EXECTIVE SUMMARY

This Report provides a complete overview of the both company’s affairs. All available data is presented in a comprehensive
and easily accessed format. The report includes financial and SWOT information, industry analysis, opinions, estimates, plus
annual and quarterly forecasts made by stock market experts. The report also enables direct comparison to be made
between FFC and Engro Fertilizers Ltd and their competitors. This providesto Clients with a clear understanding of Engro
Fertilizers Ltd and FFC position in the Chemical Manufacturing Industry. The report contains detailed information about
Engro Fertilizers Ltd and FFC that gives an unrivalled in-depth knowledge about internal business-nvironment of the
companies data about the owners, senior executives, locations, subsidiaries, markets products, and company history.
Another part of the report is a SWOT-analysis carried out for Engro Fertilizers Ltd and FFC. It involves specifying the objective
of the company's business and identifies the different factors that are favorable and unfavorable to achieving that objective.
SWOT-analysis helps to understand company’s strengths, weaknesses, opportunities, and possible threats against it. The
Engro Fertilizers Ltd financial analysis covers the income statement and ratio trend-charts with balance sheets and cash flows
presented on an annual and quarterly basis. The report outlines the main financial ratios pertaining to profitability, margin
analysis, asset turnover, credit ratios, and company’s longinfo@marketpublishers.com Engro Fertilizerntas Ltd Fundamel
Company Report Including Financial, SWOT, Competitors and Industry Analysis term solvency. This sort of company's
information will assist and strengthen your company’s decision-making processes. In the part that describes Engro Fertilizers
Ltd competitors and the industry in whole, the information about company's financial ratios is compared to those of its
competitors and to the industry. The unique analysis of the market and company’s competitors along with detailed
information about the internal and external factors affecting the relevant industry will help to manage your business
environment. Your company’s business and sales activities will be boosted by gaining an insight into your competitors’
businesses. Also the report provides relevant news, an analysis . The latter are correlated with pertinent news and press
releases, and annual and quarterly forecasts are given by a variety of experts and market research firms. Such information
creates your awareness about principal trends of Engro Fertilizers Ltd and FFC business.
FOUJI FERTILIZER COMPANY LIMITED

FOUJI Fertilizer Company Limited (FFC) is Pakistan’s largest urea manufacturing company, incorporated in 1978 as a joint
venture between Fauji Foundation, a charitable trust in Pakistan which owns 44.35% equity stake in the Company and Haldor
Topsoe A/S of Denmark to set up a urea production facility with capacity of 570 thousand tonnes per annum. The Company
has grown through reinvestment in fertilizer sector and at present its production capacity stands over 2 million tonnes
through its three plants. The Company has contributed more than US$ 14.95 billion to the National Exchequer through
import substitution of almost 65 million tonnes of urea since its inception.
Fauji fertilizer is a public listed company that were registered in the pakistan stock exchange and the public would easily
purchase their shares. The principal activity of the Company is manufacturing, import and subsequently marketing of
fertilizer products in addition to its investment in numerous other projects related to energy production, food processing,
financial services and other chemical production. In order to provide a quality frozen food like vegatables, fruits and French
fries to the hygiene convenience year round availability , price consistency value for money and owned subsidiary and it is a
product portfolio
 .
PRODUCT PORTFOLIO

There are different products

provided by Fauji Fertilizer
Company Limited which are
following.
 Financial Decisions
There are four financial decisions which are following;
1. Financing Decision
2. Investing Decision
3. Working Capital Decision
4. Dividend Decision

Financing Decison or Capital structure Decision

Financing decision refers to the decision that companies need to take regarding what ptoportion of debt
and equity to have in their capital structure.This decision is about financing mix of a company.In this
decision is focused on the borrowing and allocation of funds required for investing decision. FFC’ equity
comprises of share capital amounting to Rs12.72 billion representing ordinary shares of Rs 10 each, with
Fauji Foundation being the majo rshareholde rcontrolling an equitys take of 44 retention during the
year.Higher longterm borrowings resulted in a deb t to equity ratio of 20:80 compared to 15:85 of 2019
whereas,financial leverage increased from 0.93 to 0.95 due to higher short term borrowing equacy o
fthecapitalstructurefortheforeseeablefuture savailed to meet working capital needs .Future projections
indicate .35%. increase in capital structure.
Equ ity increased by 20% to Rs 42.54 billion mainly on account of higher profit.
INVESTMENT DECISION
This decision relates to as how the funds of affirm are to be invested into different assets so thst the firm is able to
earn highest possible return for the investors.This decision is also known as capital bugeting where the funds are
commited into long –term funds..The concept of When a business chooses to invest money in a project such as
an expansion, strategic acquisition or just the purchase of a new piece of equipment it may be years before that
project begins producing a positive cash flow. The business needs to know whether those future cash flows are
worth the upfront investment. That's why the time value of money is so important to capital budgeting.

Preparing a Capital Budgeting Analysis

Step 1: Determine the total amount of the investment.
Step 2: Determine the cash flows the investment will return.
Step 3: Determine the residual/terminal value
Step 4: Calculate the annual cash flows of the investment
Step 5: Calculate the NPV of the cash flows.
isprovidingsuperiorqualitySonaBoroncontainingminimum10.5%Boron.Itisin crystalline form and easy to use.
It issoluble in water and readily available toplants. Sona Boron can be applied withotherfertilizers.

