limited was incorporated as a public limited company on 17th

April 1968, as a joint venture between Dawood Group of Industries and Hercules Inc. USA. It

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was the first private sector venture in Pakistan to receive a loan from the World Bank and was

the largest ammonia/urea plant in country at that time.

Initially the plant's capacity was 345,000 metric tons of urea per annum. The plant was

revamped in 1989 / 1991 to enhance the capacity to 445,500 metric tons of urea per annum.

Also, it made the manufacturing facilities more energy efficient and environment friendly.

ISO-9000:2000 certification. Dawood Hercules also won numerous safety and excellence

awards.

Dawood Hercules Chemicals Limited has not been able to enhance its production capacity

lately. The Company operates on a gas network which is primarily domestic consumer oriented.

Any increase in demand for gas or reduced gas availability, due to the fault in the system,

immediately results in diversion of supply to domestic consumers particularly in winter months.

fertilizer plants in some other areas were able to achieve at least 10 to 12 per cent production

above the designed capacityindicating capacity utilisation at 85 per cent as against a capacity

utilisation of 76 per cent during the corresponding period in 2004. It is believed that the average

capacity utilisation for the year will improve to 90 per cent provided there is no load-shedding of

gas. However, to achieve capacity utilisation above designed capacity the Company needs supply

of gas at optimum level. This will not be possible without improving the pipeline network. By

the end of year 2005, approximately one million tonnes of additional urea manufacturing

capacity is expected to come on stream in the country. This would not only improve the

availability of the product but would also result into greater competition. With the present

downward trend in the international price of urea, the ability to recover escalation in cost through

higher prices will be limited. To remain successful in the tough competition it will be necessary

for the manufacturers to focus on cost control and improved productivity.

The policies of the government assign the highest priority to allocation of gas for the fertilizer

industry to boost agriculture production in the country. It is necessary that the government abides

by the policy and meets industry demand for allocation of additional gas at reasonable price. To

ensure availability of urea at competitive prices the government must avoid any escalation in the

gas (feedstock) prices in the near future as the government intends to enhance production of food

and cash crops in the country. Besides, the industry has become a potential foreign exchange

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earner. Efforts should be made to enable the industry to earn foreign exchange after freeing the

country from its import liability.

Head Office Location:Empress Road, Lahore

Factory Loaction:

Chichoki Mallia, Shkhupura

Product Offered: Bubber Sher: The Company's principal activity is to produce urea fertilizer. The company markets

it s urea under the brand name Bubber Sher.

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COMPETITORS ACTIVITIES

ECPLThe new urea plant with 1.3 million metric tons per annum capacity is likely to start

operations in August 2010. After the commissioning of their new urea plant their total urea

production capacity will be over 2.2 million metric tons. The company previously concentrated

its operations in the economic proximity of their plant, however now they have expanded their

operational area to the entire Pakistan. They have introduced a fourth non-management tier in

their setup with an idea to amplify the market penetration and cost effectiveness, it will also help

them to concentrate more.

ECPL's Annual Marketing Conference was held in Singapore from 16th to 19th June

2009.

M/s ECPL planned a change in the structural hierarchy of the marketing department

effective from January 01, 2010.

M/s ECPL remained focused on the expansion of their dealer network in the wake of

additional urea production from new plant.

The company ran a sales campaign, which had numerous incentives like quantity

discounts and foreign trips for the top performing dealers. During 2009, the company

held "Engro Champion dealer's conference" in Malaysia from 12th to 15th March 2009 in

which their top performing dealers participated.

The removal of Boron from the product line was one significant decision of Engro during

2009. The entire available Boron inventory was given to the main dealers free of cost.

The company vigorously ran the technical campaign in the Center Zone to strengthen the

brand & corporate image.

In order to boost the sale of DAP & Zerkhaiz the company decided to waive off the

credit charges on sales against Bank Guarantees.

The company also introduced the SMS facility regarding urea shipments from plants to

the dealers.

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DHCL North Zone remained the target of all the activities and their activities in the Central and

South zones of FFC were minimal to the point of nonexistent.

The company imported 97 kt DAP during the year.

The company reduced the DAP dealer transfer prices to as low as 1750 ex - Karachi.

NFML Their last plant Hazara Phosphate fertilizers (HPL) was privatized in December 2008 and

M/s Azgard 9 took over the operational control of the plant.

The company remained the sole distributor of the TCP's imported urea.

The company, in order to handle the huge quantity of imported urea imported by GOP

through TCP, improved its warehousing set-up by hiring warehouses at several new

locations.

The favorable market scenario enabled the company to easily sell the products in the first

half of the year but in the later half company had to carry large inventory.

During the fourth quarter of the year, the company under the pressure of heavy imports,

made a significant strategic shift in its policies when they started offering unauthorized

credit to the dealers for urea sales.

During the peak seasons, NFML indulged in various unethical practices and gave huge

quantity of urea under the political pressure, urea sales through haulage contractors etc.

A huge quantity of imported urea was also dumped en-route with the connivance of

NFML.

Al-Hamd Chemicals After acquiring the SSP plant from NFC, Al-Hamd Chemicals throughout the year

supplied SSP to the market.

Pak Arab Fertilizers Their new plant is expected to commence production in March 2010 according to the

official announcement by the company.

The company remained haphazard regarding its dealer network.

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During the year, on one hand, they were trying to enhance their dealer network and at the

same time, on the other hand they were selling large portions of production through

hidden deals to selective large dealers bypassing the dealer network.

Pak Arab tied up the sale of slow moving products with urea.

The company remained aggressive throughout the year and offered foreign trips and

quantity discounts during their sales campaigns to market their IMP, CAN and DAP

products.

Mr. Muhammad Zahir, Ex-vice president ICI Pakistan, joined the company as

Director Marketing.

Azgard The company after the acquisition of SSP plant from NFML launched its own SSP.

Initially it was sold under the brand name of "Kissan Plus" but later the company branded

it as "Tara SSP". The company presently is marketing two SSP grades with 14% P2O5

and 18% P205.

Azgard arranged trips for 70 dealers to China and Hong Kong on achieving the

phosphatic sales targets of 300 and 600 mt respectively.

The company offered Deferred Marketing Allowances (DMA) to dealers in various slabs

on DAP sales during the period May-June 2009.

Azgard utilized rail as the transport to ship its products in NWFP.

Jaffer Brothers Limited The company continued aggressive marketing of imported DAP, TSP and MAP

throughout the year.

They offered various quantity discounts and Deferred Marketing Allowances to dealers

throughout the year to promote & sell their products.

The company followed the prices of private importers to sell DAP, they were however

much lower in prices from the urea manufactures.

Private DAP Importers Private importers remained very active throughout the year.

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Part TWOCompany Management System

The reduction in DAP prices in the international market gave them a new lease of life and

they were back in business in 2009. During the year, they imported consistently and

heavily and made windfall profits.

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Part II

COMPANY MANAGEMENT SYSTEMOrganizational chart

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Structure of Marketing Division Lahore

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Now most of the responsibilities of IT Department are shifted to SAP

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Company Information

Management

Chief Executive and Managing Director

Lt. Gen. Malik Arif Hayat HI (M), (Retired)

Chief Financial Officer

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Board of Directors Lt Gen Hamid Rab Nawaz, HI(M)

(Retired)

Chairman

Lt Gen Malik Arif Hayat, HI (M) (Retired)

Chief Executive and Managing Director

Mr. Jorgen Madsen

Mr. Qaiser Javed

Mr Tariq Iqbal Khan

Dr Nadeem Inayat

Mr. Istaqbal Mehdi

Maj Gen Muhammad Tahir, HI(M) (Retired)

Brig Arif Rasul Qureshi, SI(M) (Retired)

Brig Rahat Khan, SI(M) (Retired)

Mr Shahid Aziz Siddiqi

Mr Shahid Anwar Khan

Mr Khizar Hayat Khan

Plantsites

Goth Machhi, Sadikabad

(Distt: Rahim Yar Khan)

Tel: No. 92-68-5786420-9

Fax: No. 92-68-5786401

Mirpur Mathelo

(Distt: Ghotki)

Tel: No. 92-723-651021-24

Fax: No. 92-723-651102

Marketing Group

Lahore Trade Centre,

11 Shahrah-e-Aiwan-e-Tijarat, Lahore

Tel: No. 92-42-36369137-40

Fax: No. 92-42-36366324

Karachi Office

B-35, KDA Scheme No. 1, Karachi

Tel: No. 92-21-34390115-16

Registered Office

93-Harley Street, Rawalpindi CanttTel: No. 92-51-9272307-14Fax: No. 92-51-9272316E-mail: [email protected]

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Syed Shahid HussainCompany Secretary

Brig Khalid Kibriya (Retired)Tel: No. 92-51-9272327Fax: No. 92-51-9272519

Group General Manager Marketing

Mr. Asad Sultan Chaudhry

Group General Manager Technology & Engineering

Syed Iqtidar Saeed

Group General Manager Finance/CFO

Syed Shahid Hussain

Group General Manager Manufacturing & Operations

Mr. Tahir Javed

General Manager Manufacturing & Operations (Mirpur Mathelo)

Mr. Naeem-ur-Rehman

Senior Manager Corporate Affairs/Company Secretary

Brig. Khalid Kibriya (Retired)

DIRECTORS NOMINATED BY

Mr. Jorgen Madsen 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

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Maj. Gen Muhammad Tahir (Retired) Fauji Foundation

Brig. Arif Rasul Qureshi (Retired) Fauji Foundation

Brig. Rahat Khan (Retired) Fauji Foundation

Mr. Shahid Aziz Siddiqui State Life Insurance

Mr. Shahid Anwar Khan National Bank of Pakistan

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Policy Formulation Process-MeetingsAt FFC, polices are devised at the peak level. Board of Directors and Executive Committee

devise strategies keeping in view the vision, mission and the objectives of the company. These

strategies are executed according to the instructions of top level of hierarchy.

Top management and middle management are given powers to carry out the operations for the

achievement of long-term objectives. They encourage the views and suggestions of employees as

well. It helps in the effective implementation of the formulated strategies.

Meetings of the Board (At Corporate Head Office)The chairman presides over meetings of the board and encourages the participation and

contribution of executive and non executive directors. The directors meet at least once in each

quarter. Additional meetings are called upon when required. In 2004 a total of seven meetings

were held which were also attended by chief Financial Officer and the Comp[any Secretary. The

chief Financial Officer and the Comp[any Secretary are the employees of the company and are

not entitled to cast votes at the meetings. Written notices of the meetings along with agenda and

its details were circulated seven days in advance. Minutes of each meeting are recorded and

circulated by the company within 30 days.

In these meetings the issues generally discussed are:

Approval of quarterly financial statements

Approval of half yearly financial statements

Approval of annual financial statements

Annual business plans

Annual budgets

Quarterly forecasts and annual forecasts

Cash flow projections

Performance monitoring

Internal audits reports

External audit recommendations

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Agreements and contracts

Amendment of laws

Agreement with staff unions’ Collective Bargaining Agents (CBA)

Status of payments of debts and obligations and repayments of loans

The board, after each meeting, gives the recommendations to strengthen and formalize the

corporate decision making process.

Meetings (At Marketing Head Office)

All the heads of departments meet every Tuesday to

To present the weekly reports to GMM

To discuss the sales situation

To look at the competitors’ activities

To monitor the performance against monthly and annual plans

To monitor fertilizer supply and demand situation.

Tries to devise strategies to overcome problems if any.

In every month a monthly meeting is held in which reports for the month of all departments

are presented to GMM.

In monthly meetings the targets and plans for next month are also set.

In these meetings monthly sales of FFC against the same period of last year and monthly

sales of competitors’ are also analyzed.

Sales of all regions are reviewed.

Sales performance of all sales officers are compared with targets

Best sales officer of the month is selected and rewarded.

Expenses for the month are approved.

These meetings are presided over by GMM.

All these meetings are held at Lahore marketing office.

Annual meeting of all the managers of Marketing Division is also held

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MANAGERIAL PRACTICES,

Functions and Powers of Board of Directors:The role and responsibilities of the chairman and the chief executive officer are distinct, clearly

defined and documented and are carried out separately by the two officers. The board exercise its

powers to carry out its duties with a sense of object judgment and independence in the best

interests and the company has circulated a” statement of ethics and business practices” to

establish a standard of conduct, as a model corporate citizen , for the board and employees of the

company. Each year, the director attend the orientation coerces of their duties and responsibility

to manage the affairs of the company on behalf of the shareholders; these courses are also

attended by the management of the company.

The board has also adopted vision and mission statements and an overall corporate strategy for

the company and formulated policies including risk management, procurement of the goods and

services marketing ,terms of credit and discount, acquisition and disposal of of fixed assets and

write-off inventories, bad debts, loans and advances, investments and disinvestments of funds

with maturity period exceeding six months, borrowing, donations, charities, delegations of

financial powers, transitions with related parties, loans and advances, human resource

management including succession planning , healthy ,safety and environment . decisions on

material transitions or significant matters are documented through resolution passed at their

meetings and circulated for approval.

The board monitors the operations of the management through three standard

committees. Implementations of the decisions, policies and strategies along with maintenance of

their record have been delegated to the management under the supervision of the Chief Executive

and Managing Director of the company and is executed and controlled through management

committees.

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MANAGERIAL POLICIES

Audit Practices A number of excellent manuals are available for the professional auditor or the member of a

director’s examining committee who wishes to familiarize himself with specific audit techniques.

In FFC most direct form of auditing is simple rechecking have a second person redo what

someone else has already done. In addition to this, some direct spot- checking has an important

place in the audit program even where controls are well developed.

Policies for Attracting Deposits Although management and directors of FFC do have absolute control over the level of their

deposits, they can never the less influence the amount the FFC hold. Because deposits are so

important to the profitable operation of FFC, the FFC tends to compete aggressively for them.

Among the factors determining the level of deposits in a FFC are some that the FFC usually

cannot affect significantly, some of the leading are monetary and fiscal policy and the level of

general economic activity.

Policy Statement of Ethics & Business Practices

It is the policy of FFC to follow the highest business ethics and standards of conduct. It is the

obligation of every one of us to act responsibly; that is, to be honest, trustworthy, conscientious,

and dedicated to the highest standards of ethical business practices.

The Company’s reputation and its actions as a legal entity depend on the conduct of its Directors

and employees. Each one of us must Endeavour to act according to the highest ethical standards

and to be aware of and abide by applicable laws. We must all ensure that our personal conduct is

above reproach and complies with the highest standards of conduct and business ethics and have

the obligation to ensure that the conduct of those who work around us complies with these

Standards. The Company’s Code of Business Ethics and Standards of Conduct will be enforced

at all levels fairly and without prejudice. This code to which the Company is committed in

maintaining the highest standards of conduct and thical behavior is obligatory, both morally as

well as legally and is equally applicable to all the Directors and employees of the Company who

have all been provided with a personal copy.

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Human resource practices:

Following are the practices conducted in the FFC.

Recruitment

Hiring

Training

Performance Management

Employee Development

Pay structure

Compensation & Benefits

Recruitment

External Recruiting: In the external recruiting, FFC advertises through its website

www.ffc.com.pk & also through the newspaper. They also attract the job applicants through the

reference of existing employees.

Internal recruiting: They also make internal recruitment by hiring an existing employee to

another job according to the need.

Hiring:

The hiring procedure they have conducted is the following.

Take the written tests :In written test the general knowledge, knowledge about related field and

the English level of the applicant is checked.

\

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From 2010 Onwards GAT (General) test by NTS will replace the old test conducted by FFC itself.

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Conduct the interview

Interview is compulsory in every hiring, while taking the interview the HR manager and the

specific department manager must be present.

To engineers, two interviews are conducted.

o Preliminary interview

o Final interview

Preliminary interview is conducted by the specialist person, who are special skills and

knowledge about the related field and they check the knowledge of the applicant.

Final interview is conducted by the top level management who takes the decision either the

applicant should be selected or not on the recommendations of the specialist

Training:In the training, FFC has gone for the two ways.

Internal Training: The management has gathered its pool of the experienced people who

trained the employees in their skills, behaviors & attitudes.

External Training: They hired the international consultancy firm who gives training to the

employees and assists in the different areas of job. The training period is of the two months.

Experienced personnel come from Denmark, china and gave training. On the job training and off

the job training is given to the employees. For example employees are sending to foreign country

for higher studies on scholarship.

Job assessment

Performance Management:

They made evaluation of their employees after six months. Feedback is taken from employees

and their performance is judged.

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Performance Appraisal System (PAS)

Several factors are considered to judge the performance and each having different weighted

value for the tiers, Top, Middle and Lower.

TOP: Department Managers and above

MIDDLE: Sr. Officers, Section Heads and Unit Managers

LOWER: Officer-I and below

General Hierarchy Structure in all most of the departments at Marketing Division

Factors to be considered judge the performance of the employees Job knowledge and skills

Quality of work

Organizational skills / time management

Leadership and supervisor skills

Decision making / judgment

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Senior Manager

Deputy Manager

Supervisor

Supporting Staff

Junior Executive

Supervisor

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Quantity of work

Interpersonal skills / Team work

Training and Development

Safety / Security

Personal

Job knowledge and skills

Deals the following abilities

Job Knowledge (level of knowledge possessed by the employee)

Analytical Ability (capability to consider pros and cons methodically/systematically)

Innovation (ability to generate new ideas)

Effective Employment of Job Knowledge to Produce Results

Optimum Utilization of Resources (best possible use of resources)

Quality of works

Deals the following abilities

Accuracy / Precision (ability to produce work with no/minimum errors)

Dependability (level of reliability/trustworthiness)

Follow Up Action (degree of involvement till completion of work)

Consistency (ability to maintain quality of work)

Neatness (orderly, smartly and skillfully handling of work)

Organizational skills / Time management

Deals the following abilities

Initiative (willingness to work without being told/prompted)

Knowledge and Adherence to Company policies

Effective Management of Resources (efficient/economical use of resources i.e. Lab our,

Time, Materials etc)

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Planning and Allocation of Priorities (conceiving and working out proper sequence of

action)

Meeting Deadlines with Accuracy (timely completion of work without errors)

Leadership and Supervisor skills

Deals the following abilities

Apportionment of Responsibility and Authority (assigning of jobs with required

authority)

Setting of Goals (self and subordinates)

Delegation (empowering subordinates for given assignments)

Planning and Control (formulating and directing activities)

Ability to Motivate (capacity to inspire and encourage others)

Decision making & Judgment

Deals the following abilities:

Objective Assessment of Issues / Problems (Impartial analysis of problems)

Proactive Thinking for Solutions (anticipating problems and their solutions)

Evaluation of Facts for making sound Decisions / Recommendations

Timely Decisions

Awareness of own Capabilities (Strengths and Weaknesses)

Quantity of work

Deals the following abilities

Volume of Work (capacity to handle/produce work)

Target on Time (completion of task in given time)

Priority (assigning weight age to task in order of their importance)

Ability to work Under Pressure

Sustained Work (consistent / steady output)

Interpersonal skills / Team work

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Deals the following abilities

Relationship with Colleagues

Relationship with Subordinates

Relationship with Superiors

Outside Relationships (development and maintenance of corporate relationship outside

the company)

Ability to Create Synergy amongst Team Members (act as unifying force)

Training and development

Deals the following abilities

Self Development (keenness for improvement)

Coaching Capabilities (ability to guide and train)

Acceptance of Challenges (readiness to learn/teach new technology and methods)

Setting Standards for self and Others (benchmarking training and development needs

Desire to Learn Latest Technology / Management Tools (urge and search for knowledge

Safety & Security

Deals the following abilities

Knowledge of Safety / Security Methods & Techniques

Application of Safety / Security Procedures

Security & Confidentiality of Information

Security of Company Material / Property

Health Consciousness (knowledge and implementation of basic health needs)

PersonalDeals the following abilities

Oral Communication

Written Communication

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Emotional Intelligence (ability to understand and positively influence own and other’s

emotions)

Honesty

Attitude (flexibility / adaptability)

Employees Development: The channel has strongly focused on the employee development.

Cover the laps among the employees by using frequently the mentor in the organization.

Make promotions regarding to their performance

Job rotation is also done if the managers see any need of it. But they also watch the

interest of the employee.

Pay Structure:FFC has lead the market pay strategies that is they have pay the more than the 5-10% which

has developed the external motivation in the employees.

Annual Bonus

Free education

Free pick & drop to their employees

Free medication

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Major managerial policies, practices/stylesFFC has the strong management system to run the business. Today FFC is one of the most

successful companies and its all due to its superb managerial policies. There are many planned

policies which are adopted by the company.

Marketing and Sales PoliciesMarketing and sales departments serve as backbone in the company. FFC has fully planned and

organized marketing and sale policies. Meetings are held where decisions are taken for the

efficient functioning of the company’s marketing and sales areas because the company depends a

lot on its marketing and sale policies. Marketing budget is carefully determined and sales people

incentives and salaries are reviewed from time to time. There are certain other essential things

about the sales strategies. Products are sold throughout Pakistan with no change in prices

anywhere. In case of consumer products the freight are born by the company. The customers are

offered no discount and also products are sold on cash basis. In case of industrial products freight

are the responsibilities of the customer.

Human Resource PolicyFFC has strong human resource policy. The management believes that their employees are major

assets of the company. Just because of this policy the company continues to benefit from the

efforts of its valuable people, who are actually, the strength of FFC through training and

development activities the human resource policies aim at the improved working conditions all

over the organization. The various personnel strategies can be that the employees are chosen

solely on the basis of merit and they are given monetary rewards and incentives with a view to

increasing the commitment and motivation of the employees. Although the salaries are not really

competitive if you look at the market scenario yet the employees are quite satisfied as they are

working in an excellent environment and enjoying as an employee of a market leader.

