Fauji Fertilizer Company Limited Fauji Fertilizer Company Limited (FFC), the largest urea manufacturer in the country,

was incorporated on May 08,1978 as a joint venture between Fauji Foundation, Pakistan and M/s Haldor Topsoe A/S of Denmark. It was established to fill the projected gap in demand and indigenous production. Company shares are held by Fauji Foundation (43%) and various investment companies, financial institutions and individuals. The Company was listed on Karachi and Lahore Stock Exchanges in 1991 and on Islamabad Stock Exchange in 1992. Company employees were also allotted shares for motivation and promoting a sense of participation. Based on related criteria of Karachi Stock Exchange, primarily quantum of dividend payout, FFC has been placed in the list of top 25 companies of Pakistan consecutively for seven years since 1994, topping the list in 1997. FFC has many landmarks to its credit. Since commencement of its commercial production in mid June 1982 till December 2000, the Company has sold 22.89 million tons of fertilizers. This includes 17.79 million tons of Sona urea and 0.52 million tons Sona DAP in the domestic market and 0.39 million tons urea exports to China, Iran, Philippines, India, Bangladesh, Sri Lanka, Thailand and Tanzania. The remaining 4.19 million tons include imported fertilizers i.e. urea, DAP, NP, etc. Presently, it is marketing over 2 million tons of fertilizers annually and holds 44% share of the urea market. It has saved the country around US $ 3 billion through import substitution and contributed almost Rs. 30 billion to the Government by way of taxes, levies, custom duties, excise duty/ surcharge on gas purchases besides providing employment to hundreds of individuals. FFC together with Fauji Foundation from Pakistan and Jordan Phosphate Mines Company from Jordan sponsored the establishment of a urea/ DAP complex at Port Qasim, Karachi. FFC-Jordan Fertilizer Company Limited (FJFC) was incorporated in November 1993 as a public limited company. FFC's shareholding is 30% of the paid up capital of FJFC. Under an agreement FFC is marketing the entire production of FJFC under its own brand name Sona. FFC has progressed well from its inception till to-date. Three projects in a span of less than 20 years have been set up each incurring over US$ 300 million is a performance record unparalleled

in the country. Building on its foundations the Company is confident to take on new challenges. FFC's vision for the 21st century is diversification and establishing projects beyond the territorial limits of the country in collaboration with world famous international industrial holdings. The manufacturing facilities, located in Goth Machhi near Sadiqabad in Rahimyar Khan consist of two ammonia/ urea plants with a designed production capacity of 1.33 million tons of urea based on natural gas from Mari Gas Fields. Over the years, the plants have demonstrated operational excellence which serves as a reference for the related process technology engineering concerns. Delegations from China, Middle East and Far East have visited the Plant site to acquire knowledge for their investment decisions. Product quality is accorded high priority and ISO-9002 certification confirms the excellent operational and maintenance skills of the employees and their level of performance. Great emphasis is placed on safe operations. Many awards of honour from National Safety Council, U.S.A. reflect strict compliance of plant safety standards. FFC commenced marketing operations in April 1979 with a pre-production programme called the Seeding Programme. With the commencement of commercial production in June 1982, FFC launched its product under the brand name "SONA". Since inception, a growth oriented marketing strategy has been adopted keeping in view future expansions. FFC operates in all the four provinces of the country and Azad Kashmir. The marketing area has been divided into 3 sales zones, 11 sales regions and 61 sales districts with a network of over 3,000 well trained dealers. This network is spread over 1400 locations. Due to seasonality of fertilizer consumption, the Company has established a network of 120 field warehouses to meet its storage requirements. Company's sales activities are well supported by planning, distribution and warehousing, advertising and sales promotion, finance, administrative and farm agronomic services. From the very beginning FFC was able to meet the challenges. It was able to market its entire production and capture the desired market share. Sona urea was accepted by the farming community and Sona brand was established as a premium brand. With the start-up of its plant, the country became not only self sufficient but also surplus in urea. FFC exported urea to many

