Fauji Fertilizer Company Limited ('FFC' or 'the Company') is a public listed company and was incorporated in 1978 as per the Companies Act, 1913 (now the Companies Act, 2017).

FFC was established as a joint venture between Fauji Foundation (FF), a charitable trust incorporated under the Charitable Endowments Act 1890, and Haldor Topsoe A/S of Denmark, a global leader in catalyst technology. The Company began operations in 1982 with its first urea plant in Goth Machhi, with a capacity of 570,000 MT per annum. In 1993, Plant-II was added at the same site, and FFC made its initial investment in Fauji Fertilizer Bin Qasim Limited (FFBL). In 2002, it acquired the former Pak-Saudi Fertilizer plant in Mirpur Mathelo (Plant-III). During 2024, Company achieved a major milestone in expansion through merger with FFBL, adding Plant IV with a capacity of producing 551,000 MT Urea and 650,000 MT DAP. The Company also has diversified investments in banking, power, food, and cement. 

FFC is engaged in the manufacturing and marketing of fertilizer products including Urea, DAP, SOP, MOP, Boron and Zinc. It operates four urea plants: Plant-I and Plant-II in Goth Machhi, Plant-III at Mirpur Mathelo, and now also manages production at Port Bin Qasim through the merged FFBL operations. In CY24, the Company achieved record Urea production of 2,841 KT, including 286 KT from Port Bin Qasim. This reflects a high utilization rate of ~124%. Total fertilizer production reached 3,293 KT, supported by improved gas supply to Port Qasim plant and no major turn arounds at Goth Machhi and Mirpur Mathelo.

FFC is majority owned by Fauji Foundation (~44%). General public holds (~25%). Rest of the ownership lies with foreign companies (~3%), public sector companies & financial institutions (~21%) and others (~7%).

The ownership structure is stable as majority of the shareholding vests with the sponsor (FF).

Fauji Foundation (FF), founded in 1954, has emerged as one of the leading conglomerates of the country, with established business interests in various diversified sectors i.e., agriculture, food, power, oil and gas, marine terminals, financial services, and cement sectors.

Besides holding formidable standing in FFC, the sponsors have extensive investments in agriculture, power, oil and gas, marine terminals, financial services, and cement sectors, which fortifies their sound financial strength. In CY24, FFC has 7 subsidiaries, 4 associated companies and 1 joint venture with an equity as per consolidated financial statements of ~PKR 245bln (CY23: ~PKR 150bln) and an asset base of ~PKR 574bln (CY23: ~PKR 327bln). Through its diverse set of business, it is generating a turnover of ~PKR 411bln (CY23: ~PKR 181bln) and posted a consolidated PAT of ~PKR 86bln (CY23: ~PKR 47bln).

The Board of Directors (BoD) comprises of thirteen members; out of which eight (8) are Non-Executive Directors, four (4) are Independent and one (1) is an Executive Director. The BoD holds considerable independence for policy and decision making, along with the key source of guidance for the management. 

The BoD is chaired by Lt Gen Anwar Ali Hyder, HI(M) (Retd). He has professional experience of over three decades. All members on the BoD have diversified experience. Brig Khurram Shahzada SI (M) (Retd) has replaced Brig. Zulfiqar Ali Haider, (Retd), as the Company Secretary during 1QCY25.

The BoD has various committees to assist in governing the affairs of the Company such as Audit Committee, HR and Remuneration Committee, System and Technology Committee, Strategy and Investment Committee and Sustainability Committee.The Board and its committees met regularly, with the Audit, Strategy and Investment and System and Technology Committees each convening five times, while HR and Remuneration Committee and Sustainability Committee met thrice and twice respectively. Attendance remained high across all meetings, and minutes were adequately maintained, reflecting good governance and decision making quality. 

FFC's external auditor, A.F Ferguson & Co., Chartered Accountants, has issued an unqualified opinion on CY24's financial statements.

The Company has a well defined organizational structure and operates among others, through Manufacturing & Operations, Technology Division, Corporate Affairs, Finance, Marketing & Sales and Human Resources. All functional Heads reports to the CEO, who then reports to the BoD. However, the Head of Internal Audit reports administrative matters to the CEO and functionally to the Audit Committee.

Mr. Jahangir Piracha replaced Mr. Sarfaraz Ahmed Rehman, as the CEO during CY24. He has previously served as Chief Executive Officer of Engro Polymer & Chemicals Limited, Engro Vopak Terminal Limited, Engro Elengy Terminal Limited and Engro Powergen Qadirpur Limited. The CFO, Syed Atif Ali, serves on the Board of Foundation Wind Energy I and II Ltd, Thar Energy Ltd and Food Security and Agriculture Centre of Excellence, Trustee on Sona Welfare Foundation and FFBL Power Company Limited. Overall, the management team is experienced professionals. 