Financial PoliciesFFC has the well established rules for their financial transactions. One of the most important

strategies in this regard is of investment. Before making investment future is seen rather than the

present i.e. investment is made only in the projects, which will increase the sales in the future.

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Customer Relationship PoliciesFFC adopts the strong customer relationship policy. They think customer as the king. They are

following 20 – 80 strategy in dealing with the customers.

Internal Department PoliciesThey maintain a strong relationship between the departments. All departments are interrelated. It

is one of the main aspects of strategic management that all the various functions performed in the

company by the different departments must have interrelation and collaboration if company

wants to achieve success. Thus synergy is given a lot of importance.

FFC has many other policies to run their business. These all contribute to the success to the

success of the FFC.

POLICIES REGARDING EMPLOYEES AND DESIGNATIONNumber of Employees:

There are approximately 3,162 permanent and temporary employees working in Fauji Fertilizer

Company Limited. Finance department of the company comprises of approximately 200

professionals. The Company divides its employees into three broad categories namely

Management Employees, Staff Employees, and Casual Employees.

Facilities to Employees

Medical policy

Travelling policy

Medical Policy

Eligibility

Employees and their families as per term "Dependents".

Medical Coverage

Personnel at Rawalpindi, Plant sites, Lahore = consult FFC Doctor.

Personnel at Karachi = Dr nominated by RM Karachi.

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Specialist Consultation

For personnel living in Township, SDK and RYK referral from FFC clinic is mandatory except

the child specialist on panel. For other stations referral from Company nominated

doctor/registered medical practitioner. Travel expenses according to entitlement with/ without

attendant as per doctor recommendation will be paid by Company.

Hospitalization

100 % reimbursement in case of the Company panel hospital for General Ward. For private

room 60 % reimbursement of room charges (for staff employees).

Dental Treatment

Toothache, Gum Diseases, Deteriorated Teeth extraction, Filling of Cavities, Root Canal

treatment and Crowning.

Overseas Treatment

On recommendations of Board of Armed Forces Institute of Cardiology (AFIC) (for cardiac

diseases). Oncologist CMH, Rawalpindi (for Cancer). Reimbursement up to 500000/- only.

Management approval is must before movement.

Daily Allowance

Cat I Rs. 500.00 Per day

Cat II Rs. 440.00 Per day

Cat III Rs. 315.00 Per day

NOTE

For a full calendar day exceeding 12 hours = One DA

For the part of a calendar day exceeding 6 hours = half DA

For less than 6 hours = No DA

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Technical staff when detailed for duty in emergency shutdown or turnaround from GM to

MM or Vice Versa will be entitled one additional DA.

Out of Pocket Allowance:

1 /4th of DA per day.

Relocation

Self family rail fare in entitled class.

04 x additional DAs for married staff employees.

02 x additional DAs for single staff employees.

Relocation Allowance

Category Married Single

I Rs.1000.00 Rs. 500.00

II Rs.800.00 Rs.400.00

III Rs.500.00 Rs. 300.00

Transportation of Personal Effects

By Good Train

Category Married Single

I 1500 KG 750 KG

II 1200 KG 600 KG

III 1000 KG 500 KG

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On retirement the employees can avail the above facility or one truck from place of posting to

home station.

Hotel Stay

Management employees are entitled to stay in Hotel as per entitlement:

Expenses: Hotel expenses. (Room Rent, meals Taxes for one person) Guest is not

allowed.

Bills: Bills are required to be produced.

Daily allowance: No DA in case of Hotel Stay.

Relocation/ Transfer

4 X additional DA (Married), 2 X DA (unmarried). On relocation if family is traveling with

officer in same car cost of one ACC Fare for self and Half ACC Fare for each member

Relocation Allowance

CAT Married Unmarried

1& II 10000/- 5000/-

III & IV 5000/- 3000/-

V 3000/- 2000/-

Transportation of Goods

By goods train

CatMarried Unmarried

1& II 6000 KG 3500 KG

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III & IV 5500 KG 3000 KG

V 4500 KG 2500 KG

Annual Leave

Less 5 years of Service : 18 Days

Completed 5 years 24 Days

Completed 6 years 25 Days

Completed 7 years 26 Days

Completed 8 years 27 Days

Completed 9 years 28 Days

Completed 10 years 30 Days

Casual Leave

10 working days per year.

Max 3 days at a time.

Cannot be prefixed /suffixed to any other leave.

Sick Leave:

10 working days per year.

Certificate from Doctor is must in case of leave exceeding two days.

Accumulation upto 30 working days.

SANCTION:

Unauthorized absence will cause break in service.

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Total period of absence even an account of all leaves exceeding 90 days will cause break

in service as per Factories Act.

Leave over and above entitlement will be treated as Special Leave without Pay.

Casual / Sick Annual leave will be sanctioned by Unit Managers/Section Heads.

Hotel Entitlement-Officers:

CAT 1 & II: All Hotels of their choice.

Cities Category-III Category IV / V

Peshawar Pearl Continental Ambassador

Deans

Rawalpindi/Islamabad PC Deans Faraz International

  Holiday Inn Shalimar

  Flashmans Flashmans

  Shalimar Holiday

    Silver Grill

    Kashmir Valley

Lahore PC Flettis

  Avari Shalimar

  Holiday Inn Ambassador

    Ravi Lodge

    Day Inn Hotel

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Multan Holiday Inn Sindbad

    Holiday Inn

Hyderabad Any Hotel Fraz

    New Indus

    Sain Jees

Karachi Shareton Beach Luxury

  PC Midway

  Marriott Metropole

  Avari Mehran

  Holiday Inn Best Western

  Crown Plaza Plaza

    Sky Tower

    Gulf

    Exceissior

    Chietan

    Sarwan

Faisalabad Serena Eastman Inn

    Dec-Continental

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Quetta Serena Loards

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GROWTH OPPORTUNITIES/ CAREER LADDERFFC provides growth opportunities to its employees and officers, as it deals with many leading

institutions.

PROMOTIONFFC decisions about promotions are decided upon the basis of merit in one’s present position

and ability and potential to assume the impossibilities of higher level positions.

Sometimes other factors are considered such as length of service, education, training courses

completed, previous work history and the like.

Job Satisfaction:I asked this question (regarding job satisfaction) to majority of supervisions with whom I got the

chance to work. Some of the qualitative findings are:

Most of the employees are highly satisfied with their job

Highly satisfied with monetary rewards

Highly satisfied with relation to fellow employees

Highly satisfied with subordinate junior relation

Moderately satisfied with relation promotion mechanism

Moderately satisfied with subordinate junior relation (In case of seniors from army

background)

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Part THREE

Administrative Styles

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Part 3

MANAGING THE ORGANIZATIONThe management of the FFC focuses on some of the objectives that it wants to achieve. The way

managers treat and deal with their subordinates in order to accomplish the multiple objectives of

the organization is determined primarily by management system of beliefs about the nature of

man and about the determinants of cooperation in an organized endeavor.

MANAGERIAL STYLESManagement is process of utilizing material and human resources to accomplish designated

objectives. It involves the organization, direction, coordination and evaluation of people to

achieve these goals. The role of manager is to assemble the best work team he can obtain and

then to provide a supportive motivational environment to guide that team to accomplish agreed

upon objectives. The essence of management is the activity of working with people to

accomplish results. It involves organizing, motivating, leading, training communicating with and

coordinating others.

Organizational Culture:The culture of the organization is very much differentiated with their competitor. The culture of

the organization is too much dynamic that is encouraged to the individual to do hardworking &

show the achievement. Following are the practices that make the culture of the organization

dynamic.

Centralization/ Decentralization:

The culture of the organization is centralized and also decentralized that everyone has followed

the orders of the Top management and decentralized in the sense that some decision are taken

into consideration and solved by the specific department head.

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Consultative & autocraticManagement style cannot be said purely autocratic or monarchy but it also includes consultation

from the employees. Although decision is even then is made at highest level after taking into

consideration the conditions and suggestion from the employees.

Examples of Centralized policies

Perk policy

Recruitment policy

Decision making policy

Salaries policy

Examples of decentralized policies

Temporary workers related policies

Daily wages employees related policies

Employees Relationship

The culture has focused on the good relations among the employees. each and every person is

working in the friendly environment and co-operate with each other.

Now a day world became a global village and every field is directly affected by the incident done

all over the world. Fauji Fertilizer Company Limited also affected by the political and social

conditions of world just like increase in oil prices. With this new technology, innovation, ways of

communication and new management styles affect the FFC in positive manners.

Decision Making In FFC decision making done by the team work. Leaders consult with individual or group

subordinates, obtaining their ideas and opinion, and then make the decision. While doing

decision making FFC identifying and diagnosing the problems or facts or both, generalizing the

alternatives, choosing best alternative and after implication evaluation the results.

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Identify and diagnosing problem

Generating alternative solutions

EvaluatingAlternative

Choosing best

alternative

Implication Decision

Evaluating results

FFC decision is making some times very lightly affected by organizational politics, emotions and

personal preferences but FFC management quickly overcome on it due to good controlling.

PlanningIn FFC planning through by a proper channel and it take a long time. When they plan something,

they started their planning from the beginning of year and almost taking one year on research and

other precaution and facts relating to their planning they implied what they planned.

In their planning there is a proper channel/ sequence which we mentioned above.

First of all they analysis the situation and see with the alternative goals and plan and measure the

opportunity cost. After that they select the best way and last step of their planning is implication

with monitoring and controlling.

While doing planning and implication of planning they also see and measure internal and

external threats, weakness, strengths, resources etc.

The most interesting thing in FFC’s planning that there is vertical planning but from Bottom to

Top because their bottom staff directly relating to their customers (farmers) so they started

planning at gross root level.

ControllingControlling is a very much important aspect of big business. Controlling consists of verifying

whether everything occurs in conformities with the plans adopted, instructions issued and

principles established. Controlling ensures that there is effective and efficient utilization of

organizational resources so as to achieve the planned goals. Controlling measures the deviation

of actual performance from the standard performance, discovers the causes of such deviations

and helps in taking corrective actions.

INSTITUTE OF BUSINESS ADMINISTRATION (INTERNSHIP REPORT)

FFC decision is making some times very lightly affected by organizational politics, emotions

and personal preferences but FFC management quickly overcome on it due to good

controlling.

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CompareDetermine deviation

With inLimitsStandards

YesNoTaking corrective

Action

Continuous work progress

Set performance

stander

Measure performance

In FFC the formal control, feed forward control aims to prevent problem before they arise, feed

back control implies the performance measure by the data and analysis the results. With this they

have the also have audit management and budgetary control by the help of auditors, balance

sheet, income statement and financial ratios.

Innovation In fertilizer sector innovation is not so much important aspect. Because as old as fertilizer

product as increase in value and demand of product. Because Industry Market innovation are

slowly as compare to Consumer Market

In FFC for the purpose of innovating ideas Research and Development (R&D) Department is

working. They used the latest equipment and welcome to positive innovation by all over the

world.

CommunicationIn FFC downward and upward communication is used through hard and soft copy but they

converted their communication channel from hard copy to soft copy.

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There are following way of communication in FFC.

Use of telecommunication

Use of electronic media, e-mail, fax etc.

They heavily invested in the technology. They are using the latest technology especially

imported from the foreign country.

A good deal of verbal interchange takes place in FFC each day. It is a two way street. The

competent officers discuss, listen as well as interact rather than directs. The FFC makes the

communication channel more effective by staff meeting eventually it is an extension of the

conversational or discussion technique but embraces a larger segment of the organization. Such

meetings are regular features of efficiently operated FFC and take a wide variety of forms,

ranging from daily or weekly officers meetings to annual weekend conferences.

The major portion of communication necessary for the day to day operations of a FFC consists of

simple person to person conversation more complex ideas, however, gain clarity if they are put

in writing. Thus the FFC is talented in the ability to write clearly which is an invaluable

management talent that needs constant practice and development.

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IMPACT OF MANAGEMENT STYLES ON EMPLOYEES:

MORALE AND PRODUCTIVITYThe employees of the FFC possess high morale, and thus exhibit high productivity. The

employees are happy and are also productive workers. Job attitudes and morale are quite positive

for two reasons.

Firstly employees gain social satisfaction from interactions at the work place. Working

conditions and supervision good, secondly high morale result from high motivation to produce.

MotivationMotivation can be defined as a willingness to expend energy to achieve a goal or a reward.

The management styles adopted by the FFC affect greatly, and employees are motivated in order

to enhance their performance and achieve the derived goals.

FFC focused on the motivation of employees to do work and for this purpose

FFC give them different types of incentives, bonuses, pay incentives, per

motion, Medical facility, residential facility, fair well, annual dinners and

much more.

Job design for motivation is another personnel approach that has been increasingly emphasized

in recent years. Job contents, methods and relationships are structured not only to satisfy

technological and organizational requirements but also to accommodate human needs for

meaningful and self-fulfilling work. Jobs are being designed to fit the people who hold them in

the hope that greater employee motivation (which is essential to higher productivity) will result.

Sensitivity training and / or organizational development programs have been used to aid in the

broad development of Top executive talent and teamwork. Just like it FFC create a community

for employees.

The Company has built a model township for its employees at this remote location which

consists of residential accommodation along with allied facilities. In caring for the community in

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health, education, environment & sports, Fauji Fertilizer Company Limited follows its key

objective:

"To use all skills, energies and technologies in building the image of the company, by strictly

adhering to the Company Core Values, that makes its employees to contribute towards society in

a way and enhance its image as a leading Fertilizer Business company in Pakistan."

For this FFC is providing excellent health, education, recreational and sports facilities to its

employees.

Health facilities include a modern clinic equipped with a laboratory in the vicinity of the

residential area. A panel of competent doctors is available round the clock to take care of the

community's health.

Two schools, FFC Grammar School & FFC Model School are operating in parallel in the FFC

Township, offering up to the Higher Secondary level. Imparting computer literacy to children is

one of the main elements of FFC schools, modern education. FFC operate two separate

Management and Staff clubs, offering sports and recreational as well as social activities. The

clubs are equipped with basic facilities like swimming pools, Tennis/Squash courts, Health gym

and much more. A lush green (09 holes) golf course is a panoramic element of FFC sports

facilities and it has promoted many good golfers in the community.

Many sports events like Annual Sports, Married Vs Bachelors and Sports Gala etc. are held from

time to time, imparting healthy entertainment to the residents. Social events like Musical

Evening, Mushaira, Eid-Milan, etc. are also part of the social activities of the club.

Morale and productivity The employees of the FFC possess high morale, and thus exhibit high productivity. The

employees are happy and are also productive workers. Job attitudes and morale are quite

positive for two reasons.

Firstly employees gain social satisfaction from interactions at the work place. Working

conditions and supervision good, secondly high morale result from high motivation to

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produce. In other words we can say, that management should put its eggs in the basket that

creates a high-motivated work force.

Promotion FFC decisions about promotions are decided upon the basis of merit in one’s present

position and ability and potential to assume the impossibilities of higher level positions.

Sometimes other factors are considered such as length of service, education, training

courses completed, previous work history and the like.

CRITICAL ANALYSIS OF ORGANIZATIONAL CULTURE AND MANAGEMENT STYLES

Organization’s culture is a pattern of basic assumption invented, developed by a given

group as it learn to cope with its problem of external adoption and internal integration.

Values, principles, policies, and structure of the organization are the main miles stones

to analyze the company’s strength.

Principles/Values:

These are the principles and supporting behaviors, which flow from their Purpose and

Core Values. Employees of FFC have some exceptional qualities.

They show respect for all individuals.

The interests of the Company and the individual are inseparable

They are strategically focused in their work

Innovation is the cornerstone of their success

They are externally focused

They value personal mastery

They seek to be the best

Mutual interdependency is a way of life

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Part FOUR

Production Facilities

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Part 4

Plant Sites and Production Facilities

Production FacilitiesBASE UNIT-GOTH MACHHI (FFC-1)

Start-up: June 1982

Design Capacity

Ammonia: 330,000 Met/Year

Urea: 570,000 Met/Year

REVAMPED BASE UNIT

Capacity Enhanced: 1992

New Capacity

Ammonia: 403,000 Met/Year

Urea: 695,000 Met/Year

EXPANSION UNIT-GOTH 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

Acquisition by FFC: 31 May, 2002

Merged with FFC: 1 July, 2002

Design Capacity

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Ammonia: 330,000 Met/Year

Urea: 574,000 Met/Year

Plant Description:Plant location : Goth Machhi Sadikabad Product: Sona Urea Fertilizer Plant-I Commencement of Commercial production: June 14. 1982. Project cost: Rupees 3300 MillionProduction capacity:Ammonia-1 : 1220 Tones per DayUrea-1: 2105 Tones per DayPlant-IICommencement of Commercial production: March 21,1993Project cost: Rupees 7215 Million Production capacity:Ammonia-II: 1100 Tones per Day Urea-II: 1925 Tones per Day

The year witnessed exceptional performance at every level. plant operating efficiencies surprised

all previous records with large margins. Cost effective and professional solutions are adopted to

address any major potential reliability threats.

Plants reliability improvements projects remained of prime importance and significant progress

has been achieved by addressing major unreliable areas and chronic problems. System

implementation through enforcement of FFC,s operational, maintenance, plant monitoring,

housekeeping and safety practices remained in the lime –light and deficiencies were overcome

utilizing the gap analysis approach.

The continued with selective investments necessary to sustain profitability, improve operations

and maintain its position at the leading fertilizer manufacturer in the country.

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Plants Goth MachhiOperational performance of the plants 1&2 Goth Machhi was excellent during the year with a

total “SONA” urea production of 1458 thousand tonnes. Plant 1 created a new record of daily

urea production this year.

Annual maintenance turnarounds of both plants were carried out in the first quarter of 2009 and

were executed safely and successfully within the stipulated time.

Comprehensive inspection and major overhauls of equipment and machines were carried out in

house. Various modification jobs were also executed to improve operational efficiencies. With

ongoing efforts to improve plant reliability and performance, maintenance turnarounds are now

schedule on bi-annual basis.

The continuous decline in natural gas supply pressure from & General water shortage in the

country with frequent canal closures and declining water flow in the rivers in the past few years

has also put more strain on our water supply wells & challenge with a direct impact on

production.

Dedicated booster compressor have been planned to be commissioned in the first quarter of

2005 to boost gas supply pressure and further expansion of raw water resources and its

optimization is currently under way to meet water requirements. In our endeavour of self reliance

in areas of critical maintenance activities, refurbishment of old bimetallic stripped of plant 3 was

successfully completed in the fabrication shop which made this expensive equipment operational

again at plant 1. Detailed engineering of energy revamp project of plant 1 Ammonia unit is under

process and commissioning is expected in 2006. This implantation would result in an energy

saving of 0.3 Gcal/ Met ammonia. Utilization of the safe natural gas would also result in 18

thousand tonnes of additional urea production.

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evaluation of existing BFW heat exchanger E-211 was carried out for vibration and leakage

estimation. The exchanger has completed its useful life and order has been placed for a new

exchanger with modified design.

HIGHLIGHTS – 2009 and 2010

Goth Machhi

Highest ever yearly shipments of 1,653,683 mt were made from Goth Machhi.

Highest ever road shipments of 1,649,515 mt were made during the year with an increase

of 2.9% over last year.

Highest ever monthly shipments of 143,035 mt, 147,395 nit, 141,870 mt, 135,945mt

and 165,379 mt were made from Goth Machhi during the months

of March, May, August, September and December 2009 respectively

Plant Mirpur Mathelo

Taping the potential of our recently acquired plant Mirpur Mathelo has resulted in a noteworthy

efficiency of 125% of name plate capacity with annual production 716 thousand tonnes, 14% in

excess of last year output.

We are pleased to report that the company was able to achieve the required “SONA urea”

quality level for ”FFC urea” produced by the plant 3, which was formally declared

As “SONA urea” on March 2008. we are confident that benefits will continue to acquire to the

company by providing value added quality products to our customers.

To fulfil our commitment with the GOP for enhanced urea production, annual maintenance

turnaround of the plant was deferred to 2006 after careful technical review of efficiency

maintained during the period of meet the increase in demand.

To meet its commitment to the Govt. FFC has also planned de- bottlenecking of its plant three

for increasing nameplate production capacity to 725 thousand tonnes annually in a normal year..

The project is ready for commissioning after turnaround 2006 and will help reduce NH3 contents

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of effluent water and provide additional urea production of 17 MTPD. Cooling tower packing

replacement for another two cells shall be completed before the onset of next summer season

and is expected to yield a saving of Rs. 12.50 million per annum through improved energy

efficiency.

Information technology culture was successfully inculcated at the plant in order to reduce and

simplify routine workload and to keep pace with modern technology. the marks are modern fiber

optic network , new inventory management system and computer training of all employees.

HIGHLIGHTS – 2009 and 2010

Mirpur Mathelo

Highest ever monthly shipments of 71,055 mt, 68,455 mt and 73,250 mt

were made ex-Mirpur Mathelo in the months of March, May and October

2010 respectively.

Highest ever daily shipments of 3,565 mt were made on December 31, 2009.

