1 Company Profile Fatima Group (History) In 1988 a dynamic and radical person known as Mr. Mukhtar A. Sheikh had conceptualized his revolutionary vision and laid the stone of a Multan based organization which commenced its business mainly in Sugar. In subsequent years the untiring, dedicated and missionary zeal & zest of the founders of group had woven the net of Companies into glorified galaxy of shining Stars and named it Fatima Group. The substantial Strategic benefits of vertical integration led him and his associates to consider venturing into the manufacturing field of Textile, Sugar, Fertilizers, Malaises, Trading, Mining, Power Generation, Air Line and Packing Material etc. Over the years and by the grace of all mighty Allah the Fatima Group of Companies now proudly stood unparallel and peerless leader in business groups of Pakistan. It ranks amongst the top Companies of Pakistan. The group has strong presence in most important business sectors of the region. It also has the distinction of being one of the largest players in each sector. Textile . Reliance Weaving Mills Ltd, the flagship company of the group was established in 1991. Its annual turnover for the year 2012 is approx Rs. 9 billion with the production facility of 35,520 spindles (two units) and 296 Report Compiled by Maj Raja Manzar & Maj Rana Shahzad
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1
Company Profile
Fatima Group (History)
In 1988 a dynamic and radical person known as Mr. Mukhtar A. Sheikh had
conceptualized his revolutionary vision and laid the stone of a Multan based
organization which commenced its business mainly in Sugar. In subsequent years the
untiring, dedicated and missionary zeal & zest of the founders of group had woven the
net of Companies into glorified galaxy of shining Stars and named it Fatima Group. The
substantial Strategic benefits of vertical integration led him and his associates to
consider venturing into the manufacturing field of Textile, Sugar, Fertilizers, Malaises,
Trading, Mining, Power Generation, Air Line and Packing Material etc.
Over the years and by the grace of all mighty Allah the Fatima Group of
Companies now proudly stood unparallel and peerless leader in business groups of
Pakistan. It ranks amongst the top Companies of Pakistan. The group has strong
presence in most important business sectors of the region. It also has the distinction of
being one of the largest players in each sector.
Textile . Reliance Weaving Mills Ltd, the flagship company of the group was
established in 1991. Its annual turnover for the year 2012 is approx Rs. 9 billion with
the production facility of 35,520 spindles (two units) and 296 looms (two units). It is
listed on Karachi & Lahore Stock Exchanges of Pakistan.
Fertilizers. Fatima Fertilizers Ltd is the largest fertilizer complex in Pakistan with
annual production capacity of 847,000 MT. It was put into operation in 1979. Under the
privatization policy of Government of Pakistan, the management of the company was
taken over by Fatima Group on July 14, 2005.
Fatima Fertilizer Company Ltd was incorporated on 24 December 2003 as a
Public Limited Company. Fatima Fertilizer is fully integrated fertilizer complex with
annual production capacity (in MT for the year 2011) of Urea 500,000, CAN 420,000,
NP 244,000, Nitric Acid 500,000 and Amonia 500,000. It is listed on all the Stock
Exchanges of Pakistan.
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Sugar. Fatima Sugar Mills Limited was incorporated as a public limited company in
1988. Current production capacity is 9,500 MT per day with net profit of Rs. 786
million for the year ended September 2011.
Molasses. Reliance Commodities (Pvt) Limited is a private limited company
incorporated in 1996 and deals in export of molasses, sugar, and other commodities.
Company has earned net profit for the year ended June 30, 2011 of Rs. 862 million.
Fatima Group of Companies.
1. Fatima Energy Limited.
2. Fatima Sugar Mills Limited.
3. Fazal Cloth Mills Limited.
4. Reliance Commodities (Private) Limited.
5. Reliance Weaving Mills Limited.
6. Pakistan Mining Company Limited.
7. Air One (Private) Limited.
8. Arif Habib Corporation.
9. Arif Habib Limited.
10. Arif Habib Investments Limited.
11. Arif Habib REIT Management Limited.
12. Arif Habib DMCC.
13. Aisha Steel Mills Limited.
14. Al-Abbas Cement Industries Limited.
15. Pakistan (Private) Equity Management Limited.
16. Rozgar Microfinance Bank Limited.
17. S.K.M. Lanka Holdings (Private) Limited.
18. Sweet Water Pakistan.
19. Dairies (Private) Limited.
20. Thatta Cement Company Limited.
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Landmark Events Fatima Fertilizers
Emerging History by Date
Company Incorporation and Gas Allocation.
