200 9 Analysis of Financial Statements Final Report Sectorial Analysis of Fauji Fertilizers Submitted To: Sir Maqbool - Ur - Rehman

Fauji Fertilizers | Institute of Business Management I Fauji Fertilizers 12/29/2009

Acknowledgement The compilation of this report could not have been realized without the blessing s of Almighty Allah. We are highly indebted to quite a few people who have been there from the beginning till the completion of our research. Their undue suppor t has been the source of inspiration for us to complete it efficiently within ti me. We would deeply like to thank our teacher Mr. Maqbool Ur - Rehman, Assistant Professor, Finance and Accounting, at I.o.B.M for his guidance during the proje ct. His excessive support has been the source of motivation to perform our best, regarding the report. Fauji Fertilizers | Appendix II

Contents Contents........................................................................ ............................................ III Company Profile................ ................................................................................ ......... 1 Mission Statement .................................................. ................................................2 Corporate Vision.............. ................................................................................ ........2 Manufacturing......................................................... ................................................ 2 Company Manufacturing Facilit ies...........................................................................3 Production Facilities........................................................... .....................................3 Production Efficiency.................... ...........................................................................4 Com pany Product Line............................................................... .................................5 Fertilizer SECTORAL OUTLOOK.................. .................................................................6 AGRICULTURE S ECTOR........................................................................... .................6 TYPES OF FERTILIZER.......................................... ....................................................7 GLOBAL SCENARIO........... ................................................................................ .......7 PRICING................................................................ ................................................... 9 International versus Local ................................................................................ .....10 DAP Prices.............................................................. ............................................... 11 DEMAND & SUPPLY.............. ................................................................................ ..12 TAXES...................................................................... .............................................. 14 Future Outlook Sales & growth. ................................................................................ 15 Company Financials........................................................... .......................................16 Balance Sheet......................... .............................................................................. 1 6 Income Statement.............................................................. ...................................17 Horizontal & Vertical Analysis............ .......................................................................18 Vertic al Analysis of Balance Sheet.................................................... ....................18 Vertical Analysis of Income Statement.................... ..............................................21 Horizontal Analysis of Balance Sheet....................................................................22 Hori zontal Analysis of Income Statement............................................. .................25 Component % age Analysis according to % age of Balance Sheet ........................27 Component % age Analysis according to % age of Income Statement.................30 Component Percentage Analysis according to Pakista ni Rupees of Balance Sheet ..................................................... ......................................................................... 32 Fauji Fertilizers | Appendix III

Component Percentage Analysis according to Pakistani Rupees of Income Statement. ................................................................................ ............................. 34 Internal Ratio Analysis........................ ......................................................................35 LIQUIDI TY RATIO........................................................................ ............................35 TURNOVER/EFFICIENCY RATIO........................ .......................................................39 SOLVENCY/LEVERAGE RATI O............................................................................... ..42 COVERAGE RATIO............................................................. .....................................44 PROFTABILITY RATIO...................... .......................................................................47 MARKET RATIO.......................................................................... ............................52 External Ratio Analysis.......................... ...................................................................54 LIQUIDITY RATIO........................................................................... .........................54 TURNOVER/EFFICIENCY RATIO........................... ....................................................58 SOLVENCY/LEVERAGE RATIO.. ...............................................................................6 2 .............................................................................. ................................................ 63 ............................ ................................................................................ .................. 64 COVERAGE RATIO............................................ ......................................................64 PROFTABILITY RATIO..... ................................................................................ ........66 ..................................................................... ......................................................... 69 MARKET RATIO....... ................................................................................ ...............70 DuPont Return on Equity....................................... ...................................................71 Insight for Investors & Cr editors......................................................................... ......72 Future Projections..................................................... ................................................73 Problems & their proposed sol utions with the firm...................................................74 Refere nces............................................................................ ....................................76 Appendix................................. ................................................................................ . 77 Internal Ratios of the Company............................................. ................................77 External Ratios for Industry Average......... ............................................................79 Fauji Fertilizers | Appendix IV

Fauji Fertilizers | Appendix V

Company Profile The overall financial position of the company is stable, over the year which is one of the reason of high efficiency and profitability of FFC. All the profitabi lity ratios are also showing increasing trend on the back of increasing Sales as well as Gross profit which is because of good investments by the company in hig h yielding projects. Leverage and Liquidity ratios related to FFC are also impro ving from past to present. If the company would be able to continue its current stability and investments in profitable projects then the company would be able to increase its market share as well as Profitability. With a vision to acquire self sufficiency in fertilizer production in the country, FFC was incorporated i n 1978 as a private limited company. This was a joint venture between Fauji Foun dation (a leading charitable trust in Pakistan) and Haldor Topsoe A/S of Denmark . The initial authorized capital of the company was 813.9 Million Rupees. The pr esent share capital of the company stands at Rs. 3.0 Billion. Additionally, FFC has Rs. 1.0 Billion stakes in the subsidiary Fauji Fertilizer Bin Qasim Limited (formerly FFC-Jordan Fertilizer Company Limited). FFC commenced commercial produ ction of urea in 1982 with annual capacity of 570,000 metric tons. Through De-Bottle Necking (DBN) program, the production capacity of the existing plant increased to 695,000 metric tons per year. Production capacity was enhanced by establishing a second plant in 1993 with ann ual capacity of 635,000 metric tons of urea. FFC participated as a major shareholder in a new DAPS/Urea manufacturing complex with participation of major international/national institutions. The new compan y Fauji Fertilizer Bin Qasim Limited (formerly FFC-Jordan Fertilizer Company Lim ited) Fauji Fertilizers | Company Profile 1

commenced commercial production with effect from January 01, 2000. The facility is designed to produce 551,000 metric tons of urea and 445,500 metric tons of DA P. This excellent performance was due to hard work and dedication of all employees and the progressive approach and support from the top management. In the year 2002, FFC acquired ex Pak Saudi Fertilizers Limited (PSFL) Urea Plan t situated at Mirpur Mathelo, District Ghotki from National Fertilizer Corporati on (NFC) through privatization process of the Government of Pakistan. This acquisition at Rs. 8,151 million represents one of the largest industrial s ector transactions in Pakistan. Mission Statement FFC is committed to play its leading role in industrial and agricultural advance ment in Pakistan by providing quality fertilizers and allied services to its cus tomers and given the passion to excel, take on fresh challenges, set new goals a nd take initiatives for development of profitable business ventures. Corporate Vision FFC vision for the 21st Century remains focused on harmonizing the Company with fresh challenges and encompasses diversification and embarking on ventures withi n and beyond the territorial limits of the Country in collaboration with leading business partners. Manufacturing The largest urea manufacturing facility of Pakistan consisting of two ammonia/ur ea units owned by FFC is built at Goth Machhi in district Rahim Yar Khan. Goth M achhi is situated at a distance of 2 kms from the main Lahore-Karachi highway an d is adjacent to the main railway line. Fauji Fertilizers | Appendix 2

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 pl ants have demonstrated an operational excellence which has become a reference fo r the engineering companies whose process technologies are used here. Delegation s from China, Middle East and Far East keep visiting the plant site for gaining firsthand knowledge before deciding to purchase a new plant. Company Manufacturing Facilities The Company has three plants and is a shareholder in FFBL. It markets the whole production of FFBL. PLANT-I Goth Machhi, Sadiqabad, Rahim Yar Khan PLANT-I Goth Machhi, Sadiqabad, Rahim Yar Khan PLANT-III Mirpur Mathelo PLANT-IV Fauji Fertil izer Bin Qasim Limited Production Facilities BASE UNIT-GOTH MACHHI (FFC-1) Start-up: June 1982 Design Capacity Ammonia: 330,0 00 Met/Year Urea: 570,000 Met/Year REVAMPED BASE UNIT Capacity Enhanced: 1992 Fauji Fertilizers | Appendix 3

New Capacity Ammonia: 403,000 Met/Year Urea: 695,000 Met/Year EXPANSION UNIT-GOT H MACHHI (FFC-2) Start up: 1993 Design Capacity Ammonia: 363,000 Met/Year Urea: 635,000 Met/Year MIRPUR MATHELO UNIT (FFC-3) (EX-PAKSAUDI FERTILIZER LTD.) Start up: Oct 1980 Acquition by FFC: 31 May, 2002 Merged with FFC: 1 July, 2002 Desig n Capacity Ammonia: 330,000 Met/Year Urea: 574,000 Met/Year Production Efficiency Both the plants have been consistently operating in excess of designed capacity reaching as high 115% for the Base Unit and 119% for the Expansion Unit as a res ult of high efficient operations, good maintenance and strong technical support. Fauji Fertilizers | Appendix 4

Company Product Line FFC is a leading manufacturing company with over 60% shares of urea manufacturin g and marketing in Pakistan. Urea, which represents 65% of total fertilizer cons umed and di-ammonium phosphate (DAP), which accounts for 18%, are the main types of fertilizer used in Pakistan, but there is a total of eight different fertili zer products which fall into three categories. Urea, along with calcium ammonium nitrate (CAN) and ammonium sulphate (AS) together make up almost three fourths of total fertilizer consumption and come under the nitrogenous category. Under t he phosphatic category which makes up about 27%, is DAP, triple super phosphate (TSP), single super phosphate (SSP) and nitro phosphate (NP). And under the last category, potassic is sulphate of potash which makes up only 1%. Since the soil in Pakistan generally tends to be deficient in nitrogen, urea is the most used fertilizer. DAP is used, as most phosphatic fertilizers are to counter the effec t of the acidic urea and maintain levels of fertility in the soil. SONA Granular o It produces 13% of total production SONA DAP o FFCL produces 31% of countrys demand. It is the sole producer of DAP. Fauji Fertilizers | Appendix 5

Fertilizer SECTORAL OUTLOOK AGRICULTURE SECTOR The undeniable importance of the agriculture sector to the economy of Pakistan i s reflected in its contribution to national output, employment and export earnin gs. This sector contributes 22% to the country s Gross Domestic Product (GDP) an d employs 43% of total labor force. Growth in this area of Economy is vital for poverty alleviation, as about 66 percent of rural population is directly or indi rectly dependent on the agriculture sector for sustenance. Pakistans major source of foreign exchange earnings is the textile sector which also relies on agricul tural performance. The major crops of Pakistan are wheat, cotton, rice and sugar cane, which make up 7% of the countrys GDP. Fertilizer has a significant contribu tion in increasing crop yields and productivity. Proper application of nutrients helps in efficient utilization of limited natural resources such as land and wa ter. Fertilizers improve crop yield by removing the deficiency of chemical eleme nts taken from the soil by harvesting, grazing, leaching or erosion. Coupled wit h improved seeds, better insecticides and more effective fungicides, chemical fe rtilizers play a vital role in boosting agricultural output. With proper farmer education and increased awareness, the fertilizer off-take can improve substanti ally. Nutrient application in suitable quantities can further improve farm produ ctivity, thereby helping in eradicating poverty. Fauji Fertilizers | Appendix 6

