Dun &bradstreet

Table of Contents  PREFACE  TRIBUTE  REASON FOR SELECTION OF THIS INSTITUTION  DUN & BRADSTREET  INTERNATIONAL CREDIT INFORMATION  BOARD OF DIRECTORS  MANAGEMENT  WHAT IS ICIL’S CORE BUSINESS?  PRODUCTS AND SERVICES OF ICIL o EXPORT FACILITATION SERVICES o BANKING SERVICES o WHAT IS DUNS NO o BUSINESS INFORMATION REPORT  CLIENTELE o

FINANCIAL SECTOR

o

EXPORT SECTOR

 COMPETITORS o

CURRENT MARKET SITUATION

 BUSINESS PLA YEAR 2000 AND BEYOND  WORK DONE BY ME IN ICIL o

CUSTOMER SERVICES

o

OPERATIONS

o

SALES & MARKETING

International

Credit Information Ltd Dun & Bradstreet o

ACCOUNTS

 CONCLUSION  RECOMMENDATIONS  FINANCIAL ANALYSIS o VERTICAL ANALYSIS o HORIZONTAL ANALYSIS o RATIO ANALYSIS o CONCLUSION  ANNEXURE o X-BIR REPROT (SAMPLE) o LOCAL REPORT (SAMPLE) o SEARCH REPORT (SAMPLE) o INCOMEESTIMATION REPORT (SAMPLE)  FEW WORDS FROM Mr. AWAIS KHAN  BIBLIOGRAPHY

PREPARED BY ___________________ MBA Registration No: ____________

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Credit Information Ltd Dun & Bradstreet

I acknowledge the patronage of my respected teacher Prof. ___________________ and it is not to exaggerate that due to such an assignment I became able to handle a project at such an initial stage. This is all due to the conceptual ground which is very strong in my perception as taught us in the classes of the operational & production management. I am the lucky one to get such a professional touch from my teacher regarding the operation & production methodology. I have tried to use the latest techniques of the production & management on a very different style, hence making the report unique. I am sure that I am on a very different subject and again I would like to say that only the help of my teacher could handle such a big problem. In case of any misconception I regretful to say that It is just the beginning and many things are to come next. Regards

__________________

PREPARED BY ___________________ MBA Registration No: ____________

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Credit Information Ltd Dun & Bradstreet

I pay my tribute to Mr. Mirza Asad Ahmad, who not only assisted me in my project but also like a teacher he taught me many things in the normal conversation. Although he is a very busy person but he made spare some time for mine and I became able to get the information in a consequent way. I also thank him to have a very nice company with me.

PREPARED BY ___________________ MBA Registration No: ____________

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Credit Information Ltd Dun & Bradstreet

Why Dun &Bradstreet (International Credit Information Ltd.) is selected for Internship: I met a Banker who is from my family, told me about ICIL and its services. It looked very different due to its different and versatile line of products. When I showed interest about the co. then the same banker referred us to Mr. Mirza Asad Ahmad who is Regional Sales Coordinator in the same company. Before going into the problem I should have the knowledge about the company and its products.

PREPARED BY ___________________ MBA Registration No: ____________

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Credit Information Ltd Dun & Bradstreet

Dun & Bradstreet

Dun & Bradstreet is more than 163 years old US based multinational which has its head office in USA and has its working offices in more than 213 countries which have been serving well in them. From our humble beginning as a credit rating agency, set up by Lewis Tappen in 1841 we have become a global organization. In many of the markets we serve, we are unique in our ability to provide dedicated local services backed by the global capabilities and resources of a worldwide corporation. Today,

the

Dun

&

Bradstreet

Corporation

Joined

by

long-term

partners....

Dun & Bradstreet-- The world's largest source of business-to-business Credit, Marketing and Receivable Management Information. Moody's Investors Service-A global leader in Rating Debt over 130,000 Corporate and Public Finance Ratings. ...Is a company more keenly focused on our core business areas? We have grown to become the world's largest provider of business information and related services, with annual revenue of more than US$2 Billion.

PREPARED BY ___________________ MBA Registration No: ____________

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Credit Information Ltd Dun & Bradstreet

Dun & Bradstreet has the world's largest commercial database with more than 70 Million business records. Serving your information needs around the clock, we have more than 18,000 professionals working in more than 40 countries ensuring the quality & timelines of our information with over 1.5 million updates completed each business day. Maintaining the most comprehensive commercial databases gives Dun & Bradstreet a unique advantage of providing quality credit & marketing information services. In Asia Pacific it is headed by DUN & BRADSTREET SINGAPORE. Dun & Bradstreet in Pakistan D&B entered in the Pakistani Market with the concept of Risk Management Services through its distributor International Credit Information Ltd. in February 1998.

PREPARED BY ___________________ MBA Registration No: ____________

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Credit Information Ltd Dun & Bradstreet

INTERNATIONAL CREDIT INFORMATION LIMITED (ICIL) •

ICIL is an unlisted public limited company: Registration No. K-07137 NTN Number: 13-071017382

•

ICIL is distributor / Local affiliate of Dun & Bradstreet in Pakistan (visit website: www.dnb.com.sg)

•

ICIL is co-operation partner of Gerling credit insurance company of Germany (visit website: www.gerling.com)

•

ICIL has a marketing agreement with Schober Direct Marketing Company of Germany. (Visit website: www.schober-international.com)

•

ICIL's Board of Director comprises of Commercial, Investment Bankers, Chartered Accountants, Corporate large and Industrial Managers of proven performance in Pakistan. Its management team is academically qualified and has been trained by Dun & Bradstreet in different discipline.

•

As a part of Dun & Bradstreet Asia Pacific Region, ICIL Pakistan has access to D&B technologies, its world databases, its global network & resources. It is engaged in the development of database of Pakistan's business universe and is providing global as well as local business-to-business credit, marketing, purchasing and receivable management service.

The Co. has started its activities in February 1998 as a sole and authorized distributor of Dun & Bradstreet’s Services in Pakistan. PREPARED BY ___________________ MBA Registration No: ____________

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Credit Information Ltd Dun & Bradstreet

BOARD OF DIRECTORS •

Mr. M R Khan -Ex Central Banker. -Ex Chairman Pakistan Banking Council



Mr. Abdul Azeem Shammali -Investment banker -Chairman Pakistan Kuwait Investment Bank Ltd.

•

Mr. Humayun Mufti -Chartered Accountant -Entrepreneur with Industrial management background

•

Dr. Adil S. Mufti -Ph.D. -Entrepreneur with industrial management background

•

Mr. Jamil Hamdani -Banker -Managing Director Canadian Imperial Bank of Commerce, Liaison office in Pakistan

•

Mr. Kazim Hassan -Corporate Lawyer

•

Mr. Ar if Mufti -Chartered accountant -Chairman American Life Insurance Company Limited ( ALICO)

•

Mr. David Emery -Senior Vice President Dun & Bradstreet Asia Pacific

PREPARED BY ___________________ MBA Registration No: ____________

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Credit Information Ltd Dun & Bradstreet 

Mr. Babar Mufti - Economist

MANAGEMENT A team of professional and qualified individuals manages the company. Company has a total strength of more than 53 personnel.



