The document provides an overview of Pakistan's fertilizer industry. It discusses key points such as the industry's significant contribution to Pakistan's agrarian economy and employment. It also outlines major players in the industry, types of fertilizers, factors influencing demand, and the industry's structure. Additionally, it notes opportunities for industry expansion through potential exports and low valuations compared to other countries.
2. Please Note
We have made our presentation keeping
in mind that you have some prior
knowledge regarding the Sector. Hence
our presentation will not include points
that are know to you all
Thank you
3. Overview and Importance
Agrarian based economy of Pakistan
Significant Contribution to Output
Employment Opportunities
5. Plantfood…
Types include :
(a) Nitrogenous (Protein, Color, Growth)
(b) Phosphorous (Root Development,
Synthesis of Energy)
(c) Potassium: Resistance to disease
6. Major Players
Fauji Foundation
Pak China Fertilizer
Engro Chemical
Lyallpur Chemicals & Fertilizer
Dawood Hercules
Pak- Arab Fertilizer
Pak- American Fertilizer
7. Overview…
LowPenetration of Fertilizers Expected to
Improve
Excess Demand Situation-Seller is the King
Low Resource Costs Result in High
Profitability
8. Overview
Expansions
May Open Up Attractive
Export Avenues
Attractive
investment Portfolios-Trading at
a Discount
Regional Comparison-Valuations are Low
9. Fertilizer
Consumption correlated with
macroeconomic growth (r=0.9841)
The country's GOP has grown at a CAGR
of 7.55% over the past 3 years
Totalagriculture GOP stood at
PKR1,095bn
12. Improvement in yield/hectare
Irrigation System Improvement
Subsidy to farmers
Encouraging use of fertilizer.
Above average credit disbursements.
13. World Fertilizer Situation
Consumptionincreased exponentially
between 1959-1990
IncreasedFood Demand – Burgeoning
Population
14.
15. World High Yield/hectare
through…
Turning
more land into arable land
through better irrigation
Using High Yielding Seeds (HYS)
Using fertilizers to improve soil content
23. Pricing Analysis
Initiation
of Gas Provision for ENGRO;
Buoyant Demand to Allow Price Pass-
through
We foresee excess demand of 0.41mn
tons for urea and 0.76mn tons of DAP
Applicabilityof GST is likely to increase
Urea prices by ~13% and DAP prices by
~16%
24. Pricing Analysis
Main reasons for minimal impact on
fertilizer companies stem from improved
prices of farm output and substantial
differential between imported and locally
manufactured urea
With ENGRO finally starting to receive gas
for its new urea plant, trial production is to
start in the next few days which is to act
as a trigger for the stock
25. Pricing Analysis… Sales Tax
17% ---- likely to take ex-factory urea
prices to PKR1,149/bag from current levels
of PKR1,020/bag whilst DAP price is
estimated to increase to the tune of
PKR497/bag (expected to take DAP ex-
factory price to PKR3,597/bag)
26. Pricing -- Subsidies
GoP provides a subsidy of PKR393/bag
which effectively results in industry
provided subsidy to the tune of
PKR361/bag
GSTis an ‘add on tax’, it is unlikely to have
an impact on profitability.
37. Feed Stock & fertilizers
190,163 billion Cubic meters
Current Supply 240 711 thousand tones
Current Demand 216 019 thousand tones
World population Growth Rate is 1.14%
Pakistan population growth rate is 2.1%
India Population growth rate 1.3%
Chine Population Growth Rate 0.5%
38. Natural Gas field Pakistan
Sui Gas field
mari Gas field
Recent Developments
1. enhancement of field production
capacity to 500 MMSCF/Day
Makori Gas Field (Under investigation )
Estimated reserves of hydrocarbon
reserves with upside touching tens of
trillion cubic feet of natural gas
39. Recent Developments
Thediscoveries of Bhit, Badhra Sawan,
Zamzama, Miano, Chanda, Manzalai and
Rehmat have been developed, adding
around 1.4 BCF per day of new gas into
the system and enhanced recoverable
gas reserves by 6.8 trillion cubic feet.