TYPES OF FERTILIZER Urea, which represents 65% of total fertilizer consumed and di-ammonium phosphat e (DAP), which accounts for 18%, are the main types of fertilizer used in Pakist an, but there is a total of eight different fertilizer products which fall into three categories. Urea, along with calcium ammonium nitrate (CAN) and ammonium s ulphate (AS) together make up almost three fourths of total fertilizer consumpti on and come under the nitrogenous category. Under the phosphatic category which makes up about 27%, is DAP, triple super phosphate (TSP), single super phosphate (SSP) and nitro phosphate (NP). And under the last category, potassic is sulpha te of potash which makes up only 1%. Since the soil in Pakistan generally tends to be deficient in nitrogen, urea is the most used fertilizer. DAP is used, as m ost phosphatic fertilizers are to counter the effect of the acidic urea and main tain levels of fertility in the soil. GLOBAL SCENARIO The world grain consumption has outpaced production in six of the last seven yea rs, with 2005 being the only exception, in which production superseded supply du e to favorable weather in almost all the major grain producing countries. With t he growing demand of food and rapid increase in demand for biofuels, the grain c onsumption growth has witnessed an increase of 2% in 2007 from the historical av erage rate of 1.2% p.a. This has led to a widening gap between consumption and p roduction resulting in sharp increase in food prices in the global market. Durin g 2007, total global production of grains was recorded at 2.3bn tons, up 4% YoY. Despite, the increase in production the global commodity prices have climbed si gnificantly during the past twelve months on the back of rising demand from emer ging economies. Corn, wheat, and rice account for about 85% of the global grain harvest (in terms of weight), while sorghum, millet, barley, oats, and other les s common grains make up the rest. China, India, and the United States alone acco unt for 46% of global grain production; Europe, including the former Soviet stat es, grow another 21%. Fauji Fertilizers | Appendix 7

In 2007, a 200mn ton jump in the global coarse grain harvest was responsible for nearly all of the increase in the total grain harvest. Production of coarse gra ins a group that includes corn, barley, sorghum, and other grains fed mainly to animals increased 10% from 985mn tons in 2006 to 1,080mn tons in 2007. During 20 07, a significant amount of global corn production was used in producing biofuel s, the use of which is being promoted in developed countries (mainly EU and USA) . Governments in developed countries have been encouraging the use of biofuels p rimarily due to (1) Increasing price of international crude oil and (2) Bio-fuel s are environment friendly. Out of a total of 784mn tons of corn harvested durin g 2007, about 255mn tons or 32.5% was used in extracting biofuels which has resu lted in sharp increase in price of the commodity. Higher corn prices prompted ma ny a farmers in various countries (China, Brazil and the United States) to switc h to corn harvesting. Another major consumer of grains is the livestock sector, which accounted for approximately 627mn tons (27%) in the form of feed for the c attle. Demand of grains from this sector has grown rapidly over the past few yea rs on account of higher consumption of dairy products and meat by the developing countries especially China, India and Brazil. The amount of grain stored by gov ernments, a good measure of the global cushion against poor harvests and rising prices continues to decline. Global cereal stocks were expected to stand at 318m n tons by the close of the 2007 season, equivalent to about 14 percent of annual consumption, lowest since many years. In comparison to the global scenario, Pak istans food grain production has witnessed a rising trend over the years register ing a 4-year CAGR (FY0206) of 5.7% on the back of good harvest of major crops (w heat & rice) which account for almost 84% of the total grain production of the c ountry. Fauji Fertilizers | Appendix 8

PRICING Local Arena Fauji Fertilizers | Appendix 9

Urea prices have shown a positive trend over the last few years on the back of s tep-wise increase in feedstock gas prices, the primary raw-material for urea man ufacturing. Government heavily subsidizes feedstock prices in Pakistan, to keep the urea prices within affordable limits of the farmers. A 50kg bag of urea is s old at PKR 558-565 (prices were revised upwards in Dec07) versus a price of appro ximately PKR 1000 per bag in the international market. DAP prices on the other h and have undergone a radical increase during 2007, due to record high phosphoric acid prices in the international market (a major raw material). Local prices of DAP are highly correlated with their global rates since over 70% of the commodi ty used in the country is imported. As a result, domestic DAP prices have surged during CY07, rising from PKR 800 per bag at the start of the year to touch PKR 1,680 by Dec07. International versus Local Urea Prices Fauji Fertilizers | Appendix 10

International urea prices have escalated at a healthy 4-year CAGR (FY03-07) of 1 9.6%, driven by its increased usage globally from 128mntpa in 2005 to 138mntpa i n 2007. On the other hand local urea prices have risen at a 4-year CAGR of 6.8% from FY03 to FY07. GOP heavily subsidizes the feedstock gas prices in order to m ake available the fertilizer to the local farmers at an affordable cost. Urea pr ices are primarily linked to the increase in feedstock gas prices, which are exp ected to rise at a next 4-year CAGR of 11% going forward. Consequently we expect local urea prices to increase at a 4-year CAGR of 5.5% for the period FY07-FY11 . DAP Prices International DAP prices have risen sharply during 2007 (+143% YoY) on the back of rising demand for the phosphatic fertilizer for harvesting of crops used in p roduction of biofuels. In the Fauji Fertilizers | Appendix 11

local market, price of DAP fertilizer too has followed suit and has gone up from PKR 873 per 50kg bag at the start of 2007 to around PKR 1,680 per bag at presen t. Despite the PKR 470 per bag subsidy by the GOP, the hefty rise in DAP prices has caused its off-take to drop significantly during the past few months with ma ny farmers reverting to the use of urea. FFBL the only producer of DAP and cater s to only 31% of the DAP demand of Pakistan while the rest of the demand is met through imports. Since the local prices are highly correlated to global prices w e estimate DAP prices to increase at a 4-year CAGR (CY07-11E) of 6.3%. DEMAND & SUPPLY There are nine fertilizer plants in Pakistan with a total installed capacity of 4.35mn tons including urea, Di-ammonium phosphate (DAP), single super phosphate (SSP), calcium Fauji Fertilizers | Appendix 12

ammonium nitrate (CAN), nitro phosphate (NP) and ammonium sulfate (AS). Total de mand of these fertilizers is estimated to grow at an average of 4% per annum in the medium term. The shortfall of approximately 1.1mntpa is met through import o n which GOP provides subsidies. During FY08, the GOP allocated a sum of PKR 13.5 bn for import of various fertilizers. The graph above shows the demand trend of both major fertilizers, urea and DAP, which has increased at a 4-year CAGR (CY02-06) of 4.6% and 7.7% respectively. Gi ven the increase in crop prices, low per acre usage of fertilizers, increasing a wareness among the farming community and vast cultivable land, we estimate deman d growth of fertilizers to average over 4% per annum over the next 4 years. Fauji Fertilizers | Appendix 13

TAXES The government has privatized and deregulated fertilizer imports and prices. In 1986, all subsidies on nitrogenous fertilizers were abolished followed by phosph ates in 1993 and potash in 1997. Provincial quotas were abolished, provincial su pply organizations in the public sector abandoned and import controls were lifte d. All imports are affected by the private sector. In 2001, the government impos ed a 15 percent general sales tax on all fertilizer products. Farmers have to pa y international prices for imported products, apart from urea. The share of the private sector in fertilizer marketing is 89 percent, compared to 11 percent for the public sector. The private sector handles about 90 percent of the urea and 100 percent of the DAP, the two major fertilizer products consumed in the countr y. A dealer network of about 8 000 retailers exists in the country. Fertilizer c ompanies select and train the dealers. There is no government intervention. Howe ver, under Fertilizer Acts promulgated by provinces, fertilizer quality is monitor ed by the provincial governments. Fauji Fertilizers | Appendix 14

Future Outlook Sales & growth The future outlook of the fertilizer sector is very strong because of supportive government policies, favorable climatic conditions and gas pricing. The Economi c Coordination Committee (ECC) has directed Sui Northern Gas Pipelines Limited ( SNGPL) to market an additional 100 million cubic feet a day of natural gas from the Qadirpur gas field, close to both Engro and the FFC. Short term outlook appe ars encouraging with significant projections for strong demand for our fertilize rs. In the long term, the Company is committed to achieve sustained levels of op erations at demonstrated operating efficiencies through focus on their fundament al strengths. Customs duty of 5% was withdrawn from imported urea. A similar wit hdrawal was done on imported DAP fertilizer last year this will not affect local manufacturers The medium to long term projected demand supply gap situation tog ether with commissioning of their BMR projects with enhanced urea production cap acities would further consolidate their market presence and allow improved retur ns to the Company and its stakeholders. Fauji Fertilizers | Appendix 15

Company Financials Balance Sheet 2001 (000 Rupees) SHARE CAPITAL & RESERVES Share capital Issued, subscribed and f ully paid Capital reserve Reserve for issue of bonus shares Revenue reserves Tot al Shareholders Equity Redeemable Capital NON CURRENT LIABILITIES Long Term Liabi lities DEFERRED TAXATION CURRENT LIABILITIES Trade and other payables Interest a nd mark - up accrued Short term borrowings Creditors, accrued & other liabilitie s Current portion of L.T Fin Taxation Total Liabilities Total Liab. & SHE 2002 ( 000 Rupees) 2003 (000 Rupees) 2004 (000 Rupees) 2005 (000 Rupees) 2006 (000 Rupees) 2 007 (000 Rupees) 2008 (000 Rupees) 3,000,000 2,564,959 160,000 6,776,673 9,501,632 4,420,014 3,000,000 2,564,959 160,000 8,038,098 10,736,05 7 3,730,650 3,000,000 2,564,959 160,000 8,797,753 11,522,71 2 3,000,000 2,949,703 160,000 8,742,749 12,294,90 7 5,000,000 4,934,742 160,000 7,346,166 12,440,90 8 5,000,000 4,934,742 160,000 7,861,801 12,956,54 3 5,000,000 4,934,742 160,000 7,635,303 12,730,04 5 5,000,000 4,934,742 160,000 7,190,471 12,285,213 223,867 86,000 769,488 800,000 1,561,004 503,151 527,083 4,160,726 13,972,22 5 1 ,527,227 1,283,481 2,690,000 897,736 3,388,897 2,829,008 917991 975,960 9,009,592 28,166, 14 4 9,516,474 1,987,694 7,077,892 50,137 128,495 1,618,373 630,808 1,400,893 784,570 2,522,000 1,218,355 74,233 2,972,333 2,606,854 704,821 329,910 8,659,536 27,219,46 8 9,136,537 1,883,079 7,083,151 63,920 125,511 1,686,980 681,297 1,87 6,381 2,868,403 2,407,000 5,831,105 74,233 100,000 981,078 2,401,000 6,737,803 81,644 2,504,963 1,193,750 2,396,000 4,025,926 134,039 4,531,090 2,671,250 2,363,526 5,815,276 184,430 3,141,081 5,378,214 2,431,895 5,993,674 194,570 3,114,000 2269162 598,297 8,872,797 26,443,10 7 9,180,716 1,778,464 5,765,699 67,328 3,492 1,727,309 219,180 1,407,736 1887325 1,414,418 12,626,15 3 28,449,13 9 9,184,727 1,673,849 6,058,006 64,545 3 ,435 2,154,318 560,472 659,713 887,327 1,305,606 10,883,98 8 27,430,28 1 9,607,957 1,569,234 6,409,382 76,647 2 ,474 2,202,053 952,905 961,427 1,022,500 1,313,106 11,476,39 3 29,241,21 4 10,390,49 0 1,569,234 6,325,129 142, 782 2,144 2,407,988 642,836 1,722,602 743,036 1,778,361 11,823,641 31,918,963

Prop, PLANT & Equip GOODWILL LONG TERM INVESTMENTS L.T LOANS & ADVANCES L.T Dep. & Prep CURRENT ASSETS Stores, spares and loose tools Stock in trade Trade debts 12,730,813 1,569,234 7,744,779 163,102 1,524 3,034,268 258,094 495,929 2,491,364 45,369 161,881 1,229,557 614,327 880,298 Fauji Fertilizers | Appendix 16