countries from 1983-86. However, when local demand again exceeded production in 1986 the country again started importing urea. FFC once again came forward and put-up another urea manufacturing facility at Goth Machhi to meet the growing demand. The new plant commenced commercial production in March 1993. The Government of Pakistan deregulated the trade and prices of phosphatic fertilizers in Aug 1993. Subsequent to this decision FFC started self imports of these fertilizers and as a result timely imports were arranged. Farmers were provided quality product in bags with guaranteed correct weight. This brought a very positive qualitative change in the phosphatic fertilizer business. FFC believes in selling a programme rather than just products. To this end, the Company has adopted a customer oriented strategy by marketing quality products backed by efficient and effective support services with emphasis on developing the market through practical and innovative farmer education. Farmer Advisory Service with well qualified agronomists was established by the Company in 1981, a year before the commencement of commercial production. This free of cost and on the spot service to the farmers is provided in the form of crop demonstrations, field days, farmer meetings, group discussions, farm visits and distribution of technical literature in Urdu/ Sindhi on important crops. The farmers are also provided highly subsidized soil/ water testing facilities through three laboratories equipped with the state of art equipment and computerized recommendation systems. The Company pursues an innovative education oriented advertising policy utilizing electronic/ print media and roadside advertising. Radio commercials are developed in regional languages. FFC has conducted four international seminars on core agricultural issues. Through these seminars which were attended by various local and foreign luminaries, special recommendations were developed to address the issues and enhance agri. production. Fauji Fertilizer Company Ltd. remains committed to continue to play its role in the development of agriculture in Pakistan by not only supplying high quality fertilizers but also technical services to the farmers in the years to come for improving agricultural productivity and increasing their income.

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 n June, 1982. In its first year of production the plant operated at its designed capacity of 570,000 metric tons 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 percent 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 plan to 695,000 metric tons which is 122 percent 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 Fertilizer Sales 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 selfsufficient 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 19831986 when local demand again exceeded indigenous production. Since 1986 our country again started importing increasing quantities of urea which reached 620,000 mt in 1996. FFC again rose to [TABULAR DATA OMITTED] 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 metric tons of urea per year at a cost 7 billion rupees. FFC Project II which comprises of new ammonia and urea plan 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 1.41 million tons from both the plants, FFC achieved a urea market share of 42 percent during the year 1996. The market share of FFC in comparison with the competitors from 1994-96 is given in the following table. 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 Strategies 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 15 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 wheel 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 makes 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, 1996 are 15.3 million metric tons. This includes sales of 11.8 million metric tons of Sona urea including exports of 0.33 million metric tons during urea surplus years, which in a span of nearly 15 years is a remarkable achievement. The company saved foreign exchange valuing over 1.7 billion US $ 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 the Karachi and Lahore Stock Exchange. 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 as 7th in the list of top 25 best performing companies of Pakistan for the year 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 metric tons of DAP and 550 thousand metric tons of granular urea. Fauji Fertilizer Company 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. Manufacturing The largest urea manufacturing facility of Pakistan consisting of two ammonia/urea units owned by FFC, is built at Goth Machhi in district Rahim Yar Khan.Goth Machhi is situated at a distance of 2 kms from the main Lahore-Karachi highway and is adjacent to the main railway line. The two plants are based on natural gas from Mari Gas Fields and have an annual designed production capacity of 1.3 million tons of urea. Over the years, the plants have demonstrated an operational excellence which has become a reference for the engineering companies whose process technologies are used here. Delegations from China, Middle East and Far East keep visiting the plant site for gaining first hand knowledge before deciding to purchase a new plant. Human Resources The FFC Management, acknowledging the importance of human resources has always placed personnel management at the top of its priority list. The Human Resources Department, therefore, right from the inception of the Company has played a vital role in steering the Company through all its phases, operations and progress.

The functions of Human Resources Department vis-a-vis personnel management and human resources development are going side by side and it is due to the progressive approach and dynamic philosophy of the management that Personnel Management remains abreast with the latest style of management ensuring high level of motivation and satisfaction of the work force under varied situations. Personnel policies are kept updated and are periodically modified to respond to the latest socio-economic changes and market trends of the country. Hiring quality manpower, keeping them happy, satisfied and motivated are the pillars of the Human Resources Department; justice, fair play and merit oriented treatment are some of the ingredients of processing cases by the Human Resources Department. For Human Resource development, another aspect which receives its due share is training. The employees are exposed to various kinds of cross training, technical courses, management courses, workshops and seminars both at home and abroad. At Plant site, the Company has a Technical Training Centre, which is unique, and the only centre in Asia having a true replica of the Plant for providing realistic training as far as possible, to the employees. Employees' welfare has all along received due consideration by the Management. A number of agreements have been signed with CBA Workers Union, resulting in handsome remuneration packages to employees. The company, since its inception, has undertaken five salary revisions for Management employees, to remain amongst the top paying organizations of the country. It is due to the sheer sincerity, welfare oriented policies and concern for every single employee that there has never been any strike, lock out or go slow in FFC. Technical Training Achievements in Customized Training-Foreign Clients

S.No 1. 2.

