Fauji Fertilizer Company Limited ($FFC)

Ladies and gentlemen, on behalf of Fauji Fertilizer Company, I extend a warm welcome to you all to FFC's first corporate briefing for the year 2026. This briefing is being conducted in compliance with the Pakistan Stock Exchange notification regarding corporate briefing sessions by listed companies, and also to meet the eligibility criteria for the top 25 companies. We sincerely appreciate the participation of our valued stakeholders who have joined us today through video conference. Intimation regarding this corporate briefing was duly shared with the Pakistan Stock Exchange on 10th March 2026. The primary objective of today's session is to apprise you of the company's performance and to provide opportunity to interact, discuss and receive your valuable feedbacks on FFC's current operations and future business prospects. This briefing has been organized precisely in that context. The panel of FFC's management present for today's session comprises of Mr. Jahangir Piracha, MD and CEO, who is here in person with us; Mr. Atif Ali, Chief Financial Officer, in person. We have Mr. Aamir Abbas with us, Chief Technical Officer. And we have Mr. Mian Zaka Uddin and Mamoon-ur- Rashid from Marketing Department on video conference. The panel will be pleased to respond to your queries during the discussion. At the start of the session, I request Mr. Atif, the CFO, to kindly apprise the house on the company's performance.

Thank you, [ Ali Hassan ]. Thank you, everyone, for joining. I wish and I extend warm welcome for everyone for taking their time out. So this is how the flow of information will be. We started with the overall agri economics of the country, then the highlights and challenges. We'll talk about company's performance, a snapshot of our consolidated profitability, and then we'll open the forum for question and answers. So if you look into the overall economics highlights, [Foreign Language], as we have seen over the last 2 years, overall, economy has been stabilized and as we have seen over the last 2 years. The most important aspect here was the inventory because 2025 was a challenging year where it was a long year and we carried a lot of inventory. The whole industry carried a lot of inventory throughout the course of the year, but [Foreign Language], FFC, due to its widespread dealers network, ended up with like 18% of the overall inventory, whereas our production level is more than 40%. [Foreign Language] this is currently, we are going through a geopolitical situation with war happening with Iran, so it's our neighboring country. So it has our impact -- it has impact on the energy prices. But [Foreign Language], so far, we are good in terms of our availability of the raw materials and other aspects of the production. The only impact is currently at the Port Qasim plant, where the gas has been slightly reduced. So production levels have slightly gone down at the Port Qasim site. Looking into the overall farm economics, there has been slight improvement versus last year. As you can see here, wheat numbers have not yet been finalized because the crop is being currently cultivated, but we expect that this number is to improve as well as compared to last year. [Foreign Language], the company has delivered a profitability of almost PKR 74 billion, which is like 14% higher versus last year, and that is on the back of highest ever dividend income from our investments. [Foreign Language] PMP, Askari Bank has come up as well. I think [Foreign Language] and other -- our wind farms have contributed as well. [Foreign Language] today in the AGM as well we highlighted and we highlighted that [Foreign Language], food companies have also turned around. They haven't given any dividend yet, but they are -- in terms of their profitability, they are positive [Foreign Language]. Urea production, despite challenges, [Foreign Language]. That too turned around during the course of the year. So [Foreign Language] we sold that throughout the course of the year. The company also delivered on key strategic initiatives. One of them was the Shariah compliance and [Foreign Language] stock market [Foreign Language] market cap went as well, and we touched around PKR 3 billion during the course of the year before this war happened. Sona center is one of the key initiative of the organization. [Foreign Language] across the country or [Foreign Language] 244 Sona centers, which are operational. We have a slide on that, we'll talk about a bit more when we reach there. Corporate governance [Foreign Language] I think we got the SAFA award consecutive -- second consecutive year, and this is a testament to our transparency and corporate governance. Another highlight of the year is like the MD and business team is basically aggressively following with the government and successfully, we have got the firm gas allocation to our Port Qasim plant and to Agritech as well, which is our -- like we have invested recently. [Foreign Language] gas permanent allocation [Foreign Language] peace of mind [Foreign Language] going forward, we'll have consistent production from a year -- a couple of years' time. Merger [Foreign Language] successful merger. We got synergies as well more than PKR 4 billion we saved through that [Foreign Language] performance of that and forecasted [Foreign Language] to be honest, [Foreign Language] last year performance was driven by Port Qasim products. And lastly, I think the most hot topic would be the PIA [Foreign Language] we have joined the consortium or we are proceeding as well. So probably most of you must be there in our AGM [Foreign Language]. So in case there