SonaZinc
AgriculturalUse:
Sona Zinc is a micronutrient fertilizer inthe form of Zinc Sulphate
Monohydrate(27%)in3kgpackaging.Itisanessentialmicronutrientrequiredforpla
ntnutrition,which plays an important role in numberof growth processes like;
synthesis
ofchlorophyll&proteins,enzymeactivation,hormonalactivityforgrowthregulation
.
Zinc also improves uptake of nitrogenand phosphorous by the plants.
Zincdeficiency in soil and ultimately in dietis causing different diseases in
humansandlivestock.
Keepinginviewthewide
spread deficiency of zinc in Pakistani soil>85%), FFC is providing high
qualitySonaZinctofarmers.Itisingranularformandcanbemixedwithotherfertilize
rs
for broadcast application. Sona Zinc iswater-soluble and can also be used
asfertigationi.

RenewableEnergy
 WORKING CAPITAL DECISION

Working capital management is a business strategy designed to ensure that a company operates efficiently by monitoring
and using its current assets and liabilities to their most effect Use.The efficiency of working capital management can be
quantified using ratio analysis. A company's working capitai  is made up of its current assets minus its current
liabilities.Current assets include anything that can be easily converted into cash within 12 months. These are the company's
highly liquid assets. Some current assets include cash, accounts receivable, T hese include accruals for operating expenses
and current portions of long-term debt payments.

Cash conversion cycle

The cash conversion cycle of drawing in cash and releasing cash is like drawing in a breath and releasing it. A runner breathes
more quickly the faster they go. Top athletes have trained their bodies to get the most power from that oxygen. Cash is the
oxygen of your business. You’ll receive a higher return your cash by speeding up your cash conversion cycle.

Working Capital Management Ratios

Three ratios that are important in working capital management are the working capital ratio (or current ratio), the collection
ratio, and the inventory turnover ratio.

Current Ratio (Working Capital Ratio)

The working capital ratio or current ratio is calculated as current assets divided by current liabilities. It is a key indicator of a
company's financial health as it demonstrates its ability to meet its short-term financial obligationWorking capital ratios of
1.2 to 2.0 are considered desirable, but a ratio higher than 2.0 may suggest that the company is not effectively using its
assets to increase revenues. 1  A high ratio may indicate that the company is not managing its working capital efficiently.

Collection Ratio (Days Sales Outstanding)

The collection ratio, also known as days sales outstanding (DSO), is a measure of how efficiently a company manages its
accounts receivable. The collection ratio is calculated as the product of the number of days in an accounting period
multiplied by the average amount of outstanding accounts receivable divided by the total amount of net credit sales during
the accounting period.The collection ratio calculation provides the average number of days it takes a company to receive
payment after a sales transaction on credit. If a company's billing department is effective at collections attempts and
customers pay their bills on time, the collection ratio will be lower. The lower a company's collection ratio, the more quickly
it turns receivables into cash
Inventory Turnover Ratio

This ratio maintain efficiency and maintain a comfortably high level of working capital, a company must keep sufficient
inventory on hand  to meet customers' needs while avoiding unnecessary inventory that ties up working capitaCompanies
typically measure how efficiently that balance is maintained by monitoring the inventory turnover ratio.

Dividend decision

Dividend decision determines the division of earnings between payments to shareholders and retained earnings. The
Dividend Decision, in Corporate finance, is a decision made by the directors of a company about the amount and timing of
any cash payments made to the company's stockholders.This is curicial decision made by financial manager.

Dividend policy of FFCT

he Board of Directors of Company in their Meeting held on Thursday Jan 28, 2021 at 0930 hours at FFC Head Office,
Rawalpindi recommended the following:-

a. Cash Dividend

A Final Cash Dividend for the year ended Dec 31, 2020 at Rs. 3.40 per share i.e. 34% This is in addition to the Interim
Dividend already paid at Rs. 7.80 per share i.e. 78% .

b. Bonus Shares  – NIL

c. Right Shares  – NIL
d.   Any other price sensitive information – NIL
The above entitlement will be paid to the shareholders whose names will appear in the Register of Members on March 11,
2021. The Share Transfer Books of the Company will be closed from March 12, 2021 to  March 18, 2021 (both days inclusive).
Transfers received at the Central Depository Company of Pakistan limited, Share Registrar Department, CDC House 99-B,
Block ‘B’, S.M.C.H.S Main Shahra-e-Faisal, Karachi – 74400 at the close of business on March 11, 2021 will be treated in time
for the purpose of above entitlement to treansferee.
 s
Strength
SWOTANALYSIS

Weaknesses

Strength
State 0f the art production
facilities
Mature industry with ldemand
• Estsablished brand
• Established
name loyalty
competitors’ dealer
• fertilizers products network
are high in demand by
Narrow productline
agriculture sector
• Relatively
• Well established
homogeneous produc
distribution network
limiting pricing
• Technical proce strategie
• Developent of new
and eco-friendly
formulations
• Competent &
committed human
resources
• Well diversified
investmen tportfolio
• High barrier stoentry In
the industry
Opportunities
• Horizontal as well as vertical
diversification
• Increase/ valuead ditionin
produc tline covering
macro and dmicronutrients
• Implementation o f energy
efficient technologies to
conservegas
• Exploration of alternative
sources of raw material
Threats
• Inconsistent Government policies
for
fertilizerindustryincludingpressur
esonfertilizerpricing
• Depleting naturalgasreserves
• Poo rfarm economics
• Continuous increase in rawmaterial /fuelprices
• Provision of gasto
competitors t
concessionary rates
• Imposition of additional taxes
and levies /changes in tax
regime for imported fertilizer
• Profitcutsduetocontinuousin
creaseinoperatingcost
FINANCIAL CAPITAL
FinancialPositionAnalysis
2020 2019
RsM RsM
EquityandLiabilities
Higher profitability and
Sharecapital 12,722 12,722
Capitalreserves 160 160 increased retention during
Revenuereserves 29,461 22,698 theyear resultedinan
Surplus/(deficit)onremeasurement increaseof20%
tofairvalue-net 192 (13) intheCompany’snet worth of
Equityandreserves 42,535 35,567
Rs 42.54 billion and a break-
Longtermborrowings-secured 10,627 6,473 up value
Leaseliabilities 59 62 ofRs33.43pershareasoppose
DeferredGovernmentgrant 25 – dtoRs27.96persharelastyear.
GasInfrastructureDevelopmentCess
(GIDC)payable 32,772 –
Long term borrowings
increased by Rs 4.15
billionandstoodatRs10.63billi
onattheendofyear,inlinewith
our targets for ongoing
capital expenditure. Alldebt
obligations, becoming due for
repaymentsduring the year,
were retired on timely
basiswithoutanydefault.

