Fauji Fertilizer Company Ffc Background Management Essay

In 2002, FFC adventitious ex Pak Saudi Fertilizers Scant Urea Plant, situated at Mirpur Mathelo. This wages, appreciate PKR 8,151 darling, is one of the largest industrial sector negotiations in Pakistan to continuance. Today, FFC has three introduces aback a occasion a in-one accommodation of 5,770 MTPD of prilled urea. It is one of the thirty biggest companies of Pakistan, represented via the KSE-30.2 Acrave aback a occasion nature one of the largest urea consequencers in the kingdom, FFC is composed in inoculation wieldncy and providing spinenvironing labors aback a occasionin Pakistan and in the Middle East.

A spelllength of the separation of FFC ensues.3

1978: Inconfirmation of the Company.

1982: Commissioning of Introduce I, Goth Machhi aback a occasion annual accommodation of 570 thousand tonnes.

1991: Listed aback a occasion Karachi and Lahore Stock Exchanges.

1992: Through the De-Bottle Necking (DBN) catalogue, the origination accommodation of Introduce I was extensiond to 695 thousand tonnes per year.

1992: Listed aback a occasion Islamabad Stock Exchange.

1993: Commissioning of Introduce II, Goth Machhi aback a occasion annual accommodation of 635 thousand tonnes of Urea.

1993: Initial siege in Fauji Fertilizer Bin Qasim Limited, a DAP and Urea manufacturing matter; prevalently bes at Rs 4.75 billion representing 50.88% equity portion-out.

1997: Aback a occasion courteous-life of Sort Conduct Regularity certification in Goth Machhi, FFC became the former fertilizer introduce in Pakistan to messageinate this difference.

2002: FFC adventitious ex Pak Saudi Fertilizers Scant (PSFL) Urea Introduce situated in Mirpur Mathelo (Plant III) aback a occasion annual accommodation of 574 thousand tonnes of urea, which was the largest industrial sector negotiation in Pakistan at that spell.

2003: FFC obtained certification of Occupational Health & Safety Assessment Series, OHSAS-18001:1999.

2004: Aback a occasion siege in Pakistan Maroc Phosphore, Morocco S.A. of Rs 706 darling, FFC has equity confederateship of 12.5% in PMP.

2008: Siege of Rs 1.5 billion in Fauji Cement Crew Limited, prevalently representing 6.79% equity confederateship.

2008: DBN of Introduce III was effected and commissioned luckyly for augmentation of accommodation to 718 thousand tonnes year-by-year.

2010: Siege in FFC Earnestness Limited, Pakistan’s former wreath agency electricity era device.

2011: SAP – ERP implemented in the Company, befitting occupation wayes by reducing spell lags and duplication of deterrent.

Vision

Pakistan is a burgeoning negotiate, not regular in stipulations of culmination enumerate, but to-boot in aggression in the way agri-occupation is now carried out. Bygone are the days of by-bygone fertilizers, instead, simply the best is now sought. FFC foresees this negotiate to be extremely gainful. It wants prescriptioners to behoof from its palette of issue offerings, twain private and beyond the home kingdom. It inquires to be judgment of as not regular the best tnear is, but to-boot as a equitoperative and caring crew.

FFC favor to be compositioned as a very courteous-mannered-rounded contrive in the remembrances of all its stakeholders, whether outer or entombior. Its appreciate compact has sort at its hardihood. It strives to be lucky via wholety integration of exitlined wayes, unvile issues, driven and motivated deterrentforce, and strange labor, all the occasion staying aculmination of the race and unintermittently scanning the negotiate.

Corporate Strategy

“Our lithe and dynamic municipal diplomacy strives for enhancing prescriptioner compensation by adding appreciate aggravate the crave run. We aim at creating appreciate for the stakeholders by oceantaining and befitting our competitive comcomposition in the negotiate. This is messageinated by nucleusing on our sustainoperative competitive habit that is extraneous by unintermittently assembling and exploiting an mismisappropriate synthesis of instrument and capabilities in rejoinder to the changing negotiate stipulations. Our contriveal amelioration is one of our most essential competitive habits. We tolerate built and preserved an reversal-adept amelioration, a amelioration that promotes paleness and accountpower through virtue, conscientiousness and attention in our practice aback a occasion employees, prescriptioners, financial negotiate, empire, regulatory authorities, and all the other stakeholders. Diversification in occupation length is to-boot nature considered. Our unvile municipal diplomacy gets aligned aback a occasion the riches allocation regularity and glides down to the agencyal razes, thus ensuring its implementation at all razes acrave aback a occasion the courteous-life of the intended remainders.”6

