A

PROJECT
ON
CORPORATE
GOVERNANCE
 COURSE TITLE
BUSINESS ETHICS & CORPORATE GOVERNANCE

SUBMITTED BY
NEELAM SHEHZADI
MALIK ZARAAR AWAN
JAWERIA ARIF
TARIQ NIAZI

SUBMITTED TO
MS FAYYZA JALEEL
SUBMISSION DATE
28-dec-2018

LAHORE GARRISON UNIVERSITY

DEPARTMENT OF BUSINESS ADMINISTRARION
Group task distribution page:
Group No: 1

Group Leader: Jaweria Arif

Company Name: Fouji Fertilizers Co. Ltd.

Task distribution

Sr. No Roll No Name Task

1 F16-MBA-013 TARIQ NIAZI CHAPTER 1
CHAPTER 3
2 F15-BBA-082 NEELAM CHAPTER 2
Project content
3 F16-MBA-008 JAWERIA ARIF CHAPTER 4
Project content
4 F15-BBA-090 MALIK ZARAAR AWAN CHAPTER 5
Compiling of slides

In chapter 6 or 7 content of every group member is included.

 EXECUTIVE SUMMARY
As Pakistan’s economy is agriculture based therefore the fertilizer sector assumes a central role
in the development of the country. A good quality fertilizer increases yield therefore increasing
production of crops and earning foreign exchange for Pakistan through exports. It is the policy of
FFC to follow the highest business ethics and standards of conduct. All the employees are
obligated to act responsibly i.e. to be honest, trustworthy, conscientious and dedicated to the
highest standards of ethical business practice. Fouji fertilizer is facing some problems in
governance which is because of large size and wide network of their company. Effectively
monitor and control the management. Internal controls and risk management systems. Non-
executive directors are needed on boards to monitor and control the actions of executive directors
due to their opportunistic behavior and act as the checks and balances in enhancing boards’
effectiveness. We can install some LNG (Liquid Natural Gas) plants to liquefy our “Sui Gas”. In
this way, those who will pay for a cylinder of gas will buy gas on company outlets or private
stores and in the result Pakistan will get rid of a big problem. They should provide trainings to
their army executives about the nature of business because they come from totally different field
and they did not know all about this so we help them to learn then they could make better
decisions. They have to hire qualified executives to run the operations of their business. They
should hire those executives who have technical expertise, knowledge or skills related to their
field.
 ACKNOWLEDGEMENT
This study will be incomplete without acknowledging our sincere gratitude to all those who have
contributed in some way or other in completing this project report.
I sincerely like to thank and gratitude to Ms. Fayyza Jaleel for mentoring and providing me the
necessary data when required throughout this project report. Her support and encouragement has
been a source of motivation for me.
I would also like to thank my professors and faculty members for this wonderful opportunity to
empower my skills.
 DEDICATION
I dedicate all my efforts and struggle of the educational life to my dear parents for supporting me
throughout my life they sacrifice everything for me so that I can get the best education.
Everything I am and I will be is just because of my beloved parents. I like to thank my teachers
because without them we students cannot achieve much. Teachers who taught and supported me
in developing my personality as a competent professional.
Table of Contents
EXECUTIVE SUMMARY .................................................................................................................................. 5
CHAPTER 1 .................................................................................................................................................. 11
FERTILIZER INDUSTRY.................................................................................................................................. 11
INTRODUCTION: ...................................................................................................................................... 11
TOTAL EMPLOYMENT: ............................................................................................................................ 12
CHAPTER 2 .................................................................................................................................................. 12
FAUJI FERTILIZERS CO. (FFC) ....................................................................................................................... 12
History ..................................................................................................................................................... 12
Introduction ............................................................................................................................................ 13
Vision ....................................................................................................................................................... 13
Mission .................................................................................................................................................... 14
Corporate Strategy.................................................................................................................................. 14
Core Values ............................................................................................................................................. 14
Stakeholders: .......................................................................................................................................... 15
SWOT ANALYSIS .......................................................................................................................................... 19
STRENGHTS ............................................................................................................................................. 19
WEAKNESSES........................................................................................................................................... 19
OPPORTUNITIES ...................................................................................................................................... 19
THREATS .................................................................................................................................................. 19
CHAPTER 3 .................................................................................................................................................. 21
Governance Bodies of Fauji Fertilizers........................................................................................................ 21
The Companies Ordinance, 1984 ............................................................................................................ 21
Registration by Ministry of Law, Justice & Company Affairs .................................................................. 21
Other Governing Bodies.......................................................................................................................... 22
Board of Directors ................................................................................................................................... 23
Shortcomings .............................................................................................................................................. 24
 Governing philosophy ..................................................................................................................... 24
 Compliance (Implementation) ........................................................................................................ 24
CHAPTER 4 .................................................................................................................................................. 26
ARTICLES ..................................................................................................................................................... 26
Key Governance Issues: .......................................................................................................................... 26
 SOLUTION MODEL................................................................................................................................... 27
ARTICLE ....................................................................................................................................................... 28
Solutions for shortcomings of FFC: (compliance strategy) ..................................................................... 29
Recommendations: ..................................................................................................................................... 30
Guest speakers ............................................................................................................................................ 32
CHAPTER 7 .............................................................................................................................................. 35
Learning outcomes (project) ................................................................................................................... 35
References .................................................................................................................................................. 36
 CHAPTER 1
FERTILIZER INDUSTRY
INTRODUCTION:
The fertilizer industry of Pakistan has enormous potential and is well on its way to becoming
one of the biggest fertilizer exporters in the region in the coming years. Factors that are directly
contributing to these forecasts are the recent issuance of LNG regasification licences and the
establishment of new fertilizer plants by prominent organizations within the country.
Being primarily an agrarian state, Pakistan's growth is heavily dependent on the fertilizer
industry. According to reports, Pakistan's fertilizer demand has always remained higher than its
supply. However, with the advancement of technology and increased number of players in the
industry, production capacity has increased to over 6 million tons per year, which has
consistently been surpassing the national demand over the last few years. Furthermore, the
consumption of fertilizer has increased manifold due to heightened awareness among farmers
that its usage in good quantity is fruitful for higher yields and a significant increase in their
income as the commodity is provided them on subsidized rates.
In the first half of 2018 alone, cumulative sales of urea increased 45% to 1.63 million tons and
DAP sales edged up 6% to 434,000 tons. Moreover, with the onset of Kharif sowing season, a
further pick-up in demand for urea can be foreseen. Also, comfortable inventory levels of urea
and DAP have improved pricing power for local fertilizer manufacturers and as a result, average
urea price has increased by 4.70% month-on-month.

