EXCELLENCE – FFC’S HALLMARK

SYED IQTIDAR SAEED

General Manager Technology & EngineeringFAUJI FERTILIZER COMPANY LIMITED

November 12, 2008

COMPANY INTRODUCTION

• Fauji Fertilizer Company is Pakistan’s largest manufacturer and seller of fertilizers

• Incorporated in 1978 as JV of Fauji Foundation and Haldor Topsoe, Denmark.

• Produces and markets fertilizer products under the premium brand name SONA

• One of Top-25 companies

UREA MARKET PARTICIPATIONYear 2007, MeT

Engro20%

FFC60%

Daw ood10%

Others10%

Total 2007 Urea Offtake: 4.86 million MT

LOCATION MAP

Plant Site – Goth Machhi

FFBL, Bin Qasim

Plant Site - Mirpur Mathelo

Marketing H. O.

Corporate Head Office

4,030 MTPD

1,740 MTPD

INVESTMENTS1982 Plant I, Goth Machhi 570,000 MTPY US$ 307 m

1992 DBN of Plant I 695,000 MTPY US$ 20 m

1993 635,000 MTPY US$ 317 m

1999 Fauji Fertilizer Bin Qasim

997,000 MTPY

US$ 460 m

2002 Acquisition of PSFL, Mirpur

Mathelo574,000 MTPY

US$ 145 m

2008 PMP, Morocco 375,000 MTPY

US$ 200 m

2009 DBN of Plant III 718,000 MTPY

US$ 40 m

2008 DBN of FFBL 1,288,000 MTPY

US$ 75 m

2009 Wind Power 50 MW

Plant II, Goth Machhi

US$ 130 m

VALUE ADDITION•Value addition of Rs. 20.2 billion in 2007, Foreign exchange savings of US$ 807 million

Redistribution (million Rs., Year 2007)2,201

5,428

659

11,979

67Government astaxes

Provider of capital

Shahreholder asdividends

Employees asrenumeration

Retained with thebusiness

REVENUE GROWTH

-

5,000

10,000

15,000

20,000

25,000

30,00019

8319

8419

8519

8619

8719

8819

8919

9019

9119

9219

9319

9419

9519

9619

9719

9819

9920

0020

0120

0220

0320

0420

0520

0620

07

milli

on R

s.

GROWTH IN INSTALLED UREA CAPACITY

0

500

1000

1500

2000

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

'000

Met

ric to

ns

FFC-1 DBN FFC-1 FFC-2 FFC-3

570,000 695,000

1,904,000

1,330,000

FFC PRACTICES AND VALUESFollow highest business ethics and standard of conductAttain excellence in all areas of its operationEnsure customer satisfaction through superior product quality and technical adviceFull compliance to occupational health & safety, and environmental standardsContinue to strive for improvement through:

Coordinated effortsFeedbackTrainingEmployee motivation

SUCCESS FACTORSa. Optimal operation of plants to achieve

maximum production

b. Commitment to Safety

c. Emphasis on Human Resource Development

d. Highly motivated and dedicated teams

e. Technology & Engineering Capabilities

SUCCESS FACTORSf. Effective Inventory Management System

g. Adequate Maintenance and Workshop Facilities

h. Inspection and plant audits

i. Plant Reliability Task Force

j. Quality Management System Implementation

k. Corporate Social Responsibility

ACQUISITION OF PSFL – A SUCCESS STORY

• Acquisition of Paksaudi Fertilizers, Mirpur Mathelo in 2002

• Due diligence by FFC professional team

• Areas in focus were • Evaluation of maximum production potential

• Assessment of plant integrity & reliability

• Identification of potential for further improvement

PRE-ACQUISITION PERFORMANCEYearly Avg. Performance

Prod, MT 582,000

CF, % 105SF, % 87Sp. Energy, GCal/MT Urea

7.8

Product Quality Moisture, % 0.46Biuret, % 1.00Fines, % 3.00

• Plant reliability• Capacity & Service factor• Product quality• High energy consumption • Safety and environmental

problems• Lack of standard

practices in Management, Operation and Maintenance

• Inadequate facilities• Administrative issues

MEASURES ADOPTED

• Technical skills and management practices implemented to bring plant at par with FFC standards