December 2003 GSA Signing.
September 2004 Ground Breaking Signing of.
July 2005 Contracts Financial Closure.
April 2006 Contracts Achieved.
June - September 2006 Ammonia Furnace 1st Fire.
November 2006 CAN Plant Production Initial.
November 2009 Public Offering Ammonia.
January 2010 Plant Production.
March 2010 Urea Plant Production.
April 2010 NA Plant Production.
April 2011 NP Plant Production.
July 2011 Declaration of Commercial Operations.
May 2012 Conversion and Redemption of Preference Shares.
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MANAGEMENT AND ORGANIZATION
Board of Directors
Mr. Arif Habib - Chairman
Mr. Fawad Ahmed Mukhtar - Chief Executive Officer
Mr. Fazal Ahmed Sheikh - Member
Mr. Nasim Beg - Member
Mr. Faisal Ahmed Mukhtar - Member
Mr. Rehman Naseem - Member
Mr. Abdus Samad - Member
Mr. Muhammad Kashif Habib - Member
Audit Committee -
Mr. Nasim Beg - Chairman
Mr. Fazal Ahmed Sheikh - Member
Mr. Rehman Naseem - Member
Mr. Muhammad Kashif Habib - Member
Human Resource and Remuneration Committee
Mr. Nasim Beg - Chairman
Mr. Abdus Samad - Member
Mr. Faisal Ahmed Mukhtar - Member
Mr. Rehman Naseem - Member
Chief Financial Oficer
Mr. Arif Hamid Dar
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Company Secretary
Mr. Ausaf Ali Qureshi
Key Management
Mr. M. Abad Khan - Advisor to CEO
Mr. Qadeer Ahmed Khan - Director Special Projects
Mr. Muhammad Zahir - Director Marketing
Mr. Haroon Waheed - Group Head of Human Resource
Mr. Farrukh Iqbal Qureshi - General Manager Manufacturing
Mr. Asad Murad - Head of Internal Audit
Mr. Iftikhar Mahmood Baig - General Manager Business Development
Mr. Fuad Imran Khan - Chief Information Officer
Mr. Javed Akbar - Head of Procurement
Brig (R) Muhammad Ali Asif Sirhindi
- General Manager Administrative Services
Mr. Muhammad Saleem Zafar - General Manager Projects
To be a world class manufacturer of fertilizers and ancillary
products, with a focus on safety, quality and contribution to national
economic growth and development. We will care for the environment and
the communities we work in while continuing to create shareholders’
value.
Mission
To be the preferred fertilizer company for farmers, business
associates and suppliers through quality and service. To provide
employees an exciting, enabling and supportive environment to excel in,
be innovative, entrepreneurial in an ethical and safe working place based
on meritocracy and equal opportunity.
To be a responsible corporate citizen with a concern for the
environment and the communities we deal with.
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Our Initiatives
Farmers Support
We know our long-term success is linked to the success of the thousands of farmers
who grow crops. That’s why we work on-the-ground with farmers and educate them the
proper use of fertilizers to help improve yields.
Mission Statement
Enhance farm productivity & profitability by improving farmer’s knowledge &
perception on balanced fertilizer use.
Technical Services Team.
Activities for the farming Community.
Seminars.
Farmers ‘meetings.
Farm visits / individual contacts.
Product demonstrations & Field days.
Technical Literature.
Biological Control Service.
Soil Sample Analysis.
Our CSR Initiatives
Mukhtar A. Sheikh Memorial Welfare Hospital A Kidney and
Psychiatric Hospital in Multan
Total project cost of USD 23 million approximately.
Free treatment to all workers of EOBI or ESSI.