Plant Fauji Fertilizer Bin Qasim LimitedOffice Cherifien des Phosphates (OCP) Group of Morocco and Fauji Group including Fauji

Foundation, Fauji Fertilizer Company Limited and Fauji Fertilizer Bin Qasim Limited, have

entered into a Joint Venture Company in Morocco named “Pakistan Maroc Phosphore S.A” with

equity of 800 Million Moroccan Dirhams. The proposed project is planned to be located at Jorf

Lasfar , Morocco , where OCP already has a large chemical complex. This Project will produce

375,000 MT Phosphoric Acid per year by consuming 1,300,000 MT Phosphate Rock and

370,000 MT Granular Sulfur. It is not a grass root project and will utilize basic infrastructure and

ancillary facilities already present at Jorf Lsafar Site. The cost of the project is estimated at US$

203 Million and is likely to start commercial production by early 2007. It will meet total

requirement of phosphoric acid for the DAP production in FFBL plant at Bin Qasim. Fauji

Fertilizer Bin Qasim Limited is a US$ 461 Million Project, one of the largest in private sector in

Pakistan, producing both DAP and Granular Urea for the first time in the country. The project is

sponsored by the largest and well known industrial group of Faujis and Jordan Phosphate Mines

Company. Termination agreement with Jordan Phosphate Mines Company Limited (JPMC) was

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signed on 24/06/2003, with the same JPMC is no more a partner or equity holder in the

Company. A long term agreement for the Supply of Phosphoric Acid between Maroc Phosphore

S.A, a wholly owned subsidy of Office Cherifien Des Phosphates, Morocco was signed on July

21, 2003. DAP Plant recommenced its production on September 22, 2003 and supply of DAP in

the market started thereto.

HIGHLIGHTS – 2009 and 2010

Bin Qasim / Port

Highest ever daily shipment of 3,740 mt, of Sona DAP ex-FFBL was recorded

on September 27, 2009.

Highest ever daily shipment of 7,105 mt comprising 3,440 mt Sona Urea (G) &

3,665 mt Sona DAP ex-FFBL was recorded on October 28, 2008.

MV Brother Glorry, carrying 39,628 mt DAP berthed at KPT on November 15,

2010 and was discharged in record time, earning 34,236 US$ in dispatch money for the

company.

Capacity UtilizationQuantitative Data (Production) of Sona Urea-2009 (Figures in Tonnes)

Months Plant 1,GM Plant II, GM Plant III.MM

For the

Month

Cumulati

ve

For the

Month

Cumulati

ve

For the

Month

Cumulative

Jan (p

)

72600 72600 69400 69400 63600 63600

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(A

)

72753 72753 73410 73410 57589 57589

Feb (P

)

64800 137400 62300 131700 59300 122900

(A

)

65535 138288 66774 140184 64249 121838

Ma

r

(p

)

74000 211400 71200 202900 65800 188700

(A

)

71077 209365 69078 202962 70780 192618

Apr (P) 71300 282700 62000 264900 65800 254500

(A) 65373 274738 69504 278766 68445 261063

Ma

y

(p) 71000 353700 71100 336000 65300 319800

(A) 74097 348835 72901 351667 68402 329465

Jun (p) 70100 423800 68600 404600 63200 383000

(A) 70076 418911 70262 422129 68622 398087

Jul (p) 72500 496300 67800 472400 65300 448300

(A) 71035 489946 72155 494284 69663 467750

Months Plant 1,GM Plant II, GM Plant III.MM

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For the

Month

Cumulati

ve

For the

Month

Cumulati

ve

For the

Month

Cumulativ

e

Aug (p

)

70100 566400 70000 542400 65800 514100

(A

)

70892 560838 71654 565938 70165 537915

Sep (P

)

71000 637400 66100 608500 65800 579000

(A

)

68204 629042 68657 634595 67029 604944

Oct (p

)

21600 659000 69800 678300 57500 637400

(A

)

29349 658391 68122 702717 65147 670091

Nov (P) 72500 731500 67100 745400 66300 703700

(A) 70151 728542 70206 772923 67813 737904

Dec (p) 73500 805000 69600 815000 66300 770000

(A) 78679 807221 73690 846613 72419 810323

(P) = PLAN

(A) = ACTUAL

Reasons of attaining phenomenal utilization capacity: State of the art production facilities

Excellent HR

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Effective integration with distribution, warehousing and sales departments.

Effective Planning

Control over MARI Gas fields

Demand > Supply

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Production/Sale at a glance

Urea Production (Met/Year) Sale (Met/Year)

Years

Goth MachiM.Math

eloTotal

Urea DomesticUrea

Export

Urea

Importe

d

Phos*/

PotassicTotal

PLA

NT-I

PLAN

T-II

PLANT-

IIISona FFC

1982 325,4 - - 325,452 267,641 - - - - 267,64

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52 1

1983566,7

71- - 566,771 493,339 - 42,000 - -

535,33

9

1984589,2

58- - 589,258 474,439 - 140,772 - -

615,21

1

1985598,6

94- - 598,694 521,898 - 78,957 - -

600,85

5

1986594,9

01- - 594,901 581,683 - 65,237 - -

646,92

0

1987632,0

79- - 632,079 587,891 - - 2,907 -

590,79

8

1988637,7

37- - 637,737 642,857 - - 22,542 -

665,39

9

1989632,9

72- - 632,972 678,430 - - 2,605

162,113/

14,086

857,23

4

1990652,6

65- - 652,665 645,188 - - 134,366

169,943/

24,229

973,72

6

1991629,2

66- - 629,266 643,608 - - 206,244

148,753/

18,945

1,017,

550

1992648,1

78- - 648,178 647,460 - - 187,058

153,025/

16,040

1,003,

583

1993657,3

76

477,33

9-

1,134,7

15

1,176,6

11- - 129,006

207,038/

7,147

1,519,

802

1994678,1

14

659,52

6-

1,337,6

40

1,288,8

11- - 33,387

192,002/

8,210

1,522,

410

1995680,0

62

700,03

1-

1,380,0

93

1,422,6

66- - 60,604

122,640/

9,527

1,615,

437

1996 710,8 695,74 - 1,406,6 1,413,9 - - 238,130 144,969/ 1,798,

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62 9 11 07 1,446 452

1997773,0

48

734,27

5-

1,507,3

23

1,482,9

48- - 146,813

81,181/

0

1,710,

942

1998742,5

99

682,96

9-

1,425,5

68

1,449,2

01- - 169,610

187,392/

0

1,806,

203

1999726,7

23

734,68

9-

1,461,4

12

1,581,6

55- - 26,277

291,499/

0

1,899,

431

2000729,8

64

695,93

8-

1,425,8

02

1,793,5

54- 63,350 0

321,977/

9,269

2,188,

150

2001737,6

07

756,41

7-

1,494,0

24

1,883,8

49- - 34,035

340,301/

9,377

2,267,

562

2002801,8

25

713,88

9

368,575*

*

1,884,2

89

2,033,8

83

328,14

757,000 -

285,776/

7,718

2,712,

524

2003784,8

26

738,32

7626,716

2,149,8

69

2,065,4

59

598,79

218,500 -

475,491/

10,947

3,169,

189

2004741,8

31

716,62

1715,577

2,174,0

29

2,708,5

44

148,83

213,500 105,693

515,993/

11,451

3,504,

013

2005820,4

54

772,82

5709,526

2,302,8

05

2,891,8

82- - 314,701

572,990/

45,293

3,824,

866

2006809,3

73

760,44

2725,839

2,295,6

54

2,888,6

68- - 321,601

824,361/

20,426

4,055,

056

2007829,2

50

810,67

3680,442

2,320,3

65

2,771,8

61- - 96,976

562,276/

17,305

3,448,

418

2008841,1

17

797,10

8683,986

2,322,2

11

3,027,2

45- - 58,370

348,275/

19,364

3,453,

254

2009807,2

21

846,61

3810,323

2,464,1

57

3,088,3

82- - -

708,886/

41,128

3,838,

396

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Part FIVE

Company Marketing Mix

Bottle neck problem at GOTH Machi:At Goth Machi within a radius of 65 Km there are 3 production plants (FFC, Fatima and Engro)

so it creates a bottle for trucks to tale the fertilizer inventory out of the Goth Machi.

Solution Recommended: Build an additional strategic warehouse at Goth Machi

Forward Integration into transport business

Improved facilities for truckers

Improved economic incentive for truckers

Long term agreements with transport dealer

Increase rely on railways

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Part 5

MARKETING MIX

Marketing Mix consists of major components: Product, Place, Promotion and Price. These

components are called marketing decision variables because a marketing manager can vary the

type and amount of each element. One primary goal is to create and maintain a marketing mix

that satisfies consumer’s needs for a general product type. Marketing mix often is viewed as

“controllable” variables because they can be changed. However, there are no limits to how much

these variables can be altered. They are not totally controllable major components of Marketing

Mix:

1. Product

2. Place

3. Price

4. Promotion

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FFC Product Mix

FFC PRODUCTS SONA UREA (Prilled)

IMPORTED UREA FFC

UREA FINES

DAP – FFC

SOP

TSP – FFC

SONA BORON (BORAX)

FFBL PRODUCTS (Marketed By FFC) SONA UREA (Granular)

IMPORTED UREA FFBL

SONA DAP

SONA UREASona Urea is the most concentrated solid, straight

nitrogenous and most widely used fertilizer in the country.

Mostly it is manufactured in the form of prills, but FFC is

producing in prilled as well as granular forms. Prilled and

granular fertilizers are white in color, free flowing, readily

soluble in water and both contain 46% Nitrogen. Because of its

high solubility, it is suitable for solution fertilizers and foliar

application. Urea is the best suited to our soils because some of

the salient physical and chemical characteristics of Sona

Urea Prilled and Granular are below.

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DescriptionActualStatus

Prilled Granular

Physical Condition Free Flowing Prills Free Flowing Granules

Nitrogen(%) 46 46

Moisture (%) < 0.30 < 0.30

Biuret (%) 0.80 ~ 0.87 0.80 ~ 0.87

Fines (%) < 1.0 Dust Free

AV Prill Size (mm) 1.82 ~ 2.0 2.0 ~ 5.0

SONA DAP DAP is the most concentrated phosphatic fertilizer containing 46% P2O5 and 18% Nitrogen.

From nutrients' concentration point of view, it has got the highest quantity of total nutrients in a

50 KG bag i.e. 32 KG of nutrients / bag. The highest concentration of plant nutrients in a bag

helps saving costs of transportation, handling, storage and application. It is the widely used

phosphatic fertilizer in the world as well as Pakistan. The solubility of DAP is more than 95%,

which is highest among the phosphatic fertilizers available in the country. Due to high solubility

it can also be used through fertigation as well as by foliar application. Its nitrogen to phosphoris

ratio ( 1 : 2.5 ) makes it an ideal fertilizer for Basal application to meet the initial requirement of

most of the crops. Having an ultimate acidic effect on the soil, it is well suited for our alkaline

soils. Its salient characteristics are listed below:

Description Actual Status

Nitrogen (%) 18

P2O5 (%) 46

Crushing Strength (Kg) 6

Size (mm) 2 ~ 4

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Moisture (%) < 0.7

FFC SOPThis fertilizer is an important source of Potash, which is a quality nutrient for production of crops

especially fruits and vegetables. Potash is an important nutrient for activation of enzymes in the plant

body and helps increasing sugar and starch contents. Potash improves the resistance of the plants

against pests, diseases and stresses like water / frost injury etc. FFC SOP contains 50% K20 in addition to

18% sulfur, which is also an important nutrient especially for oil seed crops and it also has an

ameliorating effect on salt-affected soils. As readily soluble in water so it can be used through fertigation

as well as foliar application. SOP is well suited fertilizer for all types of crops and soil. Use of potassic

fertilizer in Pakistan is minimal, which needs to be promoted for qualitative as well as quantitative crop

production.

Classification of & Share of products

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S.No Products % Share

1 Nitrogenous Fertilizers

I. Urea 70.6

II. Calcium Ammonium Nitrate (CAN) 5.3

2 Phosphatic Fertilizers

I. Single Super Phosphate (SSP) 3.4

II. Triple Super Phosphate (TSP) 0.02

3 N/P Fertilizer

I. Di Ammonium Phosphate (DAP) 14.6

II. Nitro-Phosphate 4.6

4 Potash Fertilizers

I. Sulphate of Potash (SOP) 0

5 Mixed Fertilizers

I. N:P:K (in various ratios) 1.5

TOTAL 100

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DEMAND VS SUPPLY

The demand for urea has been increasing consistently and significantly. This is due to two

factors: the government of Pakistan besides offering various incentives to the fertilizer

manufacturers to keep the cost of production low also extending soft term loans to growers for

the purchase of various inputs. The manufacturers have been able to take the fullest advantage of

the GOP policies and have expanded the production capacities over the years. This, on the one

hand, has helped the country in achieving self sufficiency in the production of urea and, on the

other hand, has reduced the foreign exchange expenditure on import of the product.

Consumption of urea is seasonal. In the past, during the peak consumption period, some

unscrupulous elements used to indulge in black marketing of the commodity. However, with the

enhanced availability of indigenously produced urea and an elaborate dealer’s network the

manufacturers have been able to minimize such incidence.

Product strategiesDifferentiation StrategyUrea is quality product as described earlier and FFC do not compromise on quality. Therefore, in

product strategy, they are following differentiation strategy.                

Product line extensionCurrently FFC is following this strategy and adding new formulas to existing product categories

and it is using already established promotion for these products.

Future outlookNew brand strategyFFC is gtoing to pursue new brand strategy by introducing new product categories.FFC has plans

to diversify in near future as engro has diversified to FMCGs

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PRICEIt is the value that one puts on the utility that one receives of goods and services.

It includes price determination; pricing policies; and specific pricing strategies.

Sona Urea Maximum Sale Price Per Bag Sona Urea Pearled Rs. 850 Per 50 Kilogram Sona Urea

Granular Rs. 853 Per 50 Kilogram Fauji Fertilizer Company Limited FFC

PRICING STRATEGIES.As the demand for product is much higher than that of

supply it is a signal to charge high price as there is

monopolistic competition is prevailing in the market.

FFC applies premium pricing strategy for almost its entire

product. It charges high price but its high quality is

enough to offset the effect of high price. Premium pricing

is the practice of keeping the price of a product or service

artificially high in order to encourage favorable

perceptions among buyers. The practice is intended to

assume that expensive items enjoy an exceptional reputation or represent exceptional quality

distinction.

Product Price

Sona Urea (P) 17000/tone

Sona Urea (G) 17060/tone

Sona DAP 51040/tone

Sona SOP 45840/ tone

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PLACEMENTIt is the making available of products in quantity desired to as many customers as possible and to

hold the total inventory, transportation and storage costs as low as possible. It includes selection,

Coordination and evaluation of channels; transportation; warehousing; and inventory control.

The product is distributed directly from the plants. There is a great demand of fertilizers in the

country and company is having in advance orders. But to make the whole system very smooth a

company is having well structured distribution department. Which coordinates with carriers both

company and individuals, Because fertilizers is required in all the parts of the country and FFC

being a national firm takes it as it obligation that its product is distributed trough out the country.

The company also ensures that the prices of the product do not vary in any part of the country

because of transportation cost. For this purpose company gives some discount to those dealers,

who belong to far-flung areas.

The distribution department makes contract with private contractors to accomplish the tasks. The

contractors are responsible for any loss to the product on the way. The management also pays

surprise visit at different dealers shop to ensure that the quantity in the bag, quality and price are

the same as suggested by the company policy.

Distribution Distribution department is of the major department helping the sales force. The primary function

of distribution department is to ensure effective and efficient distribution of product from plants

up to the final customers.

Objectives Coordinate with plant management to ensure smooth operations.

Ship out entire production of FFC and FFBL plants and imported fertilizer in accost

effective manner(3.4 MT approx)

Follow up of product quality complaints.

Satisfying 3580 dealers, 1632 direct customers and 165 warehouses.

Plan and undertake self imports/exports and ensure prompt handling , quality

packing ,correct weight, timely delivery and documentation.

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Monitor packing availability and arrange safe storage of surplus production during lean

months.

Maintain liaison with Pakistan railway, NLC, port authorities and suppliers.

Transportation Arrangements

Private trucking contractions

NLC

Pakistan railway

Customer served

Dealers 3580

Direct customers 1632

Total 5212

Zone wise Warehouses and capacity

Zone Regions Warehouses Capacity MT

North 5 63 136700

Central 5 53 119400

South 4 49 78400

Total 14 165 334500

Functions of warehouse department Co ordination

Inspections

Training

Formulating warehouse plan

Weekly capacity reports

Duties of Warehouse Supervisor

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The basic purpose of the Supervisor is to checkout all the procedure related to warehouse.

Consider the security procedure.

Follow all the precaution received from the regional office.

Product wise record of the bags and monthly report send to regional office.

Check all the work of the handling contractor and watch & ward to insure that all the

work is doing according to the agreement.

Preparation of the documents carefully because any error can create a big problem

Preparation of the transaction registers on daily basis.

Signed all the vouchers carefully

Take sign of the dealers on the invoices and send to regional office immediately.

Prepare tally sheet on daily basis

All the important documents should be under locked. For example Invoice book and

SMR (Stock Movement Report) etc.

SMR Report will be send to Marketing Division Lahore on daily basis it depends on the

transaction.

Other duties of the Supervisor

Open the lock of the warehouse in the presence of the watch & ward.

Sure the condition of the lock before the open.

Lock the warehouse under the presence of the watch & ward.

The products should be stored separately.

In one line the maximum bags should be 20 not access.

There must be a gap between two lines and the gap should be two fits not more.

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Sales Promotion

Promotion is the backbone of the successful marketing network. But in fertilizer industry in

Pakistan companies need little promotion to achieve its objectives. And the reason is because

demand is greater than supply. But FFC does it for many good reasons one of them is to protect

its brand name, that is SONA Actually company wants that whenever any former in the country

thinks to use fertilizers the only name that should come into his mind should be SONA.

FFC marketing division Lahore has a sales promotion department, which is working under

marketing service department, is responsible all the promotional activities. The department is

using various ways to promote their products. These are d ifferent Medias used at FFC for

promotion.

Strategies are dynamic and change as per requirement

Seasonality factor is most important while making strategies

Sales depend upon season

Strategies regarding advertisements are rarely intensive.

Marketing Services Planning

Technical services

Advertising and Sales promotion

Objectives1. To create demand

2. Build brand image

3. Build corporate image

4. Build strength and loyalty among customers and dealers

5. Improve visibility

6. Create differentiated identity

7. Not to maintain market leadership but also to supersede current objectives

8. Earn popularity not purchase

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Means Electronic media

Outdoor media

Electronic media TV, Radio, InternetOutdoor media Bill boards, holding etc

During short supply radio is used

Frequency of usage changes according to needs

Media strategies are made by committee which listens to and watches ads by our

advertising agency

Advertising agency is not static. Decision is made by committee

Sales promotion department has keep a special liaison with other marketing services department

i.e. planning and technology.

Media used at FFC for promotion Television

Radio

CCTV

Print media

Road side

Point of purchase

Electronic Media Ptv

Ptv -world

KTN (Sindhi Language)

GEO

Indus T.V

ARY-Digital

Campaigns

Kharif campaign

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Rabi campaign

Radio National radio channels

Add duration 10sec-60sec

All around the year

CCTV Islamabad airport

Multan airport

Faisalabad airport

Lahore railway station

Multan railway station

Hyderabad railway station

Faisalabad railway station

Daewoo coaches

Daewoo lounges

Print Media National daily’s

Regional news paper

International magazines

National magazines

Regional cultural magazines

Add size 108 pcm(standard size of add)

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Road side Advertisement Jumbo hoardings

Bill boards

Ware house boards

Dealer shops boards

Plastic whole signs

Point of Purchase Crop posters

Corporate posters

Crop booklets

Agro grams

Zari reports

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Corporate Social Responsibility at FFC

For Fauji Fertilizer Company Limited, social responsibility

means facilitating communities and empowering its people.

Sustainability shall always remain quintessential for the

performance of CSR. Historically, FFC has always been

socially a responsible corporate entity. The Company started its

CSR per se as early as in 1982 by introducing Agri-Services

thus helping in poverty alleviation of common farmer and

assisting them in sustained empowerment. Gradually FFC

started interventions in most of the defined sectors and has

developed a history of about 30 years of contributions to the

society.FFC, further plans to bring sustainability in its interventions and desires to achieve

international standards by aligning CSR with our business objectives. FFC is also committed to

improve quality and quantum of its interventions by maximizing on the available resources.

Since FFC has become member of covenants like UNGC, the CSR has to be aligned with

international guidelines. It is necessary to standardize the interventions and monitor the quality

of interventions at a central level. We need to stay committed to its principles. Keeping the

vision of responsible corporate entity in mind, FFC has moved in this direction. FFC has made

quality as its core value when it comes to CSR intervention at any level, and in future this will

remain as the prime objective.

CSR Objectives

Company’s obligations of paying back to the society from which it derives its

economic gains.

Address stakeholder concerns and invest in the communities in the vicinity of our

fertilizer plants.

Empower the small and medium farmers all over Pakistan

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Incorporating UNGC Principles in our governance.

Contribute in achievement of UN Millennium Development Goals.