Besides passing on the benefits of tax incentives and gas subsidy to farmers, we must
appreciate that the fertilizer industry has always looked beyond profitability. Major key players
in the fertilizer industry have very actively been serving, educating and empowering the
farming community through valuable developmental initiatives in partnership with various
welfare and financial institutions. These enterprises pursue an elaborate philosophy to share
their success with the community around them, by fulfilling their Corporate Social
Responsibility (CSR) and contributing towards the prosperous growth of the nation.

These key players in Pakistan's fertilizer industry spend generously on improving the healthcare
and educational facilities in many deprived regions. They install renewable power projects to
reduce the energy crisis and provide relief during major calamities or disasters in the country.
While following traditions of good-governance and transparency as well as paying all their taxes
prudently as they absorb the substantial part of taxes or GIDC levied on the industry, they are
contributing significantly in helping to revive the poor farming community. Most importantly,
they have played a major role in reducing imports to save precious foreign exchange and
improve food security in the country.
Currently, in Pakistan, there are six major producers of fertilizers which include Fauji Fertilizer,
Engro Fertilizer Company, Dawood Hercules, and Fatima Fertilizers. Media reports suggest that
the Chinese government is keenly looking for avenues to enter Pakistan's agriculture and
fertilizer sector. The Chinese state and banks are expected to provide capital and loans to
Chinese companies interested in setting up ventures in Pakistan. There are rumours that China
is going to set up a fertilizer plant that will produce 800,000 tons per year.

TOTAL EMPLOYMENT:
Direct employment:

 31,000 people are directly employed in fertilizer sector.

 4139 people /day

Indirectly employment:

Agriculture is the mainstay of Pakistan’s economy. It accounts for 24 percent of the GDP and
employs 48.4 percent of the total labor force.

