Fauji Fertilizer Finalized

FAUJI FERTILIZERS COMPANY LIMITED
Table of Contents
Part: 1 PROJECT OBJECTIVES & OVERALL RESEARCH APPROACH......................3
Reason for choosing the topic....4
Reason for choosing the organization..............................................................................4
About the company..4
About the industry6
RAP objective....7
RAP framework.7
Part: 2 INFORMATION GATHERING &ACCOUNTING/ BUSINESS TECHNIQUES.9
Information gathering....10
Sources of information...11
Limitations12
Ethical information..12
Accounting techniques..13
Business techniques.15
a) SWOT15
b) PEST...17
PART: 3 ANALYSIS, CONCLUSION & RECOMMENDATION.19
Revenue trend analysis20
Ratio analysis.22
Profitability ratios22
Liquidity ratios26
Activity ratios...29
Investor ratios..32
RESEARCH AND ANALYSIS PROJECT BY ANIQA SHAKIR Page 1

Gearing ratios..35
Business
analysis37
SWOT analysis...37
PEST analysis.40
Conclusion...42
Recommendations.43

PART
1:
PROJECT OBJECTIVES
AND OVERALL
RESEARCH APPROACH
Word count: 864

INTRODUCTION
REASON FOR CHOOSING THIS TOPIC
The topic I have chosen for my research and analysis project is topic 8, An analysis
and evaluation of financial and business performance of an organization over a period
of three years.
The main reason for choosing this topic is my interest in the analysis and evaluation of
financial and business performance of organizations. Through this research and
analysis project (RAP) I will be able to apply my knowledge and skills that I have gained
as being a student of ACCA. As I have chosen Accounting and Finance as my
profession, this RAP will help me in gaining expertise over my skills and strengthening
my concepts by applying it to a real world organization like Fauji Fertilizers Company
Limited.
REASON FOR CHOOSING THE ORGANIZATION
Fauji Fertilizers Company Limited is the top largest fertilizers manufacturing company in
Pakistan. As Pakistan is an Agricultural country, where agrarian sector contributes
about 23% in overall GDP, I have my keen interest in working for an organization which
plays a key role in development of agricultural sector, FFC is one among them. It holds
the highest market share in the country and is delivering successful performances along
with quality since last 35 years.
The selection of FFC for my RAP (Research and analysis project) has given me an
opportunity to analyze this industry in depth and fulfill my desire to gain knowledge of
this industry.
ABOUT THE COMPANY
HISTORY
Fauji Fertilizers Company Limited was established in 1978 as a private limited

company. It was a joint venture between Fauji Foundation and Denmark based

HaldorTopsoe A/S. It came into existence to meet up the demand of fertilizers by local
production. The company commenced with an initial share capital of 813.9 million
Rupees and production capacity of 570,000 tons, it initiated its operations
perations by
manufacturing Urea in 1982
1982. The company then continued to expand by establishing a
second plant in 1993 with an annual capacity of 635,000 tons.
to The company then
continued to expand by acquiring major shareholding in Fauji Fertilizer Bin Qasim
Limited (FFBL) and purchasing a urea plant from National Fertilizers Corporation (NFC).
FFC acquired 12.5% shareholding in Pakistan MarrocPhosphore, a co company situated in
Morroco in 2004. (Business
Business Recorder, 2013a)
Presently, share capital of the company stands over 8.48 billion Rupees. It owns two
subsidiaries namely Fauji Fertilizer Bin Qasim limited and Fauji Fertilizer Company
Energy Limited and one associate
ssociate Fauji Cement Company Limited. (Website of FFC,
2013a)
PRODUCTS
SONA SONA FFC SONA

UREA DAP SOP BORON
(Website of FFC, 2013b)
MARKET SHARE
FFC is the market leader in Urea manufacturing which holds 51% of market share
presently along with its subsidiary FFBL.

(Website of FFC, 2013d)
ABOUT THE INDUSTRY

Fertilizer sector is one of the growing sectors of Pakistan showing opportunities to
develop and expand taking advantage from an agrarian economy. Pakistans agriculture
sector contributes around 23% in overall GDP and provides employment to 45% of
labor force. Government policies have always favored fertilizer sector in past by giving
them benefits of massive subsidies on gas bulk. (IBEX, Pakistan Fertilizer Sector: FFC,
2013)
Seven major fertilizers manufacturers of Pakistan are FFC, Engro Fertilizer, Fatima
Fertilizers, Pak Arab fertilizers, Dawood Hercules and Agritech having cumulative
installed capacity of 6.9 million tons of urea which is at the sixth largest position in the
world. (Agricorner, 2013)
KEY PLAYERS
FFC is the market leader in the fertilizer industry holding 46% of Urea market share
while combining with its subsidiary FFBL, its consolidated market share stands at 51%.
Engro Fertilizers, the key competitor of FFC in the fertilizer industry, holds 18% of
Urea market share. (Khan,2013)

Urea Market Share

6%
5%
FFC
18%
46%
Others
Engro
FFBL
25% Fatima
(Arif Habib Limited, 2013)
AIMS AND OBJECTIVES OF RESEARCH
The aims and objectives of this research report are to analyze and evaluate Financial
and Business performance of Fauji Fertilizer Company Limited over a period of three
years covering 2010, 2011 and 2012 using trend and ratio analysis for financial analysis
and SWOT and PEST model for analyzing Business performance. For an effective and
meaningful analysis financial performance of the company will be compared with its
competitor, Engro Fertilizer Limited.
A company lacks behind in long term success if it is not focused on Corporate Social
Responsibility (CSR). The aim of this report is also to analyze how Fauji Fertilizers is
contributing its role in society by applying social and ethical standards.
FRAMEWORK
EWORK OF THE REPORT
The Research and Analysis Report (RAP) begins with the overview of company chosen
i.e. Fauji Fertilizer Company limited followed by a brief insight of the industry in which
company is operating.

Gathering information is an essential part of RAP which comes along with its limitations
such as reliability and accuracy. The later part includes the sources of information used
and ethical consideration as how limitations of information has been overcome and
used in the best possible way.
For the analysis of financial performance of FFCL the knowledge detailed ratio analysis
has been appliedover the three year period and compared with its competitor, Engro.
For the purpose of ratio and computation and charts data entry, spreadsheet has been
used. This is followed by the detailed Business analysis of the company using SWOT
and PEST models along with the conclusions and recommendations based upon
financial and business analysis.

