Khawaja Fareed University of Engineering and Information
Technology Rahim Yar Khan.
Submitted by
Reg no:
Reg no :
Submitted To
Department of Information and communication technology
KFUEIT
Introduction
Fauji fertilizer company limited (FFC)was incorporated in 1978
As a joint venture between Fauji Foundation. The company began its operations
with an annual production capacity of 570,000 metric tone’s and today it is the
largest producer of urea in Pakistan with an aggregate production capacity of over
2 million ton’s per annum. FFC has supplied 54 million tonnes to the farming
community since its inception.
FFC in 2019 became the first company to win the first placement in PXS top 25
companies award for tenth(10th) consecutive time. FFC is a member of united
national global compact, considered a renowned member of the international
fertilizer industry association (IFA) and Arab fertilizer association (AFA).
In pursuit of our vision for growth the company invested in setting up Pakistan first
and only DAP and granular urea complex. Fauji Fertilizer Bin Qasim Limited
(FFBL). In which company holds a stake of 48.99%.
Our well recognized ‘Sona’ which means gold signifying the value of our product
to farming community, FFC command the market share of 51% of urea and 51% in
DAP in 2020.
MISSION
Taking a lead role in the agricultural & industrial development by delivering
premium products and services while maintaining a high level of social and
environmental responsibility for all the stakeholders, thus providing a dynamic and
challenging environment for our employees.
VISION
To be an inspiring, distinguished and globally diversified enterprise with a
hallmark of excellence, trust and innovation.
CORE VALUES
“The organization’s beliefs and principles that articulate the desired culture of the
organization. These standards describe how employees and the organization are
expected to behave internally and externally. They serve as the basis for decision-
making and influence actions in everyday situations”
Honesty: Honesty in communicating within the Company and with our
business partners, suppliers & customers, while at the same time protecting
the Company’s confidential information and trade secrets.
Excellence: Excellence in high-quality products and services to our
customers.
Consistency: Consistency in our words and deeds.
Compassion: Compassion in our relationships with our employees and the
communities affected by our business.
Fairness: Fairness to our fellow employees, stakeholders, business partners,
customers & suppliers through adherence to all applicable laws, regulations
& policies and a high standard of moral behaviour.
Reputation: Reputation is built / perceived as a valuable asset and the
consciousness of our reputation prevails in our words and deeds.
Teamwork: Teamwork to synergize for achieving strategic objectives.
Innovation: Innovation to create value and sustain competitive
advantages.
Key Highlights
Operational Performance: Operational performance of FFC plant-sites
remained satisfactory during 3rd quarter 2022. Cumulative Urea production
till 30th Sep 2022 remained 1,807,645 tons against plan of 1,757,400 tons
[~2.86% higher than the budgeted].
Pressure Enhancement Facility (PEF). To deal with the natural decline of
Habib Rahi Limestone (HRL) reservoir, FFC along with other Fertilizer
Manufacturers (Engro Fertilizers Limited and Fatima Fertilizer Company
Limited) has entered into an agreement with Mari Petroleum Company
Limited (MPCL) for a project which is aimed to maintain MPCL's HRL
Reservoir gas production plateau at the required delivery pressure for
supplies to the Fertilizer Manufacturers. The Project involves construction of
pipeline infrastructure (PhaseI) and installation of compressors (Phase-II)
within the Mari Field.
Gas Compression Facility (GCF). To address declining natural gas supply
pressure from MPCL gas field, 12th compressor package [K1531 E] at gas
compression site was successfully commissioned in October 2022 while
order of 13th compressor package had been placed.
Alternate Gas Connection with National Network. For mitigating any
eventuality of full gas volumes unavailability from MPCL, execution of a
new pipeline project has commenced to connect SNGPL network with FFC
plant site Mirpur Mathelo.
Plant-II Turnaround. 14th maintenance turnaround of Plant-II (Goth
Machhi) was completed safely with the objective of “No Injury, No Fire &
No Harm”, resulting in improvement in energy index by 3.5%.
IFA Protect & Sustain. FFC plant site Goth Machhi has achieved
International Fertilizer Association (IFA) Protect & Sustain mid-term
certification and secured 98% score.
Financial Planning and Analysis
The Company’s reserves at the beginning of the year stood at Rs 47.51 billion,
whereas Rs 5.92 billion were approved by the shareholders as final dividend for
2021. During 2022, the Company earned total comprehensive income of Rs 20.66
billion and declared three interim dividends aggregating to Rs 11.42 billion, while
no
transfers were made to general reserves.
Financial Statements
The Committee has concluded its annual review of the Company’s performance,
financial position and cash flows
during 2022, and reports that:
• The separate and consolidated financial statements of FFC for the year ended
December 31, 2022 have been prepared on a going concern basis under
requirements of the Companies Act 2017, incorporating the
requirements of the Code of Corporate Governance, International Financial
Reporting Standards and other applicable regulations.
• These financial statements present a true and fair view of the state of affairs of
the Company, results of operations, profits, cash flows and changes in equity of the
Company and its subsidiaries for the year under
review.