CHAPTER 2
FAUJI FERTILIZERS CO. (FFC)
History
FFC, along with Fauji Foundation, sponsored Fauji Jordan Fertilizer Company (FJFC) in 1993
and continues to be a major shareholder (52%) in Fauji Fertilizer Bin Qasim Limited (FFBL), the
new name of FJFC since 2003. FFC is responsible for marketing its Urea and DAP jointly, under
its own 'Sona' brand name. Thus it markets about 3.3 million tons of fertilizer per annum, giving
it a major share of around 50% of the market in Pakistan .FFC also has a 12.5% participation in
equity (as part of the Fauji Group, that has 50%) in the Fauji Group-OCP joint venture
of Pakistan Macro Phosphorus, S.A (PMP) phosphoric acid plant in Morocco; ensuring long
term supply of this raw material for FFBL's DAP production. FFC has a 12.63% equity
participation in Fauji Cement Company Limited (FCCL), a Fauji associated company that has an
annual production capacity of 1.165 million tons

Introduction
Fauji Fertilizer Company Limited (FFCL), is a listed company on the stock exchange,
incorporated in 1978. It was a joint venture between Fauji Foundation Pakistan and M/S Haldor
Topsoe A/S Denmark. Fauji Foundation holds the majority shares (44.35%) and has management
control of the company.

At Goth Machhi, in District Rahim Yar Khan, FFC operates the largest fertilizer producing
complex in Pakistan. Plant I, commissioned in 1982, now has an upgraded capacity of 695,000
metric tons per annum. Plant II, commissioned in 1993, has the capacity of 635,000 metric tons
per annum. They are amongst the largest single train urea plants in the world. The acquisition of
the Pak Saudi plant at Mirpur Mathelo (60 km away in District Ghotki) in 2002, now known as
Plant III, added another 574,000 metric tons to the annual capacity, which was upgraded to
718,000 metric tons in 2008. The combined production capacity of FFCL is now over 2 million
metric tons per annum.

FFC, along with Fauji Foundation, sponsored Fauji Jordan Fertilizer Company (FJFC) in 1993
and continues to be a major shareholder in Fauji Fertilizer Bin Qasim Limited (FFBL), the new
name of FJFC since 2003. FFBL is the sole manufacturer of DAP and Urea (Granular) in
Pakistan. FFC is performing the joint marketing & distribution of Urea and DAP under the 'Sona'
brand name.

Vision
 To be leading national enterprise with global aspirations, effectively pursuing multiple growth
opportunities, maximizing returns on the stakeholders, remaining socially and ethically
responsible.

Mission
To provide our customers with premium quality products in a safe, reliable, efficient and
environmentally sound manner, deliver exceptional services and customer support, maximizing
returns to the shareholders through core business and diversification, providing a dynamic and
challenging environment for our employees.

Corporate Strategy
Maintaining our competitive position in the core business, we employ our brand name, unique
organizational culture, professional excellence and financial strength diversifying in local and
multinational environments through acquisitions and new projects thus achieving synergy
towards value creation for our stakeholders.

Core Values
At FFC we seek uncompromising integrity through each individual’s effort towards quality
products for our customers, maximizing returns to the shareholders and making sizable
contributions to the National Exchequer Our business success is dependent on trusting
relationships. Our reputation is founded on the integrity of the Company’s personnel and our
commitment to the principles of:

 HONESTY in communicating within the Company and with our business partners,
suppliers and customers, while at the same time protecting the Company’s confidential
information and trade secrets
 EXCELLENCE in high-quality products and services to our customers
 CONSISTENCY in our words and deeds
 COMPASSION in our relationships with our employees and the communities affected
by our business
 FAIRNESS to our fellow employees, stakeholders, business partners, customers and
suppliers through adherence to all applicable laws, regulations and policies and a high
standard of moral behavior.