Head of Marketing & Business Development Mr. Abid Ajmal



Head of Operations & Risk Management Services Mr. Babar Mufti ( BSC London, MSC London School of Economics)



Information Resources Manager Mr. Mobashhar Alam (BBA Management, MBA Marketing (Hamdard))



Senior Relationship Manager Mr. Hussein Javed



Global Services Manager - Trading sector Mr. Salman Farooqui (B.Com (Hon's), M. COM (Management))



Customer Services Team Leader Mr. Jawad Rasheed (BBA Management & MBA Marketing)

•

Regional Sales Coordinator Mr. Mirza Asad Ahmad



Coordinator Global Risk Mgt. Services Mr. Faisal N. Tanoli (BBA Management & MBA Marketing)



Manager - Information Technology Mr. Yasser Mufti (B. Eng. University of London, M.Sc. Information Technology, London)



Operation Manager Mr. Salman Raza (BBA Finance, MBA Finance)

PREPARED BY ___________________ MBA Registration No: ____________

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Credit Information Ltd Dun & Bradstreet

DETAILS OF BRACHES Head Office Karachi

Lahore Office

D-90, Block 2, Scheme # 5, Kehkashan, Clifton, Karachi. Telephone # 021- 5877451-5 Fax # 5877345

112-B, Sunshine Embroidery Retail House, Main Gulberg II, Lahore Telephone # 042-5717581- 82, 5711070- 71 Fax # 042-5710276

Sialkot Office

Islamabad Office 6 Agha Khan Road, F-6/4, Islamabad. Telephone # 051- 2820829

Warraich Mansion, Office # 22, 2nd Floor, Paris Road, Sialkot. Telephone # 0432- 292435

Faisalabad Office

Multan Office

B 13, 18-A/3, Faisal Plaza, Bilal Road, Civil Lines, Faisalabad. Telephone # 041- 623411

Trust Plaza, Multan.

COMPANY'’S BANKS:  ANZ Grindlays Bank, Clifton Branch, Karachi.  Bank Al- Habib, Karachi.  Bank Al - Falah, Karachi.

COMPANY AUDITORS:  KPMG (Taseer Hadi & Company) PREPARED BY ___________________ MBA Registration No: ____________

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Credit Information Ltd Dun & Bradstreet

WHAT IS ICIL'S CORE BUSINESS:

Being Local partner of Dun & Bradstreet in Pakistan, ICIL is primarily engaged in:  Providing D&B's cross border credit, marketing and purchase and Receivable Management Services to Pakistani companies.  Development of database of Pakistani companies and putting it on D&B World base.  Providing Credit reports on Pakistani companies to D&B customers worldwide and to Pakistani businesses.  Registered Charges Search Report and Registration of charges.  D&B International Receivable Management / Debt Collection Services to Pakistani exporters.  Gerling Export Credit insurance.

PREPARED BY ___________________ MBA Registration No: ____________

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Credit Information Ltd Dun & Bradstreet

PROD UCTS AND SER VICE S OF ICIL: ICIL has been serving the business sector of Pakistan since its incorporation and is unique due to its professional touch and quality of the services. Following is a brief description of the products that are being offered by the Co.

Marketing Services     

DUNS Number Business Marketing Services Direct Marketing Service Business Marketing Services T.R.A.D.E Report

Risk Management Services  Business Information Report  Cross Border Receivable Management/ Debt Collection  Gerling Export Credit Insurance

Banking Services  Credit Services

Marketing Services:

PREPARED BY ___________________ MBA Registration No: ____________

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Credit Information Ltd Dun & Bradstreet ICIL, in collaboration with DnB provides the services for Pakistani Exporters not to introduce them in the International Market but also to explore new markets, and the ways how to enter into them with available resources.

Following is a brief description of the Marketing related services

A) D-U-N-S Number The Data Universal Numbering System (D-U-N-S) is maintained solely by Dun & Bradstreet. We assign each business location with a distinct, unique and separate operation its own DUNS No. when the business first enters into D&B Business Information Database. DUNS No. is assigned once and if a business decides to shut its operation, its DUNS No. is retired and will not be assigned to any other business concern. This specific DUNS No. will only become alive if the same concern becomes operational again.

The DUNS Number and i ts Value: Access the world's most premier database of more than 60 million business records worldwide customized to meet your business objectives and uniquely identified through the D&B DUNS No. The D&B DUNS No.'s distinctive nine digit identification sequence links you to a wealth of quality information products and services originally exclusively from D&B. As an internationally recognized common company identifier in EDI and e-commerce transactions, the DUNS No. is in use by the world's most influenced standard organizations. And more than 50 global industrial and trade associations and the US Federal Government recognize, recommend or require the D&B DUNS No.

The D&B DUNS No. can help you;     

Enhance your customer and vendor files. Locate and identify potential buyers and suppliers all over the world. Streamline your credit, billing and collection systems. Take advantage of new automated transactions technologies (including D&B EDI) Gather business and credit information quickly and easily.

DUNS No. May be Ass igned to any business ent i ty inc luding: •

Public Limited Companies

PREPARED BY ___________________ MBA Registration No: ____________

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Credit Information Ltd Dun & Bradstreet • • •

Private Limited Companies Partnerships Trade Associations Single Owner type like 1. Clinics 2. Law Firms 3. CA Firms

The DUNS No.s are not ass igned to : •

Different Departments of the same company located at the same location, such as a single company's marketing and finance departments will not have different DUNS No.

• •

Un-staffed operations or locations, such as automated teller machines. Trade styles or additional names used by the company for buying and/or advertising purposes.

•

Post Office Box No. used only for general mailing purposes.

How to reg ister your co. on D&B's World Database by Gett ing your own DUNS No. Contact International Credit Information Ltd.- Dun & Bradstreet to get your own DUNS NO. Only a one time processing cost of US$ 7.50 applies (equivalent to Pak Rs. 395/-)

B) Business Marketing Services Business Marketing Services use the power of Dun & Bradstreet's database to provide specialized businessto-business marketing solution. As an exporter /importer, you are always in search of buyers/suppliers. Who can give data beyond some basic information? Who can provide you only current information?

PREPARED BY ___________________ MBA Registration No: ____________

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Credit Information Ltd Dun & Bradstreet What is most credible source of information?