Loans & advances Dep. Other Short term investments Cash and bank balances 1,025,100 3,726,744 2,270,358 9,746,384 13,972,22 5 1068419 2,792,279 1,894,680 9,405,452 28,166,14 4 647619 2,200,845 1,834,148 8,927,270 27,219,46 8 671,896 4,565,457 1,055,830 9,647,408 26,443,10 7 Total Assets 722,709 6,195,252 1,172,113 11,464,57 7 28,449,13 9 1,572,123 2,452,850 1,623,229 9,764,587 27,430,28 1 1,660,345 3,027,664 1,350,000 10,811,43 5 29,241,21 4 1,477,792 3,511,563 931,865 9,709,511 31,918,963 Income Statement 2001 (000 Rupees) Sales Cost of sales GROSS PROFIT Distribution cost Operating Pr ofit Finance cost Other expenses Other income NET PROFIT BEFORE TAXATION Provisi on for taxation NET PROFIT AFTER TAXATION Earnings per share No. of Shares Outst anding 11,982,41 4 6,362,616 5,619,798 1,022,139 4,597,659 275,271 390,520 3,931 ,868 1,061,844 4,993,712 1,790,000 3,203,712 12.49 256,496 2002 (000 Rupees) 16,7 86,69 9 10,109,11 7 6,677,582 1,457,797 5,219,785 668,213 496,073 4,055,499 783, 922 4,839,421 1,766,000 3,073,421 11.98 256,496 2003 (000 Rupees) 21,034,62 9 13, 701,31 9 7,333,310 1,851,170 5,482,140 520,838 488,206 4,473,096 457,413 4,930,5 09 1,786,000 3,144,509 12.26 256,496 2004 (000 Rupees) 21,027,03 0 13,157,65 3 7, 869,377 1,766,652 6,102,725 372,949 560,494 5,169,282 933,762 6,103,044 2,099,00 0 4,004,044 8.11 493,474 2005 (000 Rupees) 25,481,12 1 16,382,71 4 9,098,407 2,37 1,208 6,727,199 325,999 626,819 5,774,381 1,439,955 7,214,336 2,317,000 4,897,33 6 9.92 493,474 2006 (000 Rupees) 29,950,87 3 20,242,19 4 9,708,679 2,746,782 6,96 1,897 501,241 735,331 5,725,325 1,259,819 6,985,144 2,349,000 4,636,144 9.39 493 ,474 2007 (000 Rupees) 28,429,00 5 18,311,52 5 10,117,48 0 2,418,793 7,698,687 70 3,612 845,327 6,149,748 1,665,205 7,814,953 2,454,000 5,360,953 10.86 493,474 20 08 (000 Rupees) 30,592,806 18,234,692 12,358,114 2,668,571 9,689,543 695,371 895, 647 8,098,525 1,942,558 10,041,083 3,516,000 6,525,083 13.22 493,474 Fauji Fertilizers | Appendix 17

Horizontal & Vertical Analysis Vertical Analysis of Balance Sheet 2001 SHARE CAPITAL & RESERVES Share capital Issued, subscribed and fully paid Ca pital reserve Reserve for issue of bonus shares Revenue reserves Total Sharehold ers Equity Redeemable Capital 2002 2003 2004 2005 2006 2007 2008 21.47 % 18.36 % 1.15% 48.50 % 68.00 % 31.63 % 10.65 % 9.11% 0.57% 28.54 % 38.12 % 13.25 % 11.02 % 9.42% 0.59% 32.32 % 42.33 % 11.35 % 11.15 % 0.61% 33.06 % 46.50 % 17.58 % 17.35 % 0.56% 25.82 % 43.73 % 18.23 % 17.99 % 0.58% 28.66 % 47.23 % 17.10 % 16.88 % 0.55% 26.11 % 43.53 % 15.66 % 15.46 % 0.50% 22.53 % 38.49 % NON CURRENT LIABILITIES Long Term Liabilities DEFERRED TAXATION CURRENT LIABILIT IES Trade and other payables Interest and mark - up accrued Short term borrowing s Creditors, accrued & other liabilities Current portion of L.T Fin Taxation 1.60% 0.62% 5.51% 0.00% 5.73% 4.56% 9.55% 3.19% 2.88% 9.27% 4.48% 10.85 % 9.10% 22.05 % 0.28% 0.38% 3.45% 8.44% 23.68 % 0.29% 8.81% 4.35% 8.73% 14.68 % 0.49% 16.52 % 9.14% 8.08% 19.89 % 0.63% 10.74 % 16.85 % 7.62% 18.78 % 0.61% 9.76% Total L & SHE 0.00% 0.27% 12.03 10.92 % % 11.17 10.04 9.58% % % 3.60% 3.26% 2.59% 8.58% 6.63% 3.23% 3.50% 3.77% 3.47% 1.21% 2.26% 4.97% 4.76% 4.49% 29.78 31.99 31.81 33.55 44 .38 39.68 39.25 % % % % % % % 100.00 100.00 100.00 100.00 100.00 100.00 100.00 % % % % % % % 2.33% 5.57% 37.04 % 100.00 % Fauji Fertilizers | Appendix 18

As we know that FFC is a leading manufacturing company with over 60% shares of u rea manufacturing and marketing in Pakistan. Let see how they progressed in perspect ive of all their Assets and liabilities over the years. The number of shares iss ued till 2004 was same after which they increased. The company after 2004 raised some share capital to raise fund as their value was Going Up. Although the shar eholders equity section was increasing but it was reducing in percentage as compa red to the assets section. The reduction was around 20 to 30 percent. The long t erm liabilities also started increasing from year to year and till 2008 it almos t doubles from the previous years. The amount of deferred taxation also was bein g reduced which seems that the company started paying off their deferred tax ins tead to defer it to the next upcoming years. In the year 2001 and 2002 we see th e redeemable capital which vanished in the upcoming years which tells us the sto ry that the company position is getting good and strong after year 2002 that the y were not in the need of urgent funds by issuing some temporary shares. The tra de and other payables increased by a huge amount in percentage from year 2004 wh ich tells the company increased the liabilities in greater proportion of percent age over the last six years. The short term borrowing was also been seen but the y did not increased that much as the trade and other payables and remained consi stent over the years. Creditors, accrued & other liabilities was just seen in th e year 2001 and 2002 after which company completely get rid of this liability. T he taxation amount was quiet high as around 30 to 40 percent all of the years be ing analyzed. Fauji Fertilizers | Appendix 19

The current liability section was around 30 to 40 percent which tells that the c ompany is been paying most of their liabilities in the one years period for the l ast eight years. Prop, PLANT & Equip GOODWILL LONG TERM INVESTMENTS L.T LOANS & ADVANCES L.T Dep. & Prep CURRENT ASSETS Stores, spares and loose tools Stock in trade Trade debts Loans & advances Dep. Other Short term investments Cash and bank balances 2001 10.93 % 17.83 % 0.32% 1.16% 8.80% 4.40% 6.30% 7.34% 26.67 % 16.25 % 69.76 % 100.0 0% 2002 33.79 % 7.06% 25.13 % 0.18% 0.46% 5.75% 2.24% 4.97% 3.79% 9.91% 6.73% 33.39 % 100.0 0% 2003 33.57 % 6.92% 26.02 % 0.23% 0.46% 6.20% 2.50% 6.89% 2.38% 8.09% 6.74% 32.80 % 100.0 0% 2004 34.72 % 6.73% 21.80 % 0.25% 0.01% 6.53% 0.83% 5.32% 2.54% 17.27 % 3.99% 36. 48 % 100.0 0% 2005 32.28 % 5.88% 21.29 % 0.23% 0.01% 7.57% 1.97% 2.32% 2.54% 21.78 % 4.12% 40. 30 % 100.0 0% 2006 35.03 % 5.72% 23.37 % 0.28% 0.01% 8.03% 3.47% 3.50% 5.73% 8.94% 5.92% 35.60 % 100.0 0% 2007 35.53 % 5.37% 21.63 % 0.49% 0.01% 8.23% 2.20% 5.89% 5.68% 10.35 % 4.62% 36. 97 % 100.0 0% 2008 39.88 % 4.92% 24.26 % 0.51% 0.00% 9.51% 0.81% 1.55% 4.63% 11.00 % 2.92% 30. 42 % 100.0 0% Total Assets Since the company position starts getting better from year 2002 the Fixed assets section increased in huge amount which tells us that the company really investe d In the buying of the fixed assets for much better capacity and storage so they can improve and increase their production. Fauji Fertilizers | Appendix 20

The company position as it start getting better and better from year 2002 they a lso invested lot of their money in the long term investments which tells how bet ter the company is and how much better they are improving financially. The curre nt assets section as it is clear that the stores, spares and loose tools and sto ck in trade were almost just enough as much they needed. It seems that the compa ny is utilizing their inventory as much they needed. The company also made a lot of percentage in short term investment which tells how much the company is in i nvesting in short term projects to raise more money and this amount was much bet ter in percentage. The current assets section was in the greater proportion as c ompared to rest of assets that how well the company not in the long term but als o in short term is keeping it better in the market and improved their position o ver the last few years. Vertical Analysis of Income Statement 2001 Sales Cost of sales GROSS PROFIT Distribution cost Operating Profit Finance cost Other expenses 2002 2003 2004 2005 2006 2007 2008 Other income NET PROFIT BEFORE TAXATION 100.0 0% 53.10 % 46.90 % 8.53% 38.37 % 2.30% 3.26% 32.81 % 8.86% 41.68 % 100.0 0% 60.22 % 39.78 % 8.68% 31.09 % 3.98% 2.96% 24.16 % 4.67% 28.83 % 100.0 0% 65.14 % 34.86 % 8.80% 26.06 % 2.48% 2.32% 21.27 % 2.17% 23.44 % 100.0 0% 62.57 % 37.43 % 8.40% 29.02 % 1.77% 2.67% 24.58 % 4.44% 29.02 % 100.0 0% 64.29 % 35.71 % 9.31% 26.40 % 1.28% 2.46% 22.66 % 5.65% 28.31 % 100.0 0% 67.58 % 32.42 % 9.17% 23.24 % 1.67% 2.46% 19.12 % 4.21% 23.32 % 100.0 0% 64.41 % 35.59 % 8.51% 27.08 % 2.47% 2.97% 21.63 % 5.86% 27.49 % 21 100.0 0% 59.60 % 40.40 % 8.72% 31.67 % 2.27% 2.93% 26.47 % 6.35% 32.82 % Fauji Fertilizers | Appendix

Provision for taxation NET PROFIT AFTER TAXATION 14.94 % 26.74 % 10.52 % 18.31 % 8.49% 14.95 % 9.98% 19.04 % 9.09% 19.22 % 7.84% 15.48 % 8.63% 18.86 % 11.49 % 21.33 % As we seen the companys strengthens from year 2002 it improved in all kinds of se ction. If we talk about their sales are increasing a lot year after years. So be cause of this the cost of goods sold also increased in much greater amount but i n the year 2008 they not only increased their sales but also reduced the cost of sales expense by around 5 percent which is quiet good for future sales growth t he profits. The company also improved year after year in the gross profit sectio n as well which better tells the company how much they improved over the past fe w years and the big reason for that in not only better sales but also a decline in cost of sales percentage. The company maintained its distribution cost over a ll the past years which were around 8 to 9 percent. As the company improved in i ncreasing sales and decreasing their cost of sales and maintain their distributi on cost they also made a healthier operating profit over the last few years. So because all these reason the company improved in maintain their before tax and a fter tax profit to a much better position. Horizontal Analysis of Balance Sheet 2001 SHARE CAPITAL & RESERVES Share capital Issued, subscribed and fully paid Ca pital reserve 2002 2003 2004 2005 2006 2007 2008 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 115.00 % 100.00 % 166.67 % 192.39 % 100.00 % 166.67 % 192.39 % 100.00 % 166.67 % 192.39 % 100.00 % 22 166.67 % 192.39 % 100.00 % Fauji Fertilizers | Appendix

Reserve for issue of bonus shares Revenue reserves Total Shareholders Equity Rede emable Capital 100.00 % 100.0 0% 100.00 % 118.61 % 112.99 % 84.40% 129.82 % 121.27 % 129.01 % 129.40 % 108.40 % 130.93 % 116.01 % 136.36 % 112.67 % 133.98 % 106.11 % 129.30 % NON CURRENT LIABILITIES Long IES Trade and other payables s Creditors, accrued & other al Liabilities Total Liab. & Term Liabilities DEFERRED TAXATION CURRENT LIABILIT Interest and mark - up accrued Short term borrowing liabilities Current portion of L.T Fin Taxation Tot SHE 100.0 0% 100.0 0% 100.0 0%