40. Natural Gas [Pakistan]
840.2 Billion Cubic meter
Shortage of Gas in Pakistan
Import of Urea
44. Total 725 exploratory wells (since inception) have
been drilled till December, 2008 (710 onshore and
15 offshore)
219 oil and gas fields (54 oil and 165 gas and
gas/condensate) have been discovered in various
basins
Pakistan has a drilling density of 1.99 wells per
1,000 sq.km
and success rate of 1:3.3
Global drilling density of 10 wells per 1,000 sq. km,
the success rate of Pakistan compares favorably
with international success rate of 1:10.
57. RELATED AND SUPPORTING INDUSTRIES
COAL INDUSTRY
PESTICIDES
AGRICULTURAL MACHINERY AND TOOLS
OIL AND GAS EXPLORATION
TRANSPORATATION
PACKAGING
58. Harmful Effects Of Chemical Trace mineral depletion of the soil. Because most
Fertilizers
chemical fertilizer programs don't these elements in the
Loss of fertile topsoil soil, they gradually get depleted by crops. Iron and Zinc
Loss of organic humus content in soil deficiencies are common in soil over-loaded with non-
dissolving P. Various diseases in livestock including Grass
Reduced porosity of top soil Tetany, Milk fever, Grass staggers, Scouring, Ill Thrift and a
whole range of metabolic disorders
Nitrate pollution of waterways Excessive energy consumption. 2% of the world's entire
energy consumption is used to make ammonia, much of
Phosphate pollution of waterways which is used to make N fertilizers
Desertification Depletion of non-renewable natural resources.
Phosphorous comes from rocks which are limited in
Poisoning of people eating plants supply. Nitrogen is made from fossil fuels.
Eutrophication of Waterways
containing excessive levels of
Loss of biodiversity in the ocean
inorganic salts
Soil Acidification
Blue-baby syndrome Toxic persistent organic compounds -
Dioxins, polychlorinated dibenzo-p-dioxins (PCDDs), and
(methemoglobinemia) and polychlorinated dibenzofurans (PCDFs) have been
miscarriage in pregnant women detected in fertilizers and soil amendments
caused by nitrate pollution of drinking Radioactive poisoning. Highly-radioactive Polonium-210
in phosphate fertilizers
water Increased Greenhouse Gases. Nitrous Oxide is the 3rd
most important GHG because of the excessive use of
Heavy metal pollution of soils causing chemical N fertilizers
poisoning and cancer - Increased pest problems caused by excessive nitrogen
mercury, lead, cadmium and fertilizer applications
Death, injury and environmental damage caused
uranium
directly by the manufacture of chemical fertilizers
Fertilizer burn - caused by too much
fertilizer being applied, resulting in a
drying out of the roots and damage
or even death of the plant
Higher than normal rates of Cancer in
humans living close to phosphate
mining operations
60. What are Bio Fertilizers
Bio fertilizers are 100% organic nutrition for all crops and products
Advantages
environment friendly, unlike chemical fertilizers that damage the
environment
They are comparatively low on cost inputs
Their use leads to soil enrichment and the quality of the soil
improves with time Though they do not show immediate results,
Microorganisms convert complex organic materail into simple
compounds, so that the plant can easily take up the nutrients
These fertilizers harness atmospheric nitrogen and make it directly
available to the plants
They increase the phosphorous content of the soil by solubilising
and releasing unavailable phosphorous Bio-fertilizers improve root
proliferation due to the release of growth promoting hormones
They help in increasing the crop yield by 10-25%
63. Progress in India & china
Rhizonik: All types of Rhizobium species infecting cultivating crops. There are
seven cross inoculation groups all are available for sale used for legume
crops.
Azonik (Azotobacter chroococcum): It is non-symbiotic bacteria used for all
cereals.
Spironik (Azospirillum brazilense) : It is associative symbiont and most useful for
grasses and similar type of crops.
Phosphonive (Phosphate solubilizing inoculant): This includes bacteria as well
as fungi under field condition they solubilize "P" and provide to plants.
Sulphonik (Sulphur oxidising inoculant): This biofertilizer includes bacteria and
also fungi. The inoculant enhances the availability of sulphur under field
condition. Phospho-Sulphonik: In this unique type of biofertilizer both the types
are equally mixed thereby crops are benefited.
Niku-2000- (Decomposing culture): This inoculant degrades all cellylolytic and
lignolutic organic matter thereby releasing nutrients to plants.