will be more questions, we'll respond to that. Challenges are more or less the same we have been highlighting during the course of the year. So I won't be talking about them in detail. Long market [Foreign Language] and this continue to be a long market till H1, that's what we expect. So we'll see how things evolve post this war situation. [Foreign Language] slide. I think inventory levels, [Foreign Language] 6.7. Industry [Foreign Language] versus 6.5 last year. Our production was lower mainly because of the 2 turnarounds. Market share [Foreign Language] overall industry went down mainly because of decline in that overall market because of the affordability issue [Foreign Language], price was much higher, so farm economics [Foreign Language] we had an impact here as well. If you look into our components of profitability, [Foreign Language], 62% last year, 62% this year. But with the growth or the other thing is the main difference is our dividend income we spent. [Foreign Language] actually has gone up from 13% to 22%. So overall, the ratio is like 60% to 40%. 60% we get from core operations and 40% from our investments in subsidiaries and banks and mutual funds. It's just a 5-year snapshot of our profit -- revenue and profitability. [Foreign Language] growth is there, and the company aspires to continue to deliver value for the stakeholders and shareholders. [Foreign Language] balance sheet [Foreign Language] equity results are healthy. Our stocks [Foreign Language] stuck in stocks mainly because of increase in phosphoric acid prices, although inventories are lower [Foreign Language] over the last year, phosphoric acid prices [Foreign Language]. Due to that, [Foreign Language] inventory [Foreign Language]. Borrowing has been on a higher side, mainly on the back of the CapEx project like Pressure Enhancement, throughout the course of year we have been highlighting [Foreign Language] $130 million FFC share. The time is here [Foreign Language] $30 billion borrowing [Foreign Language]. So that's one of the main impact that has been reflected in the borrowing side. Overall, our debt to equity and current ratios are, [Foreign Language], very healthy. Group profitability is flat versus last year PKR 55 million. So not much of a change. Sona centers [Foreign Language] this has been a key initiative of the organization and very close to our heart. [Foreign Language] progress is quite healthy, and we are trying to build an ecosystem [Foreign Language] we have like registered 118,000 farmers, 1.7 million acres of land coverage so far. [Foreign Language] we have sold like 65,000 tonnes, but our aspiration is much higher. [Foreign Language] 244 Sona centers nationwide. So the most important aspect is like a one-stop shop. We are like providing crop or life insurance, pesticides, seeds. We have brought bank [Audio Gap] and [Foreign Language] international company Yara [Foreign Language]. We are bringing their products, which are going to increase the crop yield by 10% to 15%. So that's a one-stop shop. [Foreign Language] I just want to highlight as well [Foreign Language] agronomist [Foreign Language] hire [Foreign Language] which provides free like services and advanced technologies or advisory [Foreign Language] farmers to improve their crop yield. So I think this is getting traction, and we aspire to sell more from this. Again, this is a deterrent as well in case [Foreign Language] situation arise [Foreign Language] going forward [Foreign Language] urea short [Foreign Language] so we sell at the DTP price it goes to the farmer. MRP [Foreign Language] basically there's no possibility [Foreign Language] price charge [Foreign Language] as we have seen a few years back. Again, this is like -- I won't go into the detail. This is a testament of our [Foreign Language] performance of the whole organization. Our team are constantly up to it, and we continue to get accolades which is a testament, again, of our top reporting in terms of governance, sustainability and transparency. PIA, again [Foreign Language] I explained in the morning as well, just we'll try to explain the transaction structure right now. Government of Pakistan owned 100% share, which they offered for bidding on 23rd of December. Arif Habib-led consortium won. We became part of that consortium. So overall, [Foreign Language] the share which is like on offer was 75% share. [Foreign Language] part of the consortium [Foreign Language] FFC share is 34% [Foreign Language] the 75% completion is going to be completed in a year's time. [Foreign Language] first completion is like 2/3 of the payment will be made like in March -- in April to May, which is around PKR 90 billion overall. Second completion will be done like within a course of 1 year from the first completion, which will be like around PKR 45 billion. [Foreign Language] April, May [Foreign Language]. And by that time, we'll have the option, call option [Foreign Language] if you want to buy the remaining 25% of the holding as well, [Foreign Language] additional PKR 50 billion [Foreign Language] overall consortium total price [Foreign Language] PKR 135 billion, plus PKR 50 billion, so PKR 185 billion [Foreign Language]. So on the top right side, like FFC's contribution, [Foreign Language] FFC share, April, May, we expect to basically outflow [Foreign Language] PKR 31 billion. Within a year's time, [Foreign Language] and call option when it will be exercised PKR 21 billion. So overall, [Foreign Language] total investment will be around PKR 67 billion in 2 years' time. Yes, that's it from my side. In case you have -- I think the platform is open for questions, so we can take your questions.

