Annual Report for the year ended December 31, 2008 Annual Report 31, 2008 December ended for the year The Cover Concept Nothing on earth is so well suited to make the sad merry than everyone associated with us. We go extra miles to deliver green. With every green bough come the singing birds, their happiness all around that is synonymous with green. And it is songs greet the sun and makes the grains sprung up in fun. Each here, at the highest pitch of happiness that our world is flung grain of food becomes harbinger of the season of happiness in into a kaleidoscope of new possibilities. the courtyard of our farmer, and hence the chain reaction of happiness starts to take the world in its spell. We have accelerated our efforts after our record achievement this year to deliver better value to our stakeholders, customers, It is here that our story begins. We are the secret potion that employees and society. We are here to improve lives and to helps seeds discover the world and develop their virtues as plants strengthen our ability to efficiently serve customers all around. for the world to take joy and earth to laugh more often. Today We are finding superior ways to do business and are operating we celebrate this secret relationship with the earth and its people. in a more sustainable manner. We understand the way forward, and we will continue driving ahead with an unwavering focus FFC is an experience at its best with several offshoots of on positioning FFC for maximum financial performance -now happiness and dreams attached. Which is why we try and expand and forever for the benefit of all, for the happiness of all. as often as possible so as to keep happiness moving, to listen to unspoken words, to hear unsaid needs, and to recognize secret dreams that are so well attached with the financial strength of Contents Company Information 2 - 3 BOD and Management Committees 4 - 5 Notice of Annual General Meeting 6 - 7 Vision, Mission, Strategy and Objectives 8 - 9 Financial Performance 10 - 14 Directors' Report 16 - 39 Report of the Audit Committee 40 Financial Statements FFC Statement of Compliance 42 - 43 Review Report to the Members 44 Auditors’ Report to the Members 45 Balance Sheet 46 - 47 Profit and Loss Account 48 Cash Flow Statement 49 Statement of Changes in Equity 50 Notes to the Financial Statements 51 - 79 Consolidated Financial Statements Auditors’ Report to the Members 83 Consolidated Balance Sheet 84 - 85 Consolidated Profit and Loss Account 86 Consolidated Cash Flow Statement 87 Consolidated Statement of Changes in Equity 88 Notes to the Consolidated Financial Statements 89 - 121 Pattern of Shareholding 122 - 124 Form of Proxy Company Information Board of Directors Lt Gen Hamid Rab Nawaz, HI(M) (Retired) Chairman Lt Gen Munir Hafiez, HI(M) (Retired) Registered Office Chief Executive and Managing Director Dr Haldor Topsoe 93-Harley Street, Rawalpindi Cantt Mr Qaiser Javed Website: www.ffc.com.pk Mr Tariq Iqbal Khan Tel No. 92-51-9272307-14 Dr Nadeem Inayat Fax No. 92-51-9272316 Mr Istaqbal Mehdi E-mail: [email protected] Brig Arif Rasul Qureshi, SI(M) (Retired) Maj Gen Muhammad Tahir, HI(M) (Retired) Brig Rahat Khan, SI(M) (Retired) Plantsites Mr Shahid Aziz Siddiqui Mr Shahid Anwar Khan Goth Machhi, Sadikabad (Distt: Rahim Yar Khan) Mr Amir Tariq Zaman Khan Tel: 92-68-5786420-9 Fax: 92-68-5786401 Chief Financial Officer Mirpur Mathelo (Distt: Ghotki) Tel: 92-723-651021-24 Syed Shahid Hussain Fax: 92-723-651102 Tel: No. 92-51-9272339 Fax: 92-51-9272337 Marketing Division E-mail: [email protected] Lahore Trade Centre, Company Secretary 11 Shahrah-e-Aiwan-e-Tijarat, Lahore Tel: 92-42-6369137-40 Brig Khalid Kibriya (Retired) Fax: 92-42-6366324 Tel: No. 92-51-9272327 Fax: 92-51-9272519 Karachi Office E-mail: [email protected] B-35, KDA Scheme No. 1 Karachi Tel: 92-21-4390115-16 Fax: 92-21-4390117 & 4390122 Auditors M/s KPMG Taseer Hadi & Co. Chartered Accountants Shares Registrar THK Associates (Pvt) Limited Ground Floor, State Life Building - 3 Dr. Ziauddin Ahmed Road, Karachi – 75530 Tel: 92-21-111-000-322 Fax: 92-21-5655595 2 Fauji Fertilizer Company Limited Lt Gen Hamid Rab Nawaz, HI(M) (Retired) Lt Gen Munir Hafiez, HI(M) (Retired) Chairman Chief Executive and Managing Director Dr Haldor Topsoe Mr Qaiser Javed Mr Tariq Iqbal Khan Dr Nadeem Inayat Mr Istaqbal Mehdi Brig Arif Rasul Qureshi, SI(M) (Retired) Maj Gen Muhammad Tahir, HI(M) (Retired) Brig Rahat Khan, SI(M) (Retired) Mr Shahid Aziz Siddiqui Mr Shahid Anwar Khan Mr Amir Tariq Zaman Khan Syed Shahid Hussain Brig Khalid Kibriya (Retired) Chief Financial Officer Company Secretary Annual Report • 2008 3 Delegating Responsibilities BOD Committees Audit Committee Chairman System & Technology Committee Mr Tariq Iqbal Khan Chairman Members Brig Rahat Khan SI(M) (Retired) Mr Qaiser Javed Members Maj Gen