Fauji Fertilizer Company Limited ("FFC" or "the Company") is a public listed company incorporated in 1978. Its shares are listed on the Pakistan Stock Exchange (PSX), and its registered office is located in Rawalpindi, Pakistan.

Fauji Fertilizer Company Limited was established in 1978 as a joint venture between Fauji Foundation, a charitable trust incorporated under the Charitable Endowments Act 1890, and Haldor Topsoe A/S of Denmark, a global leader in catalyst technology. Commercial operations commenced in 1982 with the commissioning of Plant-I at Goth Machhi (570,000 MT annual urea capacity), followed by the Company's listing on the Karachi and Lahore Stock Exchanges in 1991 and the Islamabad Stock Exchange in 1993. From a single-plant operation, FFC has evolved into Pakistan's largest fertilizer producer, with an installed urea capacity exceeding 3mln tonnes across four manufacturing plants.

The Company's growth has been driven through a combination of organic capacity enhancements and strategic acquisitions. Plant-I was de-bottlenecked to 695,000 MT in 1992, Plant-II (635,000 MT) was commissioned at Goth Machhi in 1993, while Plant-III at Mirpur Mathelo, acquired from the former Pak-Saudi Fertilizers in 2002, was subsequently expanded to 718,000 MT in 2008. Alongside the expansion of its core fertilizer operations, FFC progressively built a diversified investment portfolio through strategic stakes in Pakistan Maroc Phosphore, Fauji Cement Company Limited, Askari Bank Limited, Fauji Fresh n Freeze Limited, Thar Energy Limited, Foundation Wind Energy-I & II, and Agritech Limited.

The Company's most transformative milestone was the merger of Fauji Fertilizer Bin Qasim Limited (FFBL) into FFC, completed in July 2024. The transaction added Plant-IV at Port Qasim (approximately 551,000 MT urea capacity and 650,000 MT DAP capacity), providing FFC with its first captive DAP manufacturing facility, while also integrating FFBL's strategic investments, including Askari Bank, Fauji Foods Limited, Pakistan Maroc Phosphore, and FFBL Power Company Limited (FPCL), into the enlarged Group. Subsequently, in January 2026, FFC issued shares to Fauji Foundation to acquire the remaining stake in FPCL, resulting in full ownership of the captive power arrangement supporting the Port Qasim complex.

The Company is principally engaged in the manufacturing, procurement, and marketing of fertilizers and chemicals, with a core product portfolio comprising Urea, Di-Ammonium Phosphate (DAP), Sulphate of Potash (SOP), Muriate of Potash (MOP), Boron, and Zinc.

The Company operates four urea manufacturing plants:

·       Plant-I and Plant-II at Goth Machhi
·       Plant-III at Mirpur Mathelo
·       Plant-IV at Port Qasim (additionally produces DAP)

Annual production capacity stands at 2,599 KT of urea and 650 KT of DAP, with average capacity utilization exceeding 124%(CY25). Additionally, Agritech Limited holds the urea capacity of 433 KT and phosphate capacity of 81KT.

In addition to its fertilizer manufacturing operations, FFC functions as a holding company with a substantial and actively managed investment portfolio. As of June 30, 2026, the Company's long-term investments stood at approximately PKR 110bln on a standalone basis (December 31, 2025: PKR 79bln) and PKR 170bln on a consolidated basis (December 31, 2025: PKR 146bln), comprising investments in associates, joint ventures, and subsidiaries spanning the banking, power, food, cement, and aviation sectors.

Fauji Foundation holds 43.70%(CY25) of the issued share capital of FFC. The general public accounts for approximately 26% of ownership, broadly comprising domestic and foreign retail investors. The remaining shareholding is distributed among public sector entities and financial institutions (approximately 21%), foreign institutional investors (approximately 3%), and others (approximately 7%).