Please identify yourself when you ask the question.

Sir, first question is from Mr. [ Anas ]. Any material progress on the coal gasification policy that is expected to be rolled out soon? Do you expect higher payout from FPCL after the increase in your stake, sir?

[Foreign Language], ladies and gentlemen, on -- so the question specifically around coal to fertilizer, I think as some of you have seen in media, we had a detailed meeting with the Government of Sindh, the Chief Minister. The project's bankable feasibility has been completed. And now we are doing some of the key requirements, which is coal sales agreement, water allocation. Once those are done, I think that is when we will formally announce the project and then move forward because those are the key things which we need to do before we do more investment in the project. So I think we had good interaction with the Government of Sindh. They're very supportive. And hopefully, once these things are -- inks are done, I think the project moves naturally. And at an appropriate time, when investment decision is closer, we will make a formal announcement of this project. But I think we are progressing very aggressively this project now. And in the light of what is happening -- happened in Middle East now, your dependence on gas and others, I think this could be an alternate resource for Pakistan to monetize its own energy as well as coal for chemicals and fertilizers.

The next question is from Mr. Muhammad Zohaib Salman. With current gas rates to be revised in June, would you expect gas prices to increase due to the U.S.-Iran conflict or maintain status quo?

So the gas prices primarily, the gas prices, which we are getting now is basically the wellhead -- there is a PP 2012, Petroleum Policy 2012, which is a dollar-denominated number on which we were getting the gas. And I don't think so there's any -- government has planned no increase. If you see the prices of urea are stable for last 24 months. So there's been no increase. So all inflation, everything has been absorbed by the company. Our profits are going up because we are very aggressively now investing in efficiency of our plants. A lot of efficiency projects are happening, very good IRR projects, and that is where the focus will be. We want to hedge our farmers as much as possible from price changes. Pakistani farmers, Pakistani agriculture does not have very high yields. So idea is to increase our shareholder value by investing more and more into efficiency. And there's a lot of room to improve that. Thank you.

Ms. [ Mahek ] is asking, discount -- is there any discount on urea? Any plan to increase price as international prices have doubled?

There's no discount as of right now and [Foreign Language] we don't intend. We always give like -- last year, $1.3 billion import substitution [Foreign Language] that's our contribution to the country or we don't expect [Foreign Language].

[Foreign Language] Pakistani farmer [Foreign Language]. I mean, that is reality. You cannot price it at a point where your farmer cannot afford the product. So that's a very -- it is high right now. But I think once the war finishes, I think things should stabilize back.

Sir, there's a question from Mr. [ Chaudhary Shaban ]. Is the price of steam and electricity purchased from FPCL determined under a long-term fixed contract or does it vary periodically, for example, monthly, based on changes in the underlying variable costs such as fuel prices?

It has been identified and is part of the contract. So accordingly, in case the prices goes up, coal [Foreign Language] raw material [Foreign Language] of course, as per the tariff provided, [Foreign Language] it goes up.

Sir, question by Mr. [ Muhammad Waleed ]. Any plant turned around in 2026?

We have -- we did -- beginning of the year, we completed [Foreign Language] successfully.

[Foreign Language] September I think.

A question by Mr. Zaid Mohiuddin. Please provide update of super tax case and late payment surcharge on the super tax. What would be the cash outflow?

[Foreign Language] super tax [Foreign Language] actually PKR 7 billion. [Foreign Language] surcharge, we have already -- so we were compliant. The only amount which we did not pay was [Foreign Language] retrospectivity or dividend which was annulled by Islamabad High Court. So [Foreign Language] surcharge [Foreign Language] we don't expect that it will be -- it can be levied because [Foreign Language] court order [Foreign Language]. Secondly, [Foreign Language] main payment, we are continuing through the payment. Prospective implementation [Foreign Language] much of an impact on us.

Mr. [ Salim Sameer ] is asking, what is the impact of increase in freight cost on transportation and warehousing considering fuel prices? What is the estimated cost per tonne for transportation currently?

[Foreign Language] I said there is a blip because of this war. Otherwise, we were doing very well. I mean, this PKR 55 which got increased, there could have been an approach that immediately passed through everything, and we feel -- I don't think so that cost should immediately pass to the farmer. We are keeping our prices uniform. And hopefully, if things stabilizes, it will not be that much of a blip for us. So I don't see this -- but it is an increase, and it has not been passed on till now. We'll see. I mean, things are very fluid right now to make a comment what to take a decision.

That's all?

Yes, sir.

That's all, sir.

Thank you very much.

Thank you very much.

Thank you for your time.