Tradeandotherpayableswererecordedat
Rs 46.62 billion. The
decrease of 39% is
attributableto the
segregation of GIDC liability
into current andnon-current
liability, which was
previously reported
Deferredliabilities 5,259 4,41
aspartofcurrentliability.Curre
Non- 48,742 2
ntportionofGIDCliabilityamou
currentliabilities 10,9 ntstoRs23.95billion.
47
ShorttermborrowingsofRs25.
26billionincreasedby 16%
compared to last year.
Majority of theseloans were
obtained towards the end of
the year,
tomeetworkingcapitalrequir
ementswhereas,currentporti
onoflongtermborrowingsofRs
4.33billionwaslowerby8%co
mparedto2019.

Currentportionoflongtermborrowings-secured Contingencies include a

4,335 penalty of Rs 5.5
4,711 billionimposedbytheCompeti
tionCommissionofPakistan
Currentportionofleaseliabilities e tgra adeandotherpayables
CurrentportionofdeferredGovernm n nt Mark-upandprofitaccrued
 23 43 (CC theCompetitionAppellateTri
88 – P), bunalandremandedbacktoC
46,621 whi CPtodecidethecaseafreshun
76,009
chh derguidelinesprovidedbythe
275 676 asb Tribunal. The
een Companyremains confident
set of
asid successfullydefendingtheseu
eby nreasonableclaimsinfutureas
well.

Shorttermborrowings-secured 25,258 Equity&De

bt
Unclaimeddividend 468

45,000
Taxation 4,604
1
Currentliabilities 81,672 2
0

Totalequityandliabilities 172,949

Contingenciesandcommitments 40,000

35,000

30,000

FFC carried reserves of Rs Appropriations

RsinRsper
millionshare 25,000
35.57 billion.
OpeningReserves 35,567 20,000
Rs million

FinalDividend–2019 (4,135) 15,000

80
3.25 10,000

5,000

Percentage
NetProfit–2020 20,819
60
16.36 0

OtherComprehensiveIncome208 2015201620172018
AvailableforAppropriations 40
52,459 Longtermborrowings 20
0
201920
Appropriations 20

Equ
First Interim Dividend– 2020
(3,180)
2.50

SecondInterimDividend–2020(3,499)

2.75

ThirdInterim Dividend– 2020

(3,244)
2.55
Closing Reserves 42,536
Trad e debts of Rs 2.29 billion
 were 83%

Other
receivables
stood at Rs
20.97billion.
he overall asset base of the Company
recordedat Rs 172.95 billion,
ri increased by around
. 13%comparedtolastyear.

Turnover, Fixed Short Term

Assets&FixedAssets Investment and
Turnover Income
(Rsmillion)
120,000 90,000 6,000

Profit vs Retention

25,000

40
30,000
80,
100,000 00 20,00
20,000 0 0
30 5 1
70, 10,00
80,000 00 0
15,000
Percentage

0
Rs million

Rs million

20 4

10,000 60,000
60,000

50,
Times

00
5,000 40,000
0
10 3
40,
20,000 00
0

2
 3 ,0
4 , 00
5 , 0
, 0 0
0 0 0 1,
0 0 00
0 0
2

0 0 0 0 0 0
201520162017 201920 201520162017 201920 201520162017 20192020
2018 20 2018 20 2018

ProfitRetention Turnover(Inc.subsi Shorttermi Income

nvestment
dy) Fixed
s
assetsFixedassets
turnover
Downloadedfrom:www.OpenDoors.Pk

FINANCIALCAPITAL

ProfitorLossAnalysis
Operating at a combined capacity utilization of 121%,the Company’s manufacturingfacilit

2020 2019

SonaUreaProduction-KT 2,487 2,492 In spite of COVID-19 hampering marketing activities,the Company recorded Sona urea o
SonaUreaSales-KT 2,512 2,467
DAPSales-KT 233 237
RsM RsM
Turnover-net 97,655 105,78 GIDCongaswassuspendedbytheGovernmentduring the year, and in order to benefit the fa

3 SonaureacostofsalesatRs51.24billion,was16%lower than last year mainly due to reduct

ofimportedfertilizeramountingtoRs14.83billionhowever increased by 3% over last year
Costofsales (66,072 (75,04
) 6) DistributioncostofRs7.85billionwas5%belowlast year mainly due to lower fuel prices an