The Company's ownership structure is characterized by a high degree of stability, providing a solid and enduring foundation for its long-term strategic direction, with Fauji Foundation as a principal sponsor with a sustained commitment to the Company's growth.

Fauji Foundation ranks among Pakistan's most prominent conglomerates, with well-established business interests spanning agriculture, food, power, oil and gas, marine terminals, financial services, and cement. The Foundation's sustained success across these diverse industries over several decades reflects strong institutional business acumen and a demonstrated capacity to manage large-scale, complex operations effectively. In the energy sector, Fauji Foundation holds a significant shareholding and management control in Mari Energies, one of Pakistan's leading upstream oil and gas companies and a key supplier of natural gas to FFC's fertilizer plants. The common parentage supports strategic alignment between the two entities while reinforcing the broader Group's integrated presence across the energy and fertilizer value chain.

The financial strength of Fauji Foundation (FF), the Company's largest shareholder, together with its active strategic oversight, continues to support FFC's growth and diversification objectives. FF's strong financial profile provides the Company with enhanced financial flexibility, enabling it to pursue strategic investments and capitalize on emerging opportunities.

Board of Directors comprises thirteen members, including the Managing Director & Chief Executive Officer as the sole Executive Director and twelve Non-Executive Directors, of whom four are Independent Directors, including two female Independent Directors. The current Board was constituted in October 2024 for a three-year term ending in October 2027. During CY25, Mr. Mazhar Abbas Hasnani and Mr. Qamar Haris Manzoor resigned and were succeeded by Mr. Mohammad Majid Munir and Syed Shahzad Nabi, respectively. Following the demise of Dr. Shamshad Akhtar in December 2025, Ms. Fatima Asad Khan was appointed to the Board and assumed the role of Chairperson of the Strategy & Investment Committee, effective January 17, 2026.

The Board met eight times during CY25, with attendance consistently exceeding the prescribed quorum, while the Chief Financial Officer and Company Secretary attended all meetings. Governance oversight is supported by five Board committees operating under approved Terms of Reference: the Audit Committee (five meetings), the Human Resource & Remuneration Committee (two meetings), the System & Technology Committee (five meetings), the Strategy & Investment Committee (two meetings), and the Sustainability Committee (two meetings). The Audit Committee and Strategy & Investment Committee also held one joint meeting during the year. Committee attendance and meeting frequency remained compliant with, or exceeded, applicable regulatory requirements.

The Board is chaired by Lieutenant General Anwar Ali Hyder, Hilal-e-Imtiaz (Military) (Retired), whose career spans over four decades and encompasses senior roles in defence, public administration, and corporate governance. He currently serves as Chairman of the Fauji Group of Companies and Managing Director & CEO of Fauji Foundation, providing strategic leadership across one of Pakistan's largest business conglomerates. Board members collectively possess diverse professional expertise encompassing finance, information technology, banking, strategic management, and business administration. The independent directors hold distinguished qualifications.

Board demonstrates a high level of effectiveness, supported by a well-defined governance framework, clearly delineated roles and responsibilities, and a formal code of conduct. The governance framework is further strengthened by the segregation of the Chairman and Chief Executive Officer roles, ensuring an appropriate balance of authority and effective oversight. The Board provides strategic oversight across the Company's operations, including governance, capital allocation, senior management appointments and remuneration, risk management, internal controls, and the approval of major investments, financial statements, and dividend distributions. The Audit Committee complements this oversight through rigorous review of financial reporting, accounting policies, internal controls, and the findings of both internal and external auditors, prior to recommending the financial statements for Board approval.