Current CSR Interventions

As most of the sustainability conscious organizations around the world do, FFC is playing its part actively in this direction. Being the brand leader in fertilizer sector with the biggest market share and counted among one of the leading corporate entity in Pakistan, FFC understands its obligation in nation building and well being of deprived communities around the plant sites. Under the charter of FFC CSR interventions, following sectors have been made part of the program

Education

Health Care

Environment

Poverty Alleviation

Sports

Annual Fun Fares

Relief & Rehab for flood affectees

Health Care

Availability of medical facilities is essential for a productive society.FFC has embarked on a

mission of upgrading and building new modern facilities for the natives living in Rahim Yar

Khan and Ghotki districts under its CSR intervention in the field of health. Some of these

interventions are:

Sona Welfare Hospital

Hazrat Bilal Trust Hospital

Coronary Care Unit

Free Medical Camps

Sona Welfare Hospital

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Sona Welfare Hospital (SWH), Mirpur Mathelo was constructed at a cost of Rs. 12.5 Million in

2006. SWH offers following facilities and

services which include:

High-tech X-ray

Ultrasound

Pathology laboratory

10 Beds for emergency treatment of

indoor patients

OPD for outdoor patients

Free consultation (Male Doctor and

Female Gynecologist available)

Free snake bite treatment

Free emergency treatment & ambulance service Subsidized medicines, lab test, x-ray

and ultra sound (50% of the actual cost) 30% discount for dog bite patients

30% discount for dog bite patients SWH has a capacity of providing outdoor treatment to about

100 patients per day. SWH has under its belt the services of best medical staff and is a great

relief to the underserved communities in District Ghotki. The treatment at SWH is free of cost as

well as subsidized, which is serving as a life line to hundreds of patient in the entire district of

Ghotki. SWH free treatment for snake and dog bite cases is a rare facility in these

underprivileged areas.

Hazrat Bilal Trust Hospital

Hazrat Bilal Trust Hospital (HBT) was established in 1986 by FFC near Goth Machhi Plant.

Initially it had a capacity of 10 beds but gradually it was expanded to 22 beds. It can cater for

about 125 outdoor patients per day. A new 25 beds building is under construction. The hospital

will soon start its Dental section as well as a vocational training centre. HBT has the honor of

running the largest TB cure program in Rahim Yar Khan with significant success ratio. Some of

the services available at HBT are:

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Complete treatment for TB patients

OPD

Fully equipped eye department

Operation theatre for Lens surgery

X-Ray & Ultra Sound

Lab tests

Hepatitis test facility

Snake & Dog bite treatment

Coronary Care Unit

The CCU facility provided by FFC in 2008 at DHQ Hospital, Mirpur Mathelo, is designed to

provide life saving advance management of cardiac patients. It is equipped with latest medical

equipment & monitoring systems. CCU is

an example of FFC commitment for

providing health care to the under

privileged communities of these areas.

Some of the facilities and services

provided at CCU are:

Treatment Capacity of 9 Beds

Cardiac Monitors

Defibrillator

ECG Machines

Pulse Ox meter

Mobile & Automatic Gas Delivery System

Flow meter

Suction Injector Unit

Free Medical Camps

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FFC organizes various medical camps for free treatment of general public in District Ghotki and

Rahim Yar Khan. In the year 2010, FFC arranged 32 free medical camps in the area near FFC

plants.

Some of the camps arranged were in the field of general medicine, skin and eye treatment

providing relief to the local people of far flung areas. The patients are provided with free

medicines at the camp while referrals are also made to SWH for advance treatment, free of cost.

Such health care service at the door step was unimaginable in the past and this activity provides

relief to thousands of patients every year.

Environment

“We do not inherit the earth from our ancestors; we borrow it from our children” (American

Proverb)

FFC has over the years strived to adopt best security and precautionary measures in order to

safeguard environment and lives of its working staff. Following are the initiatives undertaken by

FFC in this direction

Recycling

Green Planet

Renewable Energy

Recycling

The Company has adopted all possible measures to

safeguard the environment. FFC continues to introduce most

modern and Environmental Friendly Technologies in its

manufacturing plants. The bottom line for FFC operations

remain its 3’R approach comprising of reduce, re-use and recycle. FFC has maximized water use

by water recycling and minimizing the wastage of water. Regular technical training and safety

sessions have helped FFC achieve zero accident ratios during operation at plant sites. In

recognition for its efforts, FFC has been awarded many prestigious awards for its compliance

with International Safety Standards (ISS). Some of these are

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Certification of Quality Management System[ISO-9001:2008]

Occupational health & Safety Assessment Series[OHSAS-18001:2008

Environmental Management System[ISO-14001:2004]

Compliance with National Environmental Quality Standards [NEQS]

Green Planet

The total area of forests in Pakistan according to the recent

estimate is 4.224 million hector which is 4.8% of the total land

area. The deforestation rate in Pakistan is among top five

countries in the world, which is a grave threat ignored so far.

FFC has been working in partnership with Forest Department in

plantation of trees in District Rahim Yar Khan and shall

continue this partnership in future for district Ghotki as well

Renewable Energy

In its diversification efforts, FFC has embarked on a

Renewable Energy Project to install a 50 MW Wind Energy

Farm at Jhampir in Sindh province to providing cleaner

energy. For future, FFC has a plan to expand its output to

150MW. In addition, this initiative is also aimed to provide

much needed relief to the on going energy crisis faced by

Pakistan, as this will be a valuable indigenous addition to the power grid of the nation. It is also

inline with the global vision of eco friendly natural energy and FFC is spearheading this sector in

Pakistan. Some important facts about wind energy are:

Zero emission, making it the most eco friendly source

Economically suitable amid rising fuel prices

Indigenous inexhaustible energy source

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Poverty Alleviation

FFC CSR has undertaken concrete measures for poverty alleviation in Pakistan. Some of these

are as follows:

Technical Training Centre

Sona Vocational Centre

Agri Service

FFC Contribution to Agriculture Research Globally

Technical Training Centre

Technical training is considered to be a method of immediate relief from the shackles of poverty

by imparting useful practical knowledge of basic technical trades. FFC has established its

Technical Training Center (TTC) at plant site, Rahim Yar Khan. TTC programs involve courses

for staff of FFC as well as young matriculate students from adjoining areas. Some highlights of

TTC are:

Matriculate students from surrounding community completed 3 months Mechanical

Craft Course.

3 sessions on first aid training.

3 programs were arranged on defensive driving. Highway and Motorway Police

provided resource persons for this training.

3 courses on MS-EXEL 2007, MS-WORD 2007 and MS-POWER POINT were

organized.

53 Skill Improvement Programs were held in trades of operation, equipment

maintenance, machinery maintenance, instrument and electrical.

3 courses were conducted for ENGRO including two courses on machinery

maintenance and one on equipment maintenance.

Sona Vocational Centre

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Sona Vocational Centre (SVC) has been established at

Mirpur Mathelo. It started its operation in February 2009.

The aim behind SVC is to empower womenfolk of the

society, who face deprivation especially in the rural areas of

our country. Courses covered under SVC program are:

Tailoring & Stitching

Hand Embroidery

Machine Embroidery

Aar Work

Neck Designing

Cooking

Beautician

Qurashia

All the courses running under SVC program are free of cost for women.

Agri Service

FFC has been providing Agricultural Advisory Services to the farming community throughout

Pakistan since 1982, for increasing the agriculture

production in general and the farmers’ economic

returns in particular. Till date more than 1.5 million

farmers have been given agriculture support under 

this program. Farm Advisory Centers are located in 5

cities of Pakistan, having a team of agricultural

expert providing miscellaneous advisory services through

Training Programs for the farmers

Crop Demonstrations

Field Days

Farmer Meetings

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Village Meetings

Crop Seminars

Farm Visits

Group Discussions.

All the centers are fully equipped with modern sophisticated computerized Soil & Water Testing

Laboratories and high-tech extension equipment. For stronger link and timely guidance of

farmers, FFC publishes a quarterly Urdu and Sindhi News Letter “Zarai Report” containing

season specific information regarding crops, fruits, vegetables, improved agronomic practices

and articles on agricultural issues. FFC technical teams maintain close coordination with

government departments working on these lines, so that more and more users can avail these

services. Farmers from across Pakistan can avail these services as FFC offers e-service through

its web site and via email correspondence.

FFC Contribution to Agriculture Research

FFC always strives for new research and techniques in the field of agriculture and fertilizer

industry. Team of experts from the field of agriculture, continuously devises new methods of

agriculture. FFC research work makes its way to both international and local agriculture/

fertilizer sector journals. Some of these are:

International Fertilizer Industry Association (IFA) Brochure

Soil & Environment (Pakistan Journal of Soil Science)

Proceedings of National Fertilizer Development Centre

Farming Outlook

Monthly Kissan World, Lahore

Monthly Zari Dunya, Lahore

Monthly Jadid Ziraat, Lahore

Monthly Dhamak, Lahore

Monthly Nidaay Kissan, Lahore

Monthly Mahyaar, Lahore

Monthly Kissan Wing, Lahore

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Sports

FFC has always been encouraging healthy activities and continues to support sports events in the

areas of Rahim Yar Khan and Ghotki as well as on national level. Some of the sports events

sponsored by FFC are :

All Punjab Sona Cup Girls Handball Championship

National Tae Kwondo Championship

3rd Jashan-e-Baharan Handball Mela

All Pakistan Football Tournament

Sona Cup Kabbadi Tournament

Jashan-e-Pakistan Volley Ball Tournament

2nd Twenty 20 Deaf Cricket National Champsionship

3rd M. Shamim Memorial Football Tournament

2nd Summer Season Dist. Football Tournament

Sponsorship for 15th Tour De Cycle Race

Quaid e Azam Football Tournament

District Hockey Championship-2009

Hockey Coaching Camp at Sadikabad

Interschool & College Handball

9th Sona Golf Championship

League Football Championship

3rd Anti Narcotics District Hand Ball Mela

Jashan-e-Aazadi District Throw Ball Tournament

FFC also sponsors numerous district and national level events and has assumed the role of patron

in this field. This contribution has also helped in encouraging and developing new talent in

Pakistan.

Flood Relief and Rehab

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Relief to flood effectees in district Rahim Yar Khan and Ghotki

Distribution of Dry Ration by FFC

As per the CSR commitment of Fauji Fertilizer Company Limited, one more time, relief was provided to the communities in district Rahim Yar Khan and Ghotki, on 14th and 15 April 2011 at Kot Sabzal. More than 750 flood effected families (comprising of 10 people per family) were distributed one month dry ration consisting of rice, wheat, pulses, sugar, Ghee, tea, biscuits, mineral water, Dates ,hygiene packs (detergent,toothpaste,tooth brush,soap) etc. This activity was a joint collaboration with Pakistan Red Crescent Society.

In 2010, Pakistan witnessed a devastating flood that annihilated dozens of villages and destroyed

the road and irrigation infrastructure. According to the figures released by the Government of

Pakistan, an estimated loss of $9.7 billion was caused by these floods nationwide.

In districts Rahim Yar Khan and Ghotki, flood had crippled the lives of people of the area. FFC

thus took the task of shouldering its share of responsibility initially in flood relief effort for the

affected natives of District Rahim Yar Khan and Ghotki. Some of these relief efforts were:

Distribution of cooked food

Dry ration for families

Transport for Evacuation

Mineral & FFC filtered Drinking Water

Tents/ shelters

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Cloths, Blankets & Shoes for the affected families

Soap & Washing Powder

Crockery

FFC employees voluntarily made remarkable contribution in their respective plant sites which

amounts to millions. Food, drinking water, beddings, shelters and clothing was provided to the

flood affectees in the relief phase of the operation. Medical teams from FFC medical units

performed day night service for the flood affectees in Rahim Yar Khan and Ghotki, saving many

precious lives.

Rehabilitation

FFC has taken up the challenge of reconstructing 3 villages of districts Rahim Yar Khan and

Ghotki. The intervention is planned in Reconstructing of Houses, Education, Health, Shelter,

Water and Sanitation and Infrastructure. This project of rehabilitation and reconstruction will

cost 102 million (PKR) out of which 50% will be contributed by FFC.

A project has been devised to construct

Houses, water supply, pathways & sanitation

facility for the affected natives of Muaza

Chacharan, Mohib Shah (Rahim Yar Khan)

and Chuttoo Chachar (Ghotki). FFC while

acting as a responsible corporate entity has

lead from the front in this time of national

grief and has played an exemplary role for

other entities to come forward and contribute their share

Overview of FFC CSR Future CommitmentsFFC shall work with renewed vigor to alleviate the suffering of deprived all over Pakistan. With

this, FFC desires to address the concerns of all its stakeholders especially the communities in the

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neighborhood of its manufacturing plants. In the year 2011, FFC plans to develop a CSR culture

in the Company by involving all cadres of management, including senior management for

achievement of social responsibility objectives.

FFC vision of a responsible corporate entity is reflected by from its CSR program. With its

intervention in health, education, poverty alleviation, sports, environmental protection and flood

rehabilitation, FFC is endeavoring to make a humble contribution to the society.

FFC had embarked on the mission of uplifting the underprivileged communities around the plant

sites. FFC is well underway in developing a CSR culture internally and has aligned itself with

the commitments and vision of United Nation Global Compact and UN Millennium

Development Goals.

Safety and Environment

Safety has always been a hallmark of FFC performance. FFC has always placed safety ahead of

all other business requirements. We have come a long way to develop a safety culture where

everybody speaks safety language.

Achievement of over 23 million man-hours of safe operations is reflective of our best corporate

Practices.

Philosophy:

FFC believe that most of the accidents are caused by human error and are preventable. The

management recognizes that safety is of prime importance and high production targets can only

be achieved through a good safety performance. FFC endeavors excellence in the field of

personnel and plant safety. Personnel safety is regarded above all business requirements.

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Achievements:

The company runs a safety program through which all employees are educated and trained to

perform their duties safely. 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.

Program:All safety achievements are accomplished by coordinated efforts of the safety section and all

departments. A safety culture at the plant site is created in which employees are motivated to

participate in safety talks, slogan competitions and safety incentive programs. Housekeeping is

the essential feature of our safety programs, which enables us to keep our plant in excellent

presentable form.

All employees receive token award on achievements of safe million man-hours milestone. The

company not only believes in safety at the plant but also promotes off the job safety. Township

residents and both schools are also part of safety program.

Monitoring and Control:

Plant safety performance is reviewed monthly by safe operation committee (SOC). General

Manager Plant is the Chairman and all departments Managers are SOC members. Routine plant

audits ensure compliance to all safety standards applicable to the industry and strict compliance

to industrial codes is

adhered to for the new

installations and

modifications.

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Description No. of Awards Received

Award of Honor 15

First Place Award 05

Second Place Award 04

Award of Merit 04

Outstanding Safety Award 2

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AWARDS FROM NATIONAL SAFETY COUNCIL, USA

Environment:

Like safety, environment at plant site is held sacrosanct. All efforts remain focused on the

maintenance, preservation and improvement of environment. If not complete elimination,

mitigation of pollution is the primary goal. Management is completely committed in its support

to sustenance of environment, which encompasses pollution, noise and greenery. FFC has spent

millions in achieving a complete control of the environment. For FFC, end of the pipe treatment

remains the last resort. It believes in mitigating pollution through recycling, elimination or

bringing changes to the system. Plant operation is strictly controlled to maintain a safe

environment for plant personnel as well as the surrounding community.

FUTURE OUTLOOKThis company always looks into the future prospects of growth through innovation and

diversification; FFC seek to increase productivity and profitability for enhancing returns to our

shareholders.

It shall continue to explore and tap opportunities, face challenges and make course corrections

where necessary to achieve goals for the betterment of Company and the Country. Government

policies, global & domestic economic forces and the money market would play a vital role in

decisions and ability to meet business objectives.

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Page 129: FFC Marketing Division

FFC has progressed remarkably from its inception in 1978 till to date. Three projects in a span of

less than 20 years have been set up. Each of these have incurred an investment of over 300

million US$ amounting to one of the largest investments in Pakistan. This performance record is

considered unparalleled in the country and matches high standards anywhere in the world. At

this point in time, the company is preparing to harmonize itself with new century. Building on

the foundations of the last 20 years, the company is confident to take on the new challenges.

FFC’s vision for the 21st century looks for diversification and establishing projects beyond the

territorial limits of the country in collaboration with world famous international industrial

holdings. The list of different projects that are being evaluated at present are:

INSTITUTE OF BUSINESS ADMINISTRATION (INTERNSHIP REPORT)

Oil Refinery Paper Mill Project

Software Development House Off-Shore Fertilizer Complex

Mineral Acid Production Petrochemical

Revamp of existing FFC facilities

Page 130: FFC Marketing Division

Part SIX Company Accounting/Finance System

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Page 131: FFC Marketing Division

Part 6

Company Financial Analysis

Finance & Accounting System of FFCThe Accounting System of the company is designed and installed by a team of people with many

specialized talents, System Analysts, Internal Auditors, and Chartered Accountants who work

full time in designing and improving the Accounting System.

Company uses double entry accounting system. Accounts are prepared and maintained with

compliance to the International Accounting Standards. The accounting system of the company

comprises of 4 independent sections which are on different locations. That are: - Plant Goth

Machhi, Plant Mirpur Mathelo, Marketing Division, and Head Office. Financial Reports of the

company are prepared according to the 4th schedule of the Companies Ordinance 1984.

Independent set of books of accounts are maintained at each location and monthly Trial Balances

are extracted. At each month end, six monthly, and Annual consolidated financial statements are

prepared in accordance with statutory requirements.

Head Office decides maintaining their day to day transactions, share records, lender records, etc.

and carried out consolidation job.

Marketing Division records transactions regarding sales & purchase of fertilizer, Dealers

Account, Accounts of Selling Expenses, and Marketing Expenses. Manufacturing sites at Goth

Machhi & Mirpur Mathelo maintain accounts related to cost of goods sold that is Manufacturing

Cost and related records of Plant & Machinery. All these activities are carried out on system

supported by computerization / manual operations.

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Now oracle is working as legacy system for finance function, now SAP is the frontline system, and all the financial transactions are executed on real time basis. All these activities are executed by financial and controlling module of SAP.

Page 132: FFC Marketing Division

Finance System of the OrganizationThe Company has an effective Finance Management System. Annual Business Plan is prepared

and implemented by the company. Adequate provision for dividend payments, disbursements for

operational needs, stores & spares, BMR and capital projects are made in the Business Plan.

The finance system of the Company is structured into four divisions. These divisions are further

divided in departments. Each department of the company prepares its annual budget and sends it

to divisional head. Divisions then prepare consolidated budgets and send to Head Office for

approval. Management Committee approves the business plan after thorough financial

evaluation. This Committee is chaired by the Chief Executive & Managing Director and includes

five members from the Management of the Company including the CE & MD.

The Board oversees the approval of annual Business Plan, cash flow projections and long term

plans, budgets along with variance analysis, significant internal audit issues, sale of material

investments and assets and transactions of extraordinary nature through duties delegated to the

Audit Committee.

Use of electronic data in decision makingDuring my study I learned that Management is a series of decision making processes and assert

that decision making is at the heart of executive activity in business. But decisions need to be

made fast, especially in the current context where the most precious and least manageable

commodity available to managers is time.

During my practical study at FFC, I assert that in sustainable development, everyone is a user

and provider of information considered in the broad sense. The need for information arises at all

levels, from that of senior decision makers at the top levels to the grass-roots and individual

levels. Accounting System of the FFC is based on ORACLE database, developed by the team of

System Analysts of IT department with the help of Professionals of Finance Department. Access

to the Accounting System is given to the employees according to their functions and

responsibilities.

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Page 133: FFC Marketing Division

The Management has developed the accounting system and implemented the system to make

relevant information accessible in the form and at the time required to facilitate its use. The

purpose is to meet the organizational needs for Accounting Information as efficiently as possible.

The Company uses many accounting reports that affect the daily operations of almost every

department. All employees are paid and their pay slips are generated from accounting

information.

Many reports are generated from system to control daily business operations. For example:

MD Fax. This report is generated daily in the morning and delivered to all persons at top level.

This report lists information about the last day(s) activities, i.e. production, sale, inventory etc.

Examples of other Reports Generated by the Accounting System

Cash and Credit Sale Summaries Stock Movement Report

Collection Summary Dealer Ledger

Receipt and Payment Account Receivable Accounts

Age Analysis Report General Sales Tax Report

Payable Accounts Trial Balance, etc.

INSTITUTE OF BUSINESS ADMINISTRATION (INTERNSHIP REPORT)

Page 134: FFC Marketing Division

Ratio Analyseso Liquidity ratios

o Financial leverage / solvency ratios

o Coverage ratios

o Activity ratios

o Profitability ratios

o Market ratios

1-Liquidity RatiosCurrent Ratio

It shows the relationship between current assets and current liabilities of a concern.

Current Ratio = Current Assets / Current Liabilities

The current ratio for the year 2010 remains same as compared to year 2009. To pay current

liability of Rs.1 the company has current assets of Rs. 0.84. The standard of current ratio is 2, so

yet the company needs to consider this.

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Year 2008 2009 2010

Current Assets 9709511 14917456 17,223,642

Current Liabilities 11823641 17854574 20,578,083

Current Ratio 0.82 0.84 0.84

Page 135: FFC Marketing Division

Quick Ratio/Acid test RatioQuick Ratio = Current Assets - Inventory

Current Liabilities

Year 2008 2009 2010

Quick Assets 6417149 11776736 17011922

Current Liabilities 11823641 17854574 20,578,083

Quick Ratio 0.54 0.66 0.82

Findings: The quick ratio measures a company's ability to meet its short-term obligations with its

most liquid assets. Hence higher the ratio, better it is acid test & ratio of FFC is showing

improvement as compared to previous year, which is a good sign for company.