Database Development of Pakistan i Exporters / Importers Not only in Pakistan but also all over the world there is no reliable database especially of commercial exporters and importers who are partnerships and proprietorships. D&B only put reliable information on their database. Once a company is on D&B database foreign buyers can have online access to ICIL. This database is actually the raw material for the business-to-business dealings and reliability. The edge of the Co. is that the commercial database maintained by the Co. is updated day by day so the customer can get timely updated and fresh data. So according to the needs of the day it is very important to get such type of data. At D&B we have Total Marketing Solution to help your business in finding out the right buyers/suppliers. Through our Business Marketing Services (BMS), you can explore potential markets around the world for your products/services. Just specify the region you want to explore potential and we will come up with a list of your potential buyers/suppliers with brief corporate profiles. Information on each buyer/supplier will be provided to you in the shape of PROSPEST CARD. Each Prospect Card contains information such as:           

Prospect Buyer's/Supplier's name Full Address Telephone Number Fax Number Year Business Started Sales Turnover SIC Code Name of Contact Person Title of Contact Person Import/Export Indicator Number of Employees

C) Cross Border Direct Marketing Services Direct marketing or Database Marketing is very rapidly replacing all the convention tools of marketing i.e. advertisement, promotion or actual selling of a product. Now a days database are so precise that one can reach a customer belonging to any income/age group or of any ethnic background. Similarly database of wholesaler/retailer of any products are available. If one Pakistani exporter wishes to sell Pakistani Masalas to the Pakistani community in New York, he can do so while sitting in Pakistan.

PREPARED BY ___________________ MBA Registration No: ____________

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Credit Information Ltd Dun & Bradstreet As a model we have taken a Direct Marketing Assignment of a Pakistani leather garment manufacturer who wanted us to reach 250 wholesalers in USA. Results recently received from our Direct Marketing Associates have been so encouraging that our customers want us to take similar assignment of Direct Marketing in Spain and in other country. The results have also encouraged us to consider cross border Direct Marketing Services as a profitable product.

D) Local Direct Marketing Services: ICIL has been using its Direct Marketing Capabilities to sell its export related services to the exporters community and to develop its database/sale of DUNS Number. However, in the new strategy, company is considering to use its Direct Marketing Services as a product to market other companies products.

E) T.R.A.D.E Report A T.R.A.D.E Report provides details of worldwide imports of all commodities into USA through all US seaports. The Report helps to determine which US buyer is importing which commodity and from which US buyer is importing which commodity and from which country. The report helps exporters in Pakistan to know who are its local competitors and the quantity they are exporting to US buyers

Risk Management Services

PREPARED BY ___________________ MBA Registration No: ____________

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Credit Information Ltd Dun & Bradstreet

A) Cross Border Business Information Report:

D&B's BIR is the most widely used & trusted report of its kind. The BIR can enhance the accuracy of your decision making process by providing you the vital facts & figures that reflects a firm's overall condition & ability to meet its credit obligations.

Our worldwide information base can help you answer such questions: 1. 2. 3. 4.

Will my customer pay & when? What is the level of risk associated with the customer? Is the customer well established? How does the customer compare with the others in the same industry in terms of financial condition and payment habits? 5. Can I depend on the supplier to deliver as promised? 6. Has the financial condition and stability of a customer or supplier changed? Business Information Report (BIR) is a comprehensive Credit Report, covering areas such as; 1. Company Summary: A quick overview of the Co., D&B rating Duns numbers, year started, sales, worth etc. 2. Credit Risk Index: A DnB Credit opinion. 3. Payment Experience: Payment history from trade suppliers 4. Court Information: High court or similar information 5. Registered Charges: Secured loans, debentures etc. 6. Finance: Balance sheet, Income Statement, & Financial Commentary 7. Banking Information: Principal Bankers 8. History: Company registry information, shareholding, name of officers and principals, experience & background of key personnel 9. Operations: Nature of Business & how it is conducted 10. Corporate Structure: Listing of parent/subsidiaries/branches/affiliates 11. Special Event: Latest media/ credit significant updates

PREPARED BY ___________________ MBA Registration No: ____________

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Credit Information Ltd Dun & Bradstreet

B) Cross-border Collection.

Receivable

Management

/

Debt

Dun & Bradstreet is the world's largest Receivable Management and Debt Collection Agency. D&B has been collecting Cross Border accounts for more than 150 Years, handling around 500,000 claims per Year. We are specialist in helping you to get paid in time, on your terms. Receivable Management Service (RMS) provides you a set of tool; practices and services that will help you manage your receivable professionally and efficiently. We have more than 600 professionals working in over 40 countries ensuring careful handling of your claims and information. D&b's professional experience, physical presence and comprehensive information on Companies allow our local offices to know the business climate and legal implications in our major centers of global commerce around the world. 70% of all accounts placed with D&B are collected before legal action is necessary. In fact all accounts placed us that are less than 150 old could be settled within a month.

Membership Pr iv i leges On signing the D&b RMS subscription form, our customer is entitled to certain privileges that include: 1. D&B Global Membership: The client can ask for advice and consultancy on international trade problems, UCP Laws and L/C terms etc. free of cost. 2. DUNS Number: A RMS subscriber is issued a DUNS No. (Free of cost) that makes his company globally recognized and makes it eligible for e-commerce facility. 3. Complementary BMS Cards: A member is also entitled to receive 5-10 free BMS Cards of Buyers in USA for their product. 4. Free BIR: As a member you are given one free BIR of your Customer in category A & B. 5. Special DUNS Letter: This Letter is specifically tailored to be sent along with the shipping documents, stating that D&B is the Collection Management against a particular consignment as a precautionary letter. 6. Coverage for 9 Years: RMS subscription covers all the cases that are stuck up for the last 8 years in addition to providing cover the one year in future. 7. Unlimited No. of Claims: A RMS member can lodge unlimited no. of stuck up invoices with D&B for collection. D&B will not charge any commission unless the amount is recovered.

D&B has a Policy of "No Collection no Commission"

PREPARED BY ___________________ MBA Registration No: ____________

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Credit Information Ltd Dun & Bradstreet

Col lect ion Procedure I.On expiry of a credit term, the customer can ask for "D&B Fast Collection Service." This service constitutes a set of three letters that are sent to the debtor at 10 days intervals. If the amount is recovered through this service, the ICIL/D&B will charge a flat commission of 5% on the amount collected. II.In case the D&B Fast collection service does not bring about the positive result, the client will then give D&B a Final Clearance to collect on its own behalf. The under-mentioned structure will be applicable then.

