Fauji Fertilizer Company Limited is a public listed company with its business across Pakistan. Headquartered at Rawalpindi with marketing group office at Lahore, manufacturing plants at Goth Machhi, and Mirpur Mathelo, we are one of the leading fertilizer manufacturers in Pakistan. We manufacture and market our own as well as associated company’s fertilizers in Pakistan. In addition to marketing of locally manufactured fertilizers Urea and DAP under the name Sona, we also import DAP, SOP, MOP, Boron and Zinc which are marketed as FFC DAP, FFC SOP, FFC MOP, Sona Boron and Sona Zinc.
Our net revenues for the year 2016 were Rs. 72.87 billon with net profit of Rs. 11.78 billion. Total capitalization was Rs. 90,709 million with owner equity of Rs. 28,211 million. During the year, there were no significant changes in size or capital structure. We market and sell products throughout Pakistan covering all four provinces. Our products are used mainly in the agriculture sector. The products are shipped to dealers, institutional customers and direct customers. FFC does not sell any product that is banned in certain markets or that is subject of stakeholder questions or public debate. Our market network includes 3 zones, 13 regions, 63 sales districts, 194 warehouses, over 3,700 dealers and five farm advisory centers which are spread in all four provinces of Pakistan to cater product sales and farm advisory services.
We require raw materials, packaging, capital equipment, services, and other inputs. Our suppliers consist of local suppliers and foreign suppliers, including large companies, small privately held companies, contractors and small businesses. The major raw material and other components procured locally while the materials and components which are not available in Pakistan are purchased from abroad. We are not particularly dependent on any of our suppliers. Our supply chain is mixed including labor intensive and technology intensive. The total number of our suppliers was 3,123 at the end of the year. During the year, we paid Rs. 24,258 million to our supply chain partners on account of purchases of goods and services. We have an extended network of dealers for provision of product to customers at their nearest point. There were no major changes in the location, operations, and structure of the organization and its supply chain during the year.
- United Nations Global Compact (UNGC)
- Marketing Association of Pakistan (MAP)
- Fertilizer Manufacturers of Pakistan Advisory Council (FMPAC)
- Fertilizer Industry Public Relation Committee (FIPRC)
- International Fertilizer Industry Association
- Arab Fertilizer Association
- Farmers Association of Pakistan
- World Wide Fund (WWF)
COMMITMENTS, MEMBERSHIPS AND AWARDS
We, being a responsible corporate citizen, not only abide legal obligations but also strive to follow several externally developed voluntary initiatives in the areas of economic, environment and social management. We support the Sustainable Development Goals (SDGs) as agreed between the nations and foresee it a step forward to resolve the world’s most critical issues and support an active role of business in helping the governments to meet the targets.
We do not provide substantial funding to these associations. However, events like exhibitions/seminars/workshops are sponsored. We remain engaged with these organizations on a continuous basis and actively take part in activities related to us. Our Agri. Services officers are members of the Soil Science Society of Pakistan and the annual subscription for each officer is borne by FFC. Moreover, our R&D officials also hold honorary positions with international research organizations like University of Nottingham, British Geological Survey, and Society for Environmental Geochemistry and Health (European Chapter). We participate in conferences, seminars & events organized by the Soil Sciences Society of Pakistan and give our input in public policy development.
Awards
- Best sustainability report 2015 award by the joint committee of ICAP and ICMAP
- First position for best presented annual report 2015 in SAARC region by SAFA
- Best presented annual report 2015 award by ICAP and ICMAP
- Excellence certification for “Protect & Sustain” from the International Fertilizer Industry Associations (IFA)
- First company to consecutively win six first position placements in PSX Top 25 Companies Award
- Co-winner in the “Large National Category” of the Business
- Excellence Awards of UNGC (Pakistan Network)
- Management Excellence Award by the Management Association of Pakistan
- Platinum award by Rawalpindi Chamber of Commerce and Industry
Our Business Model
Our business model is hub of everything we do. It defines inputs we consume, activities we carry on, the relationships we depend on and the outputs and outcomes, we desire to achieve to create sustainable value for our stakeholders in short, medium and long term.
STAKEHOLDERS’ ENGAGEMENT
Value creation requires integration of expectations and interests of stakeholders in decision making. Our continuous commitment to engage with our stakeholder helps us to understand the concerns, devise appropriate strategies and deliver to the expectations of our stakeholders.
The first and significant step in an engagement process with stakeholders is the identification of relevant and important stakeholders. We identified important stakeholders by considering those groups or individuals that can be significantly affected by our business activities, outputs or outcomes, or whose actions can be expected to significantly affect our ability to create value over time. The identified stakeholders were profiled, mapped and prioritized for consultation based on factors of influence, responsibility, proximity, dependency, willingness to engage and representation. Consultation with stakeholder groups is carried out on continuous basis by the relevant departments.
Knowledge of stakeholders’ concerns and exact requirements of customer base helps to respond to their concerns and gain economic success on a sustained basis. Customers are of prime importance for us, we provide support in the use of our products and gather feedback from farmers through our extended Agri-service department. We conduct customer satisfaction survey on a biannual basis. The survey comprises of a questionnaire to measure the level of customer satisfaction on aspects of quality, operations and products offered, focusing the entire product portfolio across the marketing area network of Pakistan. During the year, two customer satisfaction surveys were carried out in January and June 2016 respectively. The surveys were conducted by selecting dealers as sample size from the entire marketing area across Pakistan, covering all 13 FFC regions.