PART 2:
INFORMATION
GATHERING AND ITS
LIMITATION
Word count: 1909

INFORMATION
Data that is accurate and timely, specific and organized for a purpose, presented within
a context that gives it meaning and relevance, and can lead to an increase in
understanding and decrease in uncertainty.(Business Dictionary, 2013)
TYPES OF INFORMATION
PRIMARY
Primary sources of information are materials extracted from original sources. It is

produced all through the time under study and has not been filtered in the course of
interpretation or evaluation. Researches and analysis are carried out by using primary
sources of information. They are generally the initial formal face of results in physical,
print or electronic format. Primary sources usually share new information, resultant of an
event or discovery, present a new thinking or idea. Examples include:
Artifacts
Original Documents
Records of organizations, government agencies (e.g. annual report, treaty,
constitution, government document);
Survey Research (e.g., market surveys, public opinion polls);
Web site.(University of Maryland Libraries, 2013)
SECONDARY
Secondary sources of information are usually the analysis, interpretation and evaluation
of primary sources usually extracted for a specific purpose. Secondary sources are not
facts, butexplanation and discussion of facts. They are a deep insight of information
gathered from primary sources. Examples include:
Bibliographies
Biographical works
Commentaries, criticisms
Web site (also considered primary).(University of Maryland Libraries, 2013)

SOURCES OF INFORMATION USED
ANNUAL REPORT
For the purpose of Financial and Business analysis of Fauji Fertilizers Company
Limited, I have used audited Annual Reports of 2010, 2011 and 2012 of the chosen
company and its competitor Engro Fertilizers Limited. Annual Reports are the most
reliable and relevant source of external information published for the use of its
stakeholders. It does not include only financial data but also non-Financial data for the
evaluation of position of the Business and represents overall companys profile.
COMPANYS OFFICIAL WEBSITE
Companys official website (http://www.ffc.com.pk/)has been used to gather information

regarding history, current issues, news, events, product portfolio, annual reports and
other useful information regarding company.
ONLINE RESOURCES
Competitors website (http://engrofertilizers.com/)and other websites (such as

www.google.com.pk, www.investopedia.com, www.readyratios.com,
www.brainmass.cometc) have been used to extract financial information of competitor
and other supportive data for this RAP.
BOOKS
ACCA books P2 Corporate Reporting, P3 Business analysis etc. have been used for the
purpose of application of knowledge about financial and business analysis required for
this RAP.
NEWS AND MEDIA
Useful information for detailed research about the Industry and the chosen company
were extracted from printed and online media such as Dawn Newspaper, Business
Recorder, Daily times, IBEX, Pakistan todayetc provided

JOURNALS
Articles by ArifHabib Limited, Saud Khan, and NUST etc. have been used for detail
insight of company and fertilizer industry.
LIMITATIONS OF INFORMATION
Information comes always with its limitations. Annual reports are based on historical
data. They do not represent Companys current Financial and Business position.
Information in annual reports is limited and does not provide data for in depth study.
Official website of the company only shows the good picture of the company. It does not
contain issues and news that can cause possible threat to the company. Furthermore,
information on official website can be limited and outdated too.
While accessing online resources there can be an issue regarding relevancy and
reliability of information. Due to the junk of information available it can be misleading
too. Facts and figures are at timesdissimilar on different sites. This can cause confusion
and misguide as to what is relevant and accurate for analysis.
News and media usually contains those issues which are popular in the market. They
do not highlight general type of information.
ETHICAL CONSDERATION
In the process of making this RAP, there is no such information used which is irrelevant
to the topic. Objectivity was put emphasis onall the way through the project as all facts
and figures are reported correctly and accurately free from biasness and manipulation.
All information extracted other than Financials from Annual Report has been referred by
using Harvard referencing system. Information has been used in the best possible way
devoid ofsupport to the organization in any way. The motive of this RAP is purely
academic with no other incentives attached.

FINANCIAL AND BUSINESS TECHNIQUES
FINANCIAL ANALYSIS
The process of evaluating businesses, projects, budgets and other finance-related

entities to determine their suitability for investment is called financial
analysis. (Investopedia, 2013a)
HORIZONTOL/TREND ANALYSIS
Horizontal analysis of financial statements involves comparison of a financial ratio, a

benchmark, or a line item over a number of accounting periods. This method of analysis
is also known as trend analysis.(Ready Ratios, 2013a)
LIMITATION OF HORIZONATAL ANALYSIS

A major problem which can occur while performing horizontal analysis can be due to
aggregation of information in the financial statements may have changed because of
timing difference. It can be due to the changes in charts of account which can led
revenues, expenses, assets and liabilities shift between different accounts causing
variances while comparing account balances of one period with another.(Accounting
Tools, 2013a)
RATIO ANALYSIS
A tool used by individuals to conduct a quantitative analysis of information in a

company's financial statements. Ratios are calculated from current year numbers and
are then compared to previous years, other companies, the industry, or even the

economy to judge the performance of the company.

company. (Investopedia, 2013h)
PROFITABILITY
LIQUIDITY RATIOS ACTIVITY RATIOS
RATIOS
GEARING RATIOS INVESTORS RATIO
LIMITATIONS OF RATIO ANALYSIS
The information used in ratio analysis is based on actual historical results and it is not
necessary that same results will be carried forward in future. It may be possible that
information used for ratio analysis have been aggregated in a different way in past so
comparison on a trend line basis will not give fruitful results through the entire period.
It may be possible that different companies are following dissi

dissimilar
milar accounting policies
for same accounting transaction
transaction.. Comparing results of such companies may perhaps be
similar to comparing apples and oranges.
Comparison of ratios of two companies pursuing different strategies can also be

misleading.The biggest limitation of ratio analysis is that it is benchmarked against the
industry norms, aggregate economy and the companys past performance.(Accounting
performance.
Tools, 2013b)

BUSINESS TECHNIQUES
SWOT
SWOT
SWOT is an acronym for Strengths, Weaknesses, Opportunities and Threats. By
definition, Strengths (S) and Weaknesses (W) are considered to be internal factors over
which you have some measure of control. Also, by definition, Opportunities (O) and
Threats (T) are considered to be external factors over which you have essentially no
control.
Strengths
Weaknesses
Strengths are the capabilities and expertises
Weaknesses are the factors that limit
of an organization which help them achieve
organization from achieving its desired goals
their goals and objectives. It is th basis for
and objectives and deteriorate organizational
an organization to provide them with
growth and succes.
continued success.
Examples: Decline in funding, limited
Examples: Broad product line, motivated
facilities, lack of expertise, poor
staff, brand recognition, financial
management. etc.
resources, etc.
SWOT
Opportunities Threats
Opportunities are recognized with in the Threats are uncontrollable factors that stake
external environment in which company the survival, stability and performance of an
operates. It arises when organization can organization. It arises due to external
benefit from condition in its environment. environment in which company operates.
Examples: Expansion of local services; Examples: Economic factors that could limit
development of new facilities, new staff and resources (human and
expertise, etc. financial), competition, price wars. etc.
EXPLAINATION
SWOT analysis
ysis helps in planning strategies for a business. Using SWOT analysis
businesses can build on their strengths
strengths, address
ess the weaknesses and rectify then
then,grab
opportunities, deter threats being faced by the business.. It helps a business to
understand its core competencies and reverse its flaws.