Trichonik (Trichoderma viridi): It is biological control agent. This biofertilizer
restricts the growth of disease producing organism under field condition.
Vermiculture: Best quality vermiculture is produced and it is mixed with N-
fixing inoculant and ‘P’ solublizers so that nutrient value is increased.
64. Pakistan
India started production of it in 1997
Pakistan has a small factory producing 5000 bags a day
Pakistan Agricultural Scientists Chairman Jamshaid Iqbal
Cheema said that “ bio-fertilizer will enhance the efficiency
of DAP and other fertilizers, as most of their quantity is
wasted in the fields. “
He said that DAP or phosphorus efficiency is 15 to 20
percent. In the same way urea
nitrogen effectiveness is up to 40 percent,
Bio fertilizers increasing the production up to 70 percent.
He revealed that when a farmer uses DAP, 80 percent
quantity is wasted in the soil.
67. Industry
2007 2008 2009 2010
Industry At a Glance
Total
Assets
304,833.3
160,397.70 227,111.90 268,109.70 0
Property
Plant and 232,053.9
Equipment 107,865.90 148,040.60 206,452.60 0
Stock 17,039.20 17,497.80 20,199.60 20,607.00
Inventory 13,218.30 26,851.20 15,952.40 24,042.00
All figures in Millions of Rs
71. facts
The industry profits have increased even
though there was a financial crunch
Expansion was carried out
Assets and profits have increased
overtime
Shareholders wealth been maximized
72. Relevance of Stock Market in
analysis
The stock markets reflect performance of
the companies
Due to good returns ,private investor will
be motivated to invest in the sector
Attracts capital to Pakistan
The structure can change
73. Recommendations
R &d needs to be focused upon
The world is shifting its attention towards
Bio fertilizers
Government should encourage off shore
drilling & drilling in Baluchistan
Pakistan still can diversify into different
fertilizers
Training of Farmers
74. Alternatives energy source
Due to inflation ,governments should
lower the GST on fertilizers
Government should have a conscious
effort in establishing a tractor industry
.(cheap and affordable tractors )
Technology should be used in Farms
75. Things that can be improved
Fertilizer companies should initiate a change
in production process.(interviewer negative
response)
Fertilizer effect on Indus Dolphin
Elimination of Creeks(Breeding grounds ) and
damage to fishing industry
Firms and government should now turn their
attention towards KP new gas field .
Alternative Energy Source should be found
As well all know from our discussion in class that fertilizers are of three major types, Urea is nitrogenous, DAP is phosphorus while potash is potassic. These are the three famous kinds of fertilizers. Urea is needed in most quantities in our country while DAP is used to nullify its acidity.Urea is used in plants for it provides them with High Protein Content, Color and growthPhosphorus or DAP is used for root development, maturity expedition and synthesis of enerty regulating substancePotassic is used for disease resistance, growth from root to stack and plumpness..What you see over here is the right way you apply fertilizers, while in ads we usually see farmers spread over the fertilizers from the top like this
Now when the farmers throw fertilizers like this, the light weighted prilled fertilizer which is around 1-2mm.. Stays on the leaves.. And cause burn on leaves.. Also, the advantage of granular fertilizers is that not only they fall on groound due to there weight and size of 2 – 4 mm.. They also absorb less water and stay for longer,,, the longer they stay the longer they effect on your crops..
%age of skilled labor is 90% while semi skilled are 7% and only 3% are un skilled labor in FFBL. All these plants are imported.
National Fertilizer Research Centre, he had absolutely no idea about it. I asked him if they had any contracts with the engineering colleges or anything like that so he said that this is a huge investment, colleges are just not at that level that they can design and build such huge and efficient plants. And it is not only here but all over the world. They lack the capability to make these..Whenever they hire a new employee or engineer, s/he is give on-job-training according to the job they’re handling. There are different plants and different plants require different trainings.In my opinion the only advancement they can get from the factors is in the product… and that is very expensive to do.
As we all have discussed earlier in the class that the structure of this sector is oligopolistic in Pakistan. Key players are engro, Fauji fertilizer,
So we can see here the major players of this sector Engro, FFBL and FFC… NFML is actually a subsidiary of NFC and USC that handles the distribution of imports. Unofficial statement.
about OGDCL which is oil and gas development company limited.