Engaging stakeholders throughout the year benefits us in timely identification of negative impacts of our activities and expectations of our stakeholders, which helps us to take appropriate steps for effective management of impacts in timely manner. We consulted the following major groups throughout the year for Sustainability Report 2016.
In line with our previous practice of report specific stakeholder engagement, we identified important stakeholder groups, prioritized those groups for engagement, defined communication methodologies for each group and carried out engagement with them to gain insights for identification of material topics. The stakeholder groups were engaged through email, phone and a focus group meeting.
The details of stakeholder groups consulted, the topics identified by them and our response are as follows.
MATERIALITY ASSESSMENT
We aim to create value addition and benefits to all stakeholders through timely identification, prioritization and management of impacts, risks and opportunities. Our sustainability efforts are focused in areas which represent our significant impacts on the economy, environment and society, critical for our ability to create value over short, medium and long term and which have been defined as important by various stakeholders.
We used GRI Standard GRI 101 Foundation 2016 reporting principles of sustainability context, materiality, completeness and stakeholder inclusiveness, for defining our report contents. These principles have been consistently applied at varying degrees during identification, prioritization and validation steps, while defining material topics for this report.
Based on the results of the stakeholder engagement, review of industry specific issues, and internal analysis, a materiality analysis was carried out to produce a materiality matrix containing the material sustainability issues for our operations. This analysis has allowed us to identify the most relevant topics that reflect significant economic, environmental and social impacts and that greatly influence our value creation ability and the assessments and decisions of our stakeholders. The prioritization of the risks is based on the materiality analysis for non-financial risk as per IR framework, GRI Standards and best available practices for defining material topics. Through the materiality analysis, we consider the severity and likelihood of such a potential risk, and establish relative risk levels to guide our mitigation activities. The CSR Committee analyzes the risk identified and recommends action to the relevant departments for prevention and mitigation of the negative impacts of the operations and maximization of opportunities. Compliance with laws, international standards, internal regulations, and FFC’s code of conduct is a basic requirement for all activities as part of the precautionary approach. The validation of material topics was carried out by CSR Committee which is responsible for sustainability related activities. The GRI Standard GRI 101 Foundation 2016 principles of defining report content i.e. completeness and stakeholder inclusiveness were applied while validating the material topics for the FFC 2016 sustainability report.
The resultant material topics are activities which successful chemical companies develop, such as plant, process and product safety, environmental protection, health and safety and making investment for uplift of the plant site community. Although FFC is a leader in all these areas in its sector, it is still focused to move ahead for playing its role in sustainable development.
The matrix divides up the areas to show those which have high impacts and those which have moderate impacts of FFC’s activities and which are highly relevant and those which are moderately relevant to its stakeholders. The content and scope of this report is also derived from this matrix.
The boundaries for material topics have been identified on the basis of their impacts whether lying within the organization or outside the organization. The reporting principles for defining report content from GRI Standard GRI 101 Foundation 2016 have been used while identifying the boundaries for material topics.
STRATEGY AND RESOURCE ALLOCATION
We believe that sustainable value can only be achieved through efficient use of resources, developing sustainable products, promoting responsible consumption and treating environment and people fairly and with respect. This attitude opens up opportunities and sets us apart from our competition resulting in higher level of revenues, customer appreciation, acceptance and increased demand.
Our active strategy and management of the value creation process helps us to achieve our reputation among investors, be they shareholders or providers of debt capital, customers, and our business partners. Our investors appreciate the fact that their investment is designed to generate value over different time horizons. Although the initial investment on sustainable value creation is higher, careful planning and implementation leads to generate higher revenues which offset or exceed the initial investments in the medium to long term. Our investment in sustainability aims to minimize the quantity of material we use and cut overall costs, make the company qualified to attract highly-skilled employees and investors, and to improve product quality and the company’s image amongst its customers. As such, sustainable value creation, in its broadest sense, has become a key criterion for good corporate governance. Our governance approach for sustainable value creation is covered in the governance section of this report.
We envisage sustainable value creation as a process of change in which use of resources, goals of investment, direction of technological development, and institutional changes are not only in synchronization with each other, but also increase current and future potential to create value and meet needs of stakeholders. We are working to integrate sustainable value creation in our business processes for delivering our goal of shared value through efficient business management.
We have developed programs, initiatives, and long-term measures in all key areas as a means of achieving the goals which we have set ourselves whilst also increasing the benefit for all stakeholders. As a leading fertilizer manufacturing company, we do not limit our sustainability efforts in compliance with statutory regulations, but have also committed to ethical and sustainable conduct in all of our commercial activities. All of our actions comply with the applicable laws, principles laid down in the UN Global Compact, and our internal code of conduct. We strive for a business culture of continuous improvement, sustainable competitiveness, and top performance in line with our ethical standards. In all of our activities, we put emphasis on environmental protection and safety. Our own policies on health, safety and environment (HSE) are in line with the best practices. We are continually striving to improve in terms of economic, environmental and social sustainability to create value through efficient use of our capitals.