INSTITUTE OF BUSINESS ADMINISTRATION (INTERNSHIP REPORT)

Page 136: FFC Marketing Division

2- Financial Leverage RatiosLong term debt to equity ratioIt indicates what proportion of equity and debt the company is using to finance its assets.

Long term Debt to Equity Ratio = Long term Debt / Total Equity

Year 2008 2009 2010

Long Term Debt 5378214 4578809 3,819,405

Equity 12285213 13082442 15,447,547

Long term debt to equity

ratio

0.44 0.35 0.24

This ratio shows the extent to which company is financed with long term debt. This ratio tells us

that creditor is providing 0.24 cents for each Rs.1 being provided by shareholder. Hence the

graph shows that the company payout it’s long term loans in 2010

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Page 137: FFC Marketing Division

Long Term Debt to Total Assets RatioIndicates what proportion of the company’s assets is being financed through debt.

Long term Debt to Assets Ratio = Long term Debt / Total Assets

Year 2008 2009 2010

Long Term Debt 5378214 4578809 3,819,405

Total Assets 31918963 38551582 43,060,856

Long term debt to total

Assets

0.17 0.12 0.09

This ratio shows the percentage of the assets financed by long term debt. Thus 9% of the firm

assets are financed with debt, so company is using less of its long term debt in financing assets as

compared to previous year

.

INSTITUTE OF BUSINESS ADMINISTRATION (INTERNSHIP REPORT)

Page 138: FFC Marketing Division

Total Capitalization Ratio

The capitalization ratio measures the debt component of a company's capital structure, or

capitalization (i.e., the sum of long-term debt and shareholders' equity) to support a company's

operations and growth.

Year 2008 2009 2010

Long Term Debt 5378214 4578809 3,819,405

Total capitalization 17663427 17661251 19266952

Long term debt to total

Capitalization

0.3 0.26 0.19

This ratio shows the relative importance of long term debts to the long trend financing of the

firm. The company ratio is showing that the capital structure is mostly based on equity and the

ratio is also showing decreasing trend as compared to previous year.

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Page 139: FFC Marketing Division

3-Coverage RatioThis ratio shows the ability of firm to meet its interest from earning before interest and tax.

This ratio shows the company ability to cover interest charges. Higher the ratio, beneficial it is

for company. And the ratio of FFC is showing the decreasing trend but yet it is very good.

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Year 2008 2009 2010

EBIT 10736454 14002164 15,619,480

Interest Expense 695371 944947 1,086,741

Interest Coverage

Ratio

15.44 14.82 14.37

Page 140: FFC Marketing Division

4-Activity RatiosTotal Asset TurnoverAsset turnover measure a firm’s efficiency at using its assets in generating sales or revenue.

Total Asset Turnover = Net Sales / Total Assets

Year 2008 2009 2010

Net Sales 30592806 36163174 44,874,359

Total Assets 31918963 38551582 43,060,856

Assets Turnover Ratio 0.96 0.94 1.04

This ratio shows the overall effectiveness of the firm in utilizing its assets to generate revenue.

The standard of the ratio is 2. So the company needs to improve this ratio.

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Page 141: FFC Marketing Division

Receivable Turnover Ratio:An accounting measure used to quantify a firm's effectiveness in collecting debts.

Year 2008 2009 2010

Net Credit Sales 30592806 36163174 44,874,359

Receivables 495929 256886 357,956

Receivables Turnover

Ratio

62 141 125.3

Average Collection

Period (365/RTR)

5.88 2.5 2.9

This ratio shows the quality of receivables and how successful the firm is in its collection.

Higher the ratio, more the efficient company is. FFC’s receivable turnover ratio showed

improvement (although slight downward trend is there) that is a good sign for the company.

INSTITUTE OF BUSINESS ADMINISTRATION (INTERNSHIP REPORT)

Page 142: FFC Marketing Division

Inventory turnover Ratio:A ratio showing how many times a company's inventory is sold and replaced over a period.

= Cost of Goods Sold/ Inventory

Year 2008 2009 2010

Cost of Goods Sold 18234692 20515044 25,310,406

Inventory 258094 144087 211,720

Inventory Turnover Ratio 71 142 119.5

Avg age of

Inventory(365/ITR)

5.14 2.6 3.05

A ratio showing how many times a company's inventory is sold and replaced over a period. The

graph shows inventory management of the company. FFC’s inventory turnover ratio is good but

again it is decreased in 2010 year that is a negative sign for the company.

INSTITUTE OF BUSINESS ADMINISTRATION (INTERNSHIP REPORT)

Page 143: FFC Marketing Division

5-Profitability RatiosGross Profit MarginA ratio used to assess a firm's financial health by revealing the proportion of money left over

from revenues after accounting for the cost of goods sold.

Gross Profit Margin = Gross Profit / Sales*100

Year 2008 2009 2010

Gross Profit 12358114 15648130 19,563,953

Net Sales 30592806 36163174 44,874,359

Gross Profit Margin 40.40% 43.27% 43.5%

Gross profit ratio of this year is greater as compared to previous year that is 43.5%. It means

from one rupee of Sale Company is earning gross profit of Rs. 0.45 & that’s good for company.

INSTITUTE OF BUSINESS ADMINISTRATION (INTERNSHIP REPORT)

Page 144: FFC Marketing Division

Net Profit MarginNet Profit Margin = Net Profit / Sales*100

Year 2008 2009 2010

Net Profit 6525083 8823106 11,028,849

Net Sales 30592806 36163174 44,874,359

Net Profit Margin 21.33% 24.40% 24.5%

Net profit ratio is also higher as compared to previous year. This ratio shows that company is

earning Rs. 0.24 on it Rs. 1 sale that is increased from previous year thus indicates efficiency of

company.

Return on AssetsROA gives an idea as to how efficient management is at using its assets to generate earnings.

INSTITUTE OF BUSINESS ADMINISTRATION (INTERNSHIP REPORT)

Page 145: FFC Marketing Division

Return on Assets= Net Profit / Total Assets*100

Year 2008 2009 2010

Net Profit 6525083 8823106 11,028,849

Total Assets 31918963 38551582 43,060,856

Return on Assets 20.44% 22.89% 25.6%

ROA gives an idea as to how efficient management is at using its assets to generate earnings.

The higher the ROA ratio the better it is, because the company is earning more money on less

investment. And the company is showing increasing trend hence positive sign for the company.

Return on Equity

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Page 146: FFC Marketing Division

Return on equity measures a corporation's profitability by revealing how much profit a company

generates with the money shareholders have invested.

=EAT/ Shareholders equity

Year 2008 2009 2010

Net Profit 6525083 8823106 11,028,849

Equity 12285213 13082442 15,447,547

Return on Equity 53.11% 67.44% 71.3%

Return on equity measures a company's profitability by revealing how much profit a company

generates with the money shareholders have invested. FFC’s ratio is increased from previous

year which is a good sign.

INSTITUTE OF BUSINESS ADMINISTRATION (INTERNSHIP REPORT)

Page 147: FFC Marketing Division

6-Market RatiosEarning Per Share—EPSThe portion of a company's profit allocated to each outstanding share of common stock.

Year 2008 2009 2010

Net Profit after tax 6,525,083000 8823106000 11,028,849

Number of ordinary

shares

493474230 678527065 678527065

EPS 13.22 13 16.25

It shows the portion of a company's profit allocated to each outstanding share of common stock.

The company is showing increasing trend as compared to previous year.

2008 2009 20100

2

4

6

8

10

12

14

16

18

EPS

EPS

INSTITUTE OF BUSINESS ADMINISTRATION (INTERNSHIP REPORT)

Page 148: FFC Marketing Division

Dividend per Share—DPS

DPS = Total Amount of Dividend / Number of Outstanding Shares

Year 2008 2009 2010

Total Amount of

Dividend

518, 1480,000 6717417900 10622306000

No. of Shares 493474230 678527065 678527065

DPS 10.50 9.90 15.64

This ratio shows that how much company is distributing to it’s shareholder from earning. This

ratio increased from year 2009. So it is a promising sign for investors

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Page 149: FFC Marketing Division

Dividend Payout RatioThe percentage of earnings paid to shareholders in dividend.

Dividend Payout Ratio = Dividend per Share / Earning per Shares

Significant increase as compared to 2009 shows a very positive sign for investors.

INSTITUTE OF BUSINESS ADMINISTRATION (INTERNSHIP REPORT)

Year 2008 2009 2010

DPS 10.50 9.90 15.64

EPS 13.22 13 16.25

Dividend Payout Ratio 79.43% 76.15% 96.2%

Page 150: FFC Marketing Division

Ratios at GlanceRatios 2008 2009 2010

Liquidity Ratios:

Current Ratio 0.82 0.84 0.84

Acid Test Ratio 0.54 0.66 0.82

Solvency Ratios:

Long Term Debt to Equity 0.44 0.35 0.24

Long Term Debt to Assets 0.17 0.12 0.09

Long Term Debt to Capitalization 0.3 0.26 0.19

Coverage Ratio:

Interest Coverage Ratio 15.44 14.82 14.37

Activity Ratios:

Inventory Turnover Ratio 71 142 119.5

Average Age of Inventory (Days) 5.14 2.6 3.05

Total Assets Turnover Ratio 0.96 0.94 1.04

Receivable Turnover Ratio 62 141 125.3

Average Collection Period (Days) 5.88 2.5 2.9

Profitability:

Gross Profit Margin 40.40% 43.27% 43.5%

Net Profit Margin 21.33% 24.40% 24.5%

Return on Assets 20.44% 22.89% 25.6%

Return on Equity 53.11% 67.44% 71.3%

Market Ratios:

Earning per Share 13.22 13 16.25

Dividend per share 10.50 9.90 15.64

Dividend payout ratio 79.43% 76.15% 96.2

INSTITUTE OF BUSINESS ADMINISTRATION (INTERNSHIP REPORT)

Page 151: FFC Marketing Division

INDEX ANALYSISBalance Sheet

As at December 31, 2010

2010 2009

Percentage Percentage

Non Current

Assets

Property, plant and equipment 113.8 100

Goodwill 100 100

Long term investment 101.8 100

Long term loans and advances 134.8 100

Long term deposits and prepayments 143.3 100

Current

Assets

Stores, Spare parts & loose tools 81.4 100

Stock in trade 146.9 100

Trade debts 139.3 100

Loans and Advances 258.2 100

Deposits & prepayments 133.2 100

Other receivables 84.1 100

Short term investments 177.5 100

Cash & bank balances 30.8 100

Total Assets115.4 100

Equity & Liabilities

Share capital 100 100

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Page 152: FFC Marketing Division

Capital reserves 100 100

Revenue reserves 138.5 100

Non-current liabilities

Long-term borrowings 83.4 100

Deferred taxation 105.9 100

Current Liabilities

Trade and other payables 120.13 100

Interest &mark-up accrued on loans 93.6 100

Short term borrowings 92.6 100

Current portion of long term borrowings 97.7 100

Taxation 188.6 100

Total equity and liabilities 115.4 100

Profit and Loss Account

For the year ending December 31, 2010

2010 2009

Percentage Percentage

Sales 124 100

Cost of sales 123.3 100

Gross profit 125 100

Distribution cost 124.2 100

Finance cost 115 100

Other expenses 108 100

Other Income 112.5 100

Net Profit before taxation 124.9 100

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Page 153: FFC Marketing Division

Provision for taxation 120.42 100

Profit for Year 124.7 100

CommentsEquity & Long-term Debts

Share Capital increased in year 2010 due to issue of share bonus by the company. While the long

term debt of the company move downward over the last five years. This trend shows that

Company prefers equity financing over long-term debt financing.

Current Liabilities

There is a sharp increase in the current portion of long-term debts in first three. This increasing

trend is coupled with the decreasing trend in long-term debts. Company taxes also show an

upward movement. Company is retiring its long-term debts very quickly.

Fixed Assets

Property, Plant and Equipment has shown a increasing trend Long-term loans and advances also

showed an increasing trend on the asset side which mean Company is placing more fund in this

head.

Current Assets

Closing Inventory showed decrease in year 2010. The decrease in Inventory showed efficient

management of the inventory. Store, spares and tool are trending down. Short term investment

showed a sharp increase. Cash & bank balance also showed a sharp increase.

Comments on income statement

Sales are trending up while the cost of goods sold is also trending up. There is also increasing

trend in selling and distribution expenses, financial charges and other charges.

INSTITUTE OF BUSINESS ADMINISTRATION (INTERNSHIP REPORT)

Page 154: FFC Marketing Division

Over all profits are on increasing trend in size over the long period. The total turnover of the

company is increasing year after year

INSTITUTE OF BUSINESS ADMINISTRATION (INTERNSHIP REPORT)

Page 155: FFC Marketing Division

COMMON SIZE ANALYSISBalance Sheet as at December 31, 2010

ASSETS

2009 2010

Percentage Percentag

e

Non-Current Assets

Property, plant and equipment 36.30 37.00

Goodwill 4.07 3.64

Long term investment 20.04 18.27

Long term loans and advances 0.88 1.05

Long term deposits and prepayments 0.02 0.02

Current Assets

Stores, Spare parts & loose tools 7.77 5.66

Stock in trade 0.37 0.49

Trade debts 0.67 2.07

Loans and Advances 0.34 0.78

Deposits & prepayments 0.10 0.11

Other receivables 1.90 0.14

Short term investments 17.56 27.9

Cash & bank balances 9.98 2.76

Total Assets100 100

EQUITY AND LIABILITIES

2009 2010

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Page 156: FFC Marketing Division

Percentage Percentage

Equity

Share capital 17.60 15.75

Capital reserves 0.42 0.37

Revenue reserves 15.92 19.74

Non-current liabilities

Long-term borrowings 11.88 8.86

Deferred taxation 7.87 7.46

Current Liabilities

Trade and other payables 20.76 22.3

Interest &mark-up accrued on loans 0.38 0.32

Short term borrowings 15.79 13.09

Current portion of long term borrowings 4.67 4.085

Taxation 4.71 4.08

Total equity and liabilities 100 100

Profit and Loss Account

2009 2010

Percentage Percentage

Sales

100

100

Cost of sales 56.73 56.4

Gross profit 43.27 43.5

Distribution cost 8.78 8.79

Finance cost 2.61 2.4

Other expenses 3.52 3.06

Other Income 7.75 7.02

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Page 157: FFC Marketing Division

Net Profit before taxation 36.11 36.64

Provision for taxation 11.71 11.76

Profit for Year 24.40 24.5

General Commentary on Financial condition

During the period under review, net sales for the company increased an increase of 18%. Cost of

sales rose by 20% due to the hike in prices of raw materials, fuel and power and salaries and

wages resulting in a gross profit, an increase of 16% as compared to the corresponding period

last year.

Profit after tax increased by 12% .Finance cost decreased from Rs 520 million to Rs 494 million.

Total assets declined. The drop was mainly caused by the decline in short term investments and

cash and bank balances. There was a 50% decline in short term investments; major decline was

in the local currency term deposits with banks and FIs. Cash and bank balances declined. On the

liabilities side, there was a major decrease in short-term borrowings and trade and other

payables.

INSTITUTE OF BUSINESS ADMINISTRATION (INTERNSHIP REPORT)

Page 158: FFC Marketing Division

Financial Industry Analysis

Comparison with Key Competitor (Engro Fertilizer Limited)Ratios Engro FFC

Liquidity Ratios:

Current Ratio 0.828 0.84

Acid Test Ratio 0.772 0.82

Solvency Ratios:

Long Term Debt to Equity 4.593 0.24

Long Term Debt to Assets 0.639 0.09

Long Term Debt to Capitalization 0.8212 0.19

Coverage Ratio:

Interest Coverage Ratio 5.03 14.37

Activity Ratios:

Inventory Turnover Ratio 11.28 119.5

Total Assets Turnover Ratio 0.19 1.04

Receivable Turnover Ratio 7.28 125.3

Profitability:

Gross Profit Margin 46.48% 43.5%

Net Profit Margin 19.6% 24.5%

Return on Assets 3.803% 25.6%

Return on Equity 34.7% 71.3%

Market Ratios:

Earning per Share 3.48 16.25

Dividend per share 2.71 15.64

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Page 159: FFC Marketing Division

Dividend payout ratio 71.2%% 96.2

Interpretation:Liquidity of FFC and Engro both are good. Solvency Ratio oF FFC is much greater than Engro.

Ability to pay interest is much superb of FFC. Very strong Activity Ratios shows stronger

management of FFC. The strong managerial effectiveness of FFC is also reflected in strong

profitability and Market Ratios

INSTITUTE OF BUSINESS ADMINISTRATION (INTERNSHIP REPORT)

Page 160: FFC Marketing Division

Part 7

Training

INSTITUTE OF BUSINESS ADMINISTRATION (INTERNSHIP REPORT)

Page 161: FFC Marketing Division

Part 7: Training

Distribution DepartmentDepartment: Distribution

Period 18 -19 July

No of Days 2

Supervisor Faisal Shehzad

Distribution Officer

Hierarchy of Distribution Department:

On the first day first of all I gave my joining as an internee in HR department. In the second step

I was given a schedule according to which I have to work in the organization. My first day was

in distribution department. There I reported to Mr Faisal Shahzad. He briefed me about the

various order and distribution reports that were used on daily basis. The reports showed date on

which order was placed, the day on which it was dispatched, medium, spoilage and was divided

on regional basis. All the distribution starts from their 3 production plants:

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GGMM

SM(Distibution)

DE(Distribution) 2

Supporting Staff

Page 162: FFC Marketing Division

Mirpur Mathelo

Goth Machi

Bin Qasim, Karachi.

He gave the very simple definition of distribution “To ship the product from one source to

another effectively”. He really emphasized the word “effective” and briefed that in FFC to be

effective distribution they mean that:

Distribution should be competitive.

No Duplication of Resources.

Time Management as per agreement with customer.

Practice of FIFO

Region Based.

Cost Effective.

Effective Coordination.

Minimum Delay

Minimum Warehouse Cost.

Minimum Damages

The order is generated from agencies in respective regions and then it comes to Marketing head

office Lahore. Here a practice called “pooling” is done. The distribution executives here decide

to which production plant the order should be directed for proper execution. In this step usually

two things are considered while directing the order to a particular plant:

Time Management

Cost effectiveness

In case of order of Sona Granular and DAP the pooling is quite as only Bin Qasim plant is

manufacturing them so all the orders are directly directed to Bin Qasim plant. But in case of

orders of Sona Prilled the distribution section has to choose among Goth Machi and Mirpur

Mathelo Plant.

INSTITUTE OF BUSINESS ADMINISTRATION (INTERNSHIP REPORT)

Page 163: FFC Marketing Division

Then Mr Faisal discussed “Upcoming distribution plans and challenges” Some of the main

points are:

Challenges: Heavy Reliance on road transport

Law and order challenges such as Dacoits

Bottle Neck of Trucks at Mirpur Mathelo

Competitors (Fatima and Engro) located in radius of 65 Km

Congestion at Karachi Terminal

Increasing prices of high speed diesel

Operating Cost

Axle Load

Plans: Competitive freight rate

Better Facilities to truckers

Minimize Loading time

Minimize spoilage

Transit insurance

Then I studied the daily morning reports. These reports showed details:

Daily Production (current and cumulative)

Daily shipments to respective regions (current and cumulative)

Shipments to customers and warehouses

Region Wise Inventory

Variance

Daily shortage/excess

Procedure of assigning new dealership in FFC:Following documents are required for assigning dealership

INSTITUTE OF BUSINESS ADMINISTRATION (INTERNSHIP REPORT)

Page 164: FFC Marketing Division

CNIC

NADRA verification

Application for agency

Dealer selection form

Bank certificate

Special Adhesive Stamp of Rs 100.

Criteria for assigning new dealership in FFC: Credibility of the applicant

Location of market

Potential turnover

Commitment

Capital to be invested

Reasonable business sense

Networking

Potential improvement in market share

Criteria used for setting sales target in FFC: Past Records

Industry sales

Market share

Monthly break ups

Cropping pattern

Awareness of Brand among farmer community

Strategies used by FFC for achieving the sales target (At regional level): Effective tour planning

Tie- in strategy

Information dissemination

Assigning quotas for dealers

Dealer network

Order generation

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Page 165: FFC Marketing Division

Avoiding long lead time

Strategies used by FFC for brand positioning (At regional level): Sponsoring Agri based events

Free testing of soil samples

Assistance to farmers in cropping problems

Objectives: These are the following objectives of the distribution system.

Ship out entire production of FFC & FFBL Plants and imported fertilizers in a cost

effective manner. (3.4 million mt. approximately)

Satisfying 3580 dealers and 1632 direct customers and feeding 169 warehouses.

Truck generation for 1556 sales points

Plan & undertake self imports/ export and ensure prompt handling, quality packing,

correct weight, timely delivery and documentation.

Monitor packing availability and arrange safe storage of surplus production during lean

months.

Follow up of product quality complaints.

Co ordinate with plant management to ensure smooth operations

Maintain liaison with Pakistan Railway, NLC, Port Authorities, Customs, Export

Promotion, Bureau and foreign manufacturers and suppliers.

Transportation Arrangements private trucking contractors

national logistic cell (nlc)

pakistan railways

Customers served:

Dealers 3580

Direct Customers 1632

Total 5212

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Warehousing DepartmentDepartment: Warehousing

Period 20 July

No of Days 1

Supervisor Shehzad Anwar Butt

Deputy Executive (Warehousing)

Hierarchy of Warehousing Department

The warehousing department is involved in completing the formality For hiring And firing of

warehouses (on need basis), appointment of handling contractors, watch and ward contractors.