Grossprofit 31,583 30,737 Lower interest rates and reduced borrowingrequirements duringthe yearresultedin decrea
Distributioncost (7,848) (8,288)
TheCompanyhasmadeaprovisionofExpectedCreditLossinsubsidyreceivablefromtheGovernm
23,735 22,449
Finance cost (1,874) (2,477) Impairment of Rs 1billion has alsobeen recorded inthe Company’s investment in Fauji Fre
-19pandemiconoperationsofFFFduring2020.
Othergains/(losses) 3,940 (1,100)
Otherexpenses (2,639) (2,309) TheCompany’sdynamicandflexibleinvestmentportfolio contributedinvestmentincomeof
Rs5.05billion,whichwas11%belowlastyearduetoprevailinglowratesofreturn.Dividendincom
Otherincome 6,429 7,190 Rs1.38billiondecreasedby10%comparedtolastyearduetolowerpayoutbyassociatedcompanie

Profitbeforetax 29,591 23,753 Tax charge of Rs 8.77 billion for the year increasedby 32% compared to last year mainly
sufficientandadequateprovisionhasbeenprovidedagainsttaxassessedinthefinancialstatemen
Provisionfortaxation (8,772) (6,643)
Profitfortheyear 20,819 17,110 Theaforementionedcomponentstranslatedintonetprofit of Rs 20.82 billion which includes a

Earningspershare(Rupees) 16.36 13.45

Profitability

120,000 18

16
100,000
14

80,000 12

10
Rspershare
Rs million

60,000
8

40,000 6
15

20,000

0
201620172018
20
 20192020
4 2 0

Turnover(incl.sub
sidy)

NetprofitGross
profit EPS

2019
2,467 237 2019
Sales-Urea
Sales-DAP

2,512 233
Sales-Urea
Sales-DAP
2020

ANNUA RESILIENCE
INADVERSITY

55
LREPO
RT
2020
 ENGRO FERTLIZER LIMITED

Introduction: Engro corporation limited is a public limited incorporated in pakistan stock exchange and its shares is quoted in
pakistan stock exchange. The principal activity of parent company is to manage investment in subsidiary companies ,
associated companies and joint ventures, engaged in fertilizers , PVC resin manufacturing and marketing, food, energy ,
operating telecommunication and chemical terminals. The topic of my assignment is engro fertilizer and it also serving
farmers more than 50 years. Our services besides agriculture also cover education, health and environment. Through our
significant initiatives in different sectors of the economy, we have made sure that farmers are rewarded for their efforts, and
Pakistan continues its journey on the road of progress and prosperity.

The Annual Report is developed for a wide range of stakeholders, including employees, local communities, non-
governmental organizations (NGOs), customers and government. The aim of our integrated reporting approach is to enable
our stakeholders to make a more informed assessment of the value of Engro Fertilizers Limited and its prospects.
Reporting Framework
This Report has been prepared in compliance with the following frameworks:
• The accounting and reporting standards as applicable in Pakistan comprise:
– International Financial Reporting Standards (IFRS Standards), issued by the International Accounting
Standards Board (IASB) as notified under the Companies Act, 2017; and
– Provisions of and directives issued under the Companies Act, 2017.
Reporting requirements of Companies Act 2017, Listed Companies Code of Corporate Governance, 2018 and Listing
Regulations of the Pakistan Stock Exchange (PSX).
• Best practices on Corporate Reporting as promoted by Joint Committee of Institute of Chartered Accountants of Pakistan
(ICAP) and Institute of Cost and Management Accountants of Pakistan (ICMAP) and South Asian Federation of Accountants
(SAFA).
External Assurance:
Review Report on Compliance with Code of A. F. Ferguson & Co. Chartered Accountants
Corporate Governance.
Independent Auditor’s Report on the Audit of A. F. Ferguson & Co. Chartered Accountants
Financial Statements.
Independent Auditor’s Report on the Audit of A. F. Ferguson & Co. Chartered Accountants
Consolidated Financial Statements.
Independent Assurance Report on Statement A. F. Ferguson & Co. Chartered Accountants
of Compliance with the Sukuk (Privately
Placed) Regulations, 2017.
Entity’s Credit Rating Pakistan Credit Rating Agency
Vision: we are passionate about transforming the agricultural landscape, bringing changed and helping the farmers grow.
Board’s Approval
The Board of Directors of Engro Fertilizers Limited acknowledges its responsibility to ensure the integrity of this Annual
Report. The Directors’ Review Report and statutory financial statements included in the report have been approved by the
Board for circulation in its meeting held on February 17, 2020.

Portfolio: At Engro Fertilizers Limited, when we talk about our undying commitment to deliver the highest standards of
quality, our focus goes well beyond how our brands and services will fare amongst our target audience, rather, how they will
impact our consumer’s lives. The only Company providing seeds to harvest solutions with a portfolio comprising 3 categories
of Seeds, 21 variants of Fertilizers and 42 products of Pesticides, Engro Fertilizers Limited’s range of products and services
cover all stages of agri value chain. It also offers services to farmers to improve their farming practices.
The company has a four main decisions:
 Financing decision
 Investing decision
 Operating decision
 Dividend payout policy
Introduction of Fauji Fertilizer
Fauji Fertilizer Company Limited (FFC) is Pakistan’s largest urea manufacturing company, incorporated in 1978 as a joint
venture between Fauji Foundation, a charitable trust in Pakistan which owns 44.35% equity stake in the Company and Haldor
Topsoe A/S of Denmark to set up a urea production facility with capacity of 570 thousand tonnes per annum. The Company
has grown through reinvestment in fertilizer sector and at present its production capacity stands over 2 million tonnes
through its three plants. The Company has contributed more than US$ 14.95 billion to the National Exchequer through
import substitution of almost 65 million tonnes of urea since its inception.
Fauji fertilizer is a public listed company that were registered in the pakistan stock exchange and the public would easily
purchase their shares. The principal activity of the Company is manufacturing, import and subsequently marketing of
fertilizer products in addition to its investment in numerous other projects related to energy production, food processing,
financial services and other chemical production. In order to provide a quality frozen food like vegatables, fruits and French
fries to the hygiene convenience year round availability , price consistency value for money and owned subsidiary and it is a
product portfolio
Financing decision: it is a very important decision and in which the company decided to manage their company expenditure
by using different types of financing. Financing can be classified into two categories such as debt financing and equity
financing. In a case of debt financing , the company would issues bonds and take loans. Bonds is a long-term instrument in
which the company would issues the bond and the other parties that would purchase the bond is known as bond-holder. The
company would pay the interest to the bond-holder in annual, semi-annually and quarterly and at the end of maturity the
principal would be return to the bond-holder.

