Research and Analysis Report
AN ANALYSIS AND EVALUATION OF THE BUSINESS AND FINANCIAL PERFORMANCE OF ENGRO
FERTILIZERS LIMITED OVER PAST THREE YEARS.
ACCA Registration No.:
Mentor Name:
Introduction
Engro Fertilizer Limited’s brief history is as follows ; i) The organization came into being in
1965 to manufacture and market fertilizer ; ii) In 1968, urea plant started which at that time
was biggest foreign investment in Pakistan ; iii) In 1991, Exxon left Pakistan and company
was renamed as Engro Corp Limited and was bought out by employees ; iv) In 2005,
production was increased to 950k tons from 850k tons ; v) In 2007, the world’s biggest
single train fertilizer plant called Enven was started which started commercial production in
2011 (Kazmi, 2020).
Engro Fertilizer has operated with 14 reginal offices across Pakistan it has two plants located
at Zarkhez and Dharki. Total employees as at December 31, 2020 at the company were 1,362
(Engro Fertlizers Limited, 2020). It has the following business segments;
- Fertilizer
- Specialty Fertilizers
- Crop Science Division
- Agri Services.
Research Objectives
Analyzing Engro Fertilizer Limited’s using ratio analysis to evaluate how the company has
performed in last 3 years?
Analyzing the factors in the macro and micro environment of Pakistan’s economy and Fertilizer
Industry that helped propel Engro Fertilizer Limited to achieve such stupendous success?
Analyzing and evaluating the business performance of Engro Fertilizer Limited through SWOT
analysis to know what are internal factors that company did well to achieve the growth rate?
Linking the macro environment and evaluating how those factors will play role in future to
help company maintain the growth rate that it has maintained for past 3 years?
Comparing Engro Fertilizer Limited’s performance with competitor Fauji Fertilizer bin Qasim
which is from same Industry to understand whether the great performance was due to shrewd
business acumen of management or just because of Industry dynamics favoring the Fertilizer
business?
In the end forming a conclusion and providing recommendation based on evaluation of finance
and business analysis for future projections.
Business Performance
SWOT ANALYSIS
SWOT Analysis
Strengths
Visionary Leaders running the
Company and Part of Management
Icon of Pakistan’s Corporate Sector –
Brand name recognition
Fighting Covid- 19 Effectively through
Weaknesses
robust and adaptable policy changes
Not enough preparation for
Climate change effecting demand
Expiry of Concessionary Gas and
finding alternative source
SWOT Analysis
Opportunities
Leveraging the existing Network for
More Sales
Urea Export Market
Deregulation of Fertilizer Sector
Threats
Fluctuationin Exchange Rate
Dealer Registration in Sales Tax
Subsidy
GIDC
Financial Performance
FINANCIAL RATIO ANALYSIS
Profitability Ratios
• Gross Profit Margin for Engro Fertilizer
Stood at 32.34% , 32.58% and 32.36%
from 2018 – 2020.
• Gross Profit Margin for FFBL was
18.3% , 15.26% and 19.3% from 2018-
2020.
• Net Profit margin for Efert was 15.95% ,
13.9% and 17.13% from 2018- 2020.
• FFBL in same period had 1% , (10.27%)
and 6.15% NP Margin.
Profitability Ratio
• Efert’s ROCE was 30.9% , 35.17%
and 25.75% from 2018 – 2020
whereas FFBL’s ROCE was
2.25% ,(8.10%) and 12.62% in
same period.
Efficiency Ratios
Efert’s Current ratio was 1.15 ,
1.14 and 1.24 from 2018 – 2020
period.
Efert’s quick ratio stood at 0.85 ,
0.88 and 1.09 in same period.
FFBL’s current ratio was 0.86 ,
0.71 and 1.02 from 2018 -2020
whereas quick ratio was 0.73 ,
0.52 and 0.94.
Liquidity Ratios
Gearing Ratios
• Efert’s gearing is 0.73 , 0.80 and 0.77 in
• The year from 2018 to 2020 whereas FFBL’s
gearing is not good at 2.04 , 3.36 and 2.35 in
same period.
I N V E S T M E N T R A T I O
• Efert’s eps stood at 13.04 , 12.64 and
13.58 in 2018 – 2020 whereas FFBL
had eps of 1.68 , (6.15) and 6.23 in
same period.
• Dividend Yiled for Efert was
impressive at 22% , 22% and 23% in
2018 – 2020 whereas 3% was FFBL’s
yield in 2018 and no dividend was
paid in 2019 and 2020.
Conclusion and Recommendations
Conclusion & Recommendation
Engro Fertlizer has depicted exceptional performance in last 3 years. The financial ratios be it
profitability one’s that are GP Margin and NP Margin, Liquidity ratios such as Current Ratio ,
Gearing Ratios and Investors ratio specially Dividend Yield all are pointing towards company’s
stable position and also cashflows are healthy which shows company can easily expand , get
new technology and spend on marketing budget to increase sales.
Business Analysis reveal that its Strengths outweigh in weaknesses with strong management
at helm weak areas will easily be converted into strength and with stable government in place
the threats would be neutralized and opportunities in the market will turn into higher sales in
future.
Overall, it shows a rosy picture for the company and only recommendation would be that
management should not sleep tight and be cognizant of the fact related to climate change
which cans severely impact them and have polciies to combat it also be aware of concessionary
gas price ending and finding alternative for the low gas price as raw material.
Thank You