The management is assissted through three (3) Committees, i.e., Executive Committee, Strategy Committee and Corporate Social Responsibility Committee. Meetings of these Committees are held on periodic basis to ensure efficiency and strategic planning; while miniutes each meeting is adequately maintained and circulated for review and approval.

FFC has a state of the art IT infrastructure in place, including SAP software. The Company has maintained a profound management system that enables smooth operations of business processes and provides an end to end solution for financial, logistical, distribution, inventory, plant maintenance and human capital management.

FFC has an effective in-house internal audit function which assists in monitoring internal controls and solutions, while reporting to the Audit Committee.

The Fertilizer industry is mainly dominated by three players, i.e., Fauji Fertilizers Company Limited, Engro, and Fatima. Urea and DAP remain the primary fertilizers by volume. While Pakistan is self-sufficient in Urea, gas shortages necessitate Urea imports (~0.2mln MT in CY24). DAP is largely imported, as FFC is the only local manufacturer. Total fertilizer production averaged ~9.1mln MT (CY20-24) vs offtake of ~9.9mln MT. In CY24, production rose ~6.9% YoY, while offtake dipped ~1.1% YoY. Urea led production (~53.6%), while Urea and DAP formed ~65.6% and ~16.2% of the total offtake, respectively. DAP imports surged ~80.4% in CY24, likely driven by Punjab’s Kissan Card Scheme of ~PKR 75bln. Overall, the sector's outlook remains stable.

FFC is the largest player in the fertilizer segment in Urea and DAP with a market share (including FFBL) of ~48% and ~62%, respectively, in CY24 (CY23: 43% and 60% respectively).

The Company experienced increased revenue (CY24: ~PKR 374bln, CY23: ~PKR 159bln) owing to the increased production of Urea along with the support of DAP sales post FFBLs merger with and into FFC (CY24: ~3.293mlnT, CY23: ~2.521mlnT). During 1QCY25, the Company showed the revenue of ~PKR 64bln (1QCY24: ~PKR 58bln).

Owing to increase in the sales of the Company, the gross margins stood at ~34% during CY24 (CY23: ~40%). On the other hand, due to inflation and increased cost of raw material, net profit margins decreased a bit and stood at ~17% during CY24 (CY23: ~19%). For 1QCY25, gross profit margin and net profit margins stood at ~36% and ~21%, respectively (1QCY24 - GP Margin: ~30%, NR Margin: ~18%). Going forward, the merger with FFBL is expected to bring in synergies and reduced cost, enhancing the Company's profitability.

FFC carries a sizable investment book, along with an equity portfolio comprising of entities in the banking, power, food, and cement sectors. FFC has entered into an agreement to ensure sustainable supply of gas. This along with the merger with FFBL, and substantial stake acquired in Agritech has stablized the Company's footing in the sector. This would further benefit the Company, going forward.

The Company’s working capital requirements are a function of its inventory and trade receivables, which are financed through internal cash generation and short-term borrowings. Over the years, the Company has been able to maintain a strong position in its working capital management. In CY24, due to increase in sales average inventory days improved and stood at 13 days (CY23: 25 days). Receivable days remained nil, indicating strong financial discipline and effective oversight by management in maintaining timely collections. Trade payables decreased to 13 days in CY24 (CY23: 18 days). Gross working capital days of the Company stood at 13 days in CY24 (CY23: 25 days). In 1QCY25, average inventory days increased to 48 days (1QCY24: 3 days). Trade receivable remain managed, while trade payable days increased to 25 days (1QCY24: 3 days). Going forward, the Company's working capital managment is expected to remain streamlined.

In CY24, the Company’s free cashflows from operations increased to ~PKR 69bln (CY24: ~PKR 41bln) on the back of higher profitability. Interest coverage ratio stood at 10.9x in CY24 (CY23: 7.4), due to increase in EBITDA (CY24: PKR 114bln, CY23: PKR 59bln). Total interest coverage also increased and stood at 5.2x in CY24 (CY23: 3.5x). Going forward, coverage ratios are expected to remain stable.

The leverage of the Company improved and stood at ~35% in CY24 (CY23: ~38%) due to increase in equity of the Company following the merger with FFBL (CY24: PKR ~132bln, CY23: PKR ~62bln). Short term borrowings stood at PKR 31bln in CY24 (CY23: PKR 14bln). Whereas, long term borrowings of the Company, including current mauturity, stood at PKR 38bln in CY24 (CY23: PKR 24bln). In 1QCY25, the leverage of the Company stood at ~30% (1QCY24: ~26%). Short term borrowings comprises of PKR ~12bln in 1QCY25 (1QCY24: PKR~ 0.7bln) while the long term borrowings, including current maturity comprises of PKR 37bln in 1QCY25 (1QCY24: PKR 23bln). Going forward, capital structure is expected to remain adequate.