International Commission Schedule Amount Collected US $ 800-49,999 US $ 50,000-99,999 US $ 100,000 and over

• • • • • • •

Under 120 Days 21% 18% 16%

Age of invoice 121-210 Days 24% 21% 19%

211-365 Days 27% 25% 23%

US $ 2.5 billion (30%) of Pakistani exports are on consignment basis (unsecured credit). Every year unpaid export bills remain stuck-up. D&B's global receivable management and debt collection network service is already available on Pakistani exporters and the banking industry. D&B RMS and debt collection service is again an essential tool for increasing export profitably. D&B have a collection network in 40 countries around the world. D&B Receivable managers and debt collectors have the knowledge of local languages, laws, cultures, business practices etc. of 40 different countries. In additions to local presence, D&B collectors and receivable managers have in-depth know-how of international laws, which enables D&B to provide excellent Receivable management services throughout the world.

C) Gerling Export Credit Insurance: As a part of its Export facilitation services, ICIL now offers "Export Credit Insurance" by Gerling. Namur is 100% owned subsidiary of Gerling Insurance Group of Germany. It is the world's third largest credit insurance company. Today Export Credit Insurance facilities are not available to the Pakistani exporters. 30% of Pakistani exports is going on consignment basis / open accounts which is major global credit risk. ICIL has entered into co-operation / marketing agreement with Gerling Namur. PREPARED BY ___________________ MBA Registration No: ____________

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Credit Information Ltd Dun & Bradstreet By arranging export credit insurance it is expected that Pakistani exports can increase. Gerling will cover 85% of invoice value against protracted default and insolvency of overseas buyer. Gerling Credit Insurance policy ahs been scrutinized an international bank for use as a collateral therefore it is considered as financial guarantee for discounting purposes.

Credit Services:

The company provides many corporate/credit services to the banking as well as business sector for the enhancement of the confidence for their decision making.

Cross - border Business information / Credit Reports: Due to business failures / bankruptcies, doing business globally is becoming riskier day by day. D&B's Credit Reports act as a global credit risk alert. • • • •

Will this company pay on time? Is the company well established? How does the company compare with others in the same industry in terms of financial condition and payment habits? Has the financial condition and stability of a customer changed?

PREPARED BY ___________________ MBA Registration No: ____________

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Credit Information Ltd Dun & Bradstreet

Local Credit Reports:

ICIL provides Credit Reports on Pakistani businesses. These reports are prepared after thorough investigation and contain vital information such as Company contact details, Financial figures, Trade references, management background, etc.

Registered Charges Search Reports: ICIL provides search reports including registered charges at the Securities & Exchange Commission. ICIL Search reports are developed covering of bank-wise, security-wise and date-wise charges.

Registration of Charge: For the convenience of our banking customers ICIL provides registration of charge documents, creation of charge, and modification of charges and also satisfaction of charges.

CLIENTELE FINANCIAL SECTOR •

United Bank Limited

•

National Bank of Pakistan

•

Habib Bank Limited

•

Bank Al-Habib Limited

•

Askari Commercial Bank Limited

PREPARED BY ___________________ MBA Registration No: ____________

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Credit Information Ltd Dun & Bradstreet •

Hong Kong & Shanghai Banking Corporation

•

The Bank of Punjab

•

Muslim Commercial Bank Limited

•

Allied Bank Limited

•

Soneri Bank Limited

•

Bolan Bank Limited

•

Faysal Bank Limited

•

Union Bank Limited

EXPORT SECTOR 

Hamid Garments



National Foods



Zahur Sancho Pvt Ltd.



King Apparel



Buksh Industries Pvt Ltd



Mohammad Shafi Tanneries



Noor Foods



Mohammad Farooq Textile Mills



Kamal Fabrics



Trade Links



Comfort Knitwear Pvt Ltd



Mian Sons Textiles



Pak Leather



Royal Garments



English Boot House Pvt Ltd



Ammar Textiles Pvt. Ltd.



Naveena Industries Ltd



Kalsoft Pvt Ltd

COMPETITORS: ICIL has been facing a lot of competitors for the corporate services that are as follows:  Projects  Observers  Aslam Associates  Spelvision PREPARED BY ___________________ MBA Registration No: ____________

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Credit Information Ltd Dun & Bradstreet  Cosmos Corporate Services  Ale Imran  Others

CURRENT MARKET SITUATION: It is observed from the current market analysis that ICIL is having the major market share of the search reports because of its effective marketing and product services. Following is the current market share of the companies;

Name of the Co.

Market Share in %age

International Credit Information Ltd.

27

Projects

15

Observers

10

Aslam Associates

13

Spelvision

8

Cosmso Corporate Services

12

Ale Imran

4

Others

11

PREPARED BY ___________________ MBA Registration No: ____________

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Credit Information Ltd Dun & Bradstreet

PREPARED BY ___________________ MBA Registration No: ____________

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Credit Information Ltd Dun & Bradstreet

Fuji Fertilizer Company Limited Balance Sheet Particulars

Vertical Analysis As on December, 2000 to December 2002 2002 Trend 2001 Trend

2000

Trend

Fixed Capital Expenditure Fixed assets Capital work in progress TOTAL Goodwill Long Term Investment Long Term Loans & Advances Long Term Deposits, Prepayments & advances Curent Assets stores & Spares Stock in Trade Trade debts Loans, advances, deposits, prepayments & receivables Short Term Investments Cash & bank balances TOTAL GRAND TOTAL

PREPARED BY ___________________ MBA Registration No: ____________

9,378,161 138,313 9,516,474 1,987,694 7,007,892 50,137

33.30 0.49

10.82 0.11

7.06 24.88 0.18

1,511,310 15,917 1,527,227 0 2,491,364 45,369

14.90 0.08

0.00 17.83 0.32

2,307,489 12,207 2,319,696 0 3,406,301 34,038

128,495

0.46

161,881

1.16

161,530

1.04

1,618,373 630,808 1,400,893

5.75 2.24 4.97

1,229,557 614,327 880,298

8.80 4.40 6.30

1,242,718 67,916 769,120

8.03 0.44 4.97

1,068,419 2,792,279 1,894,680 9,405,452 28,166,144

3.79 9.91 6.73

1,025,100 3,726,744 2,270,358 9,746,384 13,972,225

7.34 26.67 16.25

989,997 4,825,040 1,666,593 9,561,384 15,482,949

6.39 31.16 10.76

99.75

100.00

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0.00 22.00 0.22

100.00

International

Credit Information Ltd Dun & Bradstreet SHARE CAPITAL & RESERVES Share Capital Authorized Issued, subscribed & paidup Capital reserve Revenue reserves Total Shareholders Equity Redeemable Capital Long Term Loans Deferred Taxation Current Liabilities & Provisions Current maturity: Redeemable capital Long term loans Short term finances Creditors, accrued & other Liabilities Taxation Dividend payable Proposed dividend TOTAL CURRENT LIABILITIES Contingencies & Commitments GRAND TOTAL