Company Kaltim-3 Fertilizer, Indonesia Fertinito, Venezuela

Training Area Urea Plant Operation Ammonia/Urea (Operation &

Year 2001 1999

Maintenance) Huainan China Gulf Petrochemical Ind. Chemical Works, Ammonia Operation. Urea Plant Operation Back End

3.

1998

4.

Bahrain. State Oil Company, Norway

Maintenance Ammonia F.E. Operation Urea Plant Operation &

1997

5.

1996

6.

Hainan Group, China

Maintenance Urea Plant Operation Urea Plant Operation Ammonia Plant Operation & Maintenance Ammonia Plant Operation.

1996

7. 8.

Inner Mongolian, China SNGCP Group. China

1995 1994 19891991 1987

9.

Jamuna Fertilizer, Bangladesh

10.

Kaltim-3 Fertilizer, Indonesia

Safety Measures Safety has always been a hallmark of our performance. We have always placed safety ahead of all other business requirements. We have come a long way to develop a safety culture where every body speaks safety language. Achievement of over 23 million man-hours of safe operations is reflective of our best corporate Practices. Our Philosophy

We believe that most of the accidents are caused by human error and are preventable. The management recognizes that safety is of prime importance and high production targets can only be achieved through a good safety performance. FFC endeavors excellence in the field of personnel and plant safety. Personnel safety is regarded above all business requirements. Achievements The company runs a safety program through which all employees are educated and trained to perform their duties safely. The effectiveness of the safety program is reflected by the various awards won from National Safety Council (USA) since 1982. The company has received 15 awards of honor. Two special safety awards on outstanding performance were given to FFC in 1989 / 1993 by the council for constantly achieving outstanding performance in the field of safety. FFC also has the honor of achieving all time best 16.49 Million man-hours without lost time injury as of 31 December 2001, which is the all time best. Program All safety achievements are accomplished by coordinated efforts of the safety section and all departments. A safety culture at the plantsite is created in which employees are motivated to participate in safety talks, slogan competitions and safety incentive programs. House keeping is the essential feature of our safety programs, which enables us to keep our plant in excellent presentable form. All employees receive token award on achievements of safe million man-hours milestone. The company not only believes in safety at the plant but also promotes off the job safety. Township residents and both schools are also part of safety program. PACKING MATERIAL WAREHOUSE Bags, liners and threads are stored separately under one roof in this warehouse. This store covers an approximate area of 1250 sq. meter. Monitoring and Control Plant safety performance is reviewed monthly by safe operation committee (SOC). General Manager Plant is the Chairman and all departments Managers are SOC members. Routine plant

audits ensure compliance to all safety standards applicable to the industry and strict compliance to industrial codes is adhered to for the new installations and modifications. AWARDS FROM NATIONAL SAFETY COUNCIL, USA

Description Award of Honor First Place Award Second Place Award Award of Merit Outstanding Safety Award

No. of Awards Received 15 05 04 04 02

Environment Like safety, environment at plant site is held sacrosanct. All efforts remain focused on the maintenance, preservation and improvement of environment. If not complete elimination, mitigation of pollution is the primary goal. Management is completely committed in its support to sustenance of environment, which encompasses pollution, noise and greenery. FFC has spent millions in achieving a complete control of the environment. For FFC, end of the pipe treatment remains the last resort. It believes in mitigating pollution through recycling, elimination or bringing changes to the system. Plant operation is strictly controlled to maintain a safe environment for plant personnel as well as the surrounding community.

Human Resource Development

An ornate technical training centre was established within few years of commissioning of PlantI. It proved to be one of the major milestones in ensuring that efficient and highly qualified personnel are always available at the plant. FFC has not only benefited from the establishment of this training institute but has along the way provided training to personnel from a number of other organizations both inside and outside the country. Marketing Division FFC Marketing Division was established in July 1978. It is responsible for all the marketing operations including planning, sales, distribution and warehousing, advertising and sales promotion, finance, IT, administration and technical/farm agronomic services. The company markets its own prilled urea and the entire production of granular urea and DAP produced by Fauji Fertilizer Bin Qasim Ltd. under the brand name of "Sona". In addition, the company also market imported nitrogenous, phosphatic, potassic fertilizers and micro-nutrients. FFC is the only fertilizer company which operates all over the country with an extensive network of field warehouses and dealer network. Presently FFC market over 3.8 million tons of all fertilizers per annum with 62% urea market share and 42% DAP market share. Today, Sona is the most popular and premium fertilizer brand in the country and is widely accepted by the farming community. The Marketing Division has a well organized, trained and experienced team which is fully capable of handling and profitably selling large volumes of fertilizers in different market situations.