The Company's external auditor, A.F. Ferguson & Co., Chartered Accountants, issued an unqualified audit opinion on FFC's financial statements for the year ended December 31, 2025, and confirmed compliance with the applicable ethical requirements of the International Ethics Standards Board for Accountants (IESBA) Code, as adopted by IFAC and ICAP. The Company maintains a disciplined financial reporting calendar and demonstrates a strong commitment to transparency through comprehensive annual report disclosures and timely notifications to the Pakistan Stock Exchange (PSX). FFC's Annual Report is a consecutive overall winner at the South Asian Federation of Accountants (SAFA) Best Presented Annual Report Awards and has consistently been recognized among the winners at the Institute of Chartered Accountants of Pakistan (ICAP) Best Annual Report Awards, reflecting the Company's enduring commitment to excellence in corporate reporting, transparency, and governance. During 2025, FFC added another milestone to its legacy by attaining Shariah-compliant status and securing inclusion in the KMI-30 Index, reflecting its commitment to the highest standards of Shariah compliance and sustainable value creation.

The Company operates through a well-defined organizational structure comprising various key functional groups: Manufacturing and Operations, Technology, Business Development, Sustainability and Innovation, Corporate Affairs, Commercial Human Resources, and Finance group. All group heads maintain a direct reporting line to the CEO, who in turn is accountable to the Board. The governance model incorporates both centralized and decentralized decision-making elements, and the Head of Internal Audit maintains a dual reporting arrangement — administratively to the CEO and functionally to the Audit Committee — preserving the operational independence of the internal audit function.

FFC is led by a seasoned management team comprising experienced professionals across operations, finance, commercial, manufacturing, and support functions. The Managing Director and Chief Executive Officer, Mr. Jahangir Piracha, assumed office in April 2024 and brings over three decades of leadership experience across the chemical, energy, and agribusiness sectors, including serving as Chief Executive Officer of several leading Engro Group companies. The Chief Financial Officer, Syed Atif Ali, is a Fellow Chartered Accountant with more than two decades of professional experience and has served as CFO since April 2022. The depth and continuity of the management team support effective execution of the Company's strategic and operational objectives.

Management effectiveness is underpinned by a clear segregation of responsibilities, well-defined reporting lines, and a structured organizational framework, complemented by three cross-functional management committees—the Executive Committee, Strategy Committee, and Corporate Social Responsibility (CSR) Committee—each chaired by the Managing Director and Chief Executive Officer. Comprising senior executives from key business and support functions, these committees oversee operational performance, strategic planning, and sustainability initiatives, supporting coordinated decision-making and effective execution. The committees meet periodically, with proceedings formally documented to ensure accountability and structured oversight.

The Company's Enterprise Risk Management (ERM) framework further strengthens management oversight. Aligned with ISO 31000:2018 Risk Management Guidelines and the Institute of Internal Auditors' Three Lines Model, the framework supports comprehensive risk identification, assessment, and monitoring across the organization. Key Risk Indicators (KRIs), aligned with the Company's risk appetite, are continuously monitored, with any breaches promptly escalated to the Board together with appropriate mitigation plans.

The Company benefits from a robust and mature Information Technology infrastructure, anchored by an SAP enterprise resource planning system that has been operational for over a decade. The SAP platform delivers an integrated, end-to-end management solution encompassing financial reporting, logistics, distribution, inventory control, plant maintenance, and human capital management across all operational locations, supporting real-time visibility and informed decision-making. The Company is in process of implementing RISE with SAP, SAP's flagship cloud ERP and business transformation solution, to create a unified digital enterprise across FFC and its group companies.

FFC's Risk Identification and Management Policy provides a structured framework for all functions and departments to identify key strategic, commercial, operational, financial and reputational risks and to develop mitigation strategies, with progress reported to the Board every six months. The Board has also established an Internal Control Framework, supported by the Audit Committee and the external auditors, to ensure efficient operations, safeguard Company assets, and uphold ethical conduct; this framework incorporates measures to prevent, detect and address instances of misconduct, fraud, corruption and abuse of authority.