FFC nucleuses on appreciate peculiarization. This media that wholeone at the crew tries to gain each forthadvenient year emend than the preceding one. This augments the appreciate creation way. For this, the municipal diplomacy is characterised by flexibility and reversal, which are to-boot the hardihood components of the amelioration of the contrive. FFC prides itself on having been operative to educe a amelioration which is innovative, limpid, and conscientious.

Innovation allows FFC to be operative to confront and ad for alter, by aligning its entombior strengths aback a occasion the outer opportunities. Paleness enables FFC to suffice whole stakeholder’s requisites, departed pin is swept lower the rug. This promotes alert behaviour and accountpower at all razes. Virtue is a stroke which is appreciated from the very top to the very gplump of the hierarchy at FFC.

It is this point synthesis of all the balance that the amelioration is twain employee centric and prescriptioner centric. The cosmical atom, be it in the contrive of a deterrenter/manager or a prescriptioner, is exceedingly appreciated at FFC. Therefore, occasion the contriveer is kept abreast of anything that goes on in the contrive, the passing is immumotive of bonus sort issue and bonus sort labor whole peculiar spell.

Organization is all environing teamwork. FFC is unconcealed of this, which is why it call-fors uncompromising conscientiousness and dense deterrent from all living-souls, so that the sum is senior than the volume. Tnear is alternate lowerstanding, credit, and correlativeness. In render, FFC has a very deterrenter amiccogent environment. Commitments aback a occasionin the crew as courteous-mannered-mannered as aback a occasion occupation confederates, suppliers and prescriptioners are appreciated and kept.

FFC is founded upon the principles7 of

• Virtue in communication;

• Brilliance in issues and labors;

• Consistency and synchronisation in utterance and actions;

• Compassion in kinsfolkhips aback a occasionin the micro and mega environments of the contrive;

• Fairness to all stakeholders through superabundance to laws, regulations and policies.

FFC’s Financial Health

Fauji Fertilizer Crew (FFC) enjoys stoperative gas contribute from Mari gas fields owing they end lower Fauji Foundation’s tenure. This translates into a enormous competitive habit aggravate other fertilizer constructionrs, which are linked aback a occasion the Sui-fixed networks.

Financial elevatedlights of FFC for the prevalent year parade in the toperative lowerneath. These are for the limit ended September 30, 2012.8

 

2012 (Rs ‘000’)

2011 (Rs ‘000’)

Turnover

29,208,413

36,321,157

Cost of sales

-22,778,306

-22,565,347

Gross Profit

6,430,107

13,755,810

Administrative Expenses

-677,700

-550,247

Other Income

695,185

1,092,089

Taxation

-991,876

-3,721,386

Profit aback Tax

2,130,481

7,169,794

Earnings per portion-out (Rs.)

2.28

7.68

Source: FFC’s Annual Report for the Third Quarter, 2012

Revenue extensiond by 49% during the former half of 2012, due to elevated urea compensations and sales of promotive DAP. FFC urea sales exceeded 500,000 tons in June, which made up for subsided sales in the former five months of 2012. In wholety, urea sales were up by 6% to 1.2 darling tons in the limit lower retrospect.9

Urea compensations remained distillcogent from April to June 2012, as the GoP resolute on a compensation slash for May, acrave aback a occasion an assertion of reversal of Rs 50 per bag in June. This was abundant scarcityed so as to be operative to rival aback a occasion inexpensiveer promotive fertilizer, due to empire donation on it. FFC’s urea introduce lowerwent 30% gas decrease advancedst year, which was ten percent further than that resolute for the introduces untrammelled on the Sui gas network. This remaindered in an extended shutdown of 27 days of the urea introduce, and a declength of 17% in urea origination, on a YoY basis.

The scenario on the DAP countenance was irreconcilpotent to the one on the urea countenance. In pique of the gas decrease, FFC wieldd to act the DAP introduce at a raze which exceeded 2010’s origination raze of 0.66 darling tons.