It can be used as a foundation to evaluate organizations internal potential and

limitations and the likelihood of opportunities and threats. It considers both positive and
negative sides, internally and externally, which can influence performance of a
business. It helps a business to analyze its overall strategic position of its environment
for decision making process.
LIMITATIONS
Considering strengths, weaknesses, opportunities and threats of an organization can be

very subjective as there can be a great degree of uncertainty in market. It can be useful
in planning stage but for complex issues, research should be carried out in detail. It
neither provides solutions to the problem nor prioritizes issues.
SWOT also considers external factors which are beyond the control of management
such as price increase, government legislation, economic environment etc. Organization
may also face difficulty in distinguishing between an opportunity and a threat due to
external factor and the model does not provide any basis for distinguishing it.
(Management Study Guide, 2013)

PEST
A
A PEST analysis is a method for reviewing the macro environment (external forces that
impact a companys ability to plan).
plan). (PESTLE Analysis, 2013)
Political: Economic
Factors that determine that how a government Factors that determines performance of
can influence the economy or a certain economy which have a direct impact on
industry. Imposition of a particular law or company. Such as a rise in inflation rate would
regulation can highly effect company's directly affect company's policy of pricing their
operations such as imposition of a new tax or product and services.
duty. Examples: Inflation rate, Interest rates, Foreign
Examples: Tax policies, fiscal policies, trade exchange rates, Economic growth patterns.
tariffs etc.
.
PEST
Technological
Social Technological factors include innovations in
Social factors that can influence a business technology that may have an affect on the
includes the social environment of the operations of the industry and the market
market, and considers determinants like favorably or adversely.
cultural trends, demographics, population Example: Product developments (employees
analytics etc. working from their homes), Production
Example: Population, Wealth, Health, Social changes (computer controlled
structure, Attitudes, Values, Tastes. machinery), Marketing (using internet and
social media).
EXPLAINATION
PEST analysis helps an organization to plan for future events by understanding the
influence of macro economic environment on organization. PEST analysis in other
words canan be referred to as an audit of environmental influences on an organization and
this information will be used to direct strategic decision making. An organization on its
own can not control these factors but can make strategies to maximize the opportunities
and minimize the threats. It can help understand the big picture of the environment
environm in
which the business is operating.
operating The elements of a PEST analysis can also be used to
analyze a strategy
rategy or position and of a company. (CIPD, 2013)

LIMITATIONS
External factors that are considered by using PEST model are highly dynamic and can
change rapidly. A change can even occur in less than a day time, making it difficult for
an organization to predict how these factors can influence a business in present or
future. Generally, the procedure of PEST model is to list down the environmental factors
that can affect a business whereas the degree of its impact on business should be
critically examined.
Collection of relevant data from reliable resources often creates a problem as well.
Often times, updated information is not available due to which factors are based on
assumptions and not on actual facts.
Due to high usage of assumptions and personal opinions PESTLE analysis becomes a
subjective exercise. The biggest limitation of PEST exercise is that it only takes into
account the external environment while the internal and competitive factors are
completely ignored. (Bright Hub PM, 2013)

PART 3:
ANALYSIS
CONCLUSIONS AND
RECOMMENDATIONS
Word count: 4998

HORIZONATAL TREND ANALYSIS
Sales
80
34.59%
70
60 23.06%
Rupees (Billion)
50
40 64.86% 2.32%
30
20
10
0
2010 2011 2012
FFC 44.87 55.2 74.3
ENGRO 19 31.35 30.62
(Annexure 4)
FFC showed excellent results in sales performance

perfor rising by 23% in 2011 and 35% in
2012.
In 2011, whole fertilizer industry

ustry faced a decline in sales due to natural gas curtailment
enforced by Government of Pakistan
Pakistan, so as FFC did. Due to high demand
emand and low
productivity, fertilizers were readily sold. Despite of that, FFC sales increased by 23%
i.e. Rs.10.3Billion which was due to high demands of Urea lead to an increase in sales
price by 39% than that in 2010. FFCs Sona sales volume declined by 3% whereas
market faced a decline of 5%. In the same period, sales of Engrogre grew by 65% i.e.
Rs.12.3 billion, showing its excellent performance in throughout the period. (FFC Annual
Report, 2011)
In 2012Sales
les performance of FFC showed a major increase
ncrease intensifying by 35%.
Although there was a marginal decline in the sales volume of Sona Urea(which
Urea
contributes 93% of the total sales)
sales due to competition forced by imported Urea, still FFC
was able to detain a market share of 46% of urea while combined market share
including FFBL was 51% i.e. 3% higher than last year.(FFC
year.(FFC annual report, 2012)
Overall Urea market declined

decline by 17% whereas FFC FC faced a decline of 13% retaining its
position
ion as a market leader.The
leader The major reason for increase in sales was due to the

increase in Urea prices by 22% whereas sales of imported DAP at enhanced prices also
added towards rise in Sales. On the other handEngro Fertilizers showed
show a declining
trend by 2.3% from last year sales as it was the key victim of gas curtailment during the
year 2012. (Business Recorder, 2013b)
Sales Volume
2.5
2.48
2.46
2.44
2.42
2.4
2.38
2.36
2010 2011 2012
Million(tonnes) 2.482 2.406 2.405
The decline in the Urea sales volume in 2011 was mainly due to the gas curtailment
imposed by Government of Pakistan. While in 2012 company maintained its sales with
w
a marginal decline due to competition faced with imported Urea in the Industry.
Industry
Regardless of the problems faced in the market, FFCL continued to increase its sales
revenue, indicative of its excellent performance all the way through.