FFC maintains a well-resourced and independent in-house internal audit function. The Head of Internal Audit is appointed by the Board and reports functionally to the Audit Committee and administratively to the Chief Executive Officer, with performance evaluations jointly conducted by the Audit Committee Chairman and the CEO; the Board ensures the Head of Internal Audit has direct access to the Audit Committee Chairman and the requisite qualifications, experience and knowledge of global best practices. The annual internal audit plan is approved by the Audit Committee, whose progress is reviewed quarterly, and the Internal Audit team — drawing on expertise from multiple disciplines — identifies key risk areas, evaluates mitigation strategies, and confirms risks are managed within acceptable limits, safeguarding both the independence and the ongoing accountability of the control environment.

Pakistan's fertilizer industry is concentrated among three principal players: Fauji Fertilizer Company (FFC), Engro Fertilizers (EFERT), and Fatima Fertilizer. Urea and DAP account for the dominant share of fertilizer consumption by volume. While the country remains broadly self-sufficient in urea, DAP is largely import-dependent, with FFC being the only domestic manufacturer. During CY25, the industry produced approximately 9.3mln MT of fertilizers, broadly matching total industry offtakes of around 9.3mln MT, reflecting balanced market fundamentals. Industry earnings are driven primarily by domestic demand, farm economics, gas availability, and regulatory policies rather than global commodity price movements. Sector recovery has continued into CY26, with urea offtakes during the five months ended May 2026 (5MCY26) increasing by 8% year-on-year, while DAP sales rose by 29% year-on-year. During 1QCY26, geopolitical tensions triggered a sharp increase in international fertilizer prices and precautionary buying; however, FFC maintained broadly stable domestic urea prices and ensured uninterrupted supply through its nationwide Sona Centre network. On the supply side, the outlook for feedstock availability is improving. New indigenous gas discoveries, together with initiatives to enhance gas production and infrastructure, are expected to provide additional comfort regarding long-term gas availability for the fertilizer sector. Furthermore, the Pressure Enhancement Facility (PEF) project, in which FFC holds a 47.7% stake alongside Fatima Fertilizer and Engro, is expected to become operational during CY26, further supporting the sustainability of gas supplies to the industry.

FFC maintains a commanding position in Pakistan's fertilizer market, underpinned by its extensive production capacity, integrated manufacturing footprint, well-established Sona Centre distribution network, and strong brand equity. Following the successful integration of FFBL, the Company strengthened its competitive position during CY25, capturing approximately 43% of the country's urea market and 62% of the DAP market. This momentum continued into 1HCY26, with FFC's urea and DAP market shares increasing to 56% and 66%, respectively. The sustained growth reflects the benefits of the expanded production base, improved operational efficiencies, enhanced product availability, and stronger customer offtakes. The significant price advantage of locally produced urea over imported alternatives provides meaningful protection against imports while ensuring affordable fertilizer availability for the domestic farming community and supporting national food security. Backed by its diversified manufacturing footprint and nationwide distribution network, FFC remains well positioned to efficiently meet seasonal demand and sustain its leadership across both the urea and DAP segments.

The Company's revenue profile is characterized by a high degree of stability, anchored by its core fertilizer business, which plays a central role in supporting Pakistan's agricultural productivity and food security. Revenue is primarily driven by urea and DAP sales. For the CY25, the Company achieved record revenue of PKR 432,410mln, representing a significant increase from PKR 373,537mln in the preceding year, driven by higher sales volumes and the inclusion of a full year of operations from the Port Qasim plant. The positive momentum continued into 1H CY26, with revenue rising to PKR 199,614mln, compared to PKR 155,449mln in 1H CY25. 

The Company's customer base remains well diversified across a large network of farmers and dealers, limiting customer concentration risk. The continued price competitiveness of locally produced urea relative to imported supplies supports demand, provides meaningful protection against imports, and contributes to price stability in the domestic market.

Beyond its core fertilizer business, FFC has built a sizeable and diversified investment portfolio that generates a recurring stream of dividend income, providing meaningful earnings diversification and strengthening cash flow resilience. In 1QCY26, dividend income from associates and subsidiaries increased to PKR 6.8bln from PKR 2.8bln in the corresponding period last year, driven by the strong performance of key investees, including Askari Bank Limited and Thar Energy Limited.