100.00 % 573.32 % 3127.9 1% 116.67 % 61.13 % 350.46 % 2932.5 6% 158.33 % 100.00 % 371.54 % 167.00 % 140.08 % 62.59 % 208.13 % 194.81 % 598.24 % 94.74% 284.31 % 140.89 % 77.53% 223.49 % 1281.3 0% 2798.8 4% 757.79 % 100.00 % 12.50 % 76.44 % 438.24 % 2791.8 6% 875.62 % 109.98 % 313.12 % 93.01 % 533.24 % 2786.0 5% 523.20 % 180.57 % 566.39 % 208.13 % 1193.2 3% 2748.2 9% 755.73 % 248.45 % 392.64 % 419.03 % 2402.4 1% 2827.7 8% 778.92 % 262.11 % 389.25 % 100.0 0% 100.00 % 100.00 % 100.0 0% 100.0 0% 100.0 0% 100.0 0% 423.61 % 181.23 % 182.45 % 185.16 % 216.54 % 201.59 % 623.12 % 100.00 % 284.10 % 110.51 % 79.38% 450.99 % 113.51 % 213.25 % 189.25 % 601.14 % 89.47% 231.43 % 148.40 % 2.16% 375.10 % 268.35 % 303.46 % 203.61 % 601.40 % 84.21% 243.16 % 142.27 % 2.12% 176.35 % 247.70 % 261.59 % 196.32 % 629.11 % 78.95% 257.26 % 168.94 % 1.53% 203.22 % 249.13 % 275.83 % 209.28 % 680.35 % 78.95% 253.88 % 314.71 % 1.32% 147.68 % 337.40 % 284.17 % 228.45 % 833.59 % 78.95% 310.87 % 359.50 % 0.94% Prop, PLANT & Equip GOODWILL LONG TERM INVESTMENTS L.T LOANS & ADVANCES L.T Dep. & Prep CURRENT ASSETS Stores, spares and loose tools Stock in trade 100.0 0% 100.00 % 100.00 % 100.00 % 100.00 % 131.62 % 102.68 %

137.20 % 110.90 % 140.48 % 35.68% 175.21 % 91.23% 179.09 % 155.11 % 195.84 % 104.64 % 23 246.78 % 42.01% Fauji Fertilizers | Appendix

Trade debts Loans & advances Dep. Other Short term investments Cash and bank bal ances Total Current Assets Total Assets 100.00 % 100.00 % 100.0 0% 100.00 % 100.0 0% 100.0 0% 159.14 % 104.23 % 74.93 % 83.45% 96.50 % 201.59 % 213.15 % 63.18% 59.06 % 80.79% 91.60 % 194.81 % 159.92 % 65.54% 122.51 % 46.51% 98.98 % 189.25 % 74.94% 70.50% 166.24 % 51.63% 117.63 % 203.61 % 109.22 % 153.36 % 65.82 % 71.50% 100.19 % 196.32 % 195.68 % 161.97 % 81.24 % 59.46% 110.93 % 209.28 % 56.34% 144.16 % 94.23 % 41.04% 99.62 % 228.45 % The company increased their share capital in the year 2005 and it is still the s ame until now. Because of this the companys issued, subscribed and fully paid sec tion also increased. The total shareholder equity section increased from year 20 02 because from year 2002 the company position was becoming better in all perspe ctive. The companys noncurrent liabilities increased in huge amount from year 200 7 and in year 2008. The Long Term Liabilities and deferred taxation also increas ed by a huge amount in percentage over the last two to three years as compared t o last eight years. The trade and other payable section also increased by a huge amount especially from year 2004 so the company increased most of their liabili ties in this section. The company also increased the short term borrowing amount by a much greater percentage from year 2005 until now which tells the company r eally increased most of their liabilities in this particular section. So overall the taxation, total liabilities and SHE section increased in much greater perce ntage from year 2002 and until now which tells how much the company increased th eir liabilities. The fixed assets section increased by a very greater proportion in percentage as the companys position started getting better from year 2002 unt il now. The percentage increase in the fixed assets was very huge which tells ho w much the company has invested to buy more fixed assets to increase their produ ction and sales. Fauji Fertilizers | Appendix 24

The company also invested a lot in the long term investments from year 2002 whic h was also by a greater proportion which tells how much the company is trying to make money from greater long term projects. The company also made lot of short term investments over the last 7 years as well just like long term investments. So over the last seven years we see how much the FFC has improved in perspective of all kinds of noncurrent and especially current assets and how better they ar e managing it. Horizontal Analysis of Income Statement 2001 Sales Cost of sales GROSS PROFIT Distribution cost Operating Profit Finance cost Other expenses 2002 2003 2004 2005 2006 2007 2008 Other income NET PROFIT BEFORE TAXATION Provision for taxation NET PROFIT AFTER TAXATION 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 140.09 % 158.88 % 118.82 % 142.62 % 113.53 % 242.75 % 127.03 % 103.14 % 73.83 % 96.91 % 98.66 % 95.93 % 175.55 % 215.34 % 130.49 % 181.11 % 119.24 % 189.21 % 125.01 % 113.77 % 43.08 % 98.73 % 99.78 % 98.15 % 175.48 % 206.80 % 140.03 % 172.84 % 132.74 % 135.48 % 143.53 % 131.47 % 87.94 % 122.21 % 117.26 % 124.98 % 212.65 % 257.48 % 161.90 % 231.98 % 146.32 % 118.43 % 160.51 % 146.86 % 135.61 % 144.47 % 129.44 % 152.86 % 249.96 % 318.14 % 172.76 % 268.73 % 151.42 % 182.09 % 188.30 % 145.61 % 118.64 % 139.88 % 131.23 % 144.71 % 237.26 % 287.80 % 180.03 % 236.64 % 167.45 % 255.61 % 216.46 % 156.41 % 156.82 % 156.50 % 137.09 % 167.34 % 255.31 % 286.59 % 219.90 % 261.08 % 210.75 % 252.61 % 229.35 % 205.97 % 182.94 % 201.07 % 196.42 % 203.67 % As we know the FFCS position started getting stronger and stronger from year 2002 they improved in almost all kinds of sections in which they can earn profit inc rease their sales and Fauji Fertilizers | Appendix 25

make more money by every ways by buying assets, short term investments and long term investment and huge amount of loans. Since the company bought lot of fixed assets that definitely have improved their production capacity and this was defi nitely due to much bigger demand and supply. So the company really improved in m uch greater proportion in increasing their sales from year 2002 and continued th eir progress until now. As the increase in the sales we know the cost of sales a lso increased so the amount of cost of sales was also quiet high but the company did make some efforts in year 2008 to reduce its cost of sales in order to make much more profit. Since the increase in sales much in greater proportion as com pare to cost of sales the companys gross profit also rose year after year. With a ll the increase in the sales and cost of sales the distribution cost also rose w ith greater proportion as compare to last eight years. Due to all the steps take n by the company to reduce their expenses with the increase in the sales that co mpany also made a huge amount of operating profit which better tells the companys position that how better they are getting year after year. This progress tells us also one more thing that the company will really earn a lot of profit with in creased sales the future as well. Other expense also rose with the increase in t he sales and as compared to the countrys condition this up and down will continue in upcoming years so the company should be aware of it and should have primitiv e measures for it. Other income also rose which tells how better they are managi ng in almost neglecting the increase in other expense means that although the ot her expense also rose but the other income is playing a big role in order to dec reases its effects so the overall before tax and after tax profit should be good . Fauji Fertilizers | Appendix 26

The before tax profit was also high year after year from year 2002 and still ris ing over the last eight years. The taxation amount also rose especially in the y ear 2008 due to the increased taxes but the companys good progress is not affecte d by it. The FFCs net profit after taxation also rose to much greater proportion over all the last eight years but raised much in year 2008 as compare to the las t few years due to the increased demand and supply. Component % age Analysis according to % age of Balance Sheet 2001 SHARE CAPITAL & RESERVES Share capital Issued, subscribed and fully paid Ca pital reserve Reserve for issue of bonus shares Revenue reserves Total Sharehold ers Equity Redeemable Capital 2002 2003 2004 2005 2006 2007 2008 100.00 % 100.00 % 100.00 % 100.00 100.00 % % 100.00 100.00 % % 100.00 100.00 % % 100.00 % 115.00 % 100.00 % 166.67 100.00 % % 167.30 100.00 % % 100.00 100.00 % % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.0 0% 100.00 % 18.61% 12.99 % 15.60% 9.45% 7.33% 0.63% 6.70% 15.97% 1.19% 7.02% 4.14% 2.88% 1.75% -5.83% 3.49% NON CURRENT LIABILITIES Long Term Liabilities DEFERRED TAXATION CURRENT LIABILIT IES Trade and other payables 100.0 0% 100.0 0% 100.0 0% 473.32 % 3027.9 1% 16.67 % 38.87 % 6.25% 35.71 % 265.6 0% 4.56% 378.6 0% 65.80 % -0.25% 21.68 % 0.21% 40.25 % 123.7 7% 1.36% 44.45 % 101.3 4% 2.89% 15.55 %

3.07% Fauji Fertilizers | Appendix 27

Interest and mark - up accrued Short term borrowings Creditors, accrued & other liabilities Current portion of L.T Fin Taxation 100.0 0% 100.00 % 100.0 0% 100.00 % 100.0 0% 100.00 % 323.61 % 12.29 % 81.23% 7.85% 82.45 % 85.16% 116.54 % 101.59 % 523.12 % 23.22 % 66.20 % 3.89% 3.36% 3.99% 5.26% 0.07% 27.49 % 2.32% 0.00% 96.64 % 100.00 % 221.9 5% 81.35 % 2.46% 2.85% 0.48% 5.56% 18.60 % 5.33% 97 .22 % 2.39% 67.83 % 24.98 % 3.75% 107.44 % 9.98% 2404.9 6% 64.17 % 80.88 % 37.59 % 30.68 % 5.50% 0.86% 16.83 % 136.41 % 42.30 % 7.59% 52.98 % 7.69% 13.80 % 3.58% 4.61% 6.25% 5.80% 18.75 % 27.98 % 2.22% 70.02 % 45.7 3 % 15.23 % 0.57% 5.44% 6.60% 27.33 % 35.43 % 3.03% 9.16% Total L & SHE 100.0 0% 100.0 0% Prop, PLANT & Equip GOODWILL LONG TERM INVESTMENTS L.T LOANS & ADVANCES L.T Dep. & Prep CURRENT ASSETS Stores, spares and loose tools Stock in trade Trade debts Loans & advances Dep. Other Short term investments Cash and bank balances 0.04% -5.88% 5.07% -4.13% -1.63% 8.14% 0.00% 1.31% 86.29 % 13.34 % 9.35% 32.54 % 79.17 % 5.61% 23.43 % 28 22.52 % 0.00% 22.44 % 14.23 % 28.92 % 26.01 % 59.85 % 71.21 % 10.99 % 15.98 % 100.00 % 100.00 % 100.00 % 184.10 % 10.51% 20.62% 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 31.62% 2.68% 59.14% 4.23% 25.07% 4.24% 8.00% 33.94 % 39.39 % 21.18 % 24.72% 155.71 % 53.14% 7.56% 117.53 % 35.70% 11.01% 60.41 % 38.49 Fauji Fertilizers | Appendix