RATIO ANALYSIS
PROFITABILITY RATIO
GPM(Annexure 5)
GPM
70.00%
60.00%
50.00%
40.00%
30.00%
20.00%
10.00%
0.00%
2010 2011 2012
FFC 43.59% 62.20% 48.42%
ENGRO 46.84% 53.60% 32.19%
(Annexure 4)
GPM in 2012 declined majorly due to the increase in cost of sales in the period. While in
2011, FFC raised its GPM from 43.59% to 62.2% due to growth in sales and fall in cost
of sales.
FFCs excellence in performance is indicated by its rise ini GPMin 2011 from 43.9% to
62.2% i.e. Rs.19.6 billion to Rs.34.3billion respectively. Sales increased
ncreased by 23.06%

whereas high and strict controls over cost resulted in decline in cost of sales by 17.53%
i.e. Rs.4.44 billion, which is an achievement in itself. Increased sales tied with improved
cost which resulted in increase in gross profit by 75.6%. (FFC Annual report, 2011)
GPM of Engro stood at 53.6% in 2011. But it is not in line with the increase in sales
revenue by 64.86% it was mainly due to the increase in cost of sales by 44.6% i.e.
Rs.4.5 billion.(Engro Annual report, 2011)
Gross profit in 2012, recorded a low growth of 5% as compared to the growth in sales
revenue of 35%, whereas cost of sales increased to 83.62%. Cost of sales in the year
2012 increased by Rs.17.453billion as compared to the last year, it was mainly due to
increase in cost of feed gas by 207%, which is the most fundamental component of
production cost. It was due to the imposition of GIDC and general gas price. However,
significant rise in cost of sales resultedin GPM to fall despite of increase in sales.(FFC
Annual Report, 2012)
The problem of increased gas price was faced by whole fertilizers industry; Engro was
no different among that which turned down GPM from 53.6% to 32.19%.
NPM (Annexure 5)
NPM
50.00%
40.00%
30.00%
20.00%
10.00%
0.00%
-10.00%
-20.00%
2010 2011 2012
FFC 24.58% 40.73% 28.04%
ENGRO 19.16% 14.63% -9.58%

(Annexure 4)
FFCs NPM increased from 24.58% to 40.73% in 2011 as a result of increased sales
revenue and efficient cost control whereas it faced a decline in 2012 and stood at
28%.NPM of Engro dropped down from 19% to 14.6% in 2011 while facing a loss in the
year 2012.
In 2011, FFCs NPM tremendously increased by 104%. The increase in NPM was
primarily due to increase in GPM by 62% which was a result of increased sales revenue
and efficient cost controls. Other factors, which lead to the increase in net profit, were
decrease in finance cost by 27.6 %( Rs.3 billion) mainly because company reduced it
short term loans by 79% i.e. Rs.2.4 billion and increased other income by 110 % i.e.
Rs.3.476 billion. Rise in other income was primarily due to its excellent cash
management policy ensuring finest return on investment accompanied by increase in
dividend income from FFBL by 2.24 billion. (FFC Annual Report, 2011)
Despite of increase in GPM in 2011, Engro fertilizers suffered decline in NPMof 23.6%
than last year due to a significant increase in finance cost of Rs.6.29 billion which was
4.65 times the last year finance cost. (Engro Annual Report, 2011)
In 2012, FFCs net profit declined by Rs. 1.65 billion i.e. 2.2% from the last year. The
decline in net profit was mainly due to increase in distribution cost and finance cost.
Increase in warehousing cost and rise in transportation rates resulted in increase
inDistribution cost swelled up by 27% from the last year. Warehousing cost increased
by 200% i.e. Rs.0.712 billion due to depression in sales level whereas communication
and other expenses increase by 57% i.e. Rs.1.84 billion than last year. The other major
reason for decline in net profit was companys strategy towards reliance on short term
borrowing. Interest on short term borrowings increased by600% i.e. Rs. 3.667 billion.
Despite of 35% increase in sales revenue, NPM fell by 28% which indicates that FFC
should focus on their cost control strategies. (FFC Annual Report, 2012)
2012 was a year of depression for Engro fertilizers as they suffered loss of Rs.2.93
billion. Net profit declined by Rs. 7.5 billion than last year. The major reason for loss
was increase in finance cost by Rs.3 billion and reduction in other operating income by
Rs.0.78 billion. (EngroAnnual Report, 2012)

RETURN ON CAPITAL EMPLOYED(Annexure 5)
Return on Capital Employed

140.00%
120.00%
100.00%
80.00%
60.00%
40.00%
20.00%
0.00%
2010 2011 2012
FFC 90.20% 131.70% 106.00%
ENGRO 8.42% 18.60% 10.08%
(Annexure 4)
ROCE of FFC and Engrofertilizers both increased by 41.5% and 10.2% respectively, in
2011. The main reason for increase in ROCE of FFC was due to high increase in PBIT
by 95% i.e. Rs.16.5 Billion from last year. Increased sales revenue mingled with low
costs, resulting in rise in PBIT. (FFC Annual Report, 2011)
In 2012, ROCE slopped down by 25.7% because of decrease in PBIT by 5.6% i.e. Rs.
1.9 billion due to increase in finance cost and COGS accompanied by decline in other
income. Capital employed swelled by 16% as a result of increase in long term borrowing
by Rs.1.2 billion. (FFC Annual Report, 2012)
Engro, as compared to FFC, has a significant low ROCE. This is mainly due to the
problems faced by the company of shortage of gas supply. It had difficulties in carrying
out their operations. Engro Fertilizers raised their ROCE from 8.42% to 18.6% in 2011
whereas they suffered a downfall in ROCE by 8.6% in 2012.

LIQUIDITY RATIOS
CURRENT RATIO(Annexure 5)
Current Ratio
2
1.8
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
2010 2011 2012
FFC 0.86 1.07 1.85
ENGRO 0.82 0.809 0.54
(Annexure 4)
Ratio of 2:1 is considered as ideal current ratio but it differs from industry to
industry.Current ratio of FFC shows an increasing trend over the last three periods
rising from 0.86 to 1.85. On the other hand, current ratio of Engro Fertilizers has
decreased from 0.82 to 0.54 over the three years period mainly due to heavy reliance
on short term borrowings.
Current ratio in 2011 increased from 0.86 to 1.07 due to increase in current asset by
60% i.e. Rs. 10.41 billion. The main reason behind increase in current asset is increase
in short term investments by 81% i.e. Rs.9.7 billion. Current liabilities of FFC also
increased in 2011 by Rs.5.9 billion which is almost half the increase in current assets.
Current assets of Engroincreased by 6.8% whereas current liabilities increased by 9%
which led to a minor decrease in current ratio.
In 2012, the current ratio of FFC increased from 1.07 to 1.85 primarily due to increase in
current assets by 12% i.e. Rs.3.3 billion.Increased sales on credit resulted insignificant
rise of Rs.3.5 billion in trade debts which led to increase in current assets whereas