Gross profit margins moderated to 30.2% in CY25 from 34.0% in CY24, primarily reflecting higher raw material costs and strategic inventory liquidation discounts. Despite the moderation, gross margins remained robust at above 30%, highlighting the Company's strong operating efficiency, cost competitiveness, and resilient demand for its products. The momentum continued into 1HCY26, with gross profit margin improving to 31.9%, while net profit margin remained strong at 20.9% compared to 17.0% in CY25. The improvement reflects sustained operational efficiencies, disciplined cost management, and a diversified earnings profile. Profitability remains strong, with net profits clocked to PKR73.5bn in CY25 (PKR64.7bn CY24) and PKR41.8bn in 1HCY26 (PKR 38.4bn 1HCY25).

FFC's sustainability is anchored in its core fertilizer operations, which are central to Pakistan's agricultural productivity and food security. The Company has strategically addressed the critical challenge of long-term gas availability, which represents the most significant operational risk for domestic fertilizer manufacturers. The Pressure Enhancement Facility (PEF) project, in which FFC holds a 47.7% stake alongside Fatima Fertilizer and Engro, is expected to become operational by September-October 2026. This facility is designed to enhance gas extraction from existing reservoirs through pressure boosting infrastructure, including associated pipelines and network upgrades, to sustain gas supply to FFC's plants over the medium term. Additionally, the expected allocation of gas from the Ghazij and Shawal discoveries in the Mari Field to FFC's Port Qasim plant site, further strengthen the long-term feedstock security. While actualization of full potential from these discoveries will take time, the present gas supply arrangement between FFC Port Qasim and SSGCL shall continue until finalization of gas supply arrangements from Ghazij. These initiatives collectively address a key operational risk and underpin the sustainability of the Company's core fertilizer operations.

Beyond its manufacturing operations, FFC maintains a substantial investment portfolio that materially enhances earnings resilience and provides meaningful non-core income streams. On a standalone basis, long-term investments stood at PKR 110bln as of 1HCY26, while on a consolidated basis, the Group's total investments, including equity-accounted investees, stood at PKR 170bln. The investment portfolio is strategically diversified across subsidiaries, associates, and joint ventures spanning the banking, power, food, and cement sectors.

The Company's subsidiary portfolio comprises entities across the energy, food, and services sectors.

·       FFC Energy Limited, Foundation Wind Energy-I Limited, and Foundation Wind Energy-II Limited collectively represent the renewable energy portfolio. During CY25, these projects collectively supplied 261 GWh of electricity to the National Grid and contributed dividend income of PKR 9.0bln. FFBL Power Company Limited, a coal-based power project, plays a key role in supporting the Group's fertilizer operations through uninterrupted supply of power and steam, with profit after tax of PKR 4.5bln during CY25.
·       The food business, through Fauji Foods Limited, continues to scale up and contributed its highest-ever profit after tax of PKR 1.3bln to Group profitability during CY25, while Fauji Fresh n Freeze Limited also registered its first-ever profitability of PKR 201mln during the year.

The associate portfolio provides meaningful scale and diversification into key strategic sectors

·       Askari Bank Limited, a systemically important financial institution, represents the Group's largest associate investment and provides significant diversification into the financial services sector, contributing PKR 16bln as a share of profit during CY25.
·       Agritech Limited complements FFC's core fertilizer operations, reporting profit after tax of PKR 4.4bln during CY25.
·       Thar Energy Limited has started generating returns with a first interim dividend of PKR 300mln in 2025, followed by PKR 5.1bln in 2026, indicating efficient operations.
·       Fauji Cement Company Limited provides diversification into the cement sector.

