PAFL Acquires Hazara Phosphate Fertilizers Limited

8/2/2019 PAFL Acquires Hazara Phosphate Fertilizers Limited

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PAFL acquires Hazara Phosphate

Fertilizers Limited.

Pak American Fertilizers Limited, a100% owned subsidiary of the Company,successfully completed the acquisition ofHazara Phosphate Fertilizers (Pvt.)Limited from the Government of Pakistanas part of its ongoing privatizationinitiative. Now the Company (through itssubsidiaries) owns and operates thecountry's newest and most efficient ureaplant, Pak American Fertilizers Limited,and also the largest Single SuperPhosphate (SSP) manufacturing plant inthe country, Hazara PhosphateFertilizers (Pvt.) Limited. This Completesthe Company's vitally important strategicgoal to become a diversifiedmanufacturer producing bothnitrogenous and phosphatic fertilizers.

Urea prices would increase by Rs.

85/bag to Rs. 605/bagDAP prices would decline by Rs.

275/bag to Rs. 825/bag

The domestic usage ratio of DAP tourea is 1:5 (20%: 80%) as againstagronomic recommendation of 1:2(33.3%: 66.7%). The present domesticusage ratio of DAP and urea isadversely affecting the productivity ofthe arable land which would hamper the

agricultural production of the countrygoing forward. In our view, this proposalof ECC is the need of the hourotherwise the country would have toface severe consequences in years tocome.

The measure EEC took would be more

focused towards provoking the demandfor DAP, keeping per acre cost constantand expected to increase the crop yieldby 10-15%.

Lower urea imports would not hurt theearnings of the domestic fertilizermanufacturers. FFBL, being a soleproducer of DAP accounts for 32%market share of DAP, rest of DAP isimported by other fertilizer

manufacturers. FFBL would bebenefited in the longterm owing tocapacity enhancement of its DAP plantwhich is expected to come online by theend of FY'07. This would increase thetotal DAP production capacity of thecompany by 51% to 2046tons per day.



PAFL has had multiple achievements inthe last few months. It achieved aSuccessful turn around for maintenance

purposes in less than fifteen days.

Since Acquisition of the plant by Azgard9, PAFL has managed to acquire 8 % ofmarket share within 9 months. Thissuccessful penetration of the marketresulted in a collection of Rs. 3.0 billionas revenue.

In the midst of all this activity asuccessful Brand Launching was

accomplished. The New Brand by thename of “ TARA ” was successfullymanaged to create a place for itself

in the market with the help of differentDealer and Consumer IncentiveSchemes.

Along with this successful diversificationof the Product categories was achievedwith the purchase of 30000 Tons of

DAP in a scenario of internationalshortage and this vessel is arriving inJune 2007. Moreover, PAFL have alsobrokered a deal for another fertilizerproduct namely MOP which is expectedto arrive in Jul 2007.

Dealer network was increased at adrastic pace from none at the time ofacquisition to 250 dealers at this point intime and still expanding.

At the same time the ProductionEfficiency was increased to 108 % fromthe earlier 100 % production level.Alongside this various cost reductionmeasures have been taken to makePAFL a more financially efficientorganization.

The plant is going through various re-engineering processes to enhance itsefficiency and output. According to thevarious plans 15 % enhancement in ureaproduction capacity will be achieved byDec 2007 and a further 35% increase will



be completed by DEC 2008.

Simultaneously 350 tons increase inproduction in the ammonia plant will beaccomplished by Dec 2008.

Sales and Marketing department wasdeveloped with presence in each keymarket.

Process and system for port logistics arenow in place with an independentresource handling the importedfertilizers.

Quality improvement activities are in process through various conventional andunconventional methods. Simultaneously PAFL has adopted the attitude ofconstantreevaluation of the market and intends to follow a policy of constantResearch & Development in the various stages involved in fertilizer production andmarketing and to achieve a competitive edge in the market.

Various steps are being

introduced in the PAFL plant

to enhance the product Quality

along with the increased

quantity. Various mechanical

and chemical changes are

being introduced to enhance

the product quality.

Through rigorous marketresearch and with the right

creative agency the brand

name ‘ TAR A ' was evolved

which was an instant hit in the



market and immediately

developed its awareness

among farming community.

In order to differentiate the

packaging from competition a

new bag color ‘Blue' was

introduced with three color

printing on the bag which is

first of its kind in the fertilizer

industry. Packaging is still

under the process of revision

to add more colors and to

create better perception about

the product in the market and

to pass on the message of

increased concentration onQuality improvement.

On the same pattern DAP bag

design has also been unique

by adopting yet another new

color in fertilizer industry i.e.

Light Purple with three colorprinting. MOP bag is under

development phase under the

similar concept.



Plan for spraying uri-soft and

adding to Urea Formaldehyde

in the product are also

underway to help achieve thequality targets.

Multiple cost saving

methods are underway or

planned.

A Gas turbine of 7.5

MWatts has been

successfully

commissioned from 31-5-

07. The gas intake has

been reduced by 50 %

while production has been

increased.

Along with this Man

power has been made

more efficient. Number of

employees has been

Since Acquisition Production Efficiencyhas been increased from 100 % to anastonishing 108 % and steps are beingtaken to take it even further.

As a result of this we are nowsuccessfully producing1120 MT fromanearlier 1050 MT Plans have beengenerated to increase the productionfurther with the help of plant re-engineering / revamping.

Since the acquisition PAFL has sold300,000 tons during the period Jul 16,2006 to May 31, 2007.



reduced from 1052 to 792

to make it a leaner and

more efficient system.

Under utilization of itsemployees has been

successfully reduced and

further action in this

regard is under process.

Immediately after

acquisition PAFL

introduced their own

distribution network with

new truckers in place

resulting in reducing

distribution cost from Rs.

1000 per ton beforeacquisition to Rs. 475 per

ton post acquisition.

Multiple steps have been

taken to improve upon the

safety standards set inplace. With the

consultancy of various

professionals rigorous

efforts are being made to

PAFL is quickly heading towardsbecoming one of the best performersin the industry. With its highly qualifiedand experienced staff and an ever

increasing eagerness of becoming thebest in the industry, the staff at PAFLis set to take overt the market with abang.

The previously over employedinfrastructure with more then 1052employees has been transformed into



achieve Occupational

Safety and Health

Administration OSHA

Certification.Simultaneously ISO 18001

Certification is targeted to

achieved by Dec 07

PAFL is a strong believer

of providing a safe

working environment for

its employees. It is

constantly working

towards improving its

safety standards and

adheres strongly to

providing a suitableworking environment.

PAFL is a holder of ISO

9001 and ISO 14001

Certification since 2005

and believes in taking its

performance over andbeyond these.

a lean and efficient system. Thepresent number of employees totals to792 people inclusive of managementand technical staff. The employees areworking as a well knitted team with

targets to be the best in the industry.

PAFL with its policy of being a socially responsible



entity, has actively participated in resolving the issues

of the community spread around it's plant. It has

stepped forward in this field by becoming the single

source of clean drinking water supply to thecommunity. The residents have appreciated this

tremendously. Along with this their need for medical

facilities has also been catered to by the company run

hospital in the area.

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PAFL Acquires Hazara Phosphate Fertilizers Limited