% 100.0 0% Total Assets 100.0 0% 16.55% -3.50% 101.59 % 3.19% 5.08% 3.36% 42.43 % 8.07% 2.85% % 18.84 % 7.59% 14.83 % 3.58% 16.83 % 10.72 % 6.60% 30.97 % 10.19 % 9.16% The revenue reserve is that part of profit that has not been given to the shareh older but retained in the business for further growth. Hence the company increas ed it in the year 2002 and 2003 by 19 and 10 percent respectively but since the companys position was getting better and better year after year this revenue rese rve declined a lot and still declining as the company is not relying on this par ticular item. The shareholders equity section did rise all the years but in the l ast two years it declined by 2 and 3.5 percent in year 2007 and 2008 respectivel y. There was variation in the long term liabilities and deferred taxation but th e long term liability rose by a drastic percentage especially in the year 2008 a s compared to deferred taxation which rose only by a very fewer percentage. The short term borrowings rose drastically in the year 2005 but later on they declin ed in the last two years. The total Liability and SHE also rose drastically in t he year 2002 but after that it increased at very smaller percentage. The fixed a sset portion of the company also rose from year 2002 which was vey vast of aroun d a 523 percent increase and later on it increased at a slow proportion in perce ntage. But this particular section is still increasing. The firms short term and long term investment rose also over the last eight years or so. But the long ter m investment rose very much I the year 2002 which was almost around a 184 percen t increase and the short term investment rose very much in the year 2005 which w as almost around a 108 percent increase. Fauji Fertilizers | Appendix 29

The firms Stock in trade and Trade debts also declined by a huge percent in the y ear 2008 which was around 60 and 70 percent respectively. This tells how better the company is managing their inventory and their decline in the account receiva bles section. So overall the firms total assets rose over the last eight years bu t they raised much in the year 2002 by around 102 percent which tells that from year 2002 the firms position was getting very strong in Pakistan. Component % age Analysis according to % age of Income Statement 2001 Sales Cost of sales GROSS PROFIT Distribution cost 100.00 % 100.00 % 100.00 % 100.00 % 2002 40.09 % 58.88 % 18.82 % 42.62 % 2003 25.31 % 35.53 % 9.82% 26.9 8 % 5.03% 22.06 % 1.59% 10.30 % 41.65 % 1.88% 1.13% 2.31% 2004 0.04% 3.97% 7.31% 4.57% 11.32 % 28.39 % 14.81 % 15.56 % 104.14 % 23.78 % 17.53 % 27.33 % 2005 21. 18 % 24.51 % 15.62 % 34.22 % 10.23 % 12.59 % 11.83 % 11.71 % 54.21 % 18.21 % 10. 39 % 22.31 % 2006 17.54 % 23.56 % 6.71% 15.84 % 3.49% 53.76 % 17.31 % 0.85% 12.5 1 % 3.18% 1.38% 5.33% 2007 5.08% 9.54% 4.21% 11.94 % 10.58 % 40.37 % 14.96 % 7.4 1% 32.18 % 11.88 % 4.47% 15.63 % 30 2008 7.61% 0.42% 22.15 % 10.33 % 25.86 % 1.1 7% 5.95% 31.69 % 16.66 % 28.49 % 43.28 % 21.71 % Finance cost Other expenses 100.00 13.53 % % 100.00 142.75 % % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 27.03 % 3.14% 26.17 % 3.09% 1.34% 4.07% Other income NET PROFIT BEFORE TAXATION Provision for taxation NET PROFIT AFTER TAXATION Fauji Fertilizers | Appendix

The firms position is quiet visible which we can measure from its sales which is rising year after year especially from year 2002 which was 40 percent and contin uing to increase over the last few years or so. Also with the increase in sales the cost of sales also rise but the company did really well in reducing their co st of sales by almost 10 percent in the year 2007 and around 1 percent in year 2 008 which tells that the company is really making efforts in order to increase t heir sales and reduce their cost of sales in order to increase the gross profit for the longer term and so far they have been successful. The firms distribution cost also rose a lot but the company did very well especially in the year 2004 a nd year 2007 in which they reduced their distributing cost but since in the year 2008 it rose much due to rising oil prices and the deterioration of the economy of Pakistan which affected every organization in Pakistan but the company still did well in order to cope such challenges and did not let such kind of cost dis turbs their profits. The company did well in maintaining as well as increasing t heir operating profit over all the last eight years and this tells us that the c ompany is measuring such steps in order to increase the profitability of the com pany. The finance cost also rose too much all of the years since they really hav e taken lot of loans from the creditors but overall this did not affected them t hat much because in the last few years the short term investments income overcom e such costs so the overall effect of this cost was negligible especially since the last five years or so. The other expense rose all over the years but the com pany did well I order that this particular item do not increase much and effect their profitability and so far over the last eight years or so they did well in order to keep it just enough that does not affect their profitability. Since the firms did well in reducing most of their expense and increased sales the company did very well especially in order make a before tax profit much high as compare d to the after tax profit. Since the firm is making more profit especially in th e year 2008which was very tough for Fauji Fertilizers | Appendix 31

all the organization in Pakistan but they did still very well although the taxat ion amount in the year 2008 was quiet high around 44 percent but still made a he avy profit which was a very good thing because the year 2008 was not much that g ood for most of the organization but they maintained their journey of increased sales and profits and the reduction in most of the expense like cost of sales, d istribution expenses etc. Component Percentage Analysis according to Pakistani Rupees of Balance Sheet 2002 126142 5 123442 5 128348 1 (22386 7) 260400 0 2003 75965 5 78665 5 (49891 1 ) 2004 (55004) 772195 2005 (13965 83) 146001 2006 515635 515635 2007 (22649 8) ( 22649 8) 147750 0 2008 (444832 ) (444832 ) 270696 4 Revenue reserves Total Shareholders Equity NON CURRENT LIABILITIES Long Term Liabilities DEFERRED TAXATION 208383 3 (18873 25) 212672 (16800 0) (11500 0) (6000) (5000) (32474) 68369 CURRENT LIABILITIES Trade and other payables Interest and mark - up accrued Shor t term borrowings Creditors, accrued & other liabilities Current portion of L.T Fin Taxation Total Liabilities Total Liab. & SHE 128248 32061 9 74233 (41656 4) (22215 4) (21317 0) (64605 0) (35005 6) (94667 6) 461275 0 906698 7411 (27118 77) 52395 202612 7 178935 0 50391 (13900 09) 178398 10140 (27081) 258889 7 126800 4 414840 448877 484886 6 141939 19 (28723 33) (26068 54) 156434 1 268387 213261 (77636 1) 240496 3 (38183 7) 816121 375335 6 200603 2

(99999 8) (10881 2) (17421 65) (10188 58) 135173 7500 592405 181093 3 32 (279464 ) 465255 347248 267774 9 Fauji Fertilizers | Appendix

Prop, PLANT & Equip GOODWILL LONG TERM INVESTMENTS L.T LOANS & ADVANCES L.T Dep. & Prep CURRENT ASSETS Stores, spares and loose tools Stock in trade Trade debts Loans & advances Dep. Other Short term investments Cash and bank balances 798924 7 198769 4 458652 8 4768 (33386) (37993 7) (10461 5) 5259 13783 (2984) 44179 (10461 5) (13174 52) 3408 (12201 9) 40329 (46211 7) (46864 5) 24277 236461 2 (77831 8) 720138 (77636 1) 4011 (10461 5) 292307 (2783) (57) 423230 (10461 5) 351376 12102 (961) 782533 234032 3 (84253) 66135 (330) 141965 0 20320 (620) 388816 16481 520595 43319 (93446 5) (37567 8) (34093 2) 141939 19 68607 50489 47548 8 (42080 0) (59143 4) (60532 ) (47818 2) (94667 6) 427009 341292 (74802 3) 50813 162979 5 116283 181716 9 200603 2 47735 392433 301714 849414 (37424 02) 451116 (16999 90) (10188 58) 205935 (31006 9) 761175 88222 574814 (27322 9) 104684 8 181093 3 626280 (384742 ) (122667 3) (182553 ) 483899 (418135 ) (110192 4) 267774 9 Total Assets If we talk about the component percent analysis to dollar of balance sheet we se e the revenue reserve section which declined a lot especially in the year 2004, 2005, 2007 and 2008. As we know that the revenue reserve is that part of profit that has not been given to the shareholder but retained in the business for furt her growth. But since the company started getting better in the early 90s they st arted declining this particular item since they did not feel of keeping this par ticular item. The total shareholders equity section also declined a lot especiall y in the year 2007 and year 2008 which was mostly due to the decline in the reve nue reserve portion so this tells that the company was totally shifting mostly t owards the debts side as compared to equity portion of the balance sheet. Fauji Fertilizers | Appendix 33

The deferred taxation amount also declined to very big figures especially from y ear 2002 till 2007 which tells that company started paying mostly instead of def erring it on the next coming years or so. Overall the total liabilities and SHE section increased most of the year except year 2003, 2004 and year 2006. The ass et portion especially the fixed assets increased a lot which tells that the comp any really invested a lot in order to get machineries properties in order to exp and their business with the increasing demand and supply of the country. There w as also a lot of long term and short term investment being made by the company i n most of the last eight years in order to make more profit and for the betterme nt of the organization. There was a lot decline in the Cash and bank balances se ction probably due to the company investing in the long term and short term proj ects in order to make more profits. Overall the companys assets rose very much es pecially in the last two year mean year 2007 and 2008 by almost 1,810,933,000 an d 2,677,749,000 Pakistani rupees respectively. Component Percentage Analysis according to Pakistani Rupees of Income Statement 2002 480428 5 374650 1 105778 4 435658 622126 392942 105553 2003 424793 0 359220 2 655728 393373 262355 (147375 ) (7867) 2004 (7599) (543666 ) 536067 (84518) 62 0585 (147889 ) 72288 2005 445409 1 322506 1 122903 0 604556 624474 (46950) 66325 2006 446975 2 385948 0 610272 375574 234698 175242 108512 2007 (152186 8) (1930 66 9) 408801 (327989) 736790 202371 109996 34 2008 2163801 (76833) 2240634 24977 8 1990856 (8241) 50320 Sales Cost of sales GROSS PROFIT Distribution cost Operating Profit Finance cost Other expenses Fauji Fertilizers | Appendix

Other income NET PROFIT BEFORE TAXATION Provision for taxation NET PROFIT AFTER TAXATION 123631 (277922 ) (154291 ) (24000) (130291 ) 417597 (326509 ) 91088 20000 71088 696186 476349 117253 5 313000 859535 605099 506193 111129 2 218000 893292 (49056) (180136 ) (229192 ) 32000 (261192 ) 424423 405386 829809 105000 724809 1948777 277353 2226130 1062000 1164130 If we see the income statement percentage analysis to dollars amount we see that how much the sales amount rose over the last few year or so especially the most sales rose in the year 2003, 2005, 2006 and 2008. Especially in the year 2008 w e know how much this difficult year was that for every organization in Pakistan. The cost of sales also rose much is amount but as we see that in year 2007 and 2008 the company did really well in order to reduce the amount with a very great er proportion. Since there was an increase in sales mostly and a reduction in th e cost of sales the gross profit rose to vast proportion especially over the las t year. The company really made a very good operating profit which in some of th e years line 2003, 2004, 2005 and 2008 the finance cost was also less which tell s that the company was getting rid from most of their liabilities and wanted to stand on their own. Overall the company enjoyed lot of profits as compared to ex pense and the company did all the last eight years or so. Internal Ratio Analysis LIQUIDITY RATIO CURRENT RATIO 200 1 2.3 4 2002 1.04 200 3 1.0 3 2004 1.09 2005 0.91 200 6 0.9 0 2007 0.94 35 2008 0.82 Fauji Fertilizers | Appendix