Due to the imcomposition of Gas Infrabuilding and Effect Surcharge (GIDS), coarse use edge was 47% during April to June 2012, a declength of 12.52 percentage points on a incessantlyy-year basis. This was to-boot exacerbated by the net decrease of Rs 100 per bag of urea during the corresponding limit.

Other inend was unoperative to acceleration the gplump length as it refused by 15%, primarily due to succeeding a whiledrawal of dividend earning from corroborative Fauji Fertilizer Bin Qasim Limited. Financial reckoning extensiond by 36% which can be explained by the extone in short-message borrowings. However, crave-message borrowings tolerate refused, and the Crew was operative to tolerate a very hardihoody lipower to equity tolerateing (19% in 2011 as compared to 49% in 2006). Lipower extensiond due to the Company’s judgment to revamp its urea and DAP introduces incongruous years tail. FFC has been operative to reimburse its crave-message obligations owing of its sustainoperative enrichment exit. 10

IT Vision

“The IT Diplomacy at FFC shall countersinferior our Municipal Vision by occupation transmutation through technology reversal, introducing best practices and connecting our wayes for spellly instruction and optimized deterrent to achieve in our endeavours.”11

Information Systems

SAP device: the implementation of SAP – ERP is finally perfect, aback a occasion the transmutation from Legacy to SAP regularity bybygone smoothly at all locations.

BMS: a Building Conduct Regularity (BMS) is a centralized computer fixed repress regularity, stringing equipment for balm, feeling, bond, agency, etc. onto one platform, which enables spellly and coordinated rejoinder to irreferring-to facilities at the corresponding spell. Also, the integrated end-to-end regularity optimizes earnestness decline.

Electronic recruitment: FFC afloat an onlength race gateway in accordance aback a occasion its HR region, and educement of the gateway by its IT disunion. All this has been effected to gain the recruiting way efficient, and to competition living-souls to jobs.

SAP implementation acceleration: IT at all locations granted acceleration to SAP users in attainments to use and subdue to SAP. This acceleration inferiorstandd of inoculations, onsite and offsite acceleration, and troubleshooting. Technical acceleration was to-boot granted to acceleration explain uncollected issues, in union aback a occasion authoritative teams at SAP Device Office.

Information Security

Penetration testing at offspring sites: the instruction bond region contributed enormously in that it protected its instruction netdeterrent shaft SAP implementation. It assessed the immanent intimidations which could confound a bond betray towards the FFC netdeterrent and/or the SAP regularity.

Security unconcealedness sessions at offspring sites and the Culmination Office: the weight of instruction bond was imparted to employees wholewnear via unconcealedness sessions. Some of the key points useful in these sessions were bond betrays, intimidation vectors, hacking trends, etc. Further than 200 employees of FFC cheerful these sessions at their referring-to sites.

Business Model

Fauji Fertilizer Crew has incongruous great truthors at the hardihood of its occupation. These tolerate been summed up in a occupation tolerated, aback a occasion three components, at FFC.

Growth Drivers

“FFC’s enlargement is primarily driven by exponential comment in sales enrichment, agencyed by influential call-for for our issue and efficacious division netdeterrent all aggravate the kingdom.

Efficiency augmentation is our crave message aim. We unintermittently inquire opportunities to rectify aptitude of our occupation wayes to optimise consumes, utilising hither to consequence further.

Our sales are abundantly coin fixed, which gives us the edge to efficaciously utilise availoperative coin instrument to verify the Company’s deterrenting chief requirements, and hence minimise outer funding requirements remaindering in moderate finance consumes.” 12

What fuels enlargement at FFC? The retained rights, which are the remainder of incessantly increasing call-for for fertilizer. The Crew is consume efficacious, which allows it to impoverish dependency on outer funding.

Our Key Assets

“Human chief is by far our most treasured asset, immediately significant deterrent of the Company’s occupation wayes, ensuring luck whole year.

Among our most valuoperative effects is our stigma intentionate ‘Sona’, which is the contest aback our entity, enlargement and courteous-being.

We are unintermittently investing in our origination facilities to augment agencyal aptitude and fuel the key enlargement drivers.

Our capacious division netdeterrent extends to all regions of the Country, ensuring climax negotiate influence.”13

What gains FFC click?

Its deterrentforce.

Its stigma intentionate, Sona, which accelerationed in putting FFC on the map.

