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Fauji Fertilizer Company Limited: a performance oriented company.

Lieutenant General Zia Ullah Khan (Retd), HI(M), is the Chief Executive and Managing Director of the Company. He was commissioned in Pakistan Army in 1962 and is a graduate Command and Staff College and National Defence College, the two premier institutions the Armed Forces of Pakistan. As a Lieutenant General he commanded a Corps. He retired as a Adjutant General in March 1997 after completion of distinguished and meritorious service. Lieutenant General Zia, because of his vast and varied experience was appointed as the Chief Executive and Managing Director of Fauji Fertilizer Company Limited (FFC). FFC is the largest urea producer in Pakistan. It has outshone its compatriots in corporate image and inspite of international recession, it is maintaining its profitability growth.

During the mid 70's the Government of Pakistan expressed the desire that Fauji Foundation should look into the possibility of establishing a urea manufacturing plant to fill the projected gap in demand and indigenous production. The shortfall was being met through imports at a high cost in foreign exchange. The project was sanctioned by the Government of Pakistan on 17th December, 1977.

Fauji Fertilizer Company Limited (FFC) was incorporated on 7th May, 1978 as a public limited company in the private sector. It was established through collaboration between Fauji Foundation and M/s. Haldor Topsoe (A/S of Denmark as a joint venture of Pakistani and foreign shareholders. The first urea plant located at Goth Machhi near Sadiqabad in Rahim Yar Khan District was completed at a cost of Rs.3,300 million and commenced its commercial production in June, 1982. In its first year of production the plant operated at its designed capacity of 570,000 tonnes which was a record achievement for any plant of this size anywhere in the world. As a result of highly efficient operations, good maintenance and strong technical support the production of Sona urea kept improving. Many improvements and modifications were made in the process and equipment to increase production. As a result the plant continued to produce well above the designed capacity attaining 115 per cent of capacity in 1990. To achieve still higher production and efficiency a major modification step was accomplished in March 1992, which brought the yearly production from this plant to 695,000 tonnes which is 122 per cent of the original design. While this level of production was being attained the quality of the product was maintained at the highest level in accordance with international specifications.

Operations at both the Company's projects were conducted in a safe manner. This is reflected by the several awards given to FFC by National Safety Council of USA. FFC plants are energy efficient and considerable efforts and investments have been made to ensure that they are environmentally and ecologically friendly.

FFC has its own Marketing Division. This organization is responsible for all marketing activities such as sales, distribution, field warehousing, planning, farm advisory services, finance, advertising/sales promotion and administration. The marketing operations commenced in April 1979 with the pre-production "Seeding Programme". The objective of this 3 years programme was to market imported fertilizers in order to develop capabilities for handling and sales of full plant production after its commencement.

With the commencement of production FFC started its commercial operations with the marketing of "SONA" urea and also imported phosphatic and potassic fertilizers allocated to the Company by the Government from June 1982. From the very beginning a growth oriented marketing strategy was adopted keeping in view future expansion. FFC operates in all the four provinces and Azad Kashmir. The marketing area has been divided into ten regions and 57 sales districts with a network of 3,000 dealers. Over the years the dealers have been trained in fertilizer use, basic agronomy and salesmanship. This network is spread over 1400 sales points. This is supplemented by a large number of cooperative societies and direct sales are made to sugar mills, cotton ginners, rice millers and large farmers. In addition to direct shipments of Sona urea from the Plant and imported fertilizers from Karachi, customers are being supplied from 100 field warehouses spread all over the country. The selling effort is effectively supported by good advertising and sales promotion.