PREPARED BY ___________________ MBA Registration No: ____________

3,000,000 2,564,959 160,000 8,038,098 10,763,057 4,420,014 1,283,481 2,690,000

15.69 4.56 9.55

3,000,000 2,564,959 160,000 6,776,673 9,501,632 0 223,867 86,000

379,946 538,045 3,383,897

1.35 1.91 12.01

2,829,008 975,960 641,240 256,496 9,009,592 0 28,166,144

0.00 1.60 0.62

3,000,000 2,564,959 160,000 6,144,086 8,869,045 0 744,199 299,000

0 503,151 800,000

0.00 3.60 5.73

0 536,123 1,650,000

0.00 3.46 10.66

10.04 3.47 2.28 0.91

1,561,004 527,083 512,992 256,496

11.17 3.77 3.67 1.84

1,846,740 511,858 512,992 512,992

11.93 3.31 3.31 3.31

99.98

4,160,726 0 13,972,225

100.00

5,570,705 0 15,482,949

100.00

9.11 0.57 28.54

18.36 1.15 48.50

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16.57 1.03 39.68 0.00 4.81 1.93

International

Credit Information Ltd Dun & Bradstreet M/S FAUJI FERTILIZER COMPANY LIMITED PROFIT & LOSS VERTICAL ANALYSIS FOR THE PERIOD ENEDED 31, DECEMBER, 2000-2002

(RUPEES’000) Sales les: Cost of goods sold GROSS PROFIT Less: Selling & distribution expenses Financial expenses Other Income other charges NET PROFIT BEFORE TAX Provision for taxation NET PROFIT AFTER TAXATION Unappropriated profit b/f Profit available for appropriations APPROPRITIONS: Transfer to general reserve Dividends: First interim Second interim Third interim Proposed final UNAPPROPRIATED PROFIT c/f Earning per share

2002 16,786,699 10,109,117 6,677,582 1,457,797 668,213 783,922 496,073 4,839,421 1,766,000 3,073,421 253,246 3,326,667

% AGE 95.54 57.53 38.00 8.30 3.80 4.46 2.82 27.54 10.05 17.49 1.44 18.93

2001 11,982,414 6,362,616 5,619,798 1,022,139 275,271 1,061,844 390,520 4,993,712 1,790,000 3,203,712 229,750 3,433,462

% AGE 91.86 48.78 43.08 7.84 2.11 8.14 2.99 38.28 13.72 24.56 1.76 26.32

2000 10,201,319 5,574,858 4,626,461 869370 333,124 1,089,623 323,677 4,189,913 1,546,000 2,643,913 337,805 2,981,718

% AGE 90.35 49.37 40.97 7.70 2.95 9.65 2.87 37.11 13.69 23.42 2.99 26.41

800,000

4.55

1,000,000

7.67

700,000

6.20

641,240 769,488 641,240 256,496 218,203 11.98

3.65 4.38 3.65 1.46 1.24

769,488 641,240 512,992 256,496 253,246 12.49

5.90 4.92 3.93 1.97 1.94

512,992 512,992 512,992 512,992 229,750 10.31

4.54 4.54 4.54 4.54 2.03

PREPARED BY ___________________ MBA Registration No: ____________

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COMMENTS ANALYSIS

ON

VERTICAL

BALANCE SHEET Fixed assets: There is a subsequent increase in the fixed assets of the company in 2002 (33.30%) with reference to 2001 (10.82%) and 2000 (14.90%). However, it decreases in 2001 as compared to 2000 but it regains its position. Capital work in progress: Is continuously increasing from 2000-2002 which shows that the conversion of capital work in progress into fixed assets is very slow. It should be avoided in order to increase the fixed assets of the company. Long term investment of the company shows a decline in 2001 as compared to 2000 but in 2002 it shows an increase which is more then in 2000. This is the result of co’s long term planning; it also states that co is mush conscious about their prosperity in the future. Long term advances of the co, is increased in amount from 2000-2002 but its proportion in total this year is reduced as compared to last year. Advances are major source of earnings so, it should be improved. Long term deposits of the co is lower in current year with reference to previous two years which shows that company has not enough deposits to meet any long term liabilities. Current Assets: As a whole there is decrease in current assets of the company in 2002 with reference to previous years. Especially cash and bank balance of the co is decreasing in 2002 which is not a good sign and shows that co has not adequate funds to meet the short tem liabilities of the bank. Decrease in trade debts is a good sign in current year However; in 2001 the position of current assets is better then 2000. So, instead of maintaining and improving its position the bank loses its position. In order to earn more profits the co has to overcome all these difficulties. Share capital:

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Credit Information Ltd Dun & Bradstreet Share capital of the company is increased in amount due to increase in revenue reserves maintained by the co, shows the increase in worth of the co. also a good sign for the business of the company.

Current liabilities of the company especially creditors and other liabilities are decreasing in 2002 as compared to 2001 and 2000. Which is a good sign for the co, the company also declare dividend which is an attractive sign for the investors to invest. The amount of dividend increasing but its proportion is more in 2001 as compare to 2002. Over all 2001 is good as compare to 2002 &2000

PROFIT AND LOSS ACCOUNTS: Sales of the co is continuously increasing from 2000-2002 which is positive sign towards the prosperity of the company. Cost of good sold of the company is decreasing in 2001 with reference to 2000 but it is more in current year due to increase in sales, its proportion is less then in sale so, we can’t said as bad. Gross profit of the company is more in 2001 due to decrease in cost of goods sold of the company as compared to 2002 and 2000 coz in both the years expenses increases in spite of the fact that sales increases. Financial selling and admin expenses of the company increases in current year as in previous years. Due to increased cost of facilities provided to the employees. It is not good for the company, so the co should control these expenses in order to increase its profit. Other charges of the co are lower in current year. Which is good for the co, . Net profit before tax of the company is less in 2002 coz it absorbs increase in expenses where as it is more in 2001 shows the strength of the company. Provision for taxation is statuary requirement however; it increases with the increase in net profit before taxation. Unappropriated profit b/f of the co, increased in amount then the last year but in proportion to the total it decreases from 1.76% to 1.44% it’s an alarming situation because the base is strong now so the profits must increase at a higher % age. Total income of the co, is more in 2001 as compared to 2002 and 2000 PREPARED BY ___________________ MBA Registration No: ____________

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Particulars

Fixed Capital Expenditure Fixed assets Capital work in progress TOTAL Goodwill Long Term Investment Long Term Loans & Advances Long Term Deposits, Prepayments & advances Current Assets stores & Spares Stock in Trade Trade debts Loans, advances, deposits, prepayments & receivables Short Term Investments Cash & bank balances TOTAL GRAND TOTAL

PREPARED BY ___________________ MBA Registration No: ____________

Fuji Fertilizer Company Limited Balance Sheet Horizontal Analysis As on December, 2000 to December 2002 2002 2001 2000

Trend %Change %Change (2002(20012001) 2000)