There are different types of bond that a company would issues such as fixed rate bond in which the interest rate would be
fixed at the of maturity). Floating rate bond ( in which the interest rate would be fluctuate according to the market
conditions) and perpetual bonds(in which the bond has no maturity ) and zero coupon bond in which the interest would not
be pay . callable bond is a bond which the company would repurchase the bond before the maturity and plain vanilla bond is
a bond in which the fixed term and predetermined rate of bonds is present. Corporation bond is a bond in which the different
types of company would issues a bond.
The other type of debt is taking long term loans in which the company would meet their operations and in taking loans the
company would pay the interest on the amount of loan which is monthly, semi-annually and annually but there are some
benefits related to the bonds such as the company could take a contract to the loan provider company or banks and it is a
contractually . the other benefit is that the loan provider does not have a right to participate in the meetings of a company
but one disadvantage is that the company pay their their fixed amount in any case.

The other type of financing is an equity financing in which the company would issues their shares and collect a finance to the
people. In an equity financing , the shareholders are the real owners and the management would controlled the company
operations. The shareholders get a dividend on the investment and the board of directors has power to announce the
dividend or not. In an financing decision , the company would see the cost of financing and it would than decided to what
ratio would we have select to finance the operations. If the debt would be cheaper than we have select the debt other-wise
we have select a equity finance.

Debt management and capital structure

The Company places great emphasis on value maximization, which in turn leads to higher shareholder returns. The Company
does this by minimizing its financing cost and maximizing its financial income. Working capital requirements are met through
internal cash generation and short-term borrowing, whereas long-term borrowing is availed to meet capex requirements (if
required) and to ensure balance sheet optimization. External financing includes both local and foreign financing which is
obtained after exhaustive evaluations of offers in hand and market conditions, ensuring maximization of shareholder value.
In 2019, the Company continued to concentrate its efforts on reducing costs of financing. Improved industry dynamics and
resultant cash generation allowed the Company to delay its drawdown of fresh long-term loans towards the tail-end of the
year, for financing of capital expenditure, in contrast to repayments of long-term loans made over the course of the year.
Long-term borrowings at year end 2019 stand at PKR 31 billion (2018: PKR 30.8 billion). All debt repayments maturing this
year were paid by their due dates and there have been no defaults in repayment of any debt during the year. Total equity as
at December 31, 2019 stands at PKR 43.3 billion (2018: PKR 45.5 billion).

Financial statement analysis:

In a financial statement we have analyzed the statement in which we have review the profit and loss account and balance
sheet. In a financial statement analysis we have collect the data of engro and Fauji fertilizers and it would be a largest
fertilizer company in Pakistan.
 Profit and loss statement
 Balance sheet
FinanciAl Ratios

2020 2019 2018 2017 2016 2015

ProfitabilityRatios
Grossprofitratio % 32.34 29.06 26.40 19.95 24.77 34.05
Grossprofitratio(includingsubsidy) % 32.34 29.06 28.03 25.38 31.34 35.18
Netprofitratio % 21.32 16.17 13.63 11.81 16.17 19.76
Netprofitratio(includingsubsidy) % 21.32 16.17 13.32 11.01 14.75 19.42
EBITDAmargintoturnover % 34.58 26.96 24.06 22.44 30.07 32.97
EBITDAmargintoturnover(includingsubsidy) 34.58 26.96 23.52 20.92 27.44 32.40
%
Operatingleverageratio Times (2.60) (73.41) 1.68 (0.33) 1.69 (0.93)
Returnonequity(Profitaftertax) % 48.94 48.11 43.25 36.49 41.76 61.39
Returnonequity(Profitbeforetax) % 69.57 66.78 64.95 53.63 61.66 89.72
Returnoncapitalemployed % 59.19 62.39 55.57 40.48 44.13 60.13
Pretaxmargin % 30.30 22.45 20.46 17.35 23.87 28.88
Pretaxmargin(includingsubsidy) % 30.30 22.45 20.01 16.18 21.78 28.39
Returnonassets % 12.04 11.15 9.86 9.86 12.98 20.92
GrowthinEBTDA % 22.51 9.16 33.15 (8.18) (26.37 (5.64)
)
Earningbeforeinterest,depreciati Rsinmill 33,773 28,514 25,49 20,35 21,91 27,97
onandtax ion 0 9 5 2
Earningsgrowth % 21.68 18.50 34.81 (9.09) (29.73 (7.73)
)
Growthinturnover % (7.68) (0.17) 16.81 24.48 (14.09 4.42
)
Growthinturnover(includingsubsidy) % (7.68) (2.38) 11.35 21.86 (7.49) 6.25
CapitalexpendituretototalAssets % 1.70 2.05 0.96 3.02 2.20 4.09
LiquidityRatios
Currentratio Times 1.37 0.91 0.95 0.95 0.91 0.84
Quick/Acidtestratio Times 1.31 0.81 0.79 0.88 0.72 0.58
Cashtocurrentliabilities Times 0.71 0.30 0.26 0.30 (0.15) (0.18)
Cashflowfromoperationstoturno Times 0.40 0.24 0.22 0.38 0.10 (0.27)
ver
Cashflowfromoperationstoturnover(includings 0.40 0.24 0.21 0.36 0.09 (0.27)
ubsidy)Times
Longtermliabilities /current liabilities % 59.68 10.24 13.17 34.35 52.24 63.39
Activity/TurnoverRatios
Inventoryturnoverratio Times 18.6 7.6 11.7 31.4 11.7 18.4
No.ofdaysininventory Days 20 48 31 12 31 20
Debtors turnover ratio Times 12.40 12.34 28.64 22.60 23.97 65.36
Debtorsturnoverratio(includings Times 7.21 6.99 10.26 9.80 12.63 42.25
ubsidy)
No.ofdaysinreceivables Days 29 30 13 16 15 6
No.ofdaysinreceivables(includi Days 51 52 36 37 29 9
ngsubsidy)
Creditors turnoverratio -with Times 1.46 1.42 2.34 5.10 17.96 4.16
GIDC
Times 24.64 51.93 88.37 98.94 89.51 84.52
Days 250 258 156 72 20 88
-without GIDC Days 15 7 - 4 4 4
witho
ut
GIDC