current liabilities increased marginally by 3% because of reduction in short term

borrowings by 43%.
. There was no major increase in current asset of Engro in 2012 whereas current
liabilities increased by 48% i.e. an increase of Rs. 8.5 billion largely due to increase in
short term borrowings by Rs.4.9 billion.
QUICK RATIO(Annexure 5)
Quick Ratio
1.2
0.8
0.6
0.4
0.2
0
2010 2011 2012
FFC 0.73 0.95 1.02
ENGRO 0.56 0.468 0.32
(Annexure 4)
Ideally quick ratio should be 1:1. Quick ratio of Fauji fertilizers shows a rising trend from
0.73 to 1.02 over the three years period indicating a better liquidity position whereas the
reverse trend is shown in Engro Fertilizers i.e. deterioration in quick ratio from 0.56 to
0.32, a better liquidity position of FFC.
Quick ratio of FFC in 2011 increased from 0.73:1 to 0.95:1 while Engro slipped down
from 0.56:1 to 0.468:1. Stock in trade of FFC increased by 66.7% i.e. a rise by Rs.0.4
billion. The rise in value of stock in trade was mainly due to increase in sales by 65%
but this does not effected quick ratio because of significant increase in short term
investments by 81%.

In 2012, acid-test
test ratio of FFC increased to 1.02:1 whereas Engro stood at 0.32:1, it
indicates that FFC was able to pay off its current liabilities
liabilities in a better way than Engro
fertilizers. Stores,
tores, spares and loose tools grew by 26% i.e. Rs. 65 million but despite of
this rise,, quick ratio of FFC increased from 0.95 to 1.02 due to major increase in trade
debts.Sales
Sales were made on credit to offl
offload
oad inventory buildup during 2012.
ACTIVITY RATIOS
INVENTORY TURNOVER DAYS(Annexure 5)
INVENTORY TURNOVER DAYS
2012
2011
2010
0 10 20 30 40 50
2010 2011 2012

Engro 32 46 30
FFC 3 11 4
(Annexure 4)
Inventory turnover days of FFC and Engro fertilizers showed a fluctuating trend over the
three year period. It grew in 2011 whereas suffered a downfall in 2012. FFC has an
efficient inventory control system than Engro. Despite of their heavy volume of sales,
their policy is to control inventory level and sale them as it is received to minimize
holding and storage cost.

Inventory turnover daysascended

ascended in 2011 from 3 to 11 because ofuncertainty
ofuncertainty in demand
of Urea in 2011 due to gas curtailment which took FFC long to convert their stock into
sales. While in 2012, FFC controlled back its inventory turnover days from 11 to 4. A
similar trend wasas followed by Engro,
Engro, increase in inventory turnover days in 2011 from
32 to 46 whilele falling in 2012 to 30. High inventory turnover days of Engro are due to
availability of bulk quantity of stock in its warehouse.
DEBTOR TURNOVER DAYS(Annexure 5)
DEBTOR TURNOVER DAYS
2012
2011
2010
0 5 10 15 20
2010 2011 2012

Engro 7 2 12
FFC 3 1 18
(Annexure 4)
The fall in debtor turnover days in 2011 by both companies show

showss that they relied
mostly on cash sales ratherr than credit sales.
sales. FFC was able to minimize its debtor
turnover days from 3 to 1 whereas, Engro on the other hand, managed to minimize its
debtor turnover days from 7 to 2 showing heavy reliance on cash sales.
In 2012, Engro showed a better debtor turnover period than FFC. Engro was able to
collect its debts in 12 days but the same function was carried out by FFC in 18 days.
The deterioration in debtor turnover days in FFC was mainly due to sales made on
credit to offload inventory build up durin
during the year. (FFC Annual Report, 2012)

PAYABLE TURNOVER DAYS(Annexure 5)
PAYABLE TURNOVER DAYS
2012
2011
2010
0 10 20 30 40
2010 2011 2012

Engro 36 26 32
FFC 6 6 4
(Annexure 4)
In both companies,, there is no major change in payable turnover days over the three
year period.FFCs
FFCs payable turnover days decreased from 6 to 4 days.
In 2011, payable turnover days remained constant as compared to last year while Engro
settled off its creditors 10 days earlier than last year, losing the benefit of free of cost
finance.
FFCs payable turnover days fell to 4 in 2012 while Engro managednaged an increase of 6
days in the same period indicating effective working capital management. Longer
payable
yable periods are considered beneficial for the company as it can invest in other short
term
m activities to generate income while it can also result in loss of discount and disturb
relationship with supplier.

INVESTOR RATIOS
EARNING PER SHARE(Annexure 5)
EPS
20
15
10
FFC
Engro
5
-5
2010 2011 2012
FFC 8.67 17.68 16.38
Engro 3.47 4.276 -2.73
(Annexure 4)
EPS is one of the key performance indicators of companys profitability attributable to

each share of the company. FFCs EPS grew from 8.67 to 16.83 over the three year
period,on contrary;Engro
Engro suffered a declining trend, facing loss per share in 2012 of
2.73.
In 2011, EPS of FFC increased by 103

103.8% i.e. from 17.68 to 8.67 indicating excellent
results, whereas EPS of Engro fertilizers increased
in by 18.8% in the same
period.Significant increase in EPS of FFC was due to increases in sales by 23.06% and
investment income by 89% which coupled with decrease in production cost by 17.5%.
In 2012, EPS of FFC reduced marginally by 7% i.e. from 17.68 to 16.38 mainly due to
increase in cost of sales by 1
1.74 billion
illion as a result of the imposition of GIDC. An
additional reason for the decrease in EPS was reduction in dividend income by b 42% by
FFBL. Company also issued new 424 million ordinary shares of Rs. 10 each as fully
paid bonus share in the same
me period. (FFC
( Annual report, 2012)

Losses
es suffered by Engro in 2012 were majorly because of the severe problems faced
by the company of gas curtailment, which effected their production and sales; creating
an adverse affect on its profitability.
PRICE-EARNINGS
EARNINGS (P/E) RATIO(Annexure 5)
P/E RATIO
60
50
40
30
20
10 FFC
0 Engro
2010
2011
2012
2010 2011 2012

FFC 14.52 8.46 7.15
Engro 55.85 21.67 0
The above chart illustrates that Engro Fertilizers had a high P/E ratio
ratio than FFC in 2010
and 2011. Although, a declining trend in P/E ratio was faced by both companies in both
the years.FFCs
FFCs P/E ratio reduced by 42% in 2011 where as in 2012 it declined by 15%. 15%
P/E ratio of a company shows confidence of an investor on the company. Reduction in
P/E ratio should be an observant factor for the company. However, it i has its limitations
as it is calculated by using
ng market share price, which is heavily influenced by
macroeconomic environment, which is beyond the control of company.
In 2012 P/E ratio turned down due to the fall in market share price by Rs.32.4/share.But
Rs.
company managed to pay dividend of Rs.15.5 per share in the same period. (FFC
Annual report 2012)

Engro suffered loss in the year 2012 due to low productivity and problems of gas supply
because of which it had a loss per share and as a result negative P/
P/E ratio. Therefore,
P/E ratio of 2012 is not applicable for Engro.
DPS(Annexure 5)
Dividend per share
20
15
10
5
0
2010
2011
2012
2010 2011 2012

FFC 13 20 15.5
(Annexure 4)
Engro has not paid dividend to its shareholders since its incorporation as a
separateentity in 2010. Whereas on the otherother hand, FFC paid a good dividend
throughout the e three year period which is interpreted as FFC is able to earn sufficient
profit to pay back return to its investors.
Dividend of FFC increased by 54% in 2011 i.e. an enhancement by Rs. 7 per share.
The increase was due to the exceptional performance of FFC as PAT increased by
104% i.e. an increase by Rs.11
Rs.11.4 billion. Increase in DPS also results in increase in
share price of the company; hence, attracting and satisfying investors.
In 2012, FFC paid Rs.4.5

4.5 per share below dividend than last year because ofincrease
of in
feed gas cost by 207% which is the
t main source of energy supply; due to which PAT
declined marginally by 7%.

GEARING RATIOS
DEBT/EQUITY(Annexure 5)
Debt/Equity
500.00%
450.00%
400.00%
350.00%
300.00%
250.00%
200.00%
150.00%
100.00%
50.00%
0.00%
2010 2011 2012
FFC 24.70% 11.70% 14.80%
Engro 470.00% 319% 326%
(Annexure 4)
The above chart depicts that FFC has a significant low gearing than Engro Fertilizers.
Fertilizers
Reason for high gearing in Engro fertilizers is its heavy dependency on long term
debt.Heavy
Heavy dependency on long term debts has many risk associated with it. It can give
rise to liquidity issues; heavy finance costs resulting losses, loss of investors
confidence etc.
In contrast to Engro, FFC is not aggressively dependent on long term debts because of
the risks associated with it. It is m
mainly financed through equity. FFC paid of its long
term borrowings of Rs. 1.1 .1 billion
b and issued new ordinary shares of Rs.1.7
Rs.1 billion due
to which its financial gearing
earing reduced 13% in 2011. Another reason for reduction in
gearing was increase in revenue reserves by Rs. 5.9 5 billion.
In 2012, long term borrowings of FFC increased by 3 billion

billion for investment purposes
which led to increase in gearing by 3.1%.(FFC Annual Report, 2012)

However, gearing of Engro fertilizers increased

increas in the same period marginally by 7%
7
showing their concern towards
toward increased gearing.
INTEREST COVERAGE RATIO(Annexure 5)
INTEREST COVER
45
40
35
30
25
20
15
10
5
0
-5
2010 2011 2012
FFC 16 44.3 34
ENGRO 6 2.2 -0.78
(Annexure 4)
Interest cover of FFC is quite higher than that of Engro
E throughout the three year period
which means that FFC has a higher ability
abilit to pay off its interest out of its profit. The
higher the interest cover, the more strong is companys financial position.
In 2011, interest cover of FFC increased by 177%.
177%. The main reason for increase in
interest cover was increase in PBIT by 95% i.e. an increase
increase by Rs. 16555 million. A
different trend was followed by Engro Fertilizers its Interest cover deteriorated by 56% in
the same period due to its heavy dependency on debt financing.
Interest cover of FFC decreased in 2012 dropped by 23%. The decrease w was due to
increase in interest cost by 22% whereas profit before interest anda d tax reduced
marginally by 5.7%. However,
However, FFCs ability to pay off its interest cost out of its
profitswas muchch better than Engro as interest cost of Engro was higher than the profit
earned in the period; resulting in loss after deducting interest cost.

BUSINESS ANALYSIS
SWOT
STRENGHTS
Market Leader
FFC holds 46% of market share in Urea market, however, combined with its
subsidiary FFBL, it cumulative market share is 51%.It faces the least urea sales
risk among its competitors as it is the only player to have a nationwide
distribution network. (Khan, 2013)
Stable gas supply
FFC enjoys the benefit of stable gas supply due to being connected to Mari Network for
its feedstock gas supply while the whole fertilizers industry is facing the problems of gas
curtailment. FFC benefits from the gas supply of Mari network by upholding its
production levels and taking advantage from high market prices due to lower production
level. (Business Recorder, 2013c))
Award Winner
FFC has received many awards since 1964 and has maintained its position within the
top 25 companies of Pakistan since then. In 2010, FFC was awarded 1st position in
Karachi Stock Exchange as the best performing company of Pakistan.(Website of FFC,
2013c)
In 2011, it was awarded by ICAP/ICMAP for attaining overall top position in all sectors
and first position in chemical fertilizer sector for best presented accounts, maintaining its
position, in 2012, it gained honor of 1st position holder in chemicals sector. (Website of
FFC, 2013e)
Strong Financial Position
FFC is one of the most stable companies in Pakistan with strong cash flows, stable
profits, low gearing and consistent dividend payout and FFC is likely to benefit steady
growth along with growth in agriculture trends.(IBEX, Pakistan Fertilizer Sector: FFC,
2013)
WEAKNESSES

Reduction in GPM and NPM
In the year 2012, GPM of FFC stood at 48% i.e. reduced by 1,400Bps mainly due to
increase in gas cost price and imposition by GIDCand FFC was unable to fully pass this
affect by increasing urea prices, thus, resulting in gross profit margin to descend. Other
income of FFC declined considerably by 36% accompanied by lower dividend income
from its subsidiary Fauji Fertilizer Bin Qasim Limited.(ArifHabib Limited,2013)
Reliance on Depleting Natural resources
The fertilizer sector has been deprived of gas since April 2010 and gets limited gas
supply making it one of the worst affected industries due to the prevailing gas crisis.
FFC is heavily reliant on gas supply for its production while switching to alternative
sources could mitigate this risk.(Tribune, 2013a)
Dependency on One product
Urea contributes 93% of total sales volume of FFC. Its massive dependency on a single
product i.e. Urea can create problems for the company because of the stiff competition
faced by imported Urea.(FFC Annual Report, 2012)
OPPORTUNITIES
Diversification
It is the former in developing a 50 megawatt wind Power plant in Pakistan which is close
to its completion and management is in view ofexpanding the project further.(Business
Recorder, 2013d)
FFC has showed its interest todiversify into food business which is a growing business
sector in Pakistan. FFC is aiming to have a well diversified portfolio by already
diversifying its businesses in different lines such as banks, cements and
power.(Business Recorder, 2013c)
Expansion
Pakistan is facing a huge problem of shortage of gas supply due to which fertilizers
sector are facing difficulties in maintaining their operation. FFC is considering setting up
fertilizer project abroad in gas rich countries. (FFC Annual report, 2012)
Use of new technology