The record of inventories is maintained and physical inspection of the warehouse and product are

carried out to ensure safety and security. This department works in collaboration with

distribution department.

Functions of warehousing department Coordinating of warehouse department with regions regarding warehouse selection,

training of supervisors, planning capacity of warehouses

To conduct inspections of the warehouses on planned and surprise basis

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GGMM

SM(Distibution)

DE(Distribution) 1

Supporting Staff

Page 168: FFC Marketing Division

Each warehouse is inspected around 17 times a year.

Warehousing department is considered with processing of

o Lease agreements

o Watch and ward agreements

o Handling agreements

o Watch and ward bills

Conduct the training of warehouse supervisors.

Preparing the operational, capital and revenue budgets on yearly basis.

Formulating warehouse plans.

Preparing weekly capacity reports.

Types of warehousesWarehouse Type Quantity Capacity

Strategic warehouse 02 20000

Permanent 61 168700

Temporary 84 89500

TOTAL 147 278200

Strategic warehousesThere are two strategic warehouses in the country, one is located at Chiniot and other is located

at Yousufwala. The total capacity of the strategic warehouses is 20000 MT. The purpose of these

two warehouses is to provide the product in bulk in major areas because both covered the huge

area.

Permanent warehousesThere are sixty one warehouses in the country, located at different places. The total capacity of

these warehouses is 168700 MT.

Temporary warehouses / purely temporary warehouses

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There re one hundred and six temporary warehouses in the country, located at different places.

The total capacity of these warehouses is 154900 MT. The purpose of these warehouses is only

to control the seasonal demand. Because in season the demand of the product is very high and

the product must be reached at the end user in short time as possible and there is impossible to

store such a huge quantity at the plants.

Zone-wise Warehouses and Capacity

ZONE REGIONS WAREHOUSES CAPACITY (MT)

North 5 55 114000

Central 5 48 99800

South 4 41 64400

TOTAL 14 144 278200

Agri Services Department

Department: Agri. Services

Period 21 July

No of Days 1

Supervisor Riaz Ahmed Ghuman

Manger Marketing (Agri Services)

Hierarchy of Agri services Department

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GGMM

SM(AS)

DE(AS) 2

Supporting Staff

Page 170: FFC Marketing Division

Fauji Fertilizer Company Limited has been providing Agricultural Advisory Services to the

farming community throughout Pakistan since 1981, for increasing the agriculture production in

general and the farmers’ economic returns in particular. FFC 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.

The company is providing quality farm advisory services all over the country through its 5 Farm

Advisory Centers and 14 Regional Technical Services Officers. Farm Advisory Centers are

located at Mandi Bahauddin, Ghakar, Bahawalnagar, Muzaffargarh and Hala. Each centre has a

team of five Agricultural Experts, providing multifarious advisory services through crop

demonstrations, field days, farmer meetings, village meetings, crop seminars, farm visits and

group discussions. All the centers are fully equipped with modern sophisticated computerized

Soil & Water Testing Laboratories and high-tech extension equipment. Moreover, FFC has also

established a micronutrient and plant tissue analysis laboratory at Farm Advisory Centre,

Ghakhar having Atomic Absorption Spectrophotometer and other analytical instruments. 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/water testing and micronutrient analysis facility is offered free of cost. Besides these five

farm advisory centers, we have 14 Technical Services Officers based at 14 Regional Offices of

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FFC spread all over the country extending these services in their respective areas. To further

strengthen advisory services and facilitate farmers, FFC also publish crop, vegetable, orchard

brochures, agro-grams, posters and pamphlets containing latest information regarding production

technologies of crops, and orchards grown in Pakistan. For a stronger direct link and timely

guidance of farmers, FFC publish a quarterly Urdu and Sindhi Newsletter “Zari Report”

containing season specific information regarding crops, fruits, vegetables, improved agronomic

practices and articles on agricultural issues. Following is the list of crop brochures available with

FFC

Wheat

Brochure

Cotton

Brochure

Sugarcane

Brochure

Rice

Brochure

Maize

Brochure

Oil Seed

Brochure

Potato

Brochure

Vegetable

Brochure

Mango

Brochure

Citrus

Brochure

Banana

Brochure

Apple

Brochure

Guava

Brochure

Date Palm

Brochure

Orchard Cultivation Brochure

Boron

Brochure

Salt-affected Soils Brochure

To improve the fertilizer use efficiency and to obtain optimum crop yields, a “Fertilizer Guide

Book” and “Fertilizer Recommendation Book” has also been published containing

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comprehensive information on various fertilizers available in Pakistan, their application methods

and their economic use.

FFC has also adopted the pragmatic approach of telecasting crop documentaries on PTV before

the onset of sowing season of major crops. In these documentaries all the components of crop

production are covered with sufficient elaboration. Cotton, wheat, sugarcane and rice

documentaries.

Agri service department is providing support function to sales..

Objectives Enhancing crop yield/overall crop production

Promotion of balanced fertilizer use

Farmer education /training

Dissemination of latest and complete package of technology

Focus on increasing farmers income

Counter fertilizer misconception

Supplement government effort for agricultural

Functions Increase and focus on farm management expertise

Establish proper linkage sales and technical services

Professional development on personnel

Collaborative research

Other Department Activities Weekly water situation report at Mangla and Terbala dam

Water availability during Rabi / Kharif season

Weekly co ordination meetings

Annual stewardship report

Annual budget preparation

Domestic demand for crop report

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Completion of monthly report received from 14 regions, 5 FAC and the department

Facilitating field officers

Facilitating the purchase of technical items

Monitoring activities of FAC

Internal structure of FAC

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FAC Manager

Reg TSO

Agronomist Chemist Chemist Ext Extensionist

Page 174: FFC Marketing Division

Finance DepartmentDepartment: Finance

Period 22- 28 July

No of Days 5

Supervisor Khalid Javed

Manager

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Page 175: FFC Marketing Division

Order Processing SystemOrder processing system (OPS) is used to control shipments from plants to sale districts or

warehouses and activities related to shipments. The activities include:

Despatch Priorities

Management of freight cost, gross rates and discounts

Track of customer order pending with Haulage Contractors (HC)

Following is the brief information regarding order processing through road and Pakistan

Railways (PR).

Order Processing Through Road:Order processing through rail is carried out in the following way:

The customer provides CO to the sales officer along with financial instrument.

Sale officer provides this information to the regional manger (RM) or he directly sends

the CO to the marketing office.

Regions send COs along with financial instruments to the finance department in the

marketing division and if the order is from the plant then RM sends a copy of the CO to

the plant as well.

Collection section punches the COs.

One copy of printed customer orders is sent to Karachi.

For further processing Karachi office downloads the punched customer orders. (These

customer orders have been punched in Lahore)

Karachi office verifies the customer orders and does the necessary actions if there is any

objection in COs.

Distribution department prepares the despatch plan on the basis of pre-planned criteria so

that each region could have pre-planned percentage of the products.

Allocation plan is prepared to allocate the customer orders to the contractors.

Finance section generates the invoices/advices.

Allocation plan leads to the generation of the daily shipment plan (DSP).

DSP is sent to the bagging section for cross checking purpose.

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Haulage contractors load the product in their vehicles by showing the bilty for loading at

plant.

Invoices are generated in case of customer orders and advices are generated in case of warehouse

orders.

The vehicles are loaded according to the plan after verification process.

Bagging section punch invoices into the system to ensure the shipment.

Order Processing Through Pakistan Railway: The customer provides CO to the sales officer along with financial instrument.

The orders are then punched into the system by the finance section.

A temporary order is made for the shipment of the consignment from plant to Dhabeji

warehouse1.

Despatch plan is prepared for TSO that shows that how much quantity to be despatched

to Dhabeji warehouse and at this stage allocation plan is also prepared accordingly.

Allocation plan is prepared according to the Dispatch plan in which order quantities are

assigned to different contractors.

Daily shipment plan is generated on the basis of allocation plan and it is sent to the

bagging section for cross checking purpose with the haulage contractors.

Haulage contractors send their vehicles along with bilty for loading at plant.

After allocation to the contractors, Dispatch Note (DN) is generated by the system that

helps the transfer of the product from plant to Dhabeji warehouse.

Haulage contractor issues a bilty slip to his driver and the driver take this slip at the

bagging section where it is compared with the Dispatch note. After successful

verification the vehicle is loaded with the product.

The amount of the product and date is written down on the DN and also punched into the

system.

After receiving the product bags from the vehicles, Pakistan Railway issues a receipt

called Railway Receipt (RR). RR(s) are used for the billing process by Pakistan Railway

for shifting the consignment from Karachi to respective regions.

1

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A copy of RR is also provided to the contractors and the contractors claim their shipping

charges on the basis of RR.

RR(s) are then punched into the system against respective customer orders.

Invoices are generated and the copies of the invoices are sent to the respective persons.

The customers receive their orders from the railway station after clearing all the dues.

GENERAL ACCOUNTING SYSTEM

Functional Workflow

General Accounting System

Data feeding

ValidateVoucher

Generation

ReceiptVoucher

BankVoucher

JournalVoucher

PaymentOrder

Validate & Finalize

Tax Ledger

GeneralLedger

CostCenterLedger

Petty CashBook

Sub-sidiaryLedger

BankBook

Govt. TaxReports

Parties TaxCertificates

Imprest SheetsPayment OrdersExpense Claim

Phone BillsUtility BillsInvoices

Other ReceiptsDD Receipts

Funds TransferTax Payments

DTRAssets

W&W ContractsGodown Rent Contracts

Rent Contracts

W&W BillsGodown Rent Bills

Rent Bills

Data feeding

Validate

Monthly BillGeneration & Pre-Payments

Long-term PaymentsActualization

Senior finance manager (SFM) is the head of the finance department. SFM is responsible to

report the managing director of the company about the performance of the finance department.

He is responsible of all the activities of the department. There is one senior finance executive of

general accounting and one finance officer of the sales accounting. Both are working under the

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supervision of the senior finance manager. SFE of general accounting monitors all the activities

related only to the general accounting and finance officer of sales accounting monitors all the

activities related to the sales accounting.

There are four person are working under the supervision of the senior finance executive of the

sales accounting.

Senior Finance Executive (Disbursment) SFE (D)

Finance Executive (Disbursment) FE (D)

Finance Executive (Fixed Assets) FE (FA)

Finance Officer (Financial Reporting) FO (FR)

Senior Finance Executive (Disbursment) SFE (D)

There are five accountants and 3 Senior Finance Assistants are attached with the SFE (D).

SFE (D) deals the following heads.

Disbursement

Salary Staff

Banks

Disbursement:Under this head the following payments are included

Payment to suppliers

Payment to Contractor

Payment to Government Agencies

Payment to Tax department

Lease/Rent of the buildings

Services of the watch and ward

Handling contractor for loading and unloading

Payment on per page

Basic as on agreement

Hospitals/ Doctors as on panels

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Banks:

FFC used the following banks.

Habib bank limited

Muslim Commercial bank limited

Union bank limited

Bank Al-flah

In bank dealing the company mainly used the two heads.

Collection Account for deposits

Imp rest Account for payments

General Accounting System (Functional Overview)General Accounting System has the followings artifacts:

Bank Voucher (BV)

Journal Voucher (JV)

Petty Cash Voucher (PCV)

Receipt Voucher (RV)

Bank Voucher (BV)This voucher is used to represent the expenditure details along with cost controller’s (also called

functionaries) detail.

Journal Voucher (JV)Journal vouchers are used for many purposes since the name suggests that these can be used for

any purpose regarding crediting or debiting an account. JV(s) are also used to make

adjustments/corrections in amount’s code/classification in the bank payments vouchers.

Petty Cash Voucher (PCV)This voucher is prepared to adjust all the official expenses under a certain limit (e.g. 1500 Rs).

This voucher is normally used to pay the employees bills/claims etc under this amount.

Receipt Voucher (RV)

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This voucher is used to receive any type of amount on behalf of FFCL. It can be used to receive

the transfer of funds from HO or funds transfer from one bank to another bank. The amount can

be an employee’s telephone bill that is debited from the employee’s account.

Purchase Requisition (PR)Purchase requisition is prepared in case the staff wants to purchase something they need. It

covers all the official expenses. In case a department needs something to purchase, a PR is

prepared and after the verification from the respective authorities, it is forwarded to the

procurement department that processes the PR.

Trial BalanceTrial balance is a monthly report showing the details of expenses during the month. It covers all

the marketing activities. It contains details about receivables, credited and debited amount

information. It is effectively used to represent the progress on the basis of the information

represented within. It is prepared monthly for MD and quarterly for the board of directors.

Cost Controllers/CentersAny department or section that can utilize an amount is called cost controller/center. Each cost

controller/center has been assigned a code. Following figure shows the list of all the cost

controllers/centers codes used:

Sales Accounting Sales accounting deals the following heads:

Bank guarantee

Receivables

Sales collection

Objectives Establishment of Dealer Network

Efficient Collection Procedure

Recording Of Sales Data

Control Of Receivables

Product Inventory Monitoring

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Sales Accounting System

Docs. Insertion into Respective Tables

CO

DDSGeneration

SMRCRVJVDCS CSTMR CDS Invoice AdviceCR

Approval

DealerBalances

MIS/Misc. Reports Posting Routines

BankDaily

CollectionReports

SalesReports

Credit SalesReports

TaxReports

WarehouseAccounting

Reports

ReceivableReports

Media

SALES ACCOUNTING SYSTEM

Bank guaranteeCredit sale of the company is only 6% to 7% of the total sale. The company is still discouraging

the credit sale because the company has an option of 100% cash sale. There are two types of the

bank guarantees.

Single bank guarantee

Revolving bank guarantee

Single bank guarantee This guarantee is used by the ginners, single means the bank guarantee is used only one time.

Revolving bank guarantee:This guarantee is used by the dealers and revolving means the dealer can use it more than one

time.

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Unsecured SaleThe sale against which there is no security is required. The company discourage the unsecured

sale if accept only with the recommendation of the top management. For example Fauji cane

farming.

Receivables

Approximately 95% sale of the company consists on cash and remaining 5% is consisting on the

following heads that leads to the account receivable.

Credit sale against Bang Guarantee

Mistakes in DD or PO

Change in amount

Adjustment in another order

Sales collection

There are two heads of sales collection.

Cash Sale

Credit Sale

Ways of collectionBank to Bank

That is mostly used in credit sale for that purpose CRV (Collection Receipt Voucher) is

used. CRV is the surety that the company’s bank has received the amount on behalf of

the company to the buyer’s bank.

Directly Debit or Credit

According to this way company’s bank directly credited the amount means received

amount to dealer on behalf of the company and directly debit the account means the bank

directly transfer the amount to the head office of the company.

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DCS (Daily Collection Statement)

DD (Demand Drafts)

PO (Payment Orders)

CDS (Cash Deposit Slip)

Sales Accounting (Workflow)Following documents are used during the customer order processing.

Customer Order (CO)Whenever an order is placed for a customer, a Customer Order (CO) is prepared containing

customer information and shipment information. CO is the basis of Sales Accounting System.

For every product of FFCL, e.g. Sona (G) and Sona (P), there will be a separate CO. Each

customer order has a customer code.

Financial InstrumentsFollowing are the financial instruments using which the customers can pay their payments to

FFCL.

DD (Demand Draft)

PO (Payment Orders)

TC (Traveler Cheques)

CDSCash Deposit Slip)

Draft in Transit (DIT)

The amount that is banked up after the completion of a particular month is identified as draft in

transit (DIT). Since bank book close on 30 or 31 of a month, but sales for the last month is

received up to the first week of the current month, so to identity this amount, it is referred as

DIT.

Collection Receipt Voucher (CRV)

Collection Receipt Voucher is used to manage the secure payments (e.g. Bank guarantees RR

payments and Miscellaneous). It is prepared daily. It is used to credit and debit from the dealer’s

account. It is also used for remittance to head office.

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Railway Receipt (RR)

If there is a mistake on Demand Draft (DD), e.g. signature is missing, wrong figure has been

entered, wrong date has been provided or drawn bank information is wrong etc. If there is any

such case the bank provides Returned DD.

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Administration Department Department: Administration

Period 29July

No of Days 1

Supervisor Maj Muhammad kamal Pasha (Retd)

Assistant Manager Administration

Hierarchy of Administration Department

INSTITUTE OF BUSINESS ADMINISTRATION (INTERNSHIP REPORT)

General Manager Marketing

Admistration Manager

Admistration Executive

Manager LLA

Page 186: FFC Marketing Division

The administration department deals with three main functions:

Its major role is to support the market division, 3 sale zones, 14 regions and FACs, 3

distribution setups and 2 guest houses.

Aim: To acquaint with the functioning of Administration Department of Marketing Division.

General Administration:In General Administration Department Head assisted by Unit Managers and Section Heads

implement policies issued by Head Office

Major Functions:1. Provision and maintenance of various types of vehicles

2. Ensure availability of utilities like electricity, gas and photocopiers etc

3. Undertake protocol duties for example reception and accommodation

4. Provision of uniforms for example uniforms of drivers

5. Ensure proper maintenance and renovation of the office premises & guest houses

6. Take disciplinary action under the rules, where necessary

7. Disposal of unserviceable Company Assets

Maintenance of Transport:Different types of vehicles held by the Marketing Division as shown on the view foil

Company Assigned Cars

Company Assisted Cars

Company Maintained Transport

Communication:

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Admin

General Admin HR Procurement Units

Page 187: FFC Marketing Division

Effective Communication network is established with a view to ensure smooth operations

and coordination between various operational departments and the Head Office.

Security:Due to prevailing law and order situation, FFC Admin has been extra vigilant at Lahore. All

the visitors are therefore, politely but firmly checked and proper record is maintained at

reception located at Ground Floor. It is endeavored not to allow any unauthorized vehicle to

enter the basement where own cars are parked.

Accommodation:Accommodation is hired for the offices and guest house. This include:-

1. Marketing Division Lahore Office

2. 14 X Regional Offices. (Lahore, Peshawar, Faisalabad, Sahiwal, D I Khan, Vehari,

Bahawalpur, D G Khan, Rahim Yar Khan, Hyderabad, Sukkur, Nawabshah and

Quetta)

3. Office accommodation for Central and South Zones at Multan and Karachi

4. Office accommodation for 5 x FACs (Kasur, Jhang, D.I.Khan, Vehari and Mirpur

Khas)

5. 2 x houses for use as Guest Houses at Lahore

Guest Houses:Company Guest House is registered in two rented bunglows at 13 & 14 Rose Lane, Sarfraz

Rafiqui Road, Lahore Cantt

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Human Resource DepartmentDepartment: Human Resource

Period 01 August

No of Days 1

Supervisor Qamar Sb

Manager HR

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-a-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.

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GGMM

SE(HR)

Senior HR Officer 2

Page 189: FFC Marketing Division

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 HRD.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.

Human resources department of the marketing division is responsible for the employees related

to marketing division. Maintaining their attendance and payroll of the staff while officers and

executives get their pay directly from head office.

Functions

Work out warehouse supervisor visor’s requirements in consultation with regional manager and

arrange recruitment and transfer activities according to head office instructions.

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1. Maintain up to date personal records, statistics including leave records , relating to

management and non- management employees.

2. Interpret company policy and provision of necessary ruling where required.

Handling cases relating to following subjects Employment/appointment of non management employees. Temporary / contract / daily

wages according to authorization.

Promotion of non management employees

Pay and allowances of non management employees.

Leaves (annual, causal, special, sick) are managed for all employees.

Transfer claims of all employees.

House/rent allowances advances

Also the House building loans

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Labor and Legal Affairs Department (LLA)Department: LLA

Period 04 August

No of Days 1

Supervisor Lt Col (Redt) Imran Zahoor

Manager LLA

The LLA department in organization is formed under the IRQ 69 [industrial relation ordination]

of Punjab labor laws act and is under the approval of Management & joint Labor Department of

Punjab Govt .IR basically deals with the Labor laws implication in an organization and has to

negotiate legislatively with the CBA certified labor union at the office .The criterion for

formation of IR department is a office having at least 50 employees and its provisions given in

the Punjab as well as GOP labor laws. The IR department not only negotiates with the labor

unions but also responsible handling with the labor.

One of the functions of IR department at FFC is to tackle with all types of court problems. There

are labor courts at regional level .At present there are 24 courts in Pakistan. Any employee who

may have a complaint about the management can go to the court so IR department representative

follow the case Major Activities

Leave records of workers

Appointment records

Record of upgrading

Annual increment record

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Manager LLA

Supporting Staff

Page 192: FFC Marketing Division

Vertical performance appraisal records

Procurement DepartmentDepartment: Procurement

Period 04 August

No of Days 1

Supervisor Muhammad Naeem

Asst. Executive Procurement

Procurement department at head office is responsible for the purchases The Purchasing section

ensures that the FFC’s assets are protected, acquired and disposed of according to state and local

requirements. Some of the main functions of this section are the consolidation of supply

acquisition to maximize cost savings and the drafting of contracts and requests for proposals to

ensure that the company is protected and aggressive in the construction and maintenance of

infrastructure and services.