No.ofda
ysinpaya
bles-
withGID
C

CurrentRa Inventory,Debtors
tio Cash Flow from
(Times) OperationstoTurnover andCreditorsTurnover
(Days)
(Times)

1.5 0.5 60

0.4
50

0.3

1.0 0.2 40
 30
0.0

-0.1
20

-0.2

0.5 -0.3 10

0.0 -0.4 0
201520162017 20192 201520162017 20192 201520162017 20192020
2018 020 2018 020 2018

Inventoryturnover

Debtors
turnoverCreditors
turnover
ort

Fixed Asset Turnover Interest Cover Financial

(Times) Leverage Ratio
Ratio
(Times) Ratio
(Times)

6 20 1.8
18
1.6
5 16

14 1.4
12

4 1.2
10

8
1.0
3
0.8
2 6 0.6

4 0.4
1
2 0.2

0 0 0.0
201520162017 20192 201520162017 20192 201520162017 20
2018 020 2018 020 2018
 Ratio Analysis
Profitability Ratios
Turnover declined compared to lastyear following a reduction in prices triggered due to reduction in GIDC rates by
the Government.
Liquidity Ratios
Current ratio of 1.37times remained highest in the last six years .
Activity /Turnover Ratios
Debt or turnover at 29days remained high for the second consecutive year because of high trade debts at start of
year.
Investment/MarketRatios
Earnings per share stood at Rs 16.36 for the year ended 2022 at the rate of 22% increase over the last year.
Capital Structure Ratios
Financial leverage ratio of 0.9 times remained in line with last year whereas Debt to equity ratio
increased .

HORIZONTAL ANALYSIS
of Statement of Profit or Loss

Turnover-net 97,65 (8) 105,7 (0.2) 105,9 17 90,71 24 72,87 (14 84,8 4
202020Vs19201919Vs18201818Vs17201717Vs16201616Vs15201515 Vs 14RsM%RsM%RsM%RsM%RsM%RsM%
5 83 64 4 7 ) 31
Costofsales (66,0 (12) (75,04 (4) (77,9 7 (72,6 32 (54,8 (2) (55,9 12
72) 6) 86) 21) 27) 49)
Grossprofit 31,58 3 30,73 10 27,97 55 18,09 0.2 18,05 (38 28,8 (7)
3 7 8 3 0 ) 82

Distributioncost (7,848 (5) (8,288 (6) (8,83 3 (8,57 20 (7,15 5 (6,81 6

) ) 3) 4) 4) 4)
Operatingprofit 23,73 6 22,44 17 19,14 101 9,519 (1 10,89 (51 22,0 (11)
5 9 5 3) 6 ) 68

Financecost (1,874 (24) (2,477 51 (1,63 (33) (2,44 2 (2,40 63 (1,47 74

) ) 7) 5) 6) 5)
Othergains/(losses) 3,940 (458 (1,100 - - - - - - - - -
) )
Otherexpenses (2,639 14 (2,309 10 (2,10 29 (1,63 (7) (1,76 (23 (2,28 (1)
) ) 8) 1) 1) ) 4)
23,16 40 16,56 8 15,40 183 5,443 (1 6,729 (63 18,3 (15)
2 3 0 9) ) 09
Otherincome 6,429 (11) 7,190 14 6,283 (39) 10,29 (3) 10,66 72 6,19 31
8 5 4
Profitbeforetaxation 29,59 25 23,75 10 21,68 38 15,74 (1 17,39 (29 24,5 (7)
1 3 3 1 0) 4 ) 03
Provisionfortaxation (8,772 32 (6,643 (8) (7,24 44 (5,03 (1 (5,61 (27 (7,73 (4)
) ) 4) 0) 0) 2) ) 7)
Profitfortheyear 20,81 22 17,11 19 14,43 35 10,71 (9) 11,78 (30 16,7 (8)
9 0 9 1 2 ) 66

EPS(Rs) 16.36 13.45 19 11.35 35 8.42 (9) 9.26 (30 13.1 (8)
) 8
22
VERTICALANALYSIS
of Statement of Profit or Loss