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Domestic Fertilizer Market 2012
a) The fertilizer market in 2012, exhibited a mixed trend.
b) The Nitrogen market continued to decline for the third consecutive year.
2012 (2011) MT Mil National
Capacity
Effective
Production
National
Demand
Nitrogen6.8 (5.9) 4.6 (5.5) 5.7 (6.7)
Phosphate 1.3 (1.0) 10 (10) 1.6 (1.2)
c) Urea off take further shrank by 12% in 2012 from 5.9 million tons to 5.2 million tons,
due to lower acreage on BT cotton, higher prices of urea and weakening of cotton
prices in midyear.
d) Urea demand spurred by yearend following late announcement of support increase for
wheat by the government.
e) Phosphate market for DAP increased by 7% over the year primarily due to increased
volumes in the first half of 2012 ~2013 Rabi season.
f) International prices of fertilizer (DAP) stayed around USD 600 mark for most of the
year.
Operational Performance ~ 2012
a) Year 2012 was challenging but successful.
b) Dehumidification Unit was successfully installed and commissioned at CAN Plant,
enabling ~200 T/Day increase in plant throughput in humid summer season.
c) Reliability of NP plant has considerably improved.
d) As a result of major efforts, consistent improvement in HSE Performance was
noticed. The yearend ‘Total Recordable Injury Rate (TRIR) was 0.22.
e) Company has launched an “Excellence plan” to achieve excellence in all areas of its
operation
f) The ‘Integrated Management System’ (IMS) certification by third party auditors is
planned by end 2013.
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g) Implementation of Clean Development Mechanism (CDM) project was completed.
The verification report is submitted to UNFCC and their certification is awaited.
Ammonia Plant Revam for 1800 MT
a) Revamp study for 1800 MT is now complete.
b) Basic Engineering contract for 1800 MT is being awarded. Detail Engineering
contractors are also being engaged in parallel.
c) Revamp shall be executed in 2015.
d) In view of very attractive payback, Waste gas boiler project at Ammonia Plant is
being done ahead of Revamp study and targeted to complete by Mid of 2014. This
project will boost company profits by lowering Fuel gas bill significantly.
e) Numerous projects in hand to improve reliability and efficiency of the fertilizer
complex, which shall be completed phase wise within next 2~3 years.
Future Outlook
The industry will continue to grapple with the issues like:
a) Gas curtailment in the next year also.
b) This is likely to result in expensive imports again.
c) Capacity within the country continuously lying idle.
d) Continued decline in usage of nitrogenous fertilizer, which will eventually reduce
yields raising the specter of food insecurity.
Earliest possible restoration of gas to the local industry will lead to:
a) Reduction in prices.
b) Foreign exchange saving along with reduced burden of subsidy.
c) Enhanced usage of fertilizers to previous levels at least.
d) Yield improvement to counter food insecurity.
The Company with its unique product portfolio and the growing awareness of the Farming
community is well placed to secure a strong foothold. The continuing marketing, channel,
farmer services and logistics thrusts will drive differentiation and bolster our sales in 2013.