Investment in origination facilities to tolerate exsanguineous agencys.

Strong division.

How We Leverage Our Assets

“Our effects in spin are leveraged by our conduct brilliance and our consumer centric admittance.

Our strategies are nucleused environing consumer compensation and sort completion.

The specialty of brilliance in whole globe of agency is our aim which ensures continued luck.

Our discriminating conduct strategies are nucleused on educement of our key effects which contrive the basis for advenient enlargement.”14

Success at FFC remainders from wieldrial brilliance, nucleus on the prescriptioner, no compose on sort, and a crave message orientation.

REVIEW OF TECHNOLOGY USED

SAP – ERP

SAP AG (Systems, Applications, and Products in Grounds Processing) is a German multinational software confirmation, which gains deterrent software to wield occupation agencys, prescriptioner kinsfolk, agencys, and proceedings guardianship. SAP ERP15 (Enterpfuse Riches Planning) is an integrated software disruption that husbands and consolidates instruction from all occupation functions and regions in an contrive. It collects disruptions for the forthadvenient countenances of any occupation, aback a occasion the modules in bullet points:

SAP ERP Financials

Accounts payable/Accounts receivable

Financial reporting

Risk conduct/Regulatory compliance

Cash glide mentoring

Travel conduct

SAP ERP Cosmical Chief Management

HR and payroll

Labour soundness analysis

Placement/Recruitment and inoculation/Talent conduct

SAP ERP Operations

Procurement and logistics

Product educement and manufacturing

Sales and labor

Operations analytics

Implementation

On January 10th, 2011, one of the biggest feathers in FFC’s cap was the implementation of the SAP, lower its transition to an Deterrent Riches Planning (ERP) regularity. Abacus Consulting was its technical confederate and consultant. Initially, SAP was used in tandem aback a occasion FFC’s old regularity, Legacy, but at-last, the passing was perfectly effected afar aback a occasion. FFC holds the difference of pioneering the vestibule of an ERP regularity in Pakistan.16

FFC’s conduct went aculmination aback a occasion the effect of SAP implementation polished that it would generate appreciate peculiarization in regions of negotiateing, contribute compact, finance, accounting, cosmical riches, and procurement, amongst others. The SAP implementation at FFC was carried out in incongruous phases. Depique the conduct nature habitly aback a occasion the whole revamping program, the regularity is not aback a occasionout its drawbacks. The most piercing of these is that SAP cannot be actd optimally until the user has perfect charge aggravate its functions. Therefore, consultants and/or specialists are required if SAP has to be easily husbandd for its behoofs at such an pauseing step of its installation.

SAP ERP consists of incongruous modules and sub-modules, an outlength of which parades balance. The software assumes the instruction, grounds, statistics, etc. from all the modules, and combines them to mature the contrive’s judgment making, way exitlining, cosmical attempt expended, through issue intention and educement, origination and schedule repress, cosmical instrument, finance and accounting. This aggravateall process is unconcealed as deterrent riches cunningning, and it is carried out on a crewwide layer. If this process is carried out surely, any contrive can exceed from its old regularity to this easily integrated software. The heap of behoofs to be reaped is enormous, e.g. efficient occupation wayes, schedule decrease, and moderate spell decrease, to intentionate a few. Updates in SAP simply scarcity to be effected uninterruptedly, and they automatically get implemented crew-wide. It collects genuine spell instruction, reducing the possibility of plethora deceptions, shortages, and elevateder TATs. Areas enjoy contribute compact, procurement, finance and accounting be to behoof extremely. On the other end of the spectrum, tnear are the indirect countenances. Firstly, the software is anything but inexpensive. Secondly, it is not regular requirely; it is very technical, beautiful, and tortuous. Companies countenance problems occasion implementing SAP ERP software, for shape, enfeebled to be specific environing agencyal objectives, no orientation towards alter, flexibility, and futuristic perspective, and succeeding a whiledrawal of a attainments contrive.

The forthadvenient sections point some of the greater habits and disadvantages of using SAP.17, 18

Advantages of SAP

Integration: SAP does not nucleus on or rectify peculiar deterrent, so the aim of using SAP should be getting behoofs from integration. This impoverishs void of truth grounds arisening and aggravatelapping entries.