2020 2019 2018 2017 2016 2015

RsM % RsM % RsM % RsM % RsM % RsM %

Turnover-net 97,65 100 105,7 100 105,9 100 90,71 100 72,87 100 84,83 100
5 83 64 4 7 1
Costofsales (66,0 68 (75,04 71 (77,98 74 (72,6 80 (54,82 75 (55,9 66
72) 6) 6) 21) 7) 49)
Grossprofit 31,58 32 30,73 29 27,97 26 18,09 20 18,05 25 28,88 34
3 7 8 3 0 2

Distributioncost (7,84 8 (8,288 8 (8,833 8 (8,57 9 (7,154 10 (6,81 8

8) ) ) 4) ) 4)
Operatingprofit 23,73 24 22,44 21 19,14 18 9,519 10 10,89 15 22,06 26
5 9 5 6 8

Financecost (1,87 2 (2,477 2 (1,637 2 (2,44 3 (2,406 3 (1,47 2

4) ) ) 5) ) 5)
Othergains/(losses) 3,940 4 (1,100 1 - - - - - - - -
)
Otherexpenses (2,63 3 (2,309 2 (2,108 2 (1,63 2 (1,761 2 (2,28 3
9) ) ) 1) ) 4)
23,16 24 16,56 16 15,40 15 5,443 6 6,729 9 18,30 22
2 3 0 9
Otherincome 6,429 7 7,190 7 6,283 6 10,29 11 10,66 15 6,194 7
8 5
Profitbeforetaxation 29,59 30 23,75 22 21,68 20 15,74 17 17,39 24 24,50 29
1 3 3 1 4 3
Provisionfortaxation (8,77 9 (6,643 6 (7,244 7 (5,03 6 (5,612 8 (7,73 9
2) ) ) 0) ) 7)
Profitfortheyear 20,81 21 17,11 16 14,43 14 10,71 12 11,78 16 16,76 20
9 0 9 1 2 6

EPS(Rs) 16.36 13.45 11.35 8.42 9.26 13.18

HORIZONTALANALYSIS
Of Statement o fFinancial Position

202020Vs19 201919Vs18 201818Vs17 201717Vs16 201616Vs15 201515Vs14

RsM % RsM % RsM % RsM % RsM % RsM %

EquityandLiabilities
Equity
Sharecapital 12,72 - 12,7 - 12,72 - 12,7 - 12,7 - 12,7 -
2 22 2 22 22 22
Capitalreserve 160 - 160 - 160 - 160 - 160 - 160 -
Revenuereserves 29,65 31 22,6 11 20,50 24 16,4 7 15,3 6 14,4 13
3 85 1 70 29 29
42,53 20 35,5 7 33,38 14 29,3 4 28,2 3 27,3 6
5 67 3 52 11 11
Non-CurrentLiabilities

Longtermborrowings-secured 10,62 64 6,47 (25) 8,58 (45) 15,5 (6) 16,6 5 15,8 536
7 3 4 72 53 93
Leaseliabilities 59 (5) 62 - - - - - - - - -
DeferredGovernmentgrant 25 - - - - - - - - - - -
GasInfrastructureDevelopme
nt
Cess(GIDC)payable 32,77 - - - - - - - - - - -
2
Deferredliabilities 5,259 19 4,41 (4) 4,57 (3) 4,69 (2) 4,81 5 4,60 1
2 8 7 2 0
48,742 345 10,947 (17) 13,162 (35) 20,269 (6) 21,465 5 20,493 190

CurrentLiabilities
Currentportionoflongterm
borrowings-secured 4,335 (8) 4,711 (35) 7,238 6 6,832 6 6,43 43 4,51 153
4 0
Currentportionofleaseli 23 (47) 43 - - - - - -
abilities
Currentportionofdeferred
Governmentgrant 88 - - - - - - - - - - -
Tradeandotherpayables 46,62 (39) 76,00 25 60,59 56 38,78 269 10,5 40 7,50 (80)
1 9 9 1 04 0
Mark-upandprofitaccrued 275 (59) 676 125 300 57 191 (40) 321 20 268 793
Shorttermborrowings- 25,25 16 21,80 (24) 28,52 147 11,53 (48) 22,1 23 18,0 55
secured 8 3 6 9 77 21
UnclaimedDividend 468 (14) 542 (15) 639 46 437 7 408 (34) 614 (29)
Taxation 4,604 49 3,092 17 2,642 115 1,230 (2) 1,24 (12) 1,41 (44)
9 3
81,67 (24) 106,8 7 99,94 69 59,01 44 41,0 27 32,3 (40)
2 76 4 0 93 26
TotalEquityandLiabilities 172,9 13 153,3 5 146,4 35 108,6 20 90,7 13 80,1 (7)
49 90 89 31 69 30
Assets
Non-CurrentAssets

Property,plant&equipment 22,84 3 22,21 3 21,5 (3) 22,3 5 21,2 (1) 21,3 6

1 2 33 12 33 82
Intangilbeassets 1,572 - 1,577 - 1,57 (1) 1,58 - 1,58 1 1,57 (2)
5 5 5 7
Logterminvestments 34,67 12 31,08 16 26,8 (3) 27,8 (6) 29,6 2 29,1 4
5 8 99 69 56 29
Longtermloans&advances- 1,946 62 1,200 8 1,11 15 966 3 934 15 814 (1)
secured 4
Longtermdeposits&prepayme 14 17 12 (1 14 - 14 - 14 8 13 (19)
nts 4)
61,048 9 56,089 10 51,135 (3) 52,746 (1) 53,422 1 52,915 4