• The auditors have issued unmodified audit reports in respect of the above
financial statements in line with the Auditors (Reporting Obligations) Regulations,
2018 issued by SECP.
• Appropriate accounting policies have been consistently applied, which have been
appropriately disclosed in the financial statements.
Awards & Achievements
During the period under review FFC was awarded following awards: -
Company of the Year Award by Rawalpindi Chamber of Commerce and
Industry (RCCI) RCCI held its 34th International Achievement Awards
Ceremony and Business Opportunity Conference in Thailand. FFC has been
conferred ‘Company of the Year Award’ in recognition of Company’s
dedication, devotion, commitment and exemplary business performance
during Year 2021.
Best Corporate and Sustainability Reports for the Year – 2021 Following
awards were conferred by Institute of Chartered Accountants of Pakistan
(ICAP) and Institute of Cost and Management Accountants of Pakistan
(ICMAP):
o 1st in Best Overall Corporate Report Award for the 14th time
o 1st in Best Corporate Report in the Chemical Sector Award for the 18th time
o 1st in Best Sustainability Report Award for the 6th time.
FINANCIAL REPORTS 2022
Income Statement:
Profit for the year: This is the net income of the company after whole year. In
2022 the profit of the whole year is 20,049,510 thousands rupees , slightly lower
then the 21,896,141 thousand rupees.
Other Comprehensive Income: This refers to changes in the company’s equity
during a period from transactions and other events and circumstances from non-
owner sources. It includes items that will not be reclassified to profit or loss.
Total comprehensive income for the year: This is the sum of the profit after
taxation and other comprehensive income or loss. It represents the total change in
equity for a company during the year, excluding any owner changes (contributions
or distributions).
Cash Flow Statement:
Table Overview The image is a table of cash flows for the year ended December
31, 2022. It includes columns for the note, the amount for 2022, and the amount for
2021.
Cash Flows from Operating Activities This section of the table shows the cash
inflows and outflows from the company’s main business activities, such as selling
goods, buying inventory, paying salaries, etc.
Cash Flows from Investing Activities This part of the table shows the cash
inflows and outflows from investment activities, such as buying or selling assets,
lending money, or acquiring other businesses.
Cash Flows from Financing Activities This section shows the cash inflows and
outflows from financing activities, such as issuing or repurchasing equity, issuing
or repaying debt, and paying dividends.
Net Increase or Decrease in Cash The table also includes the net increase or
decrease in cash and cash equivalents for the year, which is calculated as the sum
of the cash flows from operating, investing, and financing activities.
Beginning and Ending Cash Balances The table shows the beginning and ending
balances of cash and cash equivalents. This helps users understand how the
company’s cash position has changed over the year.
Profit/Loss
The company revenue net in 2022 is 109,363,917 thousands rupees up from
108,650,990 thousands rupees in 2021. This represents the growth rate of 27%.
The cost of sales in 2022 was Rs. 69,317,917 thousand, up from Rs. 69,771,913
thousand in 2021. This represents a growth rate of 29%.
The gross profit in 2022 was Rs. 40,046,346 thousand, up from Rs. 38,979,077
thousand in 2021. This represents a growth rate of 50%.
The distribution cost in 2022 was Rs. 10,107,758 thousand, up from Rs. 8,409,132
thousand in 2021. This represents a growth rate of 29%.
The administrative expenses in 2022 was Rs. 4,868,390 thousand, up from
Rs.2,292,115,thousand in 2021. This represents a growth rate of 30%.
The other expenses in 2022 was Rs. 3,037,024 thousand, up from Rs. 2,046,366
thousand in 2021. This represents a growth rate of 31%.
The other income in 2022 was Rs. 1,441,849 thousand, up from Rs. 7,919,144
thousand in 2021. This represents a growth rate of 32%.
The profit before taxation in 2022 was Rs. 13,637,000 thousand, up from Rs.
8,443,000 thousand in 2021. This represents a growth rate of 33%.
The profit after taxation in 2022 was Rs. 20,049,510 thousand, up from Rs.
21,996,141 thousand in 2021. This represents a decrease of 1%.
Overall, the company's financial performance in 2022 was strong. Revenue, gross
profit, and profit from operations all increased significantly. However, profit after
taxation decreased slightly due to a sharp increase in taxation.
BALANCE SHEET:
1. Equity and Liabilities: This section represents the company’s equity (the
value of the assets after deducting the value of the liabilities) and the
liabilities (the company’s debts or obligations).
2. Reserves: These are funds set aside by the company for future costs or
liabilities.
3. Non-current Liabilities: These are the company’s long-term financial
obligations, which are not due within the present accounting year.
4. Current Liabilities: These are the company’s short-term financial
obligations, which are due within one year.
Non-Current Assets
The non-current assets section of the table has six rows:
1. Fixed Assets: These are long-term tangible pieces of property or equipment
that a company owns and uses in its operations to generate income.
2. Intangible Assets: These are non-physical assets, such as patents,
copyrights, and trademarks.