QUICK RATIO CASH FLOW LIQUIDITY RATIO AVERAGE COLLECTION PERIOD AVERAGE INVENTOR Y DAYS PAYABLE DAYS 2.1 9 1.8 8 26. 82 35. 24 89. 55 0.97 1.04 30.4 6 22.7 8 102. 14 0.9 5 0.7 0 32. 56 18. 15 89. 43 1.06 1.49 24.4 4 6.08 161. 76 0.86 1.07 9.45 12.4 9 150. 12 0.8 1 0.3 4 11. 72 17. 18 72. 59 0.89 0.90 22.1 2 12.8 1 115. 91 0.80 1.07 5.92 5.17 119. 97 Current Ratio: The current ratio deteriorated from the last four years. The reasons for this ar e that the current liabilities increased in much greater proportion as compared to current assets. The biggest reason is that the company started the company st arted increasing more liabilities and the reduction in assets was mostly due to cash and cash balances, trade debts and stock in trade. Quick Ratio: Fauji Fertilizers | Appendix 36

The quick ratio as it is clear from the ratios over the last eight years which t ells that the company was really quiet good in managing their cash but it is not very good but they maintained it over the last six years or so. Cash Flow Liqui dity Ratio: As we know this ratio is the best ratio for the measure of liquidity of the firm . This tells how much the firm is better in managing their cash and cash equival ents in managing against their current liabilities so overall the last eight yea rs the company did very well in not only maintaining their cash against the comp anys current liabilities. Fauji Fertilizers | Appendix 37

Average Collection Period: The company was very good articular reason for this an increase in sales. The hich phenomenal thing for ry Days: in drastic improvement in this particular ratio. One p one was the reduction the net account receivables and companys receivables collection came to almost 6 days w any organization to improve that much. Average Invento

The company was very superior in extreme improvement in this particular ratio as well. One particular reason for this one was the reduction the inventory and an increase in cost of sales. The Fauji Fertilizers | Appendix 38

companys inventory came to 5 days which is also a dream to achieve as well becaus e we usually do not see such improvement. Payable Days: The payable days rose too much which tells that the company increased their paya bles as compared to cost of sales which was declining a little bit since the las t two years. The company was not good in managing their payables that much as co mpared to other two ratios like average inventory days and average collection pe riod. TURNOVER/EFFICIENCY RATIO TURNOVER/EFFICIENCY RATIO 2001 2002 2003 2004 13.61 11.98 11.21 14.94 10.36 16.0 3 20.11 60.03 4.08 3.57 4.08 2.26 7.93 1.79 2.34 2.29 0.86 0.60 0.77 0.80 RECEIVABLE TURNOVER INVENTORY TURNOVER PAYABLE TURNOVER FIXED ASSET TURNOVER TOT AL ASSET TURNOVER 2005 38.62 29.23 2.43 2.77 0.90 2006 31.15 21.24 5.03 3.12 1.09 2007 16.50 28.49 3.15 2.74 0.97 2008 61.69 70.65 3.04 2.40 0.96 Fauji Fertilizers | Appendix 39

Receivables Turnover: The receivables improved phenomenally by almost 45 times in a year which was a v ery big improvement as compared to last eight years. This tells how much better the company has improved in managing their receivables into cash. This also tell s that the company is very good in receivables collection. It is an important in dicator of a companys financial and operational performance. Inventory Turnover: The same was with the inventory turnover which also improved severely just like the receivables collection. This tells how much better the company has improved in managing their efficient Fauji Fertilizers | Appendix 40

management of inventory. This also ensures that the company is very good in mana ging their inventory as much as been required according the requirements. Payabl e Turnover: The payable turnover declined a lot as compared to other two turnover ratios. It is not good for long term as compared to their position and the way they are go ing this ratio also should be improved so they can better improve this ratio as well. Fixed Asset Turnover: Fauji Fertilizers | Appendix 41

The fixed asset turnover was just fine which tells that the company is just fine in managing their fixed assets. The big reason for this that this ratio did not increased that much is due to that the company from the last few years was incr easing their fixed asset portion as compared to sales. So the company still was good in managing their assets as compared to sales. Total Asset Turnover: The total asset turnover was just good which tells that how better the company i s efficient in the management of all their assets as compared to sales. The reas on for this was because of the increased in both the things one is the sales and the other are the total assets but the total assets increased in much percentag e as compared to sales. SOLVENCY/LEVERAGE RATIO DEBT RATIO LTD TO CAPITALIZATION DEBT TO EQUITY SOLVENCY/LEVERAGE RATIO 2001 200 2 2003 2004 2005 2006 2007 32% 62% 58% 54% 56% 53% 56% 2% 11% 6% 19% 7% 8% 17% 4 7% 162% 136% 115% 129% 112% 130% 2008 62% 30% 160% Fauji Fertilizers | Appendix 42

Debt Ratio: This tells how better the company the how better the company is good in order to pay off their loan in times. The percentage increased in a percentage in as com pared from the last five years. This tells that the company increased their debt as compared to total assets. LTD to Capitalization: This ratio also rose from the last few six years which tells the company increas ed the long term debts in permanent financing of the firm. Debt implies risk but the company still did very well overall the past few years. Fauji Fertilizers | Appendix 43

Debt to Equity: The capital structure of the firm tells us that it is more debt financed as comp ared to equity financed. There were two reasons for that one is the increase in debt and the other was the decrease in equity. COVERAGE RATIO COVERAGE RATIO 2001 2002 2003 16.7 7.81 10.5 0 6.67 13.8 1 7.07 12.3 9 3 3.89 9. 43 2004 16.3 6 20.3 1 24.2 0 2005 20.6 4 18.9 5 25.6 6 44 TIMES INTEREST EARNED FIXED CHARGE COVERAGE RATIO CASH COVERAGE 2006 13.8 9 -0.79 5.89 2007 10.9 4 8.40 13.8 8 2008 13.93 11.74 17.23 Fauji Fertilizers | Appendix

CASH FLOW ADEQUACY RATIO Times Interest Earned: 0.61 1.56 0.71 3.50 2.02 -0.06 0.69 0.72 The times interest earned increased in the last few years. This tells that the c ompany was covering their interest expense almost 14 times in a year which is go od. The reason for the increase was mostly due to the increase in operating prof it as compared to interest expense. Fixed Charge Coverage Ratio: Fauji Fertilizers | Appendix 45

The fixed charge coverage ratio tells how better the company is good in managing the interest expense from the cash flow from operations. This ratio increased n ot only because of the increase in cash generated from operations but also becau se of the reduction in interest expense. Cash Coverage: The cash coverage was also very good. The company improved very much too almost 17 times to pay the interest paid by the company. So this tells that the companys ability of the firm to cover its interest payment on taxes by cash improved ver y much. Fauji Fertilizers | Appendix 46

Cash Flow Adequacy Ratio: The cash flow adequacy ratio was just satisfactory as which tells that the compa ny was just not able to pay dividends, capital expenditure and debt repayments f rom the cash generated by their operations. PROFTABILITY RATIO Fauji Fertilizers | Appendix 47

GPM OPM NPM CASH FLOW MARGIN ROE ROA 2001 46.90 % 38.37 % 26.74 % 15.33 % 33.72 % 32.91 % GPM: PROFTABILITY RATIO 2002 2003 2004 39.78 34.86 37.43 % 31.09 % 18.31 % 28.15 % 28 .56 % 18.53 % % 26.06 % 14.95 % 9.64% 27.29 % 20.14 % % 29.02 % 19.04 % 36.02 % 32.57 % 23.08 % 2005 35.71 % 26.40 % 19.22 % 24.24 % 39.36 % 23.65 % 2006 32.42 % 23.24 % 15.48 % -1.32% 35.78 % 25.38 % 2007 35.59 % 27.08 % 18.86 % 20.80 % 42.11 % 26.33 % 2008 40.40% 31.67% 21.33% 26.69% 53.11% 30.36% The companys GPM rose to much greater percentage year after year over the last si x years. The biggest reason for this was mostly due to the increased profit as c ompared to the increase in sales. The most reason is mostly due to that the most of the expense reduced over the last two years. Fauji Fertilizers | Appendix 48

OPM: The operating profit also rose to much greater percentage over the last six year s. The major reason for this was mostly due to the amplified profit as compared to the increase in sales. The most reason for this is same which is mostly due t o that the most of the expense reduced over the last two to three years. NPM: Fauji Fertilizers | Appendix 49

The net profit margin also rose over the past few years. The reason for this is mostly because of reduction in cost of sales and distribution expense. So overal l the company did very well in managing and improving their almost all their pro fits by a much better percentage. Cash Flow Margin: This particular ratio also improved especially over the last two years or so and this trend is continuing. The sales were increasing in much proportion as compa red to cash flow generated from operations so this ratio does not seems to be in creasing that much as compared to other ratios. Fauji Fertilizers | Appendix 50

ROE: This particular ratio also increased to a much greater portion as with the other profitability ratios. One reason was same as the increase in net income over th e last four years or so and also a decline in the shareholders equity section. Ro e measures a firm s efficiency at generating profits from every unit of sharehol ders equity. The companys ROE shows how well a company uses investment funds to generate earnings growth. ROA: Fauji Fertilizers | Appendix 51

This ratio also improved over all the past years but not that much because of th e increase in total assets and the operating profit did not rose that much as th e total assets. This ratio is a useful number for comparing competing companies in the same industry. Return on assets is an indicator of how profitable a compa ny is before leverage, and is compared with companies in the same industry. MARKET RATIO MARKET RATIO 2001 2002 2003 12.49 11.98 12.26 9.44 8.48 8.81 76% 71% 72% EPS DPS DIVIDEND PAYOUT 2004 8.11 7.63 94% 2005 9.92 9.84 99% 2006 9.39 7.63 81% 2007 10.86 12.11 112% 2008 13.22 14.24 108% EPS: Fauji Fertilizers | Appendix 52

Earnings per share (EPS) are the earnings returned on the initial investment amo unt. The EPS as it is clear from the above chart that this ratio improved over t he last five years or so and still continuing as far seen the position of the co mpany. DPS: Dividends Per share also rose to very greater proportion in percentage over the last three years but this is a good improvement especially after year 2003 from which the dividend percentage rose. Fauji Fertilizers | Appendix 53

Dividend Payout: The dividend payout ratio also raised much from year 2003 and until now it was s till rising which tells how much better the company is giving their Dividend ove r earnings per share. The trend from the chart seems to be reasonable and the in vestors will be happy from the company so as the management of the company becau se year after year they have been earning profits and increasing every year. External Ratio Analysis LIQUIDITY RATIO LIQUIDITY RATIO 2001 2002 2003 2.34 1.04 1.03 1.62 2.94 2.09 2.19 0.97 0.95 1.45 2.72 1.90 1.88 1.04 0.70 1.28 2.67 1.71 26.82 30.46 32.56 CURRENT RATIO Sectorial Average QUICK RATIO Sectorial Average CASH FLOW LIQUIDIT Y RATIO Sectorial Average AVERAGE COLLECTION PERIOD 2004 1.09 2.15 1.06 2.01 1.49 1.76 24.44 2005 0.91 1.99 0.86 1.67 1.07 1.50 9.45 2006 0.90 1.27 0.81 1.08 0.34 0.88 11.72 2007 0.94 2.09 0.89 1.81 0.90 1.49 22.12 54 2008 0.82 1.91 0.80 1.59 1.07 1.09 5.92 Fauji Fertilizers | Appendix

Sectorial Average AVERAGE INVENTORY DAYS Sectorial Average PAYABLE DAYS Sectoria l Average 25.37 35.24 38.97 89.55 64.64 7 26.73 22.78 35.89 102.1 4 58.33 9 40.54 18.15 23.77 89.43 84.20 3 32.76 6.08 17.45 161.7 6 89.51 1 17.97 12.49 32.73 150.1 2 95.17 8 14.21 17.18 31.83 72.59 67.83 1 21.71 12.81 53.75 115.9 1 83.74 8 4.28 5.17 48.08 119.9 7 72.04 4 If we compare the liquidity ratio of this company with the fertilizer sector we see that the current ratio during the last six years is been 50 percent of the s ector which means that the company is way behind the industry average. Fauji Fertilizers | Appendix 55

