Chairman's Message

On behalf of the Board of Directors of Fatimafert Limited, I welcome you to the Company’s website.

Market Overview

Fatima is deeply committed to improving the lives of all our customers and other stakeholders. With a unique product portfolio and widespread network of warehouses, we continue to serve and protect the interests of millions of progressive farmers across the fertile lands of Pakistan. The year 2016 proved to be a challenging year for the Fertilizer industry. Throughout the year the industry was affected by over-supply, price fluctuations, subsidy execution and climbing inventories. In Pakistan, the urea market decreased by 2% to 5.495 million in 2016 from 5.596 million in 2015. Major decrease was due to poor crop prices for rice, sugarcane, potato and cotton and therefore deterioration in farmer economics. During the first 6 months of 2016, the Urea industry sales decreased by 36% over the same period in 2015. Realizing state of the rural economy, Government of Pakistan announced the Kissan Package with subsidy on both Nitrogen and Phosphate fertilizers. In case of Urea, the total relief of Rs. 390 per bag was provided; comprising of subsidy of Rs.340 per bag by the government and Rs.50 per bag from the local manufacturers of Urea. Resultantly, in the second half of 2016, the Urea market showed an increase of 34% over the same period in 2015. In case of DAP, price advantage due to reduced prices in international market along with subsidy of Rs.300 per bag from Government was passed on to the farmers. Both these factors clubbed together supported DAP off take leading to 22% YOY growth in DAP to 2.19 million tons in 2016 from 1.80 million tons in 2015. We at Fatima, forecasted and set bold targets after thorough analysis of sales trends, resources on the ground and our potential, translating into the most challenging target ever set for the Team. Numerous system improvements and technical service enhancements were carried out which made our operations more efficient and robust. Our proactive approach and continuous drive to achieve excellence were the key success factors to beat all odds.

Company Performance

The low-key start to the year was due to expectation of price reduction primarily from inclusion of Nitrogenous fertilizer in subsidy regime. Delayed announcement of subsidy muffled the off-take situation in the first half of the year; leading to over-supply situation and inventory stockpile with the manufacturers. The sales momentum started to build from the start of the third quarter of the year after subsidy announcement on Nitrogenous fertilizer including reduction of Sales Tax rate from 17% to 5% for Urea. Resultantly the subsidized market prices of Urea and DAP fertilizers were lowered to Rs. 1400 and Rs. 2500 per bag respectively leading to favorable farm economics. The above factors coupled with effective marketing strategies led the Company to achieve record sales mentioned earlier. NP sales increased phenomenally by 63%. The sales of CAN and Urea were also higher by 18% and 11% respectively. With effective market penetration, NP continues to go from strength to strength as farmers’ awareness of the benefits of the product increases.

Acknowledgements

The Board places on record its gratitude for the hard work and dedication of every employee of the Company. The Board also appreciates and acknowledges the assistance, guidance and cooperation of all stakeholders including the Government of Pakistan, financial institutions, commercial banks, business associates, customers and all others whose efforts and contributions strengthened the Company.

Arif Habib
Chairman
Fatimafert Limited

Page Last Updated: Wednesday, July 05, 2017