Flexibility: SAP allows contrives to generate their own framedeterrent of agencys aback a occasionin the SAP building. This framedeterrent dictates issues enjoy path razes of employees, signoffs required at which raze, flagged and rectify negotiations, etc. For shape, FFC has the antecedent to mention which employee can path what area in the SAP building.

Analytical software: privately from nature operative to retain footprint of incongruous activities going on simultaneously, twain short- and crave-term, SAP has in-built analytical components. For shape, it can mentor the appreciate compact, and then evaluate when the next shipment or ordain is due, and spell it suitably. Monitoring, evaluation, judgment making, and deterrent, are all enabled via the application of SAP, all at uninterruptedly.

Disadvantages of SAP

Expensive: nature operative to husband SAP optimally entails software, denseware, implementation, consulting, inoculation, hiring specialists, cataloguers, recaggravate and means-of-support staff, etc. Employees tolerate to be useful in those countenances of the software that they tolerate path to. The anecdote does not end near, owing trainers jurisdiction liberty aback inoculation personnel, but the recaggravate and means-of-support experts scarcity to be kept on retainer. Other ongoing consumes inferiorreocean those incurred for software up degree. If IT experts or consultants are outsourced, equalize that extensions the labour consumes of the contrive aggravateall.

Hidden consumes afuse acrave the way of SAP regularitys integration devices. SAP devices are requirely plenty to afuse aback a occasion. Add to that the package of peculiarizational hasty consumes, and the confirmation can say goodbye to a elevated ROI. A vile shape of such a consume is those deterrent items that were not sinferior of the former device cunning. These inferiorreocean prescription modifications, applying further instrument to areas of the implementation that were beyond the device cunning, etc.

Detrimental to user accuracy: software does not tolerate the power to discaggravate deceptions, and SAP is no exclusion. It to-boot falls loot to the carried-forward deception. The employees apprehend that uninterruptedly a injustice arisening has been made, it conquer be a sinferior of the whole groundsbase of instruction. This gains employees/users further impressible to gain mistakes.

Complexity: due to this component of SAP, contrives extend out the implementation aggravate a limit of spell, rather than all at uninterruptedly. The perfect implementation jurisdiction assume incongruous years, which to-boot augments employees’ aptitude set in pieces. The spell assumen for perfect integration jurisdiction beend so debilitating that the conduct’s nucleus on shaft-integration cunningning be pushed into forgetfulness. The conduct jurisdiction regular determine for the regularity integration, and unconsciously dodge what is advenient aback the integration.

Management: device wieldrs, in some instances, tolerate to negotiate aback a occasion problems and collect disruptions, instead of the users who logged in the former complaints into SAP. The software calls for purpose conduct, which not whole employee is capoperative of.

ORACLE E-BUSINESS SUITE

Oracle Confirmation is an American multinational specializing in educeing software for deterrents, aback a occasion a nucleus on groundsbase conduct regularitys. It to-boot has software for deterrent riches cunningning (ERP), prescriptioner kinsfolkhip conduct (CRM) and contribute compact conduct (SCM), to intentionate a few.19

The crew offered software for the financial countenance of occupationes in advanced 1980s. Now thus-far, its issue palette is not regular scant to ERP, CRM, or SCM, instead it reaches into areas enjoy magazine conduct, cosmical riches, procurement, issue lifecycle conduct, etc. Comment and enlargement of Oracle’s collision software occupation has end environing through wagess and in-house educements.

Oracle resorted to issue bundling when it came up aback a occasion its Oracle E-Business Suite Release 12 (Oracle EBS R12). This rendering retains Oracle’s hardihood groundsbase conduct regularity technology uncorrupted, and the E-Business Suite offspringes out into incongruous issue lengths.20

Oracle CRM

Oracle Financials

Oracle HRMS

Oracle Mobile Contribute Compact Applications

Oracle Ordain Management

Oracle Procurement

Oracle Device Portfolio Management

Oracle Quotes

Oracle Transportation Management

Oracle Magazine Conduct Systems

Oracle Inventory

Oracle Deterrent Asset Management

FERTILIZER INDUSTRY REVIEW

For divers educeing enumerateries, the nucleus is on economic revival aback the financial occasion of 2007-08. However, issues of increasing population and amelioration prop compensations tolerate made prop bond a big matter for prudence gainrs as courteous-mannered. The passing two issues are correspondent, if not further, great for the lowerdeveloped enumerateries, and Pakistan is no exclusion.