But this is not only with the current ratio the past performance of quick ratio is also the same its trend was also 50 percent during the last six years or so. So both the current ratio and the quick ratio seem to lag behind the industry av erage. As far the position of the company the management should also take some s teps to match the industry average so they can lead in every term in Pakistan. From the cash flow liquidity ratio we can say that the company did very well spe cially over in the year 2008 to match with the industry average. Since this rati o cash flow liquidity ratio is the best measure of the liquidity of the company. The company did well to at least come towards the industry level. Fauji Fertilizers | Appendix 56

The average collection period also seems to be very good of the FFCs which from t he graph is visible that the company is meeting the industry average and also co mpeting which is very good for the organization which tells that the company is very good in receivables collection. But in the average inventory days the company lags behinds very much as compared to the industry average. In the early 90s the company was good but later on the company lag behind the industry average by more than 50 percent which is not goo d especially over the last two years. Fauji Fertilizers | Appendix 57

In the payable days the company led from the front and from the above chart it i s clear that the company was way better than the industry average which is very good. So after watching all the liquidity ratios performance the company was fin e overall in which they performed well with the industry average but they should try to improve their current and quick ratio as well since there ratios tells h ow much risky the company is but company position is so good that they should no t be doing things like because they are already leading. TURNOVER/EFFICIENCY RATIO TURNOVER/EFFICIENCY RATIO 2001 2002 2003 2004 2005 13.6 11.98 11.21 14.94 38.6 1 2 16.3 23.00 11.28 17.97 33.1 RECEIVABLE TURNOVER Sectorial Average 2006 31.15 39.33 2007 16.50 23.67 58 2008 61.69 88.76 Fauji Fertilizers | Appendix

INVENTORY TURNOVER Sectorial Average PAYABLE TURNOVER Sectorial Average FIXED AS SET TURNOVER Sectorial Average TOTAL ASSET TURNOVER Sectorial Average 6 10.3 6 10.1 8 4.08 7.36 7.93 4.25 0.86 0.62 5 16.03 11.84 20.11 16.20 60.03 29.72 3.57 4.08 2.26 7.02 9.12 10.73 1.79 2.34 2.29 3.18 2.84 2.41 0.60 0.77 0.80 0.53 02 0.5792 0.6263 5 29.2 3 15.6 8 2.43 7.56 2.77 2.63 0.90 0.75 7 21.24 13.37 28.49 14.44 70.65 23.16 3.04 14.33 2.40 2.48 0.96 0.5513 5.03 3.15 9.69 12.51 3.12 2.74 2.17 2.05 1.09 0.97 0.7409 0.5428 From the receivable turnover it is clear that over the last eight years the comp any performed very well to meet the industry average which is god for the compan y as they led and matched the industry average most of the time. Fauji Fertilizers | Appendix 59

The inventory turnover for the company from the last four years was not that goo d. The company should make some efficient steps in order to better maintain thei r inventory as well as come at least to the industry average because the ratios like inventory turnover should be better and should meet the industry average. The payable turnover of the company was good as compared to the industry average . The company led from the front and from the above chart it is clear that the c ompany was way better than the industry average which is very good. Fauji Fertilizers | Appendix 60

This particular ratio was meeting the industry average over the last 7 years whi ch tells how better and efficient is the company is managing their fixed assets. That is a good achievement to at least maintain from several years to the indus try average. The total asset turnover of the company was a bit higher as compared to the indu stry average. So after seeing the turnover ratios we can conclude that the compa ny mostly did very well in not only meeting the industry average but also mainta ining from couple of years which is not good Fauji Fertilizers | Appendix 61

especially in Pakistan to show some consistent performance as far as the economy and condition of Pakistan from some two to three years. SOLVENCY/LEVERAGE RATIO SOLVENCY/LEVERAGE RATIO 2001 2002 2003 2004 32% 62% 58% 54% 27% 54% 53% 52% 2% 1 1% 6% 19% 13% 30% 25% 25% 47% 162% 136% 115% 92% 136% 110% 91% DEBT RATIO Sectorial Average LTD TO CAPITALIZATION Sectorial Average DEBT TO EQU ITY Sectorial Average 2005 56% 50% 7% 21% 129% 92% 2006 53% 51% 8% 17% 112% 79% 2007 56% 55% 17% 33% 130% 122% 2008 62% 58% 30% 36% 160% 129% The debt ratio of the company seems to meet the industry average and fractionall y over the industry average. The percentage increased in a percentage in as comp ared from the last five years. This tells that the company increased their debt as compared to total assets. But the industry average is almost the same as the FFCs so it seems that the company is meeting the average industry. Fauji Fertilizers | Appendix 62

The LTD to capitalization of the company is less than the industry average over the last eight years. This tells the company increased the long term debts in pe rmanent financing of the firm but they kept this ratio a bit less than the indus try average. Fauji Fertilizers | Appendix 63

The debt to equity show the capital structure of the company which is more debt financed than equity financed and the company was bit forward as compared to the industry average over the last seven years. COVERAGE RATIO COVERAGE RATIO 2001 2002 16.70 7.81 20.16 5.93 6.67 7.07 23.31 8.30 0.61 1.56 0. 76 1.12 2003 10.53 11.53 3.89 27.25 0.71 0.76 2004 16.36 15.58 20.31 13.43 3.50 1.52 2005 20.64 11.56 18.95 13.23 2.02 1.05 2006 13.89 7.77 -0.79 4.96 -0.06 0.2 5 64 TIMES INTEREST EARNED Sectorial Average FIXED CHARGE COVERAGE RATIO Sectorial Av erage CASH FLOW ADEQUACY RATIO Sectorial Average 2007 10.94 6.22 8.40 8.29 0.69 0.25 2008 13.93 4.92 11.74 7.50 0.72 1.22 Fauji Fertilizers | Appendix

The time interest earned of the company is way better than the industry average. This tells that the company was covering their interest expense almost better t han the industry average which is very good for the company to not only matching industry requirements but also exceeding their levels. The fixed charge coverage ratio tells how better the company is good in managing the interest expense from the cash flow from operations. As compared to the ind ustry average they are quiet competent as they are meeting the industry average. Fauji Fertilizers | Appendix 65

The cash flow adequacy ratio of the company was comparable to the industry avera ge. The cash flow adequacy ratio was just satisfactory as which tells that the c ompany was just not able to pay dividends, capital expenditure and debt repaymen ts from the cash generated by their operations. PROFTABILITY RATIO PROFTABILITY RATIO 2002 2003 2004 39.78% 34.86% 37.43% 33.64% 31.16% 30.43% 31.0 9% 26.06% 29.02% 23.85% 21.69% 22.53% 18.31% 14.95% 19.04% 21.39% 24.30% 23.39% 28.15% 9.64% 36.02% 15.65% 19.96% 21.88% 28.56% 27.29% 32.57% 12.49% 12.81% 12.9 1% 18.53% 20.14% 23.08% 24% 24% 25% GPM Sectorial Average OPM Sectorial Average NPM Sectorial Average CASH FLOW MARG IN Sectorial Average ROE Sectorial Average ROA Sectorial Average 2001 46.90% 30.10% 38.37% 17.53% 26.74% 2.25% 15.33% 12.19% 33.72% 9.49% 32.91% 18% 2005 35.71% 31.85% 26.40% 23.84% 19.22% 34.07% 24.24% 19.88% 39.36% 17.65% 23.65 % 33% 2006 32.42% 30.53% 23.24% 22.02% 15.48% 24.87% -1.32% 6.86% 35.78% 15.30% 25.38% 28% 2007 35.59% 33.34% 27.08% 25.54% 18.86% 63.86% 20.80% 14.07% 42.11% 19.17% 26.33 % 37% 2008 40.40% 34.90% 31.67% 27.78% 21.33% 22.90% 26.69% 3.42% 53.11% 13.68% 30.36% 29% Fauji Fertilizers | Appendix 66

The companys GPM rose to much greater percentage year after year over the last si x years. This tells that all the year the company was ahead of the industry aver age and enjoying profit every year more than the industry average. The operating profit was also high This tells that all the year the company was ahead of the industry average and enjoying profit every year more than the indus try average. The operating profit also rose to much greater percentage over the last six years. Fauji Fertilizers | Appendix 67

The net profit margin also rose over the past few years more than the industry a verage except year 2007 in which the industry made more use of it but overall th e industry was inconsistent in performance and maintaining their NPM. The net pr ofit margin also rose over the past few years. The reason for this is mostly bec ause of reduction in cost of sales and distribution expense. So overall the comp any did very well in managing and improving their almost all their profits by a much better percentage. Fauji Fertilizers | Appendix 68

This particular ratio also improved especially over the last two years or so and this trend is continuing and it is still better mostly all over the years if co mpared to the industry average. This particular ratio also increased to a much greater portion as with the other profitability ratios. The company also led all the last eight years from the fr ont and really exceeded the industry average by quiet a big margin which is not easy to do when your competitors are not that bad. Fauji Fertilizers | Appendix 69

ROA also kept and maintained the industry average which was good for the company which showed how consistent they were in meeting and mostly exceeding in mainta ining the profitability of the company as compared to the industry during the la st eight years or so. MARKET RATIO MARKET RATIO 2002 2003 2004 11.98 12.26 8.11 14.87 18.36 17.36 71% 72% 94% 85.94 % 65.29% 64.24% EPS Sectorial Average DIVIDEND PAYOUT Sectorial Average 2001 12.49 11.46 76% 82.48% 2005 9.92 28.25 99% 64.04% 2006 9.39 24.67 81% 61.82% 2007 10.86 51.14 112% 44.99% 2008 13.22 31.58 108% 43.37% EPS of the company was not that good as compared to the industry average which t ells that they were not earnings on returned on the initial investment amount. E arnings per share (EPS) are the earnings returned on the initial investment amou nt. The EPS as it is clear from the above chart that this ratio improved over th e last five years or so and still continuing as far seen the position of the com pany. Fauji Fertilizers | Appendix 70

The dividend payout ratio also quiet high over all the years as compared to the industry average. The dividend payout ratio also raised much from year 2004 and until now it was still rising which tells how much better the company is giving their Dividend over earnings per share. The trend from the chart seems to be rea sonable and the investors will be happy from the company so as the management of the company because year after year they have been earning profits and increasi ng every year. DuPont Return on Equity Five Component Disaggregation Profitability Turnover Taxes Financing Operations N.I/EBT EBT/EBIT EBIT/Sales N.I/Sales Sales/Avg.T.A 200 1 200 0.64 0.64 1.09 0.9 3 38.37% 31.09% 26.74% 18.31% 0.57 0.80 Solvency N.I/Avg. T.A 15.21% 14.59% Avg. T.A/Avg. S.E 2.22 1.96 71 ROE N.I/Avg. S.E 33.72% 28.56% Fauji Fertilizers | Appendix