CurrentAssets

Stores,sparesandloosetools 4,434 16 3,811 10 3,474 (1) 3,496 2 3,42 1 3,39 2

8 6
Stockintrade 320 (95) 6,795 (47) 12,93 3,17 395 (91) 4,23 (17) 5,10 419
2 4 7 0
Tradedebts 2,287 (83) 13,46 266 3,678 (1) 3,722 (14) 4,30 143 1,77 116
0 6 4
Loans andadvances 789 (56) 1,795 69 1,060 (35) 1,634 81 903 (12) 1,02 (3)
5
Depositsandprepayments 51 - 51 (38) 82 5 78 56 50 28 39 50
Otherreceivables 20,96 19 17,65 12 15,72 13 13,96 80 7,75 176 2,80 152
5 3 5 5 2 7
Shortterminvestments 81,90 70 48,04 (12) 54,58 77 30,88 118 14,1 37 10,3 (62)
2 1 5 2 44 35
Cashandbankbalances 1,153 (80) 5,695 49 3,818 123 1,712 (32) 2,52 (8) 2,73 133
6 9
111,9 15 97,30 2 95,35 71 55,88 50 37,3 37 27,2 (24)
01 1 4 5 47 15
TotalAssets 172,9 13 153,3 5 146,4 35 108,6 20 90,7 13 80,1 (7)
49 90 89 31 69 30
 VERTICALANALYSIS
of Statement of Financial Position

202020192018201720162015

RsM % RsM % RsM % RsM % RsM % RsM %

EquityandLiabilities
Equity
Sharecapital 12,722 7 12,7 8 12,7 9 12,7 12 12,7 14 12,7 16
22 22 22 22 22
Capitalreserve 160 - 160 - 160 - 160 - 160 - 160 -
Revenuereserves 29,653 18 22,6 15 20,5 1 16,4 15 15,3 17 14,4 18
85 01 4 70 29 29
42,535 25 35,5 23 33,3 2 29,3 27 28,2 31 27,3 34
67 83 3 52 11 11
Non-
CurrentLiabilities

Longtermborrowings-secured 10,62 6 6,47 4 8,58 6 15,5 14 16,6 18 15,8 20

7 3 4 72 53 93
Leaseliabilities 59 - 62 - - - - - - - - -
DeferredGovernmentgrant 25 - - - - - - - - - - -
GasInfrastructureDevelopmen
tCess
(GIDC)payable 32,77 19 - - - - - - - - - -
2
Deferredliabilities 5,259 3 4,41 3 4,57 3 4,69 4 4,81 5 4,60 6
2 8 7 2 0

48,742 28 10,947 7 13,162 9 20,269 18 21,465 23 20,493 26

CurrentLiabilities
Currentportionoflongterm
borrowings-secured 4,335 3 4,711 3 7,238 5 6,832 6 6,43 7 4,510 6
4
Currentportionofleaseli 23 - 43 - - - - - - - - -
abilities
Currentportionofdeferred
Governmentgrant 88 - - - - - - - - - - -
Tradeandotherpayables 46,62 27 76,00 50 60,59 41 38,78 36 10,5 12 7,500 9
1 9 9 1 04
Mark-upandprofitaccrued 275 0.2 676 - 300 - 191 0.2 321 1 268 0.3
Shorttermborrowings- 25,25 14 21,80 14 28,52 19 11,53 11 22,1 2418,021 22
secured 8 3 6 9 77
Unclaimeddividend 468 0.3 542 - 639 - 437 0.4 408 1 614 1
Taxation 4,604 2 3,092 2 2,642 2 1,230 1 1,24 1 1,413 2
9
81,67 47 106,8 70 99,94 68 59,01 55 41,0 4632,326 40
2 76 4 0 93
TotalEquityandLiabilities 172,9 100 153,3 100 146,4 100 108,6 100 90,7 10080,130 100
49 90 89 31 69

Assets
Non-CurrentAssets

Property,plant&equipment 22,84 13 22,21 14 21,5 1 22,31 21 21,2 23 21,3 27

1 2 33 5 2 33 82
Intangibleassets 1,572 1 1,577 1 1,57 1 1,585 1 1,58 2 1,57 2
5 5 7
Logterminvestments 34,67 20 31,08 20 26,8 1 27,86 26 29,6 33 29,1 36
6 8 99 8 9 56 29
Longtermloans&advances- 1,945 1 1,200 1 1,11 1 966 1 934 1 814 1
secured 4
Longtermdeposits&prepayme 14 - 12 - 14 - 14 - 14 - 13 -
nts

61,048 35 56,089 37 51,135 35 52,746 49 53,422 59 52,915 66

CurrentAssets

Stores,sparesandloosetools 4,434 3 3,811 2 3,47 2 3,496 3 3,42 4 3,39 4

4 8 6
Stockintrade 320 0.2 6,795 4 12,9 9 395 - 4,23 4 5,10 6
32 7 0
Tradedebts 2,287 1 13,46 9 3,67 3 3,722 3 4,30 4 1,77 2
111,901 65 0
97,301 63 8
95,354 65 55,885 51 6
37,347 41 4
27,215 34
TotalAssets 172,949 100 153,390 100 146,489 100 108,631 100 90,769 100 80,130 100
Loans andadvances 789 0.5 1,795 1 1,06 1 1,634 2 903 1 1,02 1
0 5
Depositsandprepayments 51 - 51 - 82 - 78 - 50 - 39 -
Otherreceivables 20,96 12 17,65 12 15,7 1 13,96 13 7,75 9 2,80 5
5 3 25 1 5 2 7
Shortterminvestments 81,90 47 48,04 31 54,5 3 30,88 28 14,1 16 10,3 13
2 1 85 7 2 44 35
Cashandbankbalances 1,153 1 5,695 4 3,81 3 1,712 2 2,52 3 2,73 3
8 6 9