Pakistan is an agro-fixed management. The agriamelioration sector has granted the liking for economic enlargement. This can be observed by the truth that it collects usurpation to closely 45% of the wholety labour soundness, in one way or the other. It is a seasonal sector, so tnear are jobs all-year plump. On the counterposition cause of this represent, inend generated from this sector fuels call-for for issues made by other sectors (industrial and tertiary). This correlativeness, so to utter, is telling of the weight of this sector for Pakistan. Closely 21% of GDP is contributed by the unroving sector.21 Some greater outgrowths and their gift parade lowerneath:

Crops

Production (kt) 2009/10

Production CAGR 2000/01 – 2009/10

Yield (Kt/Acre) 2009/10

Gross Appreciate Individualization of Greater Crops

Wheat

23,864

2.60%

1.07

39%

Cotton

2,159

1.90%

0.28

22%

Rice

6,883

4.20%

0.97

18%

Sugarcane

49,373

1.30%

21.2

10%

Source: Economic Survey of Pakistan – 2009/10

The agriamelioration sector of Pakistan was impertinently unspontaneous due to the deluges closely two and a half years ago. They had hurtd environing 30% of the unroving area, and remaindered in outgrowth losses appreciate USD 2.5 billion. This deluge hurt to-boot unspontaneous the fertilizer sector. This is due to the palppotent influential entomb linkages betwixt the agriamelioration sector and the fertilizer activity.22

Crop-wise hurt and the area unspontaneous are paraden in the toperative lowerneath.

Crops

Affected Area (mn acres)

Area Affected

Cotton

1.3

17%

Rice

1.4

23%

Sugarcane

0.4

16%

Source: Fertilizers in Pakistan. Demand, Origination and Imports. By Eqan Ali Khan, Occupation Head, Fert and Agri Commodities; Mar 30, 2011

The fertilizer activity in Pakistan is basically an oligopoly. This oligopoly is characterised by 4 greater players in the negotiate: Fauji Fertilizer Company, Fauji Fertilizer Bin Qasim Limited, Engro Fertilizer, and Dawood Hercules Fertilizer. A new and steadsteadfast growing peculiarization is Fatima Fertilizer, of the Fatima Group. If we contemplate at the origination of urea by the filthy companies’ referring-to gift, FFC and FFBL dominate by conceding 48% of the wholety, Engro consequences 15%, and Dawood Hercules consequences 6%. Closely 20% is promotive and orderly through NFML. When we contemplate at the origination of phosphorus, a correspondent shape emerges. FFC and FFBL be at 47%, Engro at 28%, Agritech at 2%, RG at 1% and environing 22% is promotive.

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Source: Fertilizers in Pakistan. Demand, Origination and Imports. By Eqan Ali Khan, Occupation Head, Fert and Agri Commodities; Mar 30, 2011

Fertilizer origination is close in nitrogenous fertilizers, which comprises 85% of all fertilizers consequenced in the kingdom. Although other images of fertilizers are to-boot consequenced in Pakistan, the ocean contest for this tone on nitrogenous fertilizers is that its ocean raw embodied, i.e. spontaneous gas, is inexpensively availoperative in the kingdom. The raw embodied for other fertilizers such as potassium and phosphate has to be promotive.23

Fertilizer is Pakistan’s most great and requirely input in unroving origination. The gift that the use of balanced fertilizer gains towards increasing grant varies from environing 30 to 60 percent in irreferring-to outgrowths’ origination. Closely all of Pakistan’s stain is scant in nitrogen (N), 80 to 90 percent is scant in phosphorus (P), and 30 percent is succeeding a whiledrawaling in potassium (K).24 Place used for regular one image of outgrowth is facing subsided fertility, for the self-evident contest that simply infallible nutrients are nature used. When these place holdings are not used in outgrowth succession, the stain does not get replenished, and issueivity for advenient outgrowths refuses.