FFC can use new technologies to enhance its operations and services such as use of
bar coding, tracking vehicles for efficient and effective distribution network. (FFC Annual
Report, 2012)
Export
Pakistans overall urea production capacity is 6.9 million tons out of which it produced
only 4.2 million tons of urea in the year 2012, resulting in 2.7 million production loss. To
meet the domestic demand of urea, government imported urea of 1.23 billion costing
over 566 million and also allocated subsidy of Rs.24 billion. After meeting the domestic
demand of about 5.8 million tons of urea, country can export about 1 million ton Urea
annually earning foreign exchange reserves for the country. (NUST, 2013)
THREATS
Shortage of gas supply
Shortage of gas supply is one of the major threats to FFC as it is the main source of
energy required for its operations. If gas curtailment crosses a significant level then it
would by tough for FFC to continue its operations smoothly.(IBEX, Pakistan Fertilizer
Sector: FFC, 2013)
Foreign exchange rate risk
FFC is exposed to the risk of foreign exchange rate because of its significant
shareholding in Pak MarocPhosphore Company operating in Morocco and
abroad.(IBEX, Pakistan Fertilizer Sector: FFC, 2013)
Decrease in Imported Urea prices and Increase in Gas prices
Overall fertilizers industry is facing a stiff competition because of imported urea

available at concessionary rates. Government has allocated Rs.30 billion subsidies on
imported Urea which is likely to put pressure on FFC and others operating in the same
industry.Gas prices are expected to rise in the near future which is highly essential for
FFC to run its operations. FFC has benefitted from low gas prices for a long time in the
past but it will end up if the new government implements its plan of rationalizing gas
tariffs.(Business Recorder, 2013c)

PEST
Political
In Pakistan, businesses are facing number of difficulties due to political and economical
instability. The major problem faced by the businesses was of energy crisis which led
many factory owners to shut their business. Due to political uncertainty, businesses
have to bear high costs to run their business while increase in shut down days due to
strikes. (Andleeb, 2013)
Fertilizer sector in Pakistan is worst affected by the problems of gas curtailment that
suffered more than 300 days of gas curtailment in the year 2012. Fertilizer sector was
placed third in the revised gas allocation plan behind domestic and power
sector.Government faced significant losses by importing urea of over $1 billion whereas
subsidy of over Rs 50 billion has been allocated over imported Urea in the past two
years while having the capacity to meet the domestic requirements and even export
surplus. (Syed, 2013)
Economical
In accordance with World Bank, Pakistan will not be able to achieve its growth targets
set for the fiscal year 2012-2013. Economy of Pakistan had a target to grow at 4.3%,
falling from its target, now it is expected to grow at 3.8%. Since last five consecutive
years Pakistan is not achieving its growth targets and it is expected that this trend will
continue for next two years, giving rise to unemployment. (Burj Capital Pakistan Limited,
2013)
High inflation is one of the coreproblemsin Pakistan. It is one of the factor due to which
economy is facing a decline trend. (Ehsan, 2013)
Central bank has reduced interest rate from 14% in 2011 to 9% in 2013 i.e. a decline by
500 basis points in Pakistan which is a good sign especially for highly leveraged
companies. (Alam,2013b)
Social
FFC has a history of contributing towards society forabout 30 years.In 2012, FFCs total
contribution towards welfare activities amounted to Rs 220 million, i.e. 1.06% of profits
paid to Sona Welfare society, Fauji Foundation etc. FFC in partnership with NORDEX

launched community uplift and support program with an estimating cost of US$
100,000. The motive of program was to focus on providing health and educational
facilities at Jhimpir along with provision of providing clean drinking water which scarcity
is a major problem in this area. (FFC Annual Report, 2012)
In 2011, donations of Rs. 204 million were contributed to Pakistan Red Crescent society
for flood victims, MIED for school improvement program, Sona Welfare Hospital etc.
(FFC Annual Report, 2011)
In 2010, company donated Rs. 255 million (up by 166%) to welfare activities to Sona
Welfare Hospital, Sona Public School, flood affecters etc. (FFC Annual Report, 2010)
Pakistan, a country facing severe problem of energy crisis, FFC established a power
plant aimed at providing relief from the problem of energy crisis complying with the
global vision of being environmental friendly.(Hamid, 2013))
Technological
Fertilizer industry has persistently faced problems due to gas curtailment resulting in
production losses. Considering this problem, FFC is considering to set up two coal fired
boilers which are estimated to appear on stream in 2015 and 2017.
It has also established its own solar irradiation monitoring equipment at the 50MG wind
power project. The function of the equipment is to gather data that will be used for
assessing the solar plant design. (FFC Annual report, 2012)

CONCLUSION
After analyzing financial and business performance of FFC it can be stated that FFC
has continued to maintain its position as a market leader. It effectively handled the
challenges of gas shortage and market saturation due to imported Urea which is
reflected by its financial performance. Despite of tough challenges faced by the
company, sales revenue of FFC maintained its steady growth over the three year period
growing from23.06% to 35% benefitting from Mari network of stable gas supply.
GPM in 2011 stood at 62.2% increasing from 43.6% in 2010. Such splendid results
were attained by efficient control over cost. While in 2012 it decreased to 48.43% due to
increase in prices of gas. The same trend was followed by NPM i.e. increase in 2011 by
104% whereas declining to 28% in 2012. ROCE of FFC is significantly higher than its
major competitor Engro. FFC managed to increase its ROCE from 90% to 106% over
the three year period showing excellent returns over the capital employed.
FFCs liquidity position is much better than that of Engro Fertilizers. It has strengthened
its liquidity position over the three year period showing implementation of admirable
policies to control its liquidity position.Current ratio of FFC shows an increasing trend
over the last three periods rising from 0.86 to 1.85. Cash operating cycle of both
companies is appreciable showing effectiveness in managing their working capital.
EPS and P/E ratio is the most prominent indicator of companys performance showing
confidence of shareholder. EPS and P/E ratio of FFC are significantly higher than of
Engro which incurred loss per share of 2.73 in 2012. Engro fertilizer has not paid
dividends since its inception as a separate entity whereas FFC has always maintained
its dividend payout to satisfy its shareholders.
Gearing of the company is the most considerable area of an investor. Engro is a highly
geared company while FFC relies mostly on equity financing.The company managed to
reduce its gearing from 24.8% to 14.8% over the three year period. Low gearing of FFC
gives it opportunity to raise debt in future for investment purposes at a lower interest
rate than Engro.
FFCs aim to be as the top-tier growth company in the long term is clearly indicated in
its financial performance. When the whole industry was facing problems of gas
curtailment, FFC managedits operation through its connection with Mari network
maintaining its position as the market leader and capturing 51% of market share along
with its subsidiary FFBL. The strength of the companies like stable gas supply, strong
financial position and well-built brand recognition gives opportunities to the company to
expand and diversify inland and abroad. Government can also good turn fertilizer sector