Muhammad Tahir HI(M) (Retired) Dr Nadeem Inayat Dr Nadeem Inayat Brig Arif Rasul Qureshi SI(M) (Retired) Mr Amir Tariq Zaman Khan Projects Diversification Committee Human Resources Committee Chairman Chairman Mr Tariq Iqbal Khan Brig Arif Rasul Qureshi SI(M) (Retired) Members Members Mr Qaiser Javed Mr Qaiser Javed Dr Nadeem Inayat Dr Nadeem Inayat Brig Rahat Khan SI(M) (Retired) Management Committees Executive Committee Chairman Lt Gen Munir Hafiez HI(M) (Retired) Business Development Committee Chief Executive & Managing Director Chairman Members Lt Gen Munir Hafiez HI(M) (Retired) Mr Asad Sultan Chaudhry Chief Executive & Managing Director General Manager Marketing Members Syed Iqtidar Saeed Mr Abid Maqbool General Manager (Technology & Engineering) General Manager (Business Development) Syed Shahid Hussain Mr Asad Sultan Chaudhry Chief Financial Officer General Manager Marketing Mr Tahir Javed Mr Zafar Hadi General Manager (Manufacturing & Operations) General Manager (Business Development) Mr Saulat Hussain Brig Khalid Kibriya (Retired) General Manager, Human Resource Company Secretary Mr Naeem ur Rehman General Manager Plant, Mirpur Mathelo Brig Khalid Kibriya (Retired) Company Secretary Directors' Attendance at Meeting Human System & Projects Directors Board of Audit Resources Technology Diversification Directors Committee Committee Committee Committee Lt Gen Syed Arif Hasan, HI(M) (Retired) * 5 - - - - Lt Gen Munir Hafiez, HI(M) (Retired) 5 - - - - Dr Haldor Topsoe - - - - - Mr. Qaiser Javed 4 4 6 - 1 Mr. Tariq Iqbal Khan 3 4 - - - Mr. Istaqbal Mehdi 3 - - - - Mr. Khawar Saeed * 1 1 - - - Dr. Nadeem Inayat 5 2 5 1 1 Brig Arif Rasul Qureshi (Retired) 5 - 7 1 - Maj Gen Muhammad Tahir (Retired) 4 3 - - - Brig Rahat Khan (Retired) 5 - - 3 1 Mr. Kamal Afsar * - - - - - Mr. Mohsin Raza * 3 - - - - Mr. Masood Karim Shaikh * - - - - - Mr. Shahid Aziz Siddiqui 2 - - - - Mr. Shahid Anwar Khan 1 - - - - Number of Meetings Held 5 5 7 3 1 * Retired during the year 4 Fauji Fertilizer Company Limited Annual Report • 2008 5 Notice of Meeting Notice is hereby given that the 31st Annual General Meeting of 10/- each appearing in clause V of the Memorandum of the shareholders of Fauji Fertilizer Company Limited will be held Association and Article (4) of the Articles of Association of at Pearl Continental Hotel, Rawalpindi on Friday, February 27, the Company be and are hereby substituted by the figures and 2009 at 1000 hours to transact the following business:- words Rs. 10,000,000,000/- (Rupees ten billion) divided into 1,000,000,000/- (One billion) ordinary shares of Rs.10/- each. Ordinary Business FURTHER RESOLVED THAT the Company Secretary 1. To confirm the minutes of Annual General Meeting held on be and is hereby authorized to do all acts to effect the Special February 27, 2008. Resolution and to comply with all the necessary requirements 2. To receive, consider and adopt the Audited Accounts of the of the law in this regard.” Company together with the Auditors' and the Directors' 6. To approve the issue of bonus shares in the ratio of 25 shares Reports thereon for the year ended December 31, 2008 for every 100 shares held (i.e. 25%) as declared and together with the Audited Consolidated Accounts of FFC recommended by the Board of Directors in their meeting and subsidiary FFBL for the year ended December 31, 2008. held on January 29, 2009, and if thought fit, pass the 3. To appoint Auditors for the year 2009 and to fix their following Resolution as Ordinary Resolution. remuneration. RESOLUTION 4. To approve payment of Final Dividend for the year ended RESOLVED THAT a sum of Rs. 1,233,685,570 (one billion, December 31, 2008 as recommended by the Board of two hundred thirty three million, six hundred eighty five Directors. thousand and five hundred seventy) out of Reserves of the Company available for appropriation as at December 31, Special Business 2008, be capitalized and applied for issue of 123,368,557 5. To increase the Authorized Share Capital of the Company (one hundred twenty three million, three hundred sixty eight from Rupees Five Billion to Rupees Ten Billion as thousand and five hundred fifty seven) ordinary shares of recommended by the Board of Directors in their meeting Rs.10/- each allotted as fully paid bonus shares to the held on January 29, 2009; and if thought fit pass the following members of the Company whose names appear on the register Special Resolution with or without modification as required of members as at close of business on February 20, 2009 in under Article 23 of the Articles of Association. the proportion of twenty five shares for every hundred shares held (i.e. 25%) and that such shares shall rank pari passu in RESOLUTION every respect with the existing ordinary shares of that “RESOLVED THAT the Authorized Share Capital of the Company.