9,378,161 138,313 9,516,474 1,987,694 7,007,892 50,137

1,511,310 15,917 1,527,227 0 2,491,364 45,369

2,307,489 12,207 2,319,696 0 3,406,301 34,038

520.5 769.0 523.1

-34.5 30.4 -34.2

181.3 10.5

-26.9 33.3

128,495

161,881

161,530

-20.6

0.2

1,618,373 630,808 1,400,893

1,229,557 614,327 880,298

1,242,718 67,916 769,120

31.6 2.7 59.1

-1.1 804.5 14.5

1,068,419 2,792,279 1,894,680 9,405,452 28,166,144

1,025,100 3,726,744 2,270,358 9,746,384 13,972,225

989,997 4,825,040 1,666,593 9,561,384 15,482,949

4.2 -25.1 -16.5 -3.5 101.6

3.5 -22.8 36.2 1.9 -9.8

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SHARE CAPITAL & RESERVES Share Capital Authorized Issued, subscribed & paidup Capital reserve Revenue reserves Total Shareholders Equity Redeemable Capital Long Term Loans Deferred Taxation Current Liabilities & Provisions Current maturity: Redeemable capital Long term loans Short term finances Creditors, accrued & other Liabilities Taxation Dividend payable Proposed dividend TOTAL CURRENT LIABILITIES Contingencies & Commitments GRAND TOTAL

PREPARED BY ___________________ MBA Registration No: ____________

3,000,000 2,564,959 160,000 8,038,098 10,763,057 4,420,014 1,283,481 2,690,000

3,000,000 2,564,959 160,000 6,776,673 9,501,632 0 223,867 86,000

3,000,000 2,564,959 160,000 6,144,086 8,869,045 0 744,199 299,000

0.0 0.0 0.0 18.6 13.3

0.0 0.0 0.0 10.3 7.1

473.3 3027.9

-69.9 -71.2

379,946 538,045 3,383,897

0 503,151 800,000

0 536,123 1,650,000

6.9 323.0

-6.2 -51.5

2,829,008 975,960 641,240 256,496

1,561,004 527,083 512,992 256,496

1,846,740 511,858 512,992 512,992

81.2 85.2 25.0 0.0

-15.5 3.0 0.0 -50.0

9,009,592 0 28,166,144

4,160,726 0 13,972,225

5,570,705 0 15,482,949

116.5

-25.3

101.6

-9.8

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M/S FAUJI FERTILIZER COMPANY LIMITED PROFIT & LOSS VERTICAL ANALYSIS FOR THE PERIOD ENEDED 31, DECEMBER, 2000-2002

(RUPEES’000) 2002 Sales les: Cost of goods sold GROSS PROFIT Less: Selling & distributionexpenses Fiancial expenses Other Income other charges NET PROFIT BEFORE TAX Provision for taxation NET PROFIT AFTER TAXATION Unappropriated profit b/f Profit available for appropriations APPROPRITIONS: Transfer to general reserve Dividends: First interim Second interim Third interim Proposed final UNAPPROPRIATED PROFIT c/f total income

Trend

2001

Trend

2000

Trend

16,786,699 10,109,117 6,677,582

95.54 57.53 38.00

11,982,414 6,362,616 5,619,798

91.86 48.78 43.08

10,201,319 5,574,858 4,626,461

90.35 49.37 40.97

1,457,797

8.30

1,022,139

7.84

869370

7.70

668,213 783,922 496,073

3.80 4.46 2.82

275,271 1,061,844 390,520

2.11 8.14 2.99

333,124 1,089,623 323,677

2.95 9.65 2.87

4,839,421 1,766,000

27.54 10.05

4,993,712 1,790,000

38.28 13.72

4,189,913 1,546,000

37.11 13.69

3,073,421

17.49

3,203,712

24.56

2,643,913

23.42

253,246

1.44

229,750

1.76

337,805

2.99

3,326,667

18.93

3,433,462

26.32

2,981,718

26.41

800,000

4.55

1,000,000

7.67

700,000

6.20

641,240 769,488 641,240 256,496

3.65 4.38 3.65 1.46

769,488 641,240 512,992 256,496

5.90 4.92 3.93 1.97

512,992 512,992 512,992 512,992

4.54 4.54 4.54 4.54

218,203 17570621

1.24 304.85

253,246 13,044,258

1.94 335.77

229,750 11290942

2.03 333.89

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COMMENTS ON HORIZONTAL ANALYSIS BALANCE SHEET Fixed assets of the company are decreasing in 2001 but in 2002 due to addition, there is a substantial increase in the value of the fixed assets of the company. Capital work in progress is considerably increasing which means that the company is not only exercising good managerial efforts to convert it into fixed assets but also acquiring more assets that will ultimately convert into fixed. Long-term investment shows a negative trend in 2001 but in 2002 there is a significant increase in long term investment, which means that the company is utilizing its idle cash/ resources in efficient manner. Overall the company’s long term and fixed assets are showing a mixed trend. The current assets of the company are decreasing due to decrease in short term investment and cash and bank balance which is not a positive sign for the company. There is a significant increase in current liabilities of the company in financial year 2002 due to increase in the creditors and retiring a portion of redeemable capital. The increase in creditors means that the company has made purchases on credit basis due to its good will in the market. However, there is a decreasing trend in current liabilities due to decrease in current maturity of the debts. Capital reserves is constant and revenue reserve showing an increasing trend which become a cause of increase in equity base of the company and this is positive sign for shareholders and investors as the company raised more funds from the financial institutions. The company has consistent dividend policy, which shows that it is not holding the benefits but also passing it to the shareholders.

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PROFIT AND LOSS ACCOUNT: Sales are increasing in both the financial year (2001-2002) due to increase in production capacity of the company. The cost of goods sold is increasing in proportion with the sales of 2001 but in 2002 it is increase more than the proportion of sales, which is not a favorable sign as it shows that the company is not implementing good cost control policies. No doubt the gross profit of the company is increasing but less then the previous year because most of its portion is consumed in meeting the direct cost of the company. Selling and administrative expenses are showing an increasing trend because such kind of expenses can’t remain static. So, this increase will be compare with the net profit of the company. The financial charges are increasing due to increase in the lending of the company. As the long & short term investments of the company are decreasing so the other incomes of the company are showing decreasing trend. Profit before taxation is increasing in 2001 due to effective cost controlling policy but in 2002 it is showing a negative trend due to loose cost controlling policy of the company as the major portion of the profit is consume in meeting these expenses. Provision for taxation is decreasing due to decrease in profits. As taxation is related to pre-tax profit and it is a statuary requirement so it can’t be commented. The company has a good dividend policy. However, its proportion is decreasing due to decrease in profitability of the company. In short the overall profitability of the company is satisfactory but it should implement and adopt good cost control policies in order to keep equilibrium between expenses and revenues, otherwise it will have an adverse effect over the profits. The equity base is increasing which is a positive sign for the investors. Similarly, the fixed assets of the company are increasing which will effects its productivity in near future and the company will enter in a more progressive era. So, the pulse feeling, on the basis of this analysis, indicate that co, is developing.