Stakeholders:
INSTITUTIONAL CUSTOMERS BANKS AND
STAKEHOLDERS INVESTORS / & SUPPLIERS OTHER MEDIA
SHAREHOLDERS LENDERS
FFC acknowledges FFC has invested Banks and other Different
and honours the trust significantly over financial communication
our investors pose in the years in institutions are mediums are used
us by providing a customer engaged by the on need basis to
steady return on their relationship Company on an apprise the general
investment. We management, on-going basis in public about new
rigorously enforce a going beyond relation to developments,
transparent extending credit negotiation of activities and
relationship with all facilities and trade rates, lending philanthropic
our stakeholders. discounts. Through purposes, short initiatives of FFC.
Agri. Services, term financing,
FFC has been deposits and
MANAGEMENT continuously investments.
OF inducing changes Banks are also
in agricultural consulted on
STAKEHOLDERS’ production and is issues linked with
highlighting the letters of credit
ENGAGEMENT importance of and payments to
rapid and efficient suppliers, along
transfer of advance with other
knowledge to disbursements of
farmers for their an operational
sustainable nature.
economic growth.
Our continuous
 and sustainable
growth is also
attributable to
engaging reputed
and dependable
suppliers as
business partners
for supply of raw
material, industrial
inputs, equipment
and machinery
The providers of Our success and Dealings with By informing the
capital allow FFC the performance banks and lenders media of the
EFFECT AND means to achieve its depend upon the is key to FFC’s developments and
VALUE TO FFC vision loyalty of our performance in activities of FFC,
customers, their terms of the effective
preference of the following: awareness is
‘Sona’ brand and • Access to better created regarding
our supply chain interest rates and the Company and
management loan terms the products and
• Minimal fees services offered,
• Higher level of indirectly having a
customer service positive impact.
•Effective
planning
LOCAL
REGULATORS ANALYSTS EMPLOYEES COMMUNITY
STAKEHOLDERS
AND
GENERAL
PUBLIC
FFC prides itself in In order to attract FFC’s In addition to local
being a responsible potential investors, commitment to its communities near
corporate citizen and FFC regularly most valued plant sites, FFC
abides by the laws and engages with resource, a engages with
regulations of analysts on details dedicated and general public at
Pakistan. FFC of projects already competent large through its
consciously ensures disclosed to the workforce, is at CSR department.
MANAGEMENT that all the legal regulators, with the core of its This engagement
OF requirements of other due regard to human resource helps to identify
countries are also regulatory strategy. FFC needed
STAKEHOLDERS’ fulfilled while restrictions provides a interventions in the
conducting business imposed on inside nurturing and field of education,
ENGAGEMENT outside Pakistan. FFC information and or employee friendly health and general
has paid a total of over trading, to avoid environment while economic uplift of
Rs 41 billion in taxes any negative investing the society. The
and duties this year impact on the considerably in Company has also
and continues to be Company’s local and foreign aligned its
one of the highest tax reputation or share employee interventions with
payers of Pakistan. price. The trainings. Besides the UN’s
Company held its monetary Sustainable
first Analyst compensations, Development
Briefing during the FFC has also Goals
year and apprised invested in health
the attendees on and fitness
operational and activities for its
 financial employees.
performance
during 2016.
Laws and regulations, Providing all the FFC’s employees The people of the
determination of required represent its Country provide
EFFECT AND prices and other information to biggest asset, the grounds for
VALUE TO FFC factors controlled by analysts helps in implementing FFC to build its
the Government affect clarifying any every strategic and future on.
FFC and its misconception / operational
performance rumour in the decision and
market and creates representing the
a positive investor Company in the
perception industry and
community.
 SWOT ANALYSIS
STRENGHTS
 Strong financial position
 State of the art production facilities
 Established brand name / loyalty
 Fertilizer products are high in demand by agriculture sector
 Well established distribution network
 Technical prowess
 Development of new and eco-friendly formulations
 Competent & committed human resources
 Well diversified investment portfolio
 High barriers to entry in the industry

WEAKNESSES
 The large size of the company produces administrative problems.