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Financial Statements(For the year ending Dec 2012)
Balance Sheet (as at December 31, 2012) (Rupees in thousands)
2012 2011EQUITY AND LIABILITIES, CAPITAL AND RESERVESOrdinary shares of Rs 10 each 21,000,000 21,000,000Preference shares of Rs 10 each 4,000,000 4,000,000Issued, subscribed and paid up share capital 21,000,000 20,000,000Ordinary shares of Rs 10 each - 4,000,000Preference shares of Rs 10 each 1,790,000 790,000Share premium 6,160,354 3,264,865Accumulated profit 28,950,354 28,054,865NON CURRENT LIABILITIESLong term finance 27,023,742 34,457,218Dividend & markup payable to related parties 2,917,615 2,217,219Deferred liabilities 4,841,255 1,807,018 34,782,612 38,481,455CURRENT LIABILITIESTrade and other payables 4,996,727 4,650,956Accrued finance cost 499,478 1,890,932Short term finance - secured 2,690,246 -Current portion of long term finance 4,085,379 3,032,833Provision for taxation - 236,207CONTINGENCIES & COMMITEMENTS 12,271,830 9,810,928 76,004,796 76,347,248ASSETSNON CURRENT ASSETS Property, plant and equipment 65,882,892 66,827,913Intangible assets 33,881 -Capital work in progress 1,662,461 1,287,735 67,579,234 68,115,648Long term Investments 85,190 -Long term deposits 11,361 5,481
67,675,785 68,121,129CURRENT ASSETSStores and spares 3,230,805 1,930,679Stock in trade 2,507,927 1,215,014 Trade debtors 138,480 195,840Loans, advances, deposits, prepayments and other receivables 1,467,655 1,045,225Cash and bank balances 984,144 3,839,361 8,329,011 8,226,119 76,004,796 76,347,248
Profit and Loss Account
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for the year ended Dec 31, 2012
2102 2011
Sales 29,518,623 14,833,343
Cost of Sales -12,252,427 -4,740,961
Gross Profit 17,266,196 10,092,382
Distribution Cost -1,233,944 -337,946
Administrative Expenses -738,792 -417,225
15,293,460 9,337,211
Finance Cost -5,773,821 -3,063,055
Other Operating Expenses -506,135 -320,398
9,013,504 5,953,758
Other operating Income 67,033 133,810
Profit Before Tax 9,080,537 6,087,568
Taxation -2,969,418 -1,970,593
Profit for the year 6,111,119 4,116,975Earnings per Share - Basic (in Rupees) 2.86 1.90
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Pattern of Shareholdingfor the year ended Dec 31, 2012
Categories of Shareholders SharesHeld
%
Directors, Chief Executive Officer, and their spouse and minor children
714,648,874 34.03
Associated Companies, undertakings and related parties 960,091,411 45.72
Executives 645,421 0.03
Public Sector Companies and Corporation 11,515,338 0.55
Banks, Development Financial Institutions, Non Banking Financial Institutions, Insurance Companies, Takaful, Modarabas and Pension Funds 87,932,669 4.19
Mutual Funds 17,334,064 0.83
General Public
Local 223,593,997 10.65
Foreign 787,012 0.04
Foreign Companies 30,330,361 1.44
Others 53,120,853 2.53
Total 2,100,000,000 100.00
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Financial Analysis
Key Performance Indicators 2012 2011
PROFITABILITY
Gross profit % 58.49 67.77
EBITDA % 55.35 66.48
Operating profit % 50.09 60.79
Profit before tax % 30.76 41.04
Net profit % 20.7 27.75
Return on equity % 21.11 14.67
Return on total assets % 8.04 5.39
LIQUIDITY / ACTIVITY
Current ratio Times 0.68 0.84
Quick / Acid test ratio Times 0.47 0.71
Cash from operations to sales Times 0.24 0.5
Inventory turnover Times 6.58 3.64
Fixed assets turnover Times 0.43 0.22
Total assets turnover Times 0.39 0.2
CAPITAL STRUCTURE
Debt : Equity 52:48:00 57:43:00
Interest cover Times Times 2.57 2.99
INVESTMENT / MARKET
Basic earnings per share Rs 2.86 1.9
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Balance Sheet - Vertical Analysis 2012 2011