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RATIO ANALYSIS FINANCIAL PERFORMANCE ANALYSIS The analysis of financial situation will focus on the following broad categories: 

Operating and Performance



Leverage



Efficiency



Market/Share holder analysis



Valuation

Operating and Performance Yearly GP Margin NP Margin ROE ROCE

% % % %

1998 46.73 27.72 49.95 -

1999 50.47 29.51 36.05 -

2000 44.35 25.92 29.81 -

2001 46.90 26.74 33.72 52

2002 39.78 18.31 28.55 32

Profitibility Analysis Percentage

60 50 40 30 20 10 0 1998

1999

2000

2001

GP Margin Year NP Margin

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2002 ROE

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Credit Information Ltd Dun & Bradstreet Gross profit margin has shown seven percent decrease from last year, a significant decrease in the percentage being the lowest percentage since last five years. Although the increase in sales was more than 40% in year 2002, but the increase in cost of sales is excessive than the increase in sales, that resulted in decline of GP Margin in year 2002. Reduction in GP margin is caused mainly by the acquisition of PSFL. PSFL was operating in a loss. Compilation of accounts of PSFL with FFC has thus resulted in decline of GP ratio of FFC. The decrease in NP margin is mainly caused by the reasons of decrease in GP margin. Additional reason for decrease in financial charges is inclusion of financial charges in Year 2002 accounts. Financial charges have increased from 2.3% (2001) to 4% (2002). This increase in financial charges has hit the NP margin adversely. FFC’s operating income, augmented by treasury operations, which returned investment income of Rs. 709m this year compared to Rs. 882m last year, was marginally higher than in 2001. The investment income was lower mainly due to lowering of interest rates and strengthening of Pak Rupee against foreign currencies, impacting negatively on exchange earnings with significant depreciation of the dollar during the year and outflow of funds due to additionally equity investment of Rs. 3bn in FGFC. Pre-tax profits of company this year decreased by 3% due to non-cash impairment charges of goodwill. Correspondingly, the net profit at Rs. 3.07m was lower by 4% and the EPS at Rs. 11.98 also declined proportionately compared to last year. Significant reduction in ROCE has been observed. This is due the drastic increase in capital employed. Similarly a decrease in earnings has been observed due the increase in depreciation. So ROCE has been hit twice. The company follows a strategy of earning through less risky, high yielding investments to cushion the impact on profitability and arrest declining margins due to incremental costs.

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Credit Information Ltd Dun & Bradstreet Performance of the company is also affected by economic conditions. The economic conditions improved in 2002, making business more favourable. Interest rates fell, reducing the interest expenditure. This fall in interests has benefited FFC in borrowing loan for the acquisition of PSFL. There has been significant reduction in the interest payments. The performance of agriculture sector has also shown a decline in year 2002. Shortage of water resources adversely affected summer crops. The output of cotton, on the major corps of Pakistan, observed a decline. This decline in agriculture sector resulted in the consumption of fertilizers to decrease, consequently affecting the sales revenue of the company. Competitive Return on Assets FFC

%

1998 37.58

1999 34.19

2000 27.06

2001 35.74

2002 17.18

FFC has been more efficient on use of its assets as it has yielded more return on assets from 1998 to 2001. The significant fall in ROA of FFC is evident of the fact that it has taken over FJFC. FJFC has operated it loss previously. The combination has resulted in the over all utilization of assets to decrease. Efficiency Stock Turnover Ratio FFC

2001 10

2002 16

The efficiency of the company in terms of stock turnover shows the FFC has reduced its investment in stock. Although there is nominal increase in stock, but the amount has not increased inline with increase in cost of capital. This is a good sign as it shows that the investment tied up in stock has decreased. Leverage Short Term Liquidity Yearly Quick Ratio Current Ratio

PREPARED BY ___________________ MBA Registration No: ____________

% %

1998 1.31 1.47

1999 1.76 2.14

2000 1.48 1.72

2001 1.90 2.34

2002 0.79 1.04

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Credit Information Ltd Dun & Bradstreet There has been significant reduction in both current and quick ratios. Main reason for the reduction seems to be the decrease in short term investments. These investments were used to finance the acquisition of FJFC. Current maturity in respect of redeemable capital has also significantly increased current liabilities. Keeping in view the nature of production of Fertilizers companies, the quick ratio seems highly unsatisfactory. Long term solvency Yearly Debt/Equity

Ratio

1998 19:81

Interest Cover

Times

-

1999 13:87

2000 08:92

2001 02:98

2002 35:65

-

-

35

9

Company’s debt equity ratio is constantly decreasing from 28:72 (1997) to 02:98 (2001). The sudden increase in debt/equity ratio is also because of the acquisition of PSFL. Acquisition was financed through medium tem loans from Citibank and ABN Amro bank. The company has strong financial position that enabled it to raise timely funding of over Rs. 8bn, being the largest ever private syndicated local currency financing arrangements in the history of the country, for the acquisition of PSFL. Company’s interest cover before the issue of loan explains the reason of company’s strength that enabled it to raise loan of such a big amount. Even after borrowing has been made, the interest cover has not dropped to dangerous level. This show the security investors have regarding their returns. Market Ratios EPS Rs/Share Payout Ratio Ratio P/E Ratio Times Dividend Yield % Market Price of shares Rs/Share (Avg)

PREPARED BY ___________________ MBA Registration No: ____________

1998 14.66 65.14 3.12 14.72

1999 12.04 66.47 4.42 16.46

2000 10.31 77.61 3.99 15.19

2001 12.49 68.05 3.27 21.61

2002 11.98 75.11 6.10 17.51

60.27

48.3

52

39.2

66.5

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Dividend and Payout Ratio 95

90

90 80

80 75

70

70 65

Payout Ratio

Dividend

85

60

60 55

50 1998

1999

2000

2001

2002

Years Divident Payout

Payout Ratio

Company’s P/E ratio has increased. This represents the perception of market regarding the future of the company. Investors are now willing to pay more for the company’s shares. This shows that the market has perceived the acquisition of PSFL as a positive sign. P/E ratio has increased also because of the decrease of the EPS because of reasons already discussed. The company’s dividend in absolute terms has increased from previous year. Dividend yield however has decreased. This is mainly because of the increase in share price of FFC. Company has distributed more earnings as dividend to its owners in current financial year. This is because to maintain the dividend yield to the investors. The increase in market price of the shares because of acquisition of PSFL forced the company to increase the dividends, in order to maintain the dividend yield to acceptable level.