The Group's joint venture portfolio includes:

·       Pakistan Maroc Phosphore S.A., Morocco (37.5% stake), a key strategic investment that serves as a critical raw material supplier for DAP production. PMP reported a profit of PKR 9.8bln during the period and continued to generate strong cash flows, enabling the distribution of dividends amounting to PKR 7bln to FFC during CY25.

Investment returns consistently exceed financing costs, positioning FFC as a net investor with stable and predictable dividend income. During CY25, dividend income from subsidiaries and associates amounted to PKR 22.4bln, rising to PKR 6.8bln in 1Q CY26 from PKR 2.8bln in the corresponding prior-year period, reflecting the maturing investment portfolio. A significant strategic development during 1QCY26 is the Company's investment in PIA Equity Limited; the Company invested PKR 1.7bln during the quarter, and shareholders approved further investment of approximately PKR 65bln in March 2026 as part of a consortium participating in the privatization of Pakistan International Airlines.

Taken together, the FFBL merger with FFC, the acquisition in Agritech, the gas supply arrangements, the PEF project, and the prospective PIA investment reflect a coherent and evolving strategy of capital deployment into high-strategic-value assets. These initiatives collectively underpin the Company's capacity for sustainable long-term growth.

For the year ended CY25, the gross working capital cycle expanded to 35 days from 13 days in the prior year, primarily due to higher DAP and raw material inventory levels. Trade receivable days of 9 reflect credit support extended during inventory liquidation. The net working capital cycle remained manageable at 36 days. The Company’s working capital requirements are largely funded through internal cash generation, supported by prudent utilization of short-term facilities, reflecting a healthy funding mix. Strong cash generation and disciplined working capital management enable the Company to comfortably meet operational requirements, with utilization of working capital lines remaining aligned with business needs at PKR 18.6bln in CY25 and PKR 18.4bln in 1HCY26.

A notable contingent liability relates to the Gas Infrastructure Development Cess (GIDC) amounting to PKR 84.98bln, which remains unpaid under a stay order granted by the Sindh High Court. While the amount represents a sizeable contingent obligation, the matter has remained pending for several years and continues to be managed within the Company’s financial planning framework.

The Company’s debt service coverage metrics strengthened meaningfully in CY25, supported by robust profitability and strong cash generation. Free cash flow from operations increased to PKR 73.3bln from PKR 68.6bln in CY24, while the EBITDA-to-finance cost ratio improved to 20.0x from 18.2x and the FCFO-to-finance cost ratio increased to 11.9x from 10.9x over the same period. The Company’s coverage profile is further supported by its diversified investment portfolio, with recurring dividend income exceeding finance costs, positioning FFC as a net investor. Management’s strategy to expand the investment portfolio through long-term financing reflects a prudent capital allocation approach, with repayment obligations spread over an extended period. The associated cash flows from investments are expected to further strengthen debt servicing capacity. Going forward, coverage metrics are expected to remain strong, supported by the Company’s consistent cash generation track record and diversified earnings profile.

The Company's capital structure remains anchored by a strong equity base of PKR 153bln as of 1HCY26, providing a solid foundation for financial flexibility. Driven by strong financial performance, strategic mergers and acquisitions, attainment of Shariah-compliant status, and the broader re-rating of the Pakistan equity market, FFC's market capitalization increased from approximately PKR 144bnat the end of 2023 to over PKR 800bnby mid-2026. Management maintains a disciplined leverage framework, targeting borrowings-to-equity within the 40% range. As of CY25, total borrowings-to-equity stood at 37.1% compared to 34.5% in the prior year, reflecting a moderate increase while remaining within the Company's defined comfort range. The debt profile remains well structured, with the proportion of short-term borrowings clocked to 23.3% in CY25. Long-term borrowings stood at PKR 85bln as of 1HCY26, with staggered repayment schedules extending up to December 2029 for conventional financing and December 2030 for Islamic financing. Financial flexibility remains a key strength, supported by committed short-term banking facilities and a sizeable liquid investment portfolio of PKR 174.4bln as of 1HCY26.