The non-implementation of promised rollback in gas prices for fertiliser sector at the time of Kissan Package has made things difficult for operational fertiliser companies, industry sources revealed to Business Recorder Saturday. Fertiliser companies are annually contributing huge revenues in the form of Gas Infrastructure Development Cess (GIDC) and federal taxes despite facing cuts in gas allocation. This is directly affecting the agri sector, which is the backbone of the country's economy and the most important component towards the food security.
The Sustainable Development Goals set by the world body up to the year 2030 promises food security, which requires policy alignment by Food and Agriculture Ministry, they added. According to details available to this scribe, Fauji Fertiliser Company Limited (FFC) is arguably the biggest name which enjoys a significant role in Pakistan's fertiliser industry and is slowly spreading its wings beyond borders with the installation of its first offshore fertiliser plant in Tanzania.
Fauji Fertiliser, an internationally awarded business entity for good governance and transparency, has kept the interest of farmers and farming community by absorbing most of the GIDC instead of passing the cost to farmers who are already suffering due to the massive hike in both international and local crop prices. FFC stands first in KSE consecutively for last four years and enjoys excellent record of being one of the top tax payers to the government of Pakistan.
Despite the challenges, the performance of FFC is a case study and stands as an example of successful and ethical business in Pakistan under the challenging environment. The fertiliser company enjoyed a brilliant 2015 with high sales revenue. 2015 was a year to reminisce for Fauji Fertiliser Company Limited, contributed due to its experienced and dedicated professional workforce, which made sure that the company achieves its pre-set target for the year. The output of the leading manufacturer in Pakistan would have been even better had it not been for the unfriendly business environment for the fertiliser sector. Levies of over Rs 800 million and financing costs related to payment of entire GIDC obligation negatively impacted company margins. Similarly, company revenues were also affected by non-implementation of the Fertiliser gas roll back understanding with Kissan Package, besides the change in gas billing mechanism. Consequently, company profitability resulted under 10 percent decrease compared to last year.
The consistent corporate performance of FFC, highest dividend payout ratio of around 90 percent as compared to an average of 53 percent existing in Pakistan and recognition of its professional excellence and transparency are testament of its bluechip standing. According to the results disclosed by the company, it posted net profit of Rs 16.77 billion for year 2015 with high sale revenue of Rs 84,831 million despite depressed market conditions. In spite of decreasing interest rates and bearish market the company managed to earn a handsome investment income of Rs 6.19 billion which signifies the positive results of its investment initiatives and efficient portfolio management
Decreasing international fertiliser prices owing to lower oil/gas prices in the international market, is posing a challenge to the local industry which despite buying gas at comparatively higher prices, is saving precious foreign exchange in addition to contributing a handsome amount in the government treasury as taxes and levies.
The governmental support to the local industry is therefore vital for safeguarding the sector against international competition, and also to ensure consistent contribution to the national exchequer through the transparent governance mechanism of the indigenous fertiliser sector. Any loss to local industry will not only result in unemployment but out flow of trained manpower leaving farmers at the mercy and monopoly of fluctuating international fertiliser prices, sources added.
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