Pak-Arab Fertiliser Limited (PAFL) earned after tax profit amounting to Rs 7,160.29 million for the year ended on December 31, 2008, which surpassed earnings of all other companies operating in the sector. The comparable profit of other companies, which stood short of Pak Arab Fertiliser, included Rs 6,525.08 million by Fauji Fertiliser.
Rs 4,240.43 million by Engro Chemical, Rs 3,062.69 million by Dawood Hercules, and Rs 2,899.62 million by Fauji Fertiliser Bin Qasim. Pak Arab Fertiliser is owned by Arif Habib and Fatima Group equally. Several innovative projects and products contributed to the huge earning of Pak-Arab Fertiliser during the year under review.
Foremost among them was the high income from the 'Clean Development Mechanism (CDM)' project, which it achieved through sale of carbon credits in the international markets.
The carbon credits represent certificates by the United Nations Organisation (UNO), which the company was able to win. It confirms that emission of N2O, which is a greenhouse gas and pollutant was reduced by Pak Arab, thus making the company environment-friendly. By means of the CDM project, the company not only increased its income but also earned valuable foreign exchange for the country. It also gave international recognition of creating global environment-friendly atmosphere and was a gift for the company's home city of Multan.
The CDM project is the first and only such project in Pakistan. It was installed in collaboration with Mitsubishi of Japan and the company managed to sell carbon credits in Japan and the European Union.
The Pak Arab Fertilizer's production capacities were operated at a high level during 2008. Pak Arab manufactured 312,095 tons Nitrophosphate, a phosphoric fertiliser, in addition to 342,574 tons of Calcium-Ammonium Nitrate, and 104,102 tons urea, which are nitrogenous fertilisers.
The company also had the distinction of being one of the two major units, which produce both phosphoric and nitrogenous fertilizers so as to promote balanced usage of fertilizers in Pakistan. Sales stood at Rs 18,933 million and pre-tax profits amounted to Rs 8,342.48 million.
The company achieved such record performance in the face of extremely difficult market conditions, where price of phosphates fluctuated wildly and high prices suppressed demand for phosphatic fertilisers. Together with that, the company also successfully faced the challenges of global and local recessions, which had resulted in low credit availability and high financial costs.
With a vision for the future, Pak Arab continued to invest in its fully-owned subsidiary, The Fatima Fertiliser Company Limited, which is a Greenfield fertiliser complex, being set up with an investment of Rs 15 billion, for producing 1.5 million tons fertilisers.
Fatima Fertiliser is expected to go into production by mid-2009. It will mark a big step forward in overcoming a major problem of shortage of urea, which has been a hurdle in the country's agricultural performance.
The new subsidiary will also add further to the phosphatic and compound (NPK) fertiliser capacity in the country, which is essential for increasing yields. Fatima Fertiliser also has a CDM project, already approved by the United Nations. It would give a big boost to the upcoming associate company's earnings. Moreover, it would fetch valuable foreign exchange and further improve Pakistan's image as an environmental friendly nation.
As the Fatima Fertiliser would come on stream, the combined capacity of the two group units would shoot up to 2.3 million tons, which would bring the Group's fertiliser production at par with other fertiliser producers in the country.
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