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Dividend Yield & Market Price 25

60

20

50 40

15

30

10

20

Percentage

Amount (Rs/Share)

70

5

10 0

0 1998

1999

2000

2001

Year Market Price of shares (Avg)

2002 Dividend Yield

The company continues to maintain the policy of higher dividend distribution. It has been recommended a final dividend of 10% over and above interim dividend declaration of 80% already paid to the share holders. The cumulative dividend distribution for the year 2002 at 90% amounts to Rs. 2.3 billion and represents a payout of 75% of the net profit after tax for the period as opposed to 68% paid last year. As a result of operational and financial strategies, the company has continued to make excellent progress over the years in delivering shareholder value which has been reflected in strong growth in earning per share and high dividend payout. Net of tax profits of the company for the year 2002 crossed Rs. 3bn mark, yet again this year, for the fifth time, the highest amount ever returned by any company in the fertilizer sector. FFC yet again is the winner of the top 20 companies’ award, presented by Karachi Stock Exchange. Company has secured third position. This reflects investor’s confidence over companies’ management and its policies.

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Credit Information Ltd Dun & Bradstreet Valuation 1998

1999

2000

2001

2002

Market Capitalization

Rs millions

11748

13646

10542

10478

18750

Break-up Value MP to break-up value

Ratio Times

29.35 2.08

33.38 1.46

34.58 1.52

37.04 1.06

41.69 1.22

One theory of financial performance states that there is no need to measure financial performance of managers using any model. It states that what ever company does, should make it public as soon as possible. The market in itself could perceive the benefit of company’s policies. Keeping in view this theory in mind, the study of market capitalisation shows that the market has taken company’s decision of acquiring PSFL positively and immediately responded to it by increasing its value. Company’s break up value has increased, representing that the investment in the company has become more secured. This pattern could be related to the return offered by the company. As the risk of the company has decreased, the return has also decreased. Market has not reacted to the break up values as it had in 1998. Market price to break up has decreased from 2.08 to 1.22.

Earning Per Share Amount (Rs/share)

15 10 5 0

1998 1999 2000 2001 2002 Year

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C O N C L U S I O N Conclusion of the report will be discussed with reference to its aim objectives. Company’s performance with respect to each category is discussed in brief below: Another reason of the low profitability and high gearing is the acquisition of 100% management control of PSFL a wholly owned subsidiary of NFC ”National Fertiliser Company Limited” The company has achieved 40% growth in turnover as well as 19% growth in its gross profit during 2002. During the year under review, company gained increased market shares in both urea and DAP sales, more than the industry growth. FFC is continuing to maintain fundamentally strong competitive edge in the dynamic and complex market place. Short-term solvency also decreased significantly in both current and quick ratios. Liquid funds, net of shortterm borrowings dropped by 2.9 billion due to equity investment in FJFC and stood at Rs. 4.5 billion at the close of the year. Although the company has very low percentage of short term liquidity which is normally threatened but company’s track record and it’s financial worth is still very strong and lead in the sector Company made a heavy investment in the year 2002 to acquire the PSFL , which resulted in the highest gearing of both short and long term. Although company’s performance has been decreased as compared to the previous years but company still hold the market due to the strong position Company’s market capitalisation has increased significantly from past years. This is mainly because of the acquisition of PSFL. The perception of market as to the impact of acquisition of PSFL is included in the share price, resulting in increases in overall market capitalisation.

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Credit Information Ltd Dun & Bradstreet Effects of the acquisition of PSFL The integration of PSFL with FFC can create an opportunity to further boost the intangible assets, such as human resources, organisational strength, accumulated experience and brand image. To achieve synergies FFC is structuring its systems for consolidated business management to improve capital efficiency, reduce costs, enhance sharing of assets and administrative services, eliminating duplication of resources and focus on measures that would result in improved efficiencies for the company and increase value for the shareholders in the long term. It has been assessed that investment in PSFL will further improve efficiencies, and enhance returns to our shareholders in the years to come while improving skills and of people and retaining customer loyalty. Higher quantities of phosphatic sales are also planned to diversify and bridge the gap to maintain existing margins and counter reduction of income on deposits due to decline in rates and higher financial charges on the acquisition of PSFL. The impact of acquisition of PSFL on company/s short-term indicators is mainly negative. This is because of the additional depreciation and non-cash goodwill amortisation charge to profit and loss account, having a negative impact on profits. However, market has conceived future benefits of acquisition and has thus included this effect in the share price of the company. With the passage of time, the company will enjoy the benefits of the acquisition. This will later on be revealed in the accounts of the company. So the future financial situation of the company will be improved. Future Prospects The company aims to sell and market over three million tonnes of urea phosphatic fertilizers during the year 2003 and maintain the lead in the market share, which presently stands at 54% in the urea sales. Company’s current financial situation is better than previous year. It is expected to further improve as the economies are achieved through joint operation of FFC and PSFL. Inefficiencies will be remover and significant reduction in cost is expected. This all will add value to company’s share price. Company’s financial indicators predict that the company will experience better situation in the coming year. However, you cannot be certain about the future of fertilizers companies. Products of these companies are highly PREPARED BY ___________________ MBA Registration No: ____________

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Credit Information Ltd Dun & Bradstreet dependent on the agricultural situation in the country. Agriculture is unpredictable industry and performance of it is dependent on certain factors. Some of which are: 

Weather



Planted Acreage



Agricultural Policies of Government



Grain stocks



Crop failures



Changes in agriculture production methods



Seasonal usage of fertilizers

Economic Survey of Pakistan for current year predicts that the plan Acreage is not expected to increase. So likely benefit to the company from increase of plant acreage and thus increase in urea consumption is unlikely to happen. Fertilizer policy was announced shows that the prices of fertilizer products expected to increase gradually. The prices should nevertheless remain less than that of imported fertilizers, to discourage imports. Fertilizers are a key input in agriculture contributing 30-70% increase in crop yield. Pakistan being the agrarian country cannot survive without fertilizers. So the demand side of the market is relatively favorable for the company. The competition in the market is not very high. The company’s previous performance is evident of its management capabilities. Keeping the past and present in mind, future of FFC seems bright.

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B I B L I O G R A P H Y

S.NO

REFERENCE

1

BPP (2000), Success in your Research & Analysis Project, London BPP

2

Government of Pakistan (1999-2000), ‘Economic Survey of Pakistan’ Finance Division, Islamabad, Pakistan

3

J. Harold Janis, Howard R Dressner (1993), Business Writing , 4th Edition, Harper & Row Publishers, New York

4

Joseph A Davito (1996), The Inter Personal Communication Book, 4th Edition, Harper & Row Publishers, New York

5

FFC Financial Statements (2002), ‘Annual Report’

6

Engro Ltd Financial Statements (2002), ‘Annual Report’

7

www.ffc.com.pk

8

www.engro.com

9

www.finance.gov.pk

10

www.kse.com.pk

11

www.pakboi.gov.pk

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