Fertilizer industry:

As Pakistan’s economy is agriculture based therefore the fertilizer sector assumes a central role

in the development of the country. A good quality fertilizer increases yield therefore increasing

production of crops and earning foreign exchange for Pakistan through exports. Not only does

the quantity of production increase but the quality also increase. This increases the exports of our

country which in turn helps us correct our adverse balance of trade with other countries.

Therefore it is necessary to have a vibrant fertilizer industry in Pakistan. The good news is that

future outlook for the fertilizer industry looks bright because of the supportive government

policies and favorable climate conditions. The government almost always comprises of feudal

lords and they want to try to implement encouraging agricultural policies because their aim is

also to maximize yield. Thus the fertilizer sector gets a boost in terms of subsidized gas rates.

Fatima Group:

Fatima Group was built in 1936 with trading of commodities and continuously went into the

manufacturing of different items. The Group has an example of overcoming adversity spread

more than seven decades, growing its viewpoint from trading to manufacturing. Today, the

Group is occupied with trading of commodities, manufacturing of

Fertilizers

Textiles

Sugar

Mining

Energy

Fatima group deals with the grouped turnover of Rs.75 Billion. It is the largest manufacturers of

compound fertilizers in Pakistan with a combined capacity of over 2.1 Million Tons. It employed

more than 6300 employees currently. Fatima group acquired the Pakarab Fertilizer plant

acquired in 2005.

Fatima Fertilizer:

Fatima Fertilizer Company Limited is the first and the only green field project which has

materialized under the 2001 Fertilizer Policy of the Government of Pakistan, aiming to

encourage investors in this field, in view of growing demand of fertilizer in the Country. It

started its operations in 2006.

The company is listed at all stock exchanges of Pakistan, through a successful initial offering

(IPO) in January 2010. 200 million ordinary shares were offered to the public bringing the issued

Ordinary share capital from 1800 million to 2000 million shares. The current paid up capital of

the company is 2100, million shares as a result of conversion of Preference shares into ordinary

shares.

Vision:

To be a world class manufacturer of fertilizer and ancillary products, with a focus on safety,

quality and positive 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 by

providing quality products and services.

To provide employees with 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.

Products:

Company is offering following products to the farmers

CAN

NP-Nitro-Phosphate

Urea

DAP Di-Ammonium Phosphate (Imported)

CAN has no freight factor involved and the prices is fixed at one price. The prices are fixed due to

number of producers being in the industry. If the company orders from plant the freight is beared

by company. In CAN and DAP, only Fatima fertilizers are in business. The company production

depends on slack period (when demand is high) and leans period (when crop demand is low). The

plant is 24/7 operational capacity. Discount policies are announced in lean period e.g. volume

based, cash based or kind based etc.

Due to the severe shortage of gas, Pak-Arab has been closed from the past two years. Despite

closure, the management decided not to let go of any permanent employee and has started looking

into various opportunities of generating revenue. DAP is one such source of income for the

company. Pak-Arab imports DAP and sell it under the brand name “Sarsabz”. This initiative was

started in 2013.

Sources of supply:

There are three sources of supply

Direct from plant

Warehouse

Port

There are two plants in Multan and Sadiqabad. There are two modes for transportation. In owner,

carrier, dealer uses his own transport. In company carriage, company has to pay for price and

freight. Port is for imported products and it is very similar to plant. Port is operative only for few

days when the vessel is dark.

Price:

There are two modes for paying charges

Ex plant or port

Delivered (freight)

As the products moves away from the plant, its prices increase. The prices are charged at rupees

per ton per km.

Dealer networks:

Dealer networks thrive on the following two principles:

Profit Margin

Inventory Turnover

Profit Margin:

Unless the product is regulated by the government (as in case of Urea), dealers are legally

allowed to operate in a free market and can charge higher prices in case of shortage or are forced

to sell at a loss in case of glut. This desire to charge premium often leads dealer to hold large

stocks of fertilizer when they foresee a shortage in the near future. They push products by

leveraging the trust end-consumers place on dealers in giving them recommendations on what

and how much to purchase.

Inventory turnover:

For a dealer, inventory turnover is crucial since he needs to manage his cash flows and regularly

purchase fertilizer from producers. Also, for big dealers who are trading wholesale fertilizer,

high inventory turnover is the ultimate goal. They wish to turn their inventory maximum number

of times so that they can maximize revenues and get their investment out as soon as possible in

order to purchase in bulk again. This is that one factor that balances their desire for high margins

and discourages them from holding socks too long to create artificial shortages. (Dealers, 2014)

Competitors:

Currently Fatima fertilizer is facing competition with Fauji fertilizer and Engro. Production

capacity of all fertilizer industry players are

Company Product Capacity (000’tons)

1- Fauji fertilizer UREA 2048

2- Pak-Arab CAN 450

NP 305

UREA 92

3 Fatima Fertilizer CAN 420

NP 360

UREA 500

4- Fatima Group (Total) CAN 870

NP 665

UREA 592

5- Dawood Hercules (DHL) UREA 446

6- Pak American UREA 443

7- Engro UREA 2275

NPK 100

Source: Company profiles of each producer

Industry Market share:

Industry market share of each competitor is look like that

37%

23%

29%

6%5%

Market Share

Fauji TotalFatima Group TotalEngroDawood HerculesPak American

Fauji fertilizer takes the lead when it comes to production capacity of fertilizer at 37% of industry

capacity. It is followed by Engro currently having 29% of the industry capacity .Fatima Group

with the combined capacity of Pak-Arab and Fatima plants at 23%. Apart from these three major

players, the other two smaller sized players are Dawood Hercules and Pak- America fertilizer at

6% and 5% of industry capacity respectively.

Sales Design: