G R O U P M E M B E R S :

A N U M E L A H I S H A H A M I N JAV E D

S A M E E R Z A K IA R S A L A N YA A R K H A NM A A Z B I N S H A H O O D

ANALYSIS OF FINANCIAL STATEMENT

RATIO ANALYSIS

“FAUJI FERTILIZER (PVT) LIMITED”

• 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 HaldorTopsoe 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.

• FFC participated as a major shareholder in a new DAPS/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 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 MirpurMathelo, District Ghotki from National Fertilizer Corporation (NFC) through privatization process of the Government of Pakistan.

• FFC is currently facing gas curtailment of 12%-15%. Despite gas curtailment, plant utilization has remained above 100% and is expected to re-main at this level during CY12.

Ratio Analysis of Fauji Fertilizer

CURRENT RATIO

Current Ratio: Current Assets/ Current Liability

2011 2010 Industry

Current Ratio 1.11 1.01 2.30

QUICK RATIO

Quick Ratio: (Current Assets-Stocks)/Current Lib

2011 2010 Industry

Quick Ratio 0.90 0.83 2.12

RETURN ON CAPITAL EMPLOYED

Return on Capital Employed: PBIT/Capital Employed

2011 2010 Industry

• Return on Capital Employed 38.56% 20.35% 33%

NET PROFIT MARGIN

Net Profit Margin: PBIT/Sales

2011 2010 Industry

• Net profit Margin 25.78% 17.07% 30%

CASH CONVERSION CYCLE

2011 2010 Industry

Inventory Turnover Days: (Closing Inv/COGS)*365• Inv.days 18 18 19.24Debtors Turnover Days: (Closing Debts/Sales)*365• Rec.days 6 8 7.73Credit Turnover Days: (Closing Credit/Purchases)*365• Pay.days 119 124 90.66

Cash Conversion Cycle: -95 -98 -63.51

GEARING RATIO

• Gearing Ratio: Long Term Debts/Shareholder Equ+ Long Term Debt

2011 2010

Gearing Ratio: 0.5093 0.5268

RETURN ON EQUITY

Return On Equity: PBIT/Shareholder Equity

2011 2010 Industry

• Return on Total Equity 102.80% 54.02% 66%

PROFITABILITY RATIO

Return On Assets: Sales/Capital Employed

2011 2010 Industry

• Return on assets 38.56% 20.35% 33%

PROFITABILITY RATIO

Gross Profit Margin: Gross Profit/ Sales 2011 2010

Industry

• GP Margin 49.04% 37.49% 40%

DEBT TO EQUITY RATIO

• Debt to Equity Ratio: Long Term Debts/ Shareholder Equity

2011 2010

Industry

• Debt to equity 1.91 2.18 1.38

ANALYTICAL VIEW POINT

• According to the analyst view point FFC is better than from all the fertilizer company, even the analyst says people should hold the shares of FFC as the working force of FFC is efficient and they don’t have major issues in production. Gas is the main source of fertilizer production process so the Mari Gas supply company providing the Feed Gas very efficiently. Overall, FFC has a good future in Pakistan.

• Although FFC has a good image in market because it has good payout ratio and the company is capable to maintain its market price after issuing cash/bonus dividend.

“DAWOOD HERCULES”

• DH Fertilizers Limited (DHFL) is a urea fertilizer manufacturing and marketing concern incorporated in August 2010 as a wholly owned subsidiary of the Dawood Hercules Corporation Limited (previously Dawood Hercules Chemicals Limited).

• It 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.

• DHFL manufactures and markets urea under the brand name "Bubber Sher" with market capitalization of PKR 29.39 billion.

• Its urea plant is located in Sheikupura, Punjab.

• DHFL has the privilege of becoming the first fertilizer manufacturing company to obtain ISO-9000:2000 certification.

Ratio Analysis of Dawood Hercules

CURRENT RATIO

Current Ratio: Current Assets/ Current Liability

2011 2010 Industry

• Current Ratio 4.61 2.45 2.30

QUICK RATIO

Quick Ratio: (Current Assets-Stocks)/Current Lib

2011 2010 Industry

• Quick Ratio 4.48 2.36 2.12

RETURN ON CAPITAL EMPLOYED

Return on Capital Employed: PBIT/Capital Employed

2011 2010 Industry

Return on Capital 14% 16% 33%

NET PROFIT MARGIN

Net Profit Margin: PBIT/Sales

2011 2010 Industry

Net profit Margin 46% 37% 30%

CASH CONVERSION CYCLE

2011 2010 Industry

Inventory Turnover Days: (Closing Inv/COGS)*365• Inv.days 17 13 19.42 Debtors Turnover Days: (Closing Debts/Sales)*365• Rec.days 4.62 3.34 7.73Credit Turnover Days: (Closing Credit/Purchases)*365• Pay.days 61 46 90.66

Cash Conversion Cycle: -40 -29 -63.51

GEARING RATIO

• Gearing Ratio: Long Term Debts/Shareholder Equ+ Long Term Debt

2011 2010

Gearing Ratio: 0.51628 0.5245

RETURN ON EQUITY

Return On Equity: PBIT/Shareholder Equity

2011 2010 Industry

Return on Total Equity 12% 14% 66%

PROFITABILITY RATIO

Return On Assets: Sales/Capital Employed

2011 2010 Industry

Return on assets 14% 16% 33%

PROFITABILITY RATIO

Gross Profit Margin: Gross Profit/ Sales 2011 2010

Industry

GP Margin 36% 40% 40%

DEBT TO EQUITY RATIO

• Debt to Equity Ratio: Long Term Debts/ Shareholder Equity

2011 2010

Industry

Debt to equity 0.27 0.36 1.38

ANALYTICAL VIEW POINT

• According to the analyst Dawood fertilizer is the subsidiary of Dawood Corporation. Sui- Southern Gas Company is providing the feed gas to the DAWH but due to the shortage of gas DAWH has shut down its production and now they are importing the fertilizer products. Analysts have not shared any expectation and analytical view about Dawood Hercules. • The company has given 300% bonus shares in

2010 but they have not maintain their share price which gives the negative signal to the investor.

CONCLUSION

• Every organization wants to make the profit as much as their capability and also they have to maintain their production function and money consumption system but unfortunately some factors discourage the production units which depress the sales and then profits. After analyzing all the things we come to know that every fertilizer company is better but there is a one issue which agitates the overall function which is Gas.

• Fauji fertilizer Company Ltd is taken as a whole with good performance and they always try to accomplish their production resources and somehow, they also achieve their target and goals with respect to company and investor point of view. FFC is still growing better in fertilizer industry and they also maintain their shareholder also.

• Everything is possible in our country but unluckily we don’t allocate the resources very well which dispirit our whole economy and which reflect negatively to the investor who would end up not participating in the economy engine. We will also prefer to finance in Fauji Fertilizer Company Limited. Moreover a sign of future growth has been seen in all three companies, which will grow in term of future production and profits.

• The Government of Pakistan who should take necessary measures to encourage our fertilizer sector importantly by providing the basic resource what the industry is demanding which is the supply of natural gas.

Thank you….