FFC by the grace of Allah was able to meet all the challenges faced in the early years. It was able to market its entire production and obtain the desired market share. Sona urea was immediately accepted by the farmers and soon established itself as a premium brand. With the commencement of production of FFC's first urea plant, the country became not only self-sufficient but also surplus in urea. FFC therefore exported urea to many countries of the world earning large amount of foreign exchange. The export of urea continued during the years 1983-1986 when local demand again exceeded indigenous production. Since 1986 our country again started importing increasing quantities of urea which reached 790,000 mt in 1997. FFC again rose to the challenge for achieving the goal of self-sufficiency in urea. In 1988 the Company embarked on a project to set up another urea plant for the manufacture of 635,000 tonnes of urea per year at a cost of 7 billion rupees. FFC Project II which comprises of new ammonia and urea plants commenced commercial production on March 21, 1993. The new plant has been running well at its designed capacity and producing good quality Sona urea. With a combined production of 1.51 million tonnes from both the plants, FFC achieved a urea market share of 46 per cent during the year 1997. The market share of FFC in comparison with the competitors from 1995-97 is given in the following table.
Market Participation 1995-97

 1995 1996 1997

FFC 44 42 46
NFC 20 21 21
DCL 12 11 12
ECPL 21 23 20
Pak China 3 1 1
PA 0 2 0

Government of Pakistan deregulated the trade and prices of phosphatic fertilizers on Aug. 21, 1993. Subsequent to this decision FFC started self imports of these fertilizers and as a result timely supplies were arranged. Farmers were thus provided with quality product in bags with guaranteed correct weight and this brought about a very positive qualitative change in the phosphatic fertilizer business in the country.

Market development is an important and integral part of FFC's marketing strategy. A strong Farmer Advisory Service with qualified agronomists was established in 1981, almost a year before the first plant started production. This service has continued to expand and improve during the last 16 years. It provides soil-testing facility to the farmers in addition to conducting crop demonstrations, field days, farmer meetings, group discussions and farm visits. Technical literature on various crops printed in different languages is prepared and distributed. The qualified and trained agronomists providing the above services are fully mobile with four wheels drive vehicles for use in the rural areas and are equipped with the necessary audio/visual aids.

To focus attention of international and local scientists, specialists, policy makers and experts on important crops, land and input related areas of Pakistani agriculture, the company also conducted 4 international seminars. These were very well attended. The proceedings and recommendations developed in the seminar were printed and sent to all the participants.

Since its establishment FFC has achieved many landmarks in different areas of its operations. All product sales from 1982 to December 1997 are 17 million tonnes. This includes sales of 13.3 million tonnes of Sona urea including exports of 0.33 million tonnes during urea surplus years, which in a span of nearly 16 years is a remarkable achievement. The company saved foreign exchange valuing over 1.9 billion USS through import substitution and exports for the country. It has directly and indirectly provided employment opportunities to hundreds of individuals. To date over 10 billion rupees have been paid to the Government through duties, taxes and excise duty/surcharge on gas.

In 1991, the Company was listed on Karachi and Lahore stock exchanges and in 1992 on Islamabad stock exchange when it was formed. Shares were offered to the public and it was decided to offer some share to company's employees. This promoted a sense of participation and had a very favourable impact on all the employees. In 1993-94 FFC achieved the distinction of paying highest income tax in the country. based on the exemplary dividends to the shareholders and the other criteria of Karachi Stock Exchange FFC has been selected and placed in the list of top 25 best performing companies of Pakistan consecutively for 3 years since 1994. The company has continued to operate profitably and has been paying dividends to its shareholders on a regular basis.

To meet the growing requirement of fertilizer in the country and to reduce dependence on imports FFC with JPMC of Jordan has set up a new company under the name of FFC-Jordan Fertilizer Company Limited (FJFC) which will Insh-Allah be producing 460 thousand tonnes of DAP and 550 thousand tonnes of granular urea. Fauji Fertilizer Co. Ltd. since its inception has been playing an important role in the industrial, economic and agricultural growth of the country and by the grace of Allah will continue to make its contributions towards the development of our nation.
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Publication:Economic Review
Article Type:Company Profile
Date:Sep 1, 1998
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