 Lengthy organizational hierarchy

 Sales force faced a tough time when being moved to distant areas in other provinces
to ensure they were spread equally. This also contributed to high transportation costs
for the company

 Narrow product line

 Relatively homogeneous product limiting pricing strategies

OPPORTUNITIES
 Horizontal as well as vertical diversification
 Increase / value addition in product line covering macro and micro nutrients
 Implementation of energy efficient technologies to conserve gas
 Exploration of alternative sources of raw material
 Export of urea fertilizer

THREATS
 Declining international fertilizer prices
 Inconsistent Government policies for fertilizer industry including pressures on
fertilizer pricing
 Depleting natural gas reserves
 Poor farm economics
 Continuous increase in raw material / fuel prices and GIDC
 Provision of gas to competitors at concessionary rates

 The manufacturing costs pertaining to the fertilizer industry were impacted by

inflationary factors, combined with escalations in the prices of feed and fuel gas (The
Dawn, 2007)
 Shortages of natural gas in the country can limit the opportunities for the company in
future (The Financial Daily, 2010)
 New competitors in the industry like Fatima Fertilizer Company can reduce the
market share of FFCL (The Nation, 2009
 Imposition of additional taxes and levies / changes in tax regime for imported
fertilizer
 CHAPTER 3
Governance Bodies of Fauji Fertilizers
The Companies Ordinance, 1984
(COMPANY LIMITED BY SHARES) Memorandum of Association of FERTILZERS
(PRIVATE) LIMITED.

I. The name of the Company is ABC Fertilizers (Private) Limited.

II. The Registered Office of the Company will be situated in Islamabad Capital Territory in
the Province of Sindh/ N.W.F.P/Punjab/Balochistan.
III. The objects for which the Company is established are all or any one of the rules
mentioned in ordinance.

Registration by Ministry of Law, Justice & Company Affairs

Cost Accounting Records (Fertilizers) Rules, 1993

(Published in the Gazette of India (Extra-ordinary)
Part II – Section 3- Sub. Section (I) dated 5th March 1993)
MINISTRY OF LAW, JUSTICE & COMPANY AFFAIRS
(Department of Company Affairs)

NOTIFICATION

G.S.R. 261(E): - In exercise of the powers conferred by sub-section (1) of section 642, read with
clause (d) of sub-section (1) of section 209 of the Companies Act, 1956 (1 of 1956), the Central
Government hereby makes the following rules, namely:
1. Short title and commencement –
(1) These rules may be called the Cost Accounting Records (Fertilizers) Rules, 1993.

(2) They shall come into force on the date of their publication in the official Gazette.

2. Application

These Rules shall apply to every company engaged in the production, processing or
manufacture of fertilizers whether nitrogenous, phosphates and/or complex (organic, inorganic
and / or mixed) and includes all types of fertilizers as defined in clause (h) of Section 2 of the
fertilizer (control) order, 1985, made under Section3 of the Essential Commodities Act, 1955 (10
of 1955) and as amended from time to time, excepting those companies falling under the
category of “Small Scale Industrial Undertakings.”

3. Maintenance of Records: -

(1) Every company to which these rules apply shall, in respect of each of its financial year
commencing on or after the commencement of these rules, keep proper books of accounts
containing, interlaid, the particulars specified in Schedules I and II annexed to these rules or in a
form as near thereto as practicable, relating to the utilization of materials, labor and other items
of cost in so far as they are applicable to Fertilizers referred to in rule 2. Provided that if the said
company is manufacturing any other product(s) or is engaged in other activity in addition to
items referred to in rule 2, the particulars relating to utilization of material, labor and other items
of costing so far as they are applicable to such other product or activity shall not be included in
the cost of the items referred to in rule 2.

(2) The books of account referred to in sub-rule (1) shall be kept on a regular basis in such a
manner as to make it possible to calculate the cost of production and cost of sale of all types of
Fertilizers referred to in rule 2 for every quarter of the financial year (hereinafter referred to as
the relevant period) as well as for the financial year as a whole, from the particulars entered
therein and every such books of account and the Preformat specified in Schedule II annexed to
these rules shall be completed no later than ninety days from the closing of the financial year of
the company to which they relate.

(3) It shall be the duty of every person referred to in sub- section (6) and sub-section (7) of
section 209 of the Companies Act 1956 (1 of 1956) to take all reasonable steps to secure
compliance by the company with the provisions of sub-rule (1) and (2) of this rule in the same
manner as he is liable to maintain accounts under sub-section (1) of section 209 of the said Act.

(4) Statistical and other records shall be maintained in accordance with the provisions of
Schedules annexed to these rules which shall be such as to enable the company to exercise as far
as possible, control over the various operations and costs with a view to achieve optimum
economics in cost and provide necessary data required by the Cost Auditor to suitably report on
all the points referred to in Cost Audit (Report) Rules, 1