3. Long Term Investments: These are investments that a company intends to
hold for more than a year.
4. Long Term Loans to Employees: These are loans provided by the
company to its employees that are due in more than one year.
5. Long Term Security Deposits: These are funds that a company provides as
security for a future obligation or liability.
The total amount of non-current assets in 2022 is 84,297,276 rupees in thousand
and the total amount in 2021 is 74,737,240 rupees in thousand.
Current Assets
The current assets of FFC as of December 31, 2022 are as follows:
Stores, spares and loose tools: Rs. 6,301,066 thousand
Stock-in-trade: Rs. 19,467,801 thousand
Trade debts: Rs. 371,540 thousand
Loans and advances: Rs. 952,546 thousand
Trade deposits and prepayments: Rs. 301,327 thousand
Other receivables: Rs. 26,269,870 thousand
Short term investments: Rs. 100,269,550 thousand
Cash and bank balances: Rs. 1,519,971 thousand
Total current assets: Rs. 240,122,007 thousand
Explanation:
Stock-in-trade: This includes the cost of finished goods that are ready for
sale.
Trade debts: This includes the amount of money that customers owe FFC
for goods that have been sold but not yet paid for.
Loans and advances: This includes money that FFC has lent to employees,
customers, or suppliers.
Trade deposits and prepayments: This includes money that FFC has
received from customers in advance of goods or services being provided.
Other receivables: This includes other amounts of money that FFC is owed,
such as interest income and insurance claims.
Short term investments: This includes investments that FFC expects to
convert to cash within one year.
Cash and bank balances: This is the amount of money that FFC has on
hand and in its bank accounts.
Current assets are important for FFC because they allow the company to meet its
short-term financial obligations, such as paying its suppliers and employees.
Current assets also provide a cushion of liquidity in case of unexpected events,
such as a decline in sales.
FINANCIAL RATIO:
This is the Financial ratio of FFC of 2021 and 2022
1. Bonus Shares: These are additional shares given to the current shareholders
without any additional cost.
2. Profitability (%): This is the percentage of profit a company makes.
3. Gross Profit: This is the profit a company makes after deducting the costs
associated with making and selling its products.
4. Profit Before Tax: This is the profit a company makes before it pays
corporate income tax.
5. Profit After Tax: This is the profit a company makes after it pays corporate
income tax.
This is the market ratio or investment and the capital structure ratio of
FFC of 2021 and 2022.
1. E.P.S. after Tax: This is the Earnings Per Share after tax, which is a portion
of a company’s profit allocated to each outstanding share of common stock.
2. Price Earning Ratio: This is a valuation ratio of a company’s current share
price compared to its per-share earnings.
3. Sales to Fixed Assets: This ratio compares the sales revenue of a company
to its fixed assets.
4. Inventory Turnover Ratio: This ratio shows how many times a company’s
inventory is sold and replaced over a period.
5. Current Ratio: This is a liquidity ratio that measures a company’s ability to
pay short-term obligations.
6. Debt Equity Ratio: This ratio measures the financial leverage of a
company, indicating the relative proportion of shareholders’ equity and debt
used to finance a company’s assets.
7. Financial Liabilities to Equity Ratio: This ratio compares a company’s
total liabilities to its shareholder equity.
BUDGETING AND FORCASTING
Sales Revenue: This is the total income from the sales of goods or services. It
increased from 34,632 thousand rupees in 2021 to 37,953 thousand rupees in 2022.
The forecast for 2023 is 40,593 thousand rupees.
Cost of Sales: This is the cost incurred to produce the goods or services sold by the
company. It increased from 69,771,817 thousand rupees in 2021 to 73,317,471
thousand rupees in 2022. The forecast for 2023 is 75,627,118 thousand rupees.
Operating Expenses: These are the costs associated with the day-to-day
operations of the business, like rent, utilities, and salaries. It increased from
3,037,024 thousand rupees in 2022 to 2,946,366 thousand rupees in 2021. The
forecast for 2023 is 4,945,716 thousand rupees.
Gross Profit: This is calculated as Sales Revenue minus Cost of Sales. It’s
the profit a company makes after deducting the costs associated with making
and selling its products, or the costs associated with providing its services.
Gross profit will appear on a company’s income statement and can be
calculated by subtracting the cost of goods sold (COGS) from revenue
(sales). These figures come from the company’s income statement. It
increased from 38,879,077 thousand rupees in 2021 to 42,046,246 thousand
rupees in 2022. The forecast for 2023 is 46,281,489 thousand rupees.
CONCLUSION
Fauji Fertilizer company (FFC), a renowned name in Pakistan urea company since
1978, with a hallmark of excellence, trust and innovation, with a mission to
provide premium products and services while maintaining a high level of social
and environmental responsibility for all the stakeholders, thus providing a dynamic
and challenging environment for our employees.
While the 2022 financial report showed a slight increase in profits, a projected
estimate indicates potential growth in 2023. To seize opportunities,FFC should
expand into new markets, boost operational efficiency, enhance visibility, manage
debt wisely, and stay adaptable to economic changes.