by establishing policies which allow them the benefit from stable natural gas supply and
allow subsidies over it.
RECOMMENDATION
Consider the opportunity for switching to alternative sources of energy.

Evaluate the opportunity of diversifying in Food sector as it is one of the growing
industries in Pakistan.
Strengthen its risk management policies and marketing strategies to mitigate the
risk of saturation in market.
Continuously upgrade companys production facilities to attain the best possible
level of efficiency, consequently resulting in energy conservation and output
maximization.
Consider the opportunity to establish its operations in gas rich countries.
Develop a portfolio which diversifies companys risk, expands its base and
complement its profitability.
Focus on their policies of liquidity management as Liquidity ratios i.e. Current and
quick ratio of FFC are lower than standard.
FFC relies heavily on equity financing. It should consider debt financing as it
results in tax savings and transaction cost is also low considering the risks
associated with it.

Fauji Fertilizer Finalized

Enviado por

Dados do documento

Direitos autorais

Formatos disponíveis

Compartilhar este documento

Compartilhar ou incorporar documento

Opções de compartilhamento

Você considera este documento útil?

Este conteúdo é inapropriado?

Direitos autorais:

Formatos disponíveis

Fauji Fertilizer Finalized

Enviado por

Direitos autorais:

Formatos disponíveis

FAUJI FERTILIZERS COMPANY LIMITED

Part: 1 PROJECT OBJECTIVES & OVERALL RESEARCH APPROACH......................3

Reason for choosing the topic....4

Reason for choosing the organization..............................................................................4

About the company..4

About the industry6

Part: 2 INFORMATION GATHERING &ACCOUNTING/ BUSINESS TECHNIQUES.9

PART: 3 ANALYSIS, CONCLUSION & RECOMMENDATION.19

Revenue trend analysis20

RESEARCH AND ANALYSIS PROJECT BY ANIQA SHAKIR Page 1

RESEARCH AND ANALYSIS PROJECT BY ANIQA SHAKIR Page 2

RESEARCH AND ANALYSIS PROJECT BY ANIQA SHAKIR Page 3

REASON FOR CHOOSING THIS TOPIC

REASON FOR CHOOSING THE ORGANIZATION

ABOUT THE COMPANY

Fauji Fertilizers Company Limited was established in 1978 as a private limited

RESEARCH AND ANALYSIS PROJECT BY ANIQA SHAKIR Page 4

SONA SONA FFC SONA

(Website of FFC, 2013b)

RESEARCH AND ANALYSIS PROJECT BY ANIQA SHAKIR Page 5

(Website of FFC, 2013d)

ABOUT THE INDUSTRY

RESEARCH AND ANALYSIS PROJECT BY ANIQA SHAKIR Page 6

Urea Market Share

(Arif Habib Limited, 2013)

AIMS AND OBJECTIVES OF RESEARCH

RESEARCH AND ANALYSIS PROJECT BY ANIQA SHAKIR Page 7

RESEARCH AND ANALYSIS PROJECT BY ANIQA SHAKIR Page 8

RESEARCH AND ANALYSIS PROJECT BY ANIQA SHAKIR Page 9

Primary sources of information are materials extracted from original sources. It is

RESEARCH AND ANALYSIS PROJECT BY ANIQA SHAKIR Page 10

SOURCES OF INFORMATION USED

COMPANYS OFFICIAL WEBSITE

Companys official website (http://www.ffc.com.pk/)has been used to gather information

Competitors website (http://engrofertilizers.com/)and other websites (such as

NEWS AND MEDIA

RESEARCH AND ANALYSIS PROJECT BY ANIQA SHAKIR Page 11

RESEARCH AND ANALYSIS PROJECT BY ANIQA SHAKIR Page 12

FINANCIAL AND BUSINESS TECHNIQUES

The process of evaluating businesses, projects, budgets and other finance-related

Horizontal analysis of financial statements involves comparison of a financial ratio, a

LIMITATION OF HORIZONATAL ANALYSIS

A tool used by individuals to conduct a quantitative analysis of information in a

RESEARCH AND ANALYSIS PROJECT BY ANIQA SHAKIR Page 13

economy to judge the performance of the company.

GEARING RATIOS INVESTORS RATIO

LIMITATIONS OF RATIO ANALYSIS

It may be possible that different companies are following dissi

Comparison of ratios of two companies pursuing different strategies can also be

RESEARCH AND ANALYSIS PROJECT BY ANIQA SHAKIR Page 14

RESEARCH AND ANALYSIS PROJECT BY ANIQA SHAKIR Page 15

It can be used as a foundation to evaluate organizations internal potential and

Considering strengths, weaknesses, opportunities and threats of an organization can be

RESEARCH AND ANALYSIS PROJECT BY ANIQA SHAKIR Page 16

RESEARCH AND ANALYSIS PROJECT BY ANIQA SHAKIR Page 17

RESEARCH AND ANALYSIS PROJECT BY ANIQA SHAKIR Page 18

RESEARCH AND ANALYSIS PROJECT BY ANIQA SHAKIR Page 19

HORIZONATAL TREND ANALYSIS

FFC showed excellent results in sales performance

In 2011, whole fertilizer industry

Overall Urea market declined

RESEARCH AND ANALYSIS PROJECT BY ANIQA SHAKIR Page 20

RESEARCH AND ANALYSIS PROJECT BY ANIQA SHAKIR Page 21

RESEARCH AND ANALYSIS PROJECT BY ANIQA SHAKIR Page 22