PKR % PKR %Non-Current Assets Fixed Capital Expenditure 67,579 88.91% 68,116 89.22%Deferred Tax Asset - Long Term Investments 85 0.11% - Long Term Deposits 11 0.01% 5 0.01%Total Non-Current Assets 67,676 89.04% 68,121 89.23%Current Assets Stores and Spares 3,231 4.25% 1,931 2.53%Stock-in-Trade 2,508 3.30% 1,215 1.59%Trade Debts 138 0.18% 196 0.26%Loans, Advances, Deposits and Prepayments 1,468 1.93% 1,045 1.37%Cash and Bank Balances 984 1.29% 3,839 5.03%Total Current Assets 8,329 10.96% 8,226 10.77%Total Assets 76,005 100.00% 76,347 100.00%Share Capital and Reserves Issued, Subscribed and Paid-up Capital 21,000 27.63% 20,000 26.20%Preference Shares - 4,000 5.24%Share Deposit Money for Ordinary Shares - Hedging Reserve - Share Premium 1,790 2.36% 790 1.03%Accumulated Profit / (loss) 6,160 8.10% 3,265 4.28%Total Share Capital and Reserves 28,950 38.09% 28,055 36.75%Non-Current Liabilities Long Term Finance 27,024 35.56% 34,457 45.13%Dividend and Markup Payable to Related Parties 2,918 3.84% 2,217 2.90%Deferred Liabilities 4,841 6.37% 1,807 2.37%Advance against Preference Shares - Bills Payable - Total Non-current Liabilities 34,783 45.76% 38,481 50.40%Current Liabilities Trade and Other Payables 4,997 6.57% 4,651 6.09%Accrued Finance Cost 499 0.66% 1,891 2.48%Short Term Finance Secured 2,690 3.54% Current Portion of Long Term Loans 4,085 5.37% 3,033 3.97%Derivative Financial Instruments Provision for Taxation 236 0.31%Total Current Liabilities 12,272 16.15% 9,811 12.85%Total Liabilities and Equity 76,005 100.00% 76,347 100.00%
Balance Sheet - Horizontal Analysis
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2012 12’ vs 11’ 2011 PKR Change PKRNon-Current Assets Fixed Capital Expenditure 67,579 -0.8% 68,116Deferred Tax Asset - - Long Term Investments 85 - -Long Term Deposits 11 107.3% 5Total Non-Current Assets 67,676 -0.7% 68,121Current Assets Stores and Spares 3,231 67.3% 1,931Stock-in-Trade 2,508 106.4% 1,215Trade Debts 138 -29.3% 196Loans, Advances, Deposits and Prepayments 1,468 40.4% 1,045Cash and Bank Balances 984 -74.4% 3,839Total Current Assets 8,329 1.3% 8,226
Total Assets 76,005 -0.4% 76,347 Share Capital and Reserves Issued, Subscribed and Paid-up Capital 21,000 5.0% 20,000Preference Shares - -100.0% 4,000Share Deposit Money for Ordinary Shares - Hedging Reserve - Share Premium 1,790 126.6% 790Accumulated Profit / (loss) 6,160 88.7% 3,265Total Share Capital and Reserves 28,950 3.2% 28,055 Non-Current Liabilities Long Term Finance 27,024 -21.6% 34,457Dividend and Markup Payable to Related Parties 2,918 31.6% 2,217Deferred Liabilities 4,841 167.9% 1,807Advance against Preference Shares - - - Bills Payable - - - Total Non-current Liabilities 34,783 -9.6% 38,481 Current Liabilities Trade and Other Payables 4,997 7.4% 4,651Accrued Finance Cost 499 -73.6% 1,891Short Term Finance Secured 2,690 - Current Portion of Long Term Loans 4,085 34.7% 3,033Derivative Financial Instruments Provision for Taxation -100.0% 236Total Current Liabilities 12,272 25.1% 9,811Total Liabilities and Equity 76,005 -0.4% 76,347
Profit and Loss Account - Vertical Analysis 2012 2011
PKR Million % PKR Million %
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Sales 29,519 100% 14,833 100%
Cost of sales -12,252 -42% -4,741 -32%
Gross Profit 17,266 58% 10,092 68%
Distribution cost -1,234 -4% -338 -2%
Administrative expenses -739 -3% -417 -3%
Finance cost 15,293 52% 9,337 63%
Other operating expenses -5,774 -20% -3,063 -21%
-506 -2% -320 -2%
9,013 31% 5,954 40%
Other operating income 67 0.20% 134 0.90%
Profit Before Tax 9,081 31% 6,088 41%
Taxation -2,969 -10% -1,971 -13%
Profit for the year 6,111 21% 4,117 28%
Profit and Loss Account - Horizontal Analysis
2012Change
2011PKR Million PKR Million
Sales 29,519 99% 14,833Cost of sales -12,252 158% -4,741