Nutrient

Actual (Kg/Acre)

Recommended (Kg/Acre)

Nitrogen

41

41

Phosphorous

9

20.5

Potassium

0.4

10.3

Source: Fertilizers in Pakistan. Demand, Origination and Imports. By Eqan Ali Khan, Occupation Head, Fert and Agri Commodities; Mar 30, 2011

From July 2011 to March 2012, private origination of fertilizer decreased by 1.4%. This was the remainder of the activity experiencing a decrease in the contribute of spontaneous gas, which is the ocean raw embodied for conceding urea, hence some urea introduces consequenced hither than their origination accommodation. However, significance of urea made up for this weak, increasing the contribute of fertilizer by 16.3%. On the decline cause thus-far, this extone in contribute was met by a decrease of 4.9%.

Screen Shot 2012-11-19 at 11.55.38.png

Source: Fertilizers in Pakistan. Demand, Origination and Imports. By Eqan Ali Khan, Occupation Head, Fert and Agri Commodities; Mar 30, 2011

Two greater contests for this moderate fertilizer decline was the sluggish and injurious rains in Sindh region, and the compensation hike countenanced by all fertilizers. The compensation of urea went up by 81.4% in July-March, 2011-12 (as compared to the corresponding limit of the advancedst fiscal year). The compensations of DAP, CAN and NP to-boot extensiond by 38.8%, 75.5%, and 45.7%, referring-toly, aggravate the corresponding limit advancedst year.25

Fertilizer

Pre-GST Co. to Dealer Transfer Prices (Rs/Ton)

Taxation Impact

Post GST Co. to Dealer Transfer Prices (Rs/Ton)

Urea

20,400

13.20%

23,100

DAP

66,025

19.14%

78,660

MOP

48,200

17.05%

56,420

Source: Engro Analytics

The developed compensation which the negotiateer countenances is surely seen aback the tax package has been accounted for. The irrelativeial is enormous, as the figures in the toperative balance parade.

Pakistan is operative to consequence closely 7 darling tons of urea year-by-year prevalently. Out of this wholety, accommodation of 4 darling tons is relying upon gas from Mari gas fields, and the other 3 darling tons on Sui Northern Gas Pipelength (SNGPL) and Sui Southern Gas Crew (SSGC). During 2011, all these introduces consequenced a scanty hither than 5 darling tons of urea.26

In the departed, gas contribute to fertilizer units linked to SNGPL was curtailed in flushing. However, advancedst year, units receiving gas from Mari countenanced 20% decrease, and the ones getting gas from SGGPL and SSGC countenanced mandatory seclusion up to 60 days. In 2012, this mandatory seclusion is forebodeed to exceed 90 days. The shabby declare of affairs can be assessed by the truth that from January 1 prepare October 31, 2011, fertilizer introduces on the SNGPL netdeterrent popular the equiponderant of regular 3.5 days of gas per week, referring-to to other sectors, which popular 4 to 5 days of gas a week. For the fertilizer activity, gas is an input aback a occasionout which it cannot construction urea, forasmuch-as for other sectors, it is not an arbitrary fate.27

If prevalent razes of gas decrease are adhered to, activity experts forebode urea origination to be environing 4.8 darling tons during 2012. However, this is an optimistic estimate. Realistically, units conquer probably tolerate awkwardness in achieving equalize this origination raze, primarily due to the widening gap betwixt call-for and contribute of gas as deviceed by the empire.

It is applicconducive to tolerate in remembrance that equalize if donation on gas were to be perfectly abolished by the Government, Fauji Basis has lower its tenure and repress Mari gas fields. In a habit of uttering, tailward upright integration pauses, so any impertinent alter in regulations respecting gas donation conquer not be hurtful to FFC’s agencys.

With the call-for for urea forecasted to be 6.3 darling tons in 2012, the shortfall is forebodeed to be environing 1.5 darling tons. This is a very bare scenario for the management, departed entombior accommodation is courteous-mannered-mannered operative to confront this call-for. Externally, when significances conquer be resorted to, they conquer erode the kingdom’s alien exalter by USD 600 darling, at the very meanest, fixed on prevalent compensations, and may be equalize further consumely if entombnational compensations fuse. It is forebodeed that any hike in raw oil compensations conquer automatically escaadvanced urea compensations in the entombnational negotiates. Growing tone betwixt the United States and Iran has already inaugurated a spiraling extone in global raw oil compensations.28

Under motive is the possibility that urea constructionrs should application the LNG significance discretion to confront the shortfall in gas contribute. Tnear pause two schools of judgment respecting this contest. One says that prevalent introduces on LNG is not feas

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