• Identified short-term and long-term measures to improve performance

• Investment plans

PERFORMANCE COMPARISONParameter Pre-Acquisition Average Post-

AcquisitionProduction, MeT 582,000 705,839Capacity Factor, % 105.0 120.2Service Factor, % 87.0 92.4Specific Energy, Gcal/Met Urea 7.84 6.74

Moisture in urea product, % 0.46 0.35

Biuret in urea product, % 1.00 0.86Fines, % 3.00 0.41

CONCLUSIONTo be a successful manufacturing company, following areas need attention of entire organization with commitment and support from the top management:• Commitment to safety• Compliance to systems and procedures• Human resources development• Implementation of rigorous maintenance & inspection procedures• Independent technical monitoring and audit• Strong engineering and technical backup

Thank You

TOTAL FFC UREA PRODUCTION (MeT)ACTUAL VS DESIGN (1982-2007)

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

Actual Design

MTPD / (Load %)

Plant I 2,490 / (118.3%)

Plant II 2,368 / (123.0%)

Plant III 2,201 / (126.5%)

DAILY PRODUCTION RECORDS

PLANT ON-STREAM FACTORS

85

90

95

100

1997 1998 1999 2000 2001 2002 2003P lant I P lant I I Wor ldwide aver age

North America Europe

Source: Plant Surveys International, USA

PRODUCT QUALITY Top quality product

Chemical composition (46% N, Biuret, Moisture)

Physical properties (Prill size, hardness, etc.)

Regular monitoring and investment to keep our product quality ahead of the competition

COMMITMENT TO SAFETY• Safety is exercised in all spheres of plant

operation

• 15 awards of honor from National Safety Council (USA) since 1982.

• Two special safety awards on outstanding performance in 1989 and 1993 by the Council for constantly achieving outstanding performance in the field of safety.

• Other awards as well.

SAFETY AWARDS

Description Number of Awards Received

Award of Honor 15First Place Award 5Second Place Award 4Award Of Merit 4

Perfect Award 2

Industry Leader Award 2

Outstanding Safety Award 2

HUMAN RESOURCE DEVELOPMENT

• Hiring at grassroots level to groom employees as per company needs

• Training • Apprenticeship Program: Graduates hired

and trained regularly. Only the best continue as company employees.

• Continuing Skill Improvement: Outside and in-house training on a variety of areas

• Cross Training: Effective employee training in different departments

TECHNICAL TRAINING CENTER• Technical Training Centre is

the only centre in Asia having a true replica of the Plant for providing training to the employees.

• Regular in-house training courses as well as for Pakistani industry.

• Fully equipped to impart training to employees and market its services to other clients from Pakistan and abroad

TECHNOLOGY & ENGINEERING DIVISIONContinuous monitoring and improvements of plant

operationsMajor role in expansion of FFC business by

implementing major modifications and new projects Debottlenecking of Plant I Plant II FFBL Plant III acquisition

Identify business diversification Wind Power

Close liaison with technology suppliers, other plants for knowledge sharing

QUALITY MANAGEMENT SYSTEM IMPLEMENTATION

• Routine audits by top-notch accreditation firms• Reaped significant dividends vis-à-vis quality

management system

1 ISO-9001:2000

Quality Management System, Certification by Bureau Veritas

Quality International

2 ISO 14001:1996 Environmental Management System

3 OHSAS

18001:1999

Occupational Health & Safety Assessment Series

CORPORATE SOCIAL RESPONSIBILITY

Hazrat Bilal Trust Hospital in Goth Machhi

Free medical camps in nearby villages

SONA Hospital at Mirpur Mathelo

• Free consultancy to local population (male and female doctors)

• Snake and dog bite cases, 24-hour emergency care

• Subsidized medicines and Lab facilities

Coronary care unit at Civil Hospital Mirpur Mathelo

CORPORATE SOCIAL RESPONSIBILITY - EDUCATION

• Scholarships for farmers’ children• higher secondary school and university

education throughout their tenures

• SONA Public School at a cost of Rs 33 million

• School adoption program (8 schools so far)

• Extend support to government high school having 1400 students

CORPORATE SOCIAL RESPONSIBILITY - ENVIRONMENT

• All emissions well within NEQS standards

• Continuous investment made by FFC

• Plant II is based on total recycle process

• Conversion of chromate based cooling water system to phosphate based

• Renewable energy