GOALS “To procure quality goods at the most economical and competitive rate”

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GGMM

SE (Proc)

Sr. Sub Eng

Page 193: FFC Marketing Division

FUNCTIONS Quality, Economical and timely procurement of items /spares for departments and plants

ensuring complete backup support /after sales services

Price enquiry of different items to estimate the price so that the budgeted amount may be

endorsed on the PR before initiation

Disposal of obsolete /surplus/scrap material

Continuous updating of reliable vendors list for both plants and marketing division

PROCEDURES INVOLVED IN PROCUREMENT STEPS

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Advertisement and Sales Promotion DepartmentDepartment: A & SP

Period 2- 3August

No of Days 2

Supervisor Mrs. Nabila

Objectives To create, augment and maintain the demand of FFBL and FFCL products

To enhance and sustain brand image and corporate image

Improve company visibility in the mind of consumers

To safe guard company logo

To strengthen brand loyalty In every company, the role of the sales promotion is very important

because it has a great impact on the sale volume. On world level all the big companies used the

sales promotion as a tool to increase their sales volume. Similarly FFCL also used the sales

promotion tools or techniques in order to increase the sale but due to the market leader in the

fertilizer sector the weight age of the sales promotion is sufficient but no huge. According to the

hierarchy of the sales promotion, there are two sales promotion officers each is having assistance

of two staff members, are reporting to senior executive of sales and advertisement. SE reports to

GM (MS). In FFC there is a coordination and cooperative environment. So, First, the SE of

INSTITUTE OF BUSINESS ADMINISTRATION (INTERNSHIP REPORT)

General Manager Marketing

SE (A& SP)

Sales Promotion Officer 3

Page 195: FFC Marketing Division

Planning determines the sales for the running period which is achievable and measurable then SE

of sales and advertisement makes promotion to achieve the task. In FFC sales promotion is also

working in very well defined manners. But the way of marketing is different sector, so, it is

required by the firm to much emphasize on the marketing.

ADVERTISING & SALES PROMOTION TOOLS Advertising and Sales Promotion contributed in maintaining the corporate and brand

image of the Company. During the year, electronic, print and outdoor media were

efficiently utilized to provide support to the field. Company visibility through display of

billboards and jumbo hoardings was ensured. Banners and display materials were made

for various agronomic activities in the field.

TECHNICAL SERVICES Technical services department was very active and assist FFC's field sales apparatus in

achieving the company objectives in addition to imparting the necessary agronomic

education to the farmers. The following activities are conducted Advertising & Sales

Promotion

Ads were placed in regional/ national newspapers and magazines.

Damaged dealer shop boards are replaced at company's expense, 136 plastic pole signs

and 600 dealer shop boards replaced as per the demand from the regions in order to

improve the company's image & visibility in 2009

FFC Wall Calendar-2009 received best six sheet wall calendar award in the 40th

corporate Printing & Designing Exhibition 2009, organized by National Council of

Culture & Arts.

Electronic MediaRADIO was extensively used to promote Sona brand owing to its effective reach and

being economical. Separate spots of Sona P & G, Sona DAP, FFC SOP and Sona Boron are

broadcasted from 10 stations of Pakistan Broadcasting Corporation (PBC) in Punjabi, Sindhi and

Pushto languages. The duration of these spots ranged between 22-35 seconds. The release of

spots is done on fortnightly basis based on market conditions, availability of product and the

seasonality factor. Pakistan Broadcasting Corporation (PBC) provided the company a discount of

30% on broadcast of radio spots in 2009

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Page 196: FFC Marketing Division

TELEVISIONFFC in line with cost efficient electronic media strategy and short supply market situation

during the year did not opt for regular advertisement on TV. However, crop documentaries on

wheat, sugarcane, rice and cotton are telecasted on PTV Home prior to the onset of their

respective seasons. These documentaries covered all the steps from land preparation to

harvesting.

A Documentary on the advisory services being offered to the farming community by

FFC's Technical Services Department and Farm Advisory Centers are produced. New

documentary on cotton is also produced.

CCTVThe network of closed circuit television (CCTV) was regularly utilized during the year.

FFC commercials are telecasted on CCTV at 7 railway stations & 26 AC Parlour trains (Lahore,

Multan, Faisalabad, Hyderabad, Karachi, Rawalpindi & Peshawar), 4 airports (Islamabad,

Multan, Faisalabad & Lahore) and in Daewoo coaches & waiting lounges on all routes.

PRINT MEDIATo promote corporate and brand image, print media is effectively used. Release of

corporate and brand ads to national / regional newspapers, agriculture related magazines and to

other publications is processed.

During 2010, a total of 50 ads were released comprising 04 ads in national news papers,

12 in regional newspapers, 31 in magazines and 3 in other publications.

OUTDOOR MEDIATo give a new look to the jumbo hoardings redesigning is done and during the year the

old design of thirty jumbo hoardings are replaced with the new design. In addition, relocation

and repair isalso done wherever necessary. Display of thirty three billboards is monitored to

ensure company visibility in the field and display of ads at Lahore, Karachi, Islamabad and RY

Khan airports continued for corporate image projection.

AMCON Display material and stationery for Annual Marketing Conference is developed and

printed.

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Page 197: FFC Marketing Division

POINT OF PURCHASE MATERIAL

To disseminate latest information to farmers, booklets on major crops, fruits, vegetables

and salt effected soils are printed. In addition, booklets on Sona Boron are printed to promote its

use.

Agri-newsletters were published on quarterly basis.

INSTITUTIONAL ADVERTISINGTo project the corporate image, the company sponsored various events as under:

International Conference on "Sustainable Food Grain Production: Challenges and

Opportunities" arranged by Pakistan Society of Agronomy

Dawn Spelling Bee Hospitality Contest for Schools of Upper Sindh

Annual dinner of Marketing Association of Pakistan-Lahore chapter

15th Allama Iqbal Open Golf Tournament organized by Garrison Golf Club, Sialkot

Cricket tournament organized by Lion Sports Club for the Deaf

Cricket tournament organized by Bahawalpur Cricket Club of the Blind

SALES PROMOTION ITEMSCalendars, diaries, planners, table calendars and eid cards are distributed for GR/PR

purposes.

Advertising and Sales Promotion work in coordination with Public Relations Department

for selection of paintings, designing and layout of the corporate/dealer calendar, table calendar,

planner and diaries.

Corporate giveaways comprising various leather items are made. Telephone sets for

dealers as giveaways are also produced.

AWARDSTo acknowledge long association of dealers with the company, awards for the dealers

who completed 10 and 20 years of business relationship are made and distributed at dealer

training programs.

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Page 198: FFC Marketing Division

Corporate Social Responsibility Department (CSR)Department: CSR

Period 05 August

No of Days 1

Supervisor Hamid Abbas

Junior Executive (CSR)

CSR is a marketing Approach that is used by FFC to implement the positive image of the

company as well as for the welfare of the nation as well the community in which the company is

operating

CSR Objectives

Company’s obligations of paying back to the society from which it derives its

economic gains.

Address stakeholder concerns and invest in the communities in the vicinity of our

fertilizer plants.

Empower the small and medium farmers all over Pakistan

INSTITUTE OF BUSINESS ADMINISTRATION (INTERNSHIP REPORT)

GGMM

SM(CSR)

JE(CSR)

Supporting Staff

Page 199: FFC Marketing Division

Incorporating UNGC Principles in our governance.

Contribute in achievement of UN Millennium Development Goals.

Current CSR Interventions

As most of the sustainability conscious organizations around the world do, FFC is playing its part actively in this direction. Being the brand leader in fertilizer sector with the biggest market share and counted among one of the leading corporate entity in Pakistan, FFC understands its obligation in nation building and well being of deprived communities around the plant sites. Under the charter of FFC CSR interventions, following sectors have been made part of the program

Education

Health Care

Environment

Poverty Alleviation

Sports

Annual Fun Fares

Relief & Rehab for flood affectees

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Page 200: FFC Marketing Division

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Page 201: FFC Marketing Division

Information technology (IT) DepartmentDepartment: IT

Period 08 August

No of Days 1

Supervisor Mr Sherazi

Information Technology unit was properly setup in FFC Marketing division Lahore. IT unit is

one of the most important departments working at marketing division Lahore. The

Unit has to play a leading role in the marketing division in order to enable all the department to

perform all their functions effectively and efficiently .It enables the management to make timely

decisions.

OBJECTIVES OF IT UNITS To meet computing needs of all the departments of all the departments of the marketing

divisions.

To design and develop, efficient, effective and user friendly information systems

To provide the maintenance services and proper updating of all these systems

To properly cope with the security and ethical challenges related to information

technology and information system

To design proper feedback and control procedures toward achievement of its goals.

SYSTEMS DEVELOPED BY I.T UNITS Sales accounting system

General accounting system

Order processing system

Regional information system

Sales promotion system

Distribution management system

Procurement system

Human resource system

INSTITUTE OF BUSINESS ADMINISTRATION (INTERNSHIP REPORT)

Now after the formation of SAP, most of the functions mentioned, have been obsolete due to standards approach of SAP. Now IT is mainly restricted to maintenance of hardware.

Page 202: FFC Marketing Division

SAP DepartmentDepartment: SAP

Period 09-10 August

No of Days 2

Supervisor Mr Majid

SAP Officer

To implement SAP is the vision of the top management of the company. Consultancy and

support is provided by ABACUS. It is one the most effective ERP system. The module that deals

with marketing operations is managed by marketing team, which is formulated by training the

marketing persons from different sections. One of main strategic advantage of SAP is integration

of all the parts of organization. SAP is replacing oracle in FFC. At present both the system are

working simultaneously but from October 2010 only SAP will work. With implementation of

SAP all the transaction are recorded on real time basis with proper authorization.

1972 German SAP architecture has evolved from R/S up to 4.6 C R/S Enterprise.

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GGMM

SM(SAP)

SAP Officers 5

Page 203: FFC Marketing Division

Modules acquired by FFC:I. SD Sales And Distribution

II. PM Plant Management

III. QM Quality Management

IV. HCM Human Capital Management

V. PP Production Planning

VI. MM Materials Management

VII. PS Project System

VIII. FI/CO Finance & Controlling

IX. BI/BO Business Intelligence

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Page 204: FFC Marketing Division

Regional Office (LHR)Department: RO-LHRPeriod 11-19 AugustNo of Days 7Supervisor Muhammad Tayyab

Senior Executive

The regional office Lahore is a front line department. It is actually involved with direct sales of

fertilizer and interacting with dealers. The regional manager, regional TSO and the sales officer

Lahore district are working with assistance of stock members’ .For three days Tuesday –

Thursday the officers are on field visits

and for rest 2 working days they perform their office work. The districts included in Lahore

region.

Lahore Region

1. Gujranwala

2. Sheikhupura

3. M.B.Din

4. Rawalpindi

INSTITUTE OF BUSINESS ADMINISTRATION (INTERNSHIP REPORT)

GGMM

SM(SALES)

Regional Manager (LHR)

Page 205: FFC Marketing Division

5. Sialkot

6. Hafizabad

Activities Monitoring product wise /district wise achievement with respect to targets

Monitoring current market situation with respect to fertilizer industry

Monitoring competitors activities in detail

Managing warehouses, their sales and closing stocks

Appointing and terminating dealers as regard to their performance, literate goal is to have

a strong dealer network

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Page 206: FFC Marketing Division

Sales (NZ)Department: Sales(NZ)

Period 22-23 August

No of Days 2

Supervisor Muhammad Inamullah

Deputy Executive

Marketing Zones

INSTITUTE OF BUSINESS ADMINISTRATION (INTERNSHIP REPORT)

GGMM

Zonal SM(SALES)

Regional Manager (LHR)

Marketing Zone

North Zone Central Zone South Zone

Page 207: FFC Marketing Division

Total Regions 51. Lahore

2. Faisalabad

3. Sahiwal

INSTITUTE OF BUSINESS ADMINISTRATION (INTERNSHIP REPORT)

Central Zone

Zonal Office

Bhawalpur Region

Dera Ghazi Khan

Region

Multan Region

Vehari Region

South Zone

Zonal Office

Hyderabad Region

Nawab Shah

Region

Sukkur Region

North ZoneZonal Office

Lahore Office

Faisalabad Region

Sahiwal Region

Peshawar Region

Page 208: FFC Marketing Division

4. Peshwar

5. D.I.Khan

Functions of North zone Conduction sale forecast for regions include in North zone

Monitoring sales allocation as per decided ratios

Monitoring daily sales

Studying competitors price structure

Co-coordinating regions included in North zone

Managing sales force of North zone

Checking and inventory

Coordination with top management

Ensuring availability controlling warehouses

Monitoring of product

Monitoring and keeping record of turnover of productivity

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Page 209: FFC Marketing Division

PLANNING DEPARTMENT

Department: Planning

Period 24-26- August

No of Days 3

Supervisor Muhammad Ikram Malik

Planning Officer

General Manager of marketing is the head of the department who reports to the managing

director. In the hierarchy senior executive (planning) report to the GMM. There are four planning

officers and one planning executive working under the supervision of the SE (P). There is a

concept of job rotation in the company. Due to job rotation, there is no specific task assign to any

person. Every person is performing all the duties that are necessary to perform all the functions

of the planning department.

Planning department functions: Maintain an efficient management information system and provide reliable information

for management decisions.

INSTITUTE OF BUSINESS ADMINISTRATION (INTERNSHIP REPORT)

GGMM

SE(Planning)

Planning Officers 5

Page 210: FFC Marketing Division

Development of annual business plan

Monitoring of performance.

Analysis

Generating reports

Management Information System: Daily sales and stock update

Weekly inventory status

Competitors price and discount structure

Monthly reports

Annual Business Plan: Develop key assumption

Sales forecast by product, month, sales and regions

Dispatch plans

Trade discounts

Expense and capital budgets

Monitoring: Fertilizer market situation. (Production, Import, Sales, Prices)

Competitors Activities. (Sales, Prices, Strategies)

Sales Campaigns

International and Domestic Prices

Analysis: Fertilizer Industry Supply/Demand

Sales Performance (Target Vs Achievement)

Marks Share Own and Competitors

Warehousing Requirements

Freight Analysis

Dealers Sale Profile

Other Functions: Collect and compile relevant information/data

Supply of information to Govt. Agencies

Market surveys (NEED BASIS)

Preparation of data for training

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Page 211: FFC Marketing Division

Coordination of local and foreign training

Training schedules for internees

Preparation of data book

Undertake any study/ analysis on need basis

Coordination of marketing conference

Assistance in presentations

Preparation of reports for the BOD meetings

Annual STEWARSHIP Report

Annual Business PlanAnnual Business Plan for the year 2011 was developed covering key assumptions, sales

plans, dispatch plans, warehousing plans, technical services activities plans, advertising and sales

promotion plans. Expense and capital budgets for marketing group were prepared and submitted

to Head office for approval. The plan also included the marketing of FFBL products and their

related expenses and revenues. Capital and operational budgets of all departments were

reviewed, finalized and integrated into marketing group's Annual Business Plan and submitted to

CE & MD FFCL and Chief Financial Officer Head Office. Final presentation on the salient

features of the annual business plan was made by General Manager Marketing and General

Manager Finance (Marketing) to the Managing Director.

Long & Short Term Projections / Marketing Feasibility During the year, marketing feasibility for BMR of plant—I was prepared & Sent to

General Manager (T&E)

Profitability projections for the period 2010-2019 were prepared & sent to Finance

Manger (B&P)

Daily Reports The product-wise sales and stock report was prepared on daily basis and furnished to all

concerned. This report contained data on daily production, ex-plant dispatches to

customers and warehouses, direct/ warehouse sales, inventories, daily orders generation

and pending orders.

A separate report to monitor Sona urea (P), (G) & Total urea cumulative sales and

inventories was also prepared consisting comparisons on daily basis with last year's

INSTITUTE OF BUSINESS ADMINISTRATION (INTERNSHIP REPORT)

Page 212: FFC Marketing Division

figures.

Weekly / Fortnightly Reports All products sales, inventory status, existing warehouse capacity and available space at

company warehouses was updated on weekly basis. The information was used to list the

over/ under capacity warehouses.

Urea and DAP industry situation was prepared regularly showing sales, production and

inventory status of all the competitors.

Weekly international prices of urea and DAP and their freight rates were updated and

furnished to all the concerned.

Prevailing market prices of urea and DAP were compiled on fortnightly basis.

Monthly, Quarterly & Annual ReportsReports for top Managements' review were prepared on monthly, quarterly and on annual

basis, highlighting marketing group achievements, information on fertilizer marketing situation,

water availability, urea, DAP and phosphatic fertilizers supply/ demand estimates and the

competitors' activities. Other reports included:

Urea and DAP fertilizers market participation.

Pakistan's all fertilizer sales and stock position.

Freight cost analysis ex-plants/port and dealer sales analysis.

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Page 213: FFC Marketing Division

Analysis of FFC (comparison to key Competitors with reference to DATA BOOK)

INSTITUTE OF BUSINESS ADMINISTRATION (INTERNSHIP REPORT)

Page 214: FFC Marketing Division

Pakistan Urea Off take Agency Wise .All amount in 000'mtYe

ar

FFC DCL Engro Pak

Chi

na

NFM

L

Azga

rd

Pak

Arab

P.A/

Other

Total

200

6

32102

69

485,4

66

10094

45

0 24656

8

1611

70

133,8

06

0 5246724

200

7

28688

37

51342

6

92752

5

0 85611 4005

48

12165

5

0 4917602

200

8

30856

15

54390

5

10597

86

0 30357

7

3806

41

10538

0

0 5478904

200

9

30910

08

50688

1

93345

1

0 14364

30

3870

70

10618

5

0 6461025

FFC DCL Engro Pak China

NFML Azgard Pak Arab

P.A/Other

0

500000

1000000

1500000

2000000

2500000

3000000

3500000

2006200720082009

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Page 215: FFC Marketing Division

Pakistan Urea Market Participation (%)Year FFC DC

L

Engr

o

Pak China NFM

L

Azgar

d

Pak

Arab

P.A/

Other

2006 61.2 19 19.2 0 4.7 3.1 3 0

2007 58.3 9.04 18.7 0 1.8 8.1 0 0

2008 56.3 9.9 19.4 0 5.5 7 1.9 0

2009 47.6 7.8 14.4 0 22.6 6 1.6 0

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Page 216: FFC Marketing Division

INSTITUTE OF BUSINESS ADMINISTRATION (INTERNSHIP REPORT)

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec0

2

4

6

8

10

12

14

16

18DAP Consumption Pattern In Pakistan Mont

h

Monthly

Shares in total

Consumption

(%) in 2009

Jan 2.5

Feb 3.9

Mar 4.2

Apr 3

May 5.6

Jun 9.2

Jul 13

Aug 12

Sep 10.9

Oct 8.3

Nov 17.3

Dec 10.1

Total 100

Page 217: FFC Marketing Division

Company wise/ Provine wise Urea offtake (qty in 000'mt for 2009)FFC ECP

L

DCL NFM

L

Azgar

b

Pak

Arab

PA/others Total

Punjab 2062.

1

474 506.

9

1230.5 295.9 70.7 0 4639.7

KPK 283.2 5.4 0 28.5 1.8 18.7 0 337.6

Sinsdh 598.9 438.6 0 193.8 5.5 16.5 0 1253.3

Balochista

n

146.8 15.8 0 10.7 4 0.3 0 177.6

Pakistan 3091 933.4 506.

9

1463.5 307.2 106.2 0 6408.2

INSTITUTE OF BUSINESS ADMINISTRATION (INTERNSHIP REPORT)

Pakistan

FFCECPLDCLNFMLAzgarbPak ArabPA/others

Page 218: FFC Marketing Division

INSTITUTE OF BUSINESS ADMINISTRATION (INTERNSHIP REPORT)

FFC

ECPL

DCLNFM

L

Azgarb

Pak Arab

PA/others

0

500

1000

1500

2000

2500

Punjab

KPK

Sinsdh

Balochistan

Page 219: FFC Marketing Division

Share Holding Pattern of FFC:

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Page 220: FFC Marketing Division

Gross Margins with respect to industry:

Strong pricing Strategies together with efficiencies of production and economies of scale enable

to enjoy the Gross Margins greater than industry. Its largest market share is also one of the

reason for the increasing Gross Margins

Due to High payout Ratios its ROE is greater than other market players. Strong pricing Strategies

together with efficiencies of production and economies of scale enable to enjoy the ROE greater

INSTITUTE OF BUSINESS ADMINISTRATION (INTERNSHIP REPORT)

Page 221: FFC Marketing Division

than competitors. Its largest market share is also one of the reason for the increasing ROE.

Majority shares are also held by company itself

Comparison With Engro (Key Competitor)Key Ratios of FFC:

Key Ratios of Engro:

Gross profit of FFC is greater than Engro .Operating margin is also better which shows

managerial inefficiencies.Net margin of FFC is also much healthy than the competitor. Sales

Growth of Engro is much better which is a point of concern for FFC. FFC also should increase

its EPS growth. Far better ROE and ROA of FFC than Engro shows both a superb combination

of managerial efficiencies and interest of the investors.

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Page 222: FFC Marketing Division

Part EIGHT Strategic Matrices Problems Recommended Solutions Conclusion

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Page 223: FFC Marketing Division

STRATEGY FORMULATION FRAMEWORK

Important Strategy-formulation techniques can be integrated into a three stage decision-making

framework.

The tools presented in this framework are applicable to all sizes and types of organizations and

can help strategists identify, evaluate and select strategies. Strategists never consider all feasible

alternatives that could benefit the firm because there are infinite number of possible actions and

INSTITUTE OF BUSINESS ADMINISTRATION (INTERNSHIP REPORT)

Input Stage

Matching stage

Decision Stage

Page 224: FFC Marketing Division

an infinite number of ways to implement those actions. Therefore, a manageable set of the most

attractive alternative strategies must be developed with the help of this three stage framework.

STAGE: 1

INPUT STAGEThis stage summarizes the basic input information needed to formulate strategies. It consists of

three matrices which is shown by the diagram:

INSTITUTE OF BUSINESS ADMINISTRATION (INTERNSHIP REPORT)

The Input Stage

Internal Factor Evaluation Matrix (IFE)External Factor Evaluation Matrix (EFE)Competitive Profile Matrix (CPM)

The Matching Stage

Strength-Weaknesses-Opportunities-Threats (SWOT) MatrixStrategic Position and Action Evaluation (SPACE) MatrixBoston Consulting Group (BCG)MatrixInternal External (IE) MatrixGrand Strategy Matrix

The Decision Stage

Quantitative Strategy Planning Matrix (QSPM)

INPUT STAGE

External Factor Evaluation Matrix (EFE)

Comprehensive Profile Matrix (CPM)

Internal Factor Evaluation Matrix (IFE)

Page 225: FFC Marketing Division

Internal Factor Evaluation (IFE) Matrix

KEY INTERNAL FACTORS

Weights Rating Weighted Score

Internal Strengths

1. Larger fertilizer Producer .05 3 . 15

2. Highest Market share .04 4 . 16

3. Growing Sales .10 3 .30

4. Countrywide location of plants .05 4 .20

5. Goodwill in market .05 3 .15

6. Strong Financial Position .03 3 .09

7. Corporate Culture .05 3 .15

8. Strong Distribution Channel .03 4 .12

9. Wider Product line .09 4 .36

10. ISO Certification .10 3 .30

Internal Weaknesses

1. Dumping of the fertilizer by dealers .04 1 .04

2. Insufficiency of technical sales officers .04 2 .08

3 The administrative problems due to large

size of the company and relaxed army

personals

.03 2 .06

4. Centralized authority .05 1 .05

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Page 226: FFC Marketing Division

5. Non availability of transport during peak

season

.05 2 .10

6. Low advertising campaigns .10 1 .10

7. Sales force has to face tough time in

remote areas

.03 2 .06

8. Very frequent transfers .04 2 .08

9. Lengthy hierarchy .03 2 .06

TOTAL 2.61

0.0 = Not Important 1.0= Important

1 = Major Weakness 2 = Minor Weakness

3 = Minor Strength 4 = Major Strength

INTERPRETATION:

The IFE Matrix describes the strengths and weaknesses of FFC. And Weighted Score of

IFE matrix is (2.61). Its weighted score is above average (2.50). So we can recommend that FFC

is an internally strong and well managed company. The company uses its internal strengths well

to overcome its internal weaknesses. It has a group of loyal customers, and this loyalty is due to

the trust on quality of products like well known and most leading product of its type “Sona

DAP”. Now we can recommend that FFC must have strong promotion activities on TV. Channel

as it already has on radio and newspapers.

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Page 227: FFC Marketing Division

EXTERNAL FACTOR EVALUTATION (EFE) MATRIXSr. No

KEY EXTERNAL FACTORS WEIGHT RATING WEIGHTED SCORE

OPPURTUNITIES1 Having strong financial position company can

introduce new products0.09 4 0.36

2 Company is in a position to set up a new plant 0.08 3 0.243 Agricultural financing can be started 0.05 3 0.154 No quota Restriction put more chances of export 0.06 2 0.125 Proper advertising in international media can

increase the market share0.06 3 0.18

6 Increase sales by implementing the credit policy strategies

0.06 2 0.12

7 Can add new units to existing plants to enhance production capacity of plants

0.08 3 0.24

8 It can participate in acquisition of companies 0.07 3 0.21THREATS

9 Gas supply constraints 0.08 2 0.1610 Strong Competition with existing competitors 0.1 2 0.211 Farmers liquidity 0.07 2 0.1412 Changing government regulations 0.08 3 0.2413 Instable political situation in country 0.07 2 0.1414 Weather conditions 0.05 2 0.1

TOTAL 1.00 2.6

Interpretation:

The above matrix shows the opportunities and threats faced by FFC. The weighted score of the

FFC in the EFE matrix is 2.6, which is just above the average response so the company should

improve its ability to respond to external opportunities and should exert more efforts to reduce

the impact of threats present in the environment.

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Page 228: FFC Marketing Division

COMPETITIVE PROFILE MATRIX (CPM):Critical Success Factors

FFCL EFCL NFCL

Weight

Rating

Weighted Score

Rating Weighted Score

Rating Weighted Score

1) Financial Position

0.16 4 0.64 3 0.48 2 0.32

2) Market Share 0.16 4 0.64 3 0.48 2 0.323) Customer

Loyalty0.13 4 0.52 3 0.39 2 0.26

4) Organization Structure

0.09 2.4 0.27 3 0.27 3 0.27

5) Production Capacity

0.09 3 0.27 3 0.27 2 0.18

6) Price Competitive

0.12 3 0.36 3 0.36 3 0.36

7) Global Expansion

0.12 3 0.36 2 0.24 2 0.24

8) Advertising 0.13 2.5 0.33 4 0.52 1 0.13Total 1.00 3.39 3.01 2.08

1= Major Weakness

2= Minor Weakness

3= Minor Strength

3= Major Strength

INTERPRETATIONS:

The Competitive Profile Matrix (CPM) identifies FFC major competitors and its particular

strengths and weaknesses in relation to the sample firm’s strategic position.

From the CPM provided above we see that financial position and the Market share are the most

important critical success factors as indicated by a weight of 0.16. The market share of FFC is

very high as it has a rating of 4; financial position is also very strong.

INSTITUTE OF BUSINESS ADMINISTRATION (INTERNSHIP REPORT)

Page 229: FFC Marketing Division

STAGE: 2

Matching StageThis stage focuses upon generating feasible alternative Strategies by Aligning key

external and internal factors.

INSTITUTE OF BUSINESS ADMINISTRATION (INTERNSHIP REPORT)

Matching Stage

SWOT

Strategic position and

Action Evaluation

Matrix (SPACE)

Boston Consulting

Group Matrix (BCG)

Internal-External Matrix

Grand Strategy Matrix

Page 230: FFC Marketing Division

SWOT MATRIXStrengths (S)

1. Larger fertilizer

Producer

2. High brand recognition

3. Strong financial position

4. Strong internal control

5. Well trained and

disciplined

work force

6. ISO 9002 certified

7. Research and

development

Weaknesses (W)

1. Maximum investment

in the same sector.

2. Delayed decisions

3. Lack of diversification.

4. No proper utilization

of warehouses.

5. Pending orders during

peak season.

Opportunities (O)

1. Can introduced new

products

2. Can set up new

plants

3. Agriculture financing

4. Can increase exports

5. Participate in

acquisition

6. Increase sales by

implementing the

credit policy

strategies

SO Strategies

1.Extend product line

(S3,O1)

2.Increase production (S3,

O1)

3.Export urea ( S7, O6 )

4.Takeover companies

(S5.O5)

WO Strategies

1. Set up a new plant

(W5,O2 )

2. Introduce new products

( W3, O1 )

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Page 231: FFC Marketing Division

Threats (T)

1. Gas supply

constraints

2. Strong Competition

with existing

competitors

3. Farmers liquidity

4. Changing

government

regulations.

5. Instable political

situation in country.

6. Weather conditions

ST Strategies

1. Market development

( S1,S7,T2 )

2. Maintain competitive

advantage (S2, T2)

WT Strategies

1. Diversification (W1, T2)

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SPACE MATRIXRating Total Average

Financial Strength (FS)

1. Net Income

2. Leverage Ratios

3. Liquidity Position

4. Return on Equity

+3

+3

+2

+2 +10 +2.5

Industry Strength (IS)

1. Pakistan largest producer of fertilizer

2. Increased Demand of products

3. Quality products

4. Bigger market share

+3

+2

+2

+2 +9 +2.25

Environmental Stability (ES)

1. High Inflation Rate

2. Political stability

3. Demand Variability

4. Barriers to Entry in New Markets

5. Competition

-4

-3

-2

-3

-3 -15 -3

Competitive Advantage (CA)

1. Highest production

2. Technological Advancement

3. Control over Suppliers and Distributor

4. Customer Loyalty

-1

-2

-2

-2 -7 -1.75

ConclusionFS Average = +2.50 IS Average = +2.25

CA Average = -1.75 ES Average = -3.00

Directional Vector Coordinates: x-axis: (CA: IS) -1.75 + (+2.25) = +0.50

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Y-axis: (FS: ES) 2.50 + (-3.00) = -0.50

Interpretation

This particular SPACE matrix tells us that the organization should pursue a Conservative

strategy. FFC is at better position in the competition and it should develop the plan to compete

the others in the industry. The appropriate strategies for FFC are market penetration, market

development, product development and diversification. As competitor of Engro is adopting

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ISCA

FS

ES

(+0.50, - 0.50)

Page 234: FFC Marketing Division

aggressive strategies of related, unrelated diversification and getting success, so FFC should also

take steps to come in front and introduce something new.

The Boston Consulting Group (BCG) Matrix:

The BCG matrix graphically portrays differences among divisions in terms of relative market

share position and industry growth rate. The BCG matrix allows a multidivisional organization to

manage its portfolio of business by examining the relative market share position and the industry

growth rate of each division in the organization. The relative market share position is defined as

the ratio of the divisions’ own market share in a particular industry to the market share held by

the largest firm in the industry.

In this case division is made on the basis of different products. Here we will graphically present

different of FFC how they are contributing towards market share and growth rate. There are 2

main categories of products. Other detail of these products is given below.

Product wise

Division

Percent

Market Share

Percent

Growth Rate

Percent

Revenues

Percent

Profits

Sona Urea 48% 28% 62% 71%

Sona DAP 42% 43% 38% 29%

Total 100% 100%

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Page 235: FFC Marketing Division

BCG Matrix of FFC

Relative Market Share

100% 50% 0%

0%

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50%

I nd

ust

rial

G

row

th R

ate

Star

DAP Question Mark

Urea

Cash cow Dog

Object 8

Page 236: FFC Marketing Division

Interpretation:

Sona Urea: Sona Urea lies in the upper right quadrant of the BCG matrix i.e. Question Marks.

This division has high relative market share but it should be improve i.e. above 50% so that it

become star. The product has high industry growth rate. This division represents the

organizations’ best part for growth and profitability for long run.

Sona DAP: This division lies in the upper right quadrant of the BCG matrix i.e. Question Marks.

It has low relative market share and high industry growth rate. Generally their cash needs are

high and cash generation is low. These are called Question Marks because the organization has

to decide that whether to strengthen them by pursuing an intensive strategy (market penetration,

market development) or to sell out them.

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-50%

Page 237: FFC Marketing Division

The Internal – External (IE) Matrix

2.61

2.74

Interpretations

The Internal – External matrix is based on the key dimensions of: the IFE total weighted scores

on the x – axis and the EFE total weighted scores on the y – axis. It can then be divided into 3

major regions that have different strategy implications.

In the above matrix it can be seen that both the Products in the sections relating to Grow and

Build. Thus intensive strategies (market penetration, market development and product

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EFE Tota

l Weighte

d Scor

e

IFE Total weighted Score

4.0

3.0

2.0

1.0

4.0 3.0 2.0 1.0

Page 238: FFC Marketing Division

development) or integrative strategies (backward integration, forward and horizontal integration)

can be most favorable.

GRAND STRATEGY MATRIX

FFC is located in the first quadrant of the matrix are in excellent strategic position and the

market growth is high.

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Strong competitive

position

Slow market growth

Rapid Market Growth

FFC

Market development Integration Diversification Market penetration Product development

Weak Competitive

position

Page 239: FFC Marketing Division

Since FFC has rapid market growth and strong competitive position so it lies in 1st Quadrant of

Grand strategy matrix .

So it must follow the following strategies

Market development

Market penetration

Product development

Since FFC have also excessive resources

Forward integration

Horizontal integration

Diversification

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DECISION STAGEThis stage involves the single technique, the Quantitative Strategic Planning Matrix (QSPM). A

QSPM uses input information from Stage 1 to objectively evaluate feasible alternative strategies

identified in Stage 2. A QSPM reveals the relative attractiveness of alternative strategies and thus

provide objective basis for selecting specific strategies.

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Page 241: FFC Marketing Division

The Quantitative Strategic Planning Matrix: (QSPM)

Key Factors

Diversification Integration

Weight AS TAS AS TAS

Opportunities:

1. New product line can be introduced 0.12 4 0.48 2 0.24

2. Can set up new plants 0.12 2 0.24 3 0.36

3. Agriculture financing 0.07 - - - -

4. Increase exports 0.10 - - - -

5. Participate in acquisition 0.10 3 0.30 4 0.40

Threats:

1. Gas supply constraints 0.10 3 0.30 1 0.10

2. Competition with existing competitors 0.14 4 0.56 3 0.42

3. Farmers liquidity 0.07 3 0.21 2 0.14

4. Changing Govt. regulation 0.10 3 0.30 2 0.20

5. Instable Political situation 0.08 - - - -

1.00

Strengths:

1. Largest fertilizer producer 0.12 - - - -

2. High brand recognition 0.13 3 0.39 2 0.26

3. Strong financial position 0.12 4 0.48 3 0.36

4. Strong internal control 0.11 4 0.44 3 0.33

5. Well trained & disciplined work force 0.10 3 0.30 2 0.20

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6. Research & development 0.10 4 0.40 2 0.20

Weaknesses:

1. Maximum investment in same sector 0.09 4 0.36 2 0.18

2. Delayed decision 0.08 - - - -

3. No proper utilization of warehouses 0.08 - - -

4. Pending orders during peak season 0.07 2 0.14 3 0.21

1.00 4.90 3.60

AS = Attractiveness Score

TAS = Total Attractiveness Score

1= Not Attractive

2= Somewhat Attractive

3= Reasonably Attractive

4= Highly Attractive

Interpretation:Sum TAS of 4.90 indicates that Diversification is more attractive strategy as compared to

integration.

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PORTERS’ FIVE FORCES MODEL

Supplier Power In this industry supplier has a high bargaining power, as most of them are Foreign

Groups.

Concentration is low. They act as separate groups competing for the same project.

High Switching cost because it is difficult to contract with other groups and deal with

them.

No threat of forward integration

Buyers Power Although Buyers are large in numbers and purchases a large quantity as well, but buyers

do not have a bargaining power. There is no forum available that protects them, and this

group is not educated enough to fight for their rights.

Potential Entrants There are number of barriers to entry such, as capital requirements, government

policies, reputation of existing firms and ecological surveys.

Huge capital requirement is one of the greatest barriers for entry.

Government Policies and regulation are also act as barriers; because Natural Gas

which is the main raw material of the industry, and the prices and supply of it is

completely depend upon the Government. As before government was charging feed gas

at lower rate and Fuel gas at higher rate. But now they are being charged at the same rate.

Government does not easily give permission for manufacturing plant due to shortage of

Natural gas and harmful environmental effects, this also act as a barrier.

Massive Ecological surveys must be done before companies can begin production.

Brand reputation of existing companies is also one of the barriers because customers

do not easily get ready to switch. There are two substitutes available

1. Imported Fertilizer

2. Bio-Fertilizer

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Page 244: FFC Marketing Division

Suitability of Alternatives: Imported fertilizer is as suitable as the industry products are. Bio-fertilizer is more suitable to use then the industry products, as it has no harmful

environmental effects, cheap to produce and it also enhance the fertility of the soil. Whereas our

product reduces the natural fertility, but its production is almost over. Therefore industry does

not have a threat of substitutes.

Switching cost is low.

Rivalry Fixed Costs are too high, which is not easily possible to tolerate. It reduces the

competition.

Industry is at maturity stage so; competition on the basis of growth is low.

Prices are almost fixed for every season so no competition on the basis of pricing

behavior.

Competition is only on the basis of Quality.

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Problems and RecommendationsAfter my internship of six weeks in the FFC, I came to know that the Company has a very strong

financial position & progressed remarkably from its inception in 1978 till to date. My

recommendations include following:

Marketing Division: Department wise Problems and Recommended SolutionsProblems Solutions

Distribution Department

Bottleneck at Goth Machi

Production Plant

Provide Better Facilities to truckers

Forward Integration

Increase Rely On Railways

Motivate Dealers from adjoining areas to

get their share straight from production site

Warehousing

Supervisors of warehouses are not

competent enough to deal with

data entries in SAP

Training sessions should be conducted for

supervisors

District Sales officers should be directed to

help supervisors in this regard

Agri. Services

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Page 246: FFC Marketing Division

Less awareness in Farmer

Community about the services

provided by agri services

department

Field ales officers should increase the

awareness among farmers about the state of

the art services provided by agri services

department

Finance

Implementation of SAP Proper Training

Minimize the customizations in Finance

module of SAP

Go for standard approach for SAP

Administration

Less job Satisfaction Top management should address the

grievances of admin employees

Increase the pay scale

Lessen the work load

Should revise the JD of some employees

Human Resource Management

Very few powers with HR of

Marketing Division

Decentralization

Policy formulation policies be also given to

HR Lhr

They should do something more than just

implementing the directions of Corporate

Office.

Labor and Legal Affairs Department (LLA)

No Specialized Legal professional LLA manager should be assisted by a legal

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Page 247: FFC Marketing Division

Professional

Advertisement and Sales Promotion

More focus on maintain status quo

and brand recall than increasing the

sales

More use of TV advertisement

Should implement social media and e-ads

in their IMC

Procurement

Complex Procedures and

committees when procurement

orders exceeds certain amount

It should be more autonomous

Procedures should be simplified to

minimize the delays

CSR

Clash of visions between CSR and

Marketing Personnel

Marketing employees should be educated

that CSR is not just about to donate their

hard earned money, but it’s a strategic tool

to complement the overall marketing

efforts.

IT

Demoralized employees due to

downsizing as most of the

responsibilities are shifted to SAP

Get IT employees adjusted in new SAP

setup.

SAP

Implementation issues Proper Training

Change the set mind set of employees

working in remote areas.

Regional and Sales (NZ)

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Page 248: FFC Marketing Division

Fixed share to Dist Sales Officers Share of the sales officers should be

increased if number of distributors are

increased and they are showing increased

sales patterns

Planning

Training schedules should not be

responsible of planning

It should be transferred to HR

General recommendationsMy recommendations include:

1. It is suggested that the Company may increase their credit quota from 10% to 20%. As

the market is on expansion and need for fertilizer is increasing every year, an increase in

credit quota will allow more customers to take advantage from this facility. In my

opinion this will help in to improve the sales and market share.

2. Financial analysis of FFC shows that the performance of FFC is increasing but FFC need

to go for diversification ant integration. Diversification strategies are more effective.

Consumption of fertilizer is increasing 5 % per year so to meet the domestic need it is

necessary to set up the new operation and plants in different areas.

3. It is recommended that all warehouses may be provided Warehouse Control System. In

my opinion this will definitely improve the warehouse efficiency and control over

inventory. Therefore it is suggested that more investment may be made in technology and

the project of Wide Area Network should be complete as soon as possible.

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Page 249: FFC Marketing Division

Conclusion:Fertilizer industry occupies an important place in Pakistan’s economy. Pakistan is basically an

agrarian economy. Fertilizer is one of the key inputs used in agricultural production and is

thereby the backbone of agriculture. Agriculture contributes to 23% of the country’s GDP and

accounts for approximately 42% of employment and is the largest source of foreign exchange

earnings by serving as the base sector of the country’s major industries like textiles.

Fauji Fertilizer Company Limited (FFC) is the largest fertilizer manufacturer in the country with

a designed production capacity of 1,887 thousand tonnes of urea (including the production

capacity of Pak Saudi Fertilizer. With the commencement of commercial production in June

1982, the company started marketing of its own urea under the brand name "Sona". The

company markets not only Sona urea and DAP but also imported nitrogenous, phosphatic,

potassic fertilizers and micronutrients. The Government of Pakistan deregulated the trade and

prices of nitrogenous fertilizers in 1986. FFC met the challenge by capturing the desired market

share of urea and in the process, enhanced the image of its brand name, which has now become

the number one brand in the country.

. So we can conclude to say that Fauji Fertilizer Company is the asset of our country because it

serves as a major source of earning foreign exchange for the country. An agri-based country like

Pakistan needs such a resource from where the Farmers can get best quality urea for their crops

an FFC have served this need very well. That is the reason the government supports FFC in a

very good manner. FFC believes in selling a program rather than just a product. For this the

company has adopted a customer oriented strategy, marketing quality products backed up by

efficient and effective support services with emphasis on developing the market through practical

and innovative farmer education.FFC is proud of its financial strength and its impressive growth

record. Our future prospects are linked to the need to feed growing population in an

environmentally sustainable way.

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FFC is a value-driven Company and the Board takes decisions considering the long term

perspective and aspirations of all our stakeholders. With market capitalization at Rs 70 billion at

the end of the year, the Company maintained and strengthened its position as the market leader

in the fertilizer industry

FFC believes and says that:

“Our products give earth the energy to fill up our lives with green.

At FFC we make sure that we give earth our trust, our zeal, our faith

as much as we can to keep it fertile.”

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Page 251: FFC Marketing Division

References & Sources Used1. Financial Management by: James C Van Horne

2. Financial Accounting by: Meigs, Williams, Haka, and Buttner

3. Company’s Annual Reports – Last 5 years

4. Company web site – www.ffc.com.pk

5. Fundamentals of Marketing by Kotler

6. Sona Bulletin – Year 2010 volume 1

7. Briefings by Finance Executive and Finance Officers of FFC

8. FFBL - Annual Report for the year 2009

9. Fertilizer Sector Review May 2009

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