2 200 3 200 4 200 5 200 6 200 7 200 8 0.64 0.66 0.68 0.66 0.69 0.65 0.90 1.00 1.07 1.00 1.02 1.04 26.06% 29.02% 26.40% 23.24% 27.08% 31.67% 14.95% 19.04% 19.22% 15.48% 18.86% 21.33% 0.76 0.78 0.93 1.07 1.00 1.00 11.35% 14.92% 17.84% 16.59% 18.92% 21.34% 2.40 2.18 2.21 2.16 2.23 2.49 27.29% 32.57% 39.36% 35.78% 42.11% 53.11% The Du Pont identity breaks down Return on Equity five distinct elements. The re turn on equity (ROE) ratio is a measure of the rate of return to stockholders. F rom the above table it is clear from the above DuPont analysis that over the pas t few years the return on equity section of the company rose very much. We see t he N.I/EBT column over the last eight years remained consistent and the same was with the EBT/EBIT section and we did not see much bigger changes in this column as well. If we now talk about EBIT/Sales and N.I/Sales this section was sound a s well as it is clear from the above table that overall the last eight years the company did well in maintaining it as well. Although the Sales/Avg. totals asse ts section we saw changes but they also became to better position during the las t few years. The N.I/Avg. T.A, Avg. T.A/Avg. S.E we also see that there was no p roblem in these two columns as well they were consistent and became better and b etter over the last two years especially. So the DuPont analysis of this company tells us the company is very good in all kinds of distinct elements and this te lls how better the company is. Insight for Investors & Creditors Looking at Pakistan s corporate earnings over the past year and the story they t ell for the future leaves investors with a lot left to hope for. Most sectors of the economy proved disappointing for shareholders, with some sectors being comp letely inactive. Amidst such a market, however, the Fauji Fertilizers | Appendix 72

fertilizer sector has shown stable and consistent results; with the key players performing extremely well in terms of profitability and being spurred on by raci ng demand. The government is likely to keep input costs low for some time to com e because local manufacturers are determined to pass on all such increases to co nsumers. This will preserve the industry s growth, expansion and move towards se lf-sufficiency; the entry barriers for new firms have already been discussed. Th is sector has offered excellent shareholder returns and demand is still on the r ise as manufacturers expand aggressively to accommodate this increase. So it is probably fair to conclude that the industry has sound fundamentals and significa nt potential for the future. A particularly bright spot for the sector is the ca pacity for the export of fertilizer; if investors are worried about over-supply in the next few years, both India and China are the world s largest urea importe rs, and other markets such as Iran, Bangladesh, Sri Lanka and Thailand are also not too far away. Future Projections FFC has progressed remarkably from its inception in 1978 till to date. Three pro jects in a Span of less than 20 years have been set up. Each of these have incur red an investment of Over 300 million US$ amounting to one of the largest invest ments in Pakistan. This Performance record is considered unparalleled in the cou ntry and matches high standards anywhere in the world. At Fauji Fertilizers | Appendix 73

this point in time, the company is preparing to harmonize itself with new centur y. Building on the foundations of the last 20 years, the company is confident to take on the new challenges. FFCs vision for the 21st century looks for diversifi cation and establishing projects beyond the territorial limits of the country in collaboration with world famous international industrial holdings. The list of different projects that are being evaluated at present are: Oil Refinery Paper ill Project Software Development House Off-Shore Fertilizer Complex Mineral Acid Production Petrochemical refurbish of existing FFC facilities Problems & their proposed solutions with the firm During the peak demand period the three urea manufacturers, Engro, Fauji and Pak Saudi, face serious logistic problems. This include availability of trucks and railway wagons, heavy traffic and frequent traffic jams on National Highway as a ll these units are located within a radius of Fauji Fertilizers | Appendix 74

100 kilometers. The manufacturers have been demanding, for a long time, of the g overnment to expand the roads but the problem still persists. Size of the compan y is very large which produces administrative problems. The company should focus on this particular problem because if this one is improved the company will imp rove more financially. There are new competitors in the industry. Adding some ne w unit can enhance the production capacity of the plants. Company is in a positi on to set up a new plant in the country. Having a strong financial position comp any can start production of the new product line. No availability of railway wag ons. The company should take some steps with the government in order to improve their distribution and reduce their expense more as they are doing it without it . There is an unstable use of fertilizer. Due to rising demand the company is im porting urea instead of producing. The company should try to increase their capa city by adding more units. Adding some new unit can enhance the production capac ity of the plants. Having a strong financial position company can start producti on of the new product line. If FFC decides for the export of Urea it can earn mu ch better revenues. Availability of natural gas from Iran can help setting up a new Urea plant in that vicinity and thus meeting the demand of Urea in the count ry at cheap Rates. There is a phenomenal increase in the prices of basic feedsto cks. Of this problem there is no such solution because since there is a lot of gl obal disorder going all over the world this particular effect will be solved lat er. There is a difficult coexistence between public and private fertilizer produ cer/importer. Future fertilizer demand the companys position is so better that th ey should try to add more units as the company is financially very strong. Compa ny is having strong dealer network all Fauji Fertilizers | Appendix 75

over country that helps in proper availability even in far-flung areas.FFC has d eveloped a well planned network of 170 field warehouses to ensure that fertilize rs is available to the farmers uninterrupted. References http://www.ffc.com.pk/contents/annualrep.htm http://www.google.com.pk Fauji Fertilizers | Appendix 76

http://en.wikipedia.org/wiki/EPS http://www.kse.com.pk/market-data/history_by_da te.php?id=1&sid=1.20 http://www.sbp.org.pk/ http://www.brecorder.com/ Appendix Internal Ratios of the Company Fauji Fertilizers | Appendix 77

CURRENT RATIO QUICK RATIO CASH FLOW LIQUIDITY RATIO AVERAGE COLLECTION PERIOD AV ERAGE INVENTORY DAYS PAYABLE DAYS LIQUIDITY RATIO 2001 2002 2003 2004 2.34 1.04 1.03 1.09 2.19 0.97 0.95 1.06 1.88 1.04 0.70 1.49 26.82 30.46 32.56 24.44 35.24 22.78 18.15 6.08 89.55 102.14 89.4 3 161.76 TURNOVER/EFFICIENCY RATIO 2001 2002 2003 2004 13.61 11.98 11.21 14.94 1 0.36 16.03 20.11 60.03 4.08 3.57 4.08 2.26 7.93 1.79 2.34 2.29 0.86 0.60 0.77 0. 80 SOLVENCY/LEVERAGE RATIO 2001 2002 2003 2004 32% 62% 58% 54% 2% 11% 6% 19% 47% 162% 136% 115% COVERAGE RATIO 2001 2002 2003 2004 16.70 7.81 10.53 16.36 6.67 7 .07 3.89 20.31 13.81 0.61 12.39 1.56 9.43 0.71 24.20 3.50 2005 0.91 0.86 1.07 9.45 12.49 150.12 2006 0.90 0.81 0.34 11.72 17.18 72.59 2007 0.94 0.89 0.90 22.12 12.81 115.91 2008 0.82 0.80 1.07 5.92 5.17 119.97 RECEIVABLE TURNOVER INVENTORY TURNOVER PAYABLE TURNOVER FIXED ASSET TURNOVER TOT AL ASSET TURNOVER 2005 38.62 29.23 2.43 2.77 0.90 2006 31.15 21.24 5.03 3.12 1.09 2007 16.50 28.49 3.15 2.74 0.97 2008 61.69 70.65 3.04 2.40 0.96 DEBT RATIO LTD TO CAPITALIZATION DEBT TO EQUITY 2005 56% 7% 129% 2006 53% 8% 112% 2007 56% 17% 130% 2008 62% 30% 160% TIMES INTEREST EARNED FIXED CHARGE COVERAGE RATIO CASH COVERAGE CASH FLOW ADEQUA CY RATIO 2005 20.64 18.95 25.66 2.02 2006 13.89 -0.79 5.89 -0.06 2007 10.94 8.40 13.88 0.69 2008 13.93 11.74 17.23 0.72 GPM OPM NPM CASH FLOW MARGIN ROE PROFTABILITY RATIO 2001 2002 2003 2004 46.90 39.78 34.86 37.43 % % % % 38.37 31. 09 26.06 29.02 % % % % 26.74 18.31 14.95 19.04 % % % % 15.33 28.15 9.64% 36.02 % % % 33.72 28.56 27.29 32.57 2005 35.71 % 26.40 % 19.22 % 24.24 % 39.36 2006 32.42 % 23.24 % 15.48 % -1.32% 35.78

2007 35.59 % 27.08 % 18.86 % 20.80 % 42.11 78 2008 40.40% 31.67% 21.33% 26.69% 53.11% Fauji Fertilizers | Appendix

ROA % 32.91 % % 18.53 % % 20.14 % % 23.08 % % 23.65 % % 25.38 % % 26.33 % 30.36% EPS DPS DIVIDEND PAYOUT MARKET RATIO 2001 2002 2003 12.49 11.98 12.26 9.44 8.48 8.81 76% 71% 72% 2004 8.11 7.63 94% 2005 9.92 9.84 99% 2006 9.39 7.63 81% 2007 10.86 12.11 112% 2008 13.22 14.24 108% External Ratios for Industry Average 2001 LIQUIDITY Fauji Fertilizers | Appendix 79 2002 2003 2004 2005 2006 2007 2008

Current Ratio Quick Ratio Cash Flow Liquidity Ratio Average Collection Period Av erage Inventory Days Average Payable Days TURNOVER/EFFICIENCY Receivables Turnov er Inventory Turnover Payable Turnover Fixed Asset Turnover Total Asset Turnover SOLVENCY/LEVERAGE Debt Ratio Long Term Debt To Capitalization Debt To Equity Ra tio 1.62 1.45 1.28 25.37 38.97 64.65 2.94 2.72 2.67 26.73 35.89 58.34 2.09 1.90 1.71 40.54 23.77 84.20 2.15 2.01 1.76 32.76 17.45 89.51 1.99 1.67 1.50 17.97 32.73 95.18 1.27 1.08 0.88 14.21 31.83 67.83 2.09 1.81 1.49 21.71 53.75 83.75 1.91 1.59 1.09 4.28 48.08 72.04 16.36 10.18 7.36 4.25 0.63 23.00 11.84 7.02 3.18 0.53 11.28 16.20 9.12 2.84 0.58 17.97 29.72 10.73 2.41 0.63 33.15 15.68 7.56 2.63 0.76 39.33 13.37 9.69 2.17 0.74 23.67 14.44 12.51 2.05 0.54 88.76 23.16 14.33 2.48 0.55 27.28 % 12.88 % 92.07 % 54.00% 30.01% 135.56 % 53.17% 25.18% 109.79 % 51.83 % 24.76 % 91.43 % 49.85 % 20.86 % 92.33 % 51.48 % 16.89 % 79.42 % 55.49% 33.47% 121.75 % 58.25% 36.16% 129.36% COVERAGE Times Interest Earned Cash Coverage Ratio Fixed Charge Coverage Ratio C ash Flow Adequacy Ratio PROFTABILITY Gross Profit Margin Operating Margin Net Pr ofit Margin Cash Flow Margin Return On Asset Return On Equity Cash Return On Ass et 20.16 23.31 23.88 0.76

5.93 8.30 486.61 1.12 11.53 27.25 14.67 0.76 15.58 13.43 14.10 1.52 11.56 13.23 11.52 1.05 7.77 4.96 0.57 0.25 6.22 8.29 5.24 0.25 4.92 7.50 4.36 1.22 30.10 % 17.53 % 2.25% 12.19 % 9.49% 17.71 % 8.50% 33.64% 23.85% 21.39% 15.65% 12.49% 24.30% 8.36% 31.16% 21.69% 24.30% 19.96% 12.81% 24.10% 10.39% 30.43 % 22.53 % 23.39 % 21.88 % 12.91 % 24.62 % 8.88% 31.85 % 23.84 % 34.07 % 19.88 % 17.65 % 33.29 % 8.31% 30.53 % 22.02 % 24.87 % 6.86% 15.30 % 28.44 % 8.98% 33.34% 25.54% 63.86% 14.07% 19.17% 36.50% 7.30% 80 34.90% 27.78% 22.90% 3.42% 13.68% 29.20% -2.89% Fauji Fertilizers | Appendix

MARKET Earnings Per Share Price to Earning Dividend Payout Dividend Yield 11.46 4.12 82.48 % 12.75 % 14.87 7.00 85.94% 7.30% 18.36 9.24 65.29% 7.10% 17.36 10.60 64.24 % 29.97 % 28.25 8.46 64.04 % 5.01% 24.67 8.69 61.82 % 16.19 % 51.14 7.58 44.99% 1.68% 31.58 4.86 43.37% 3.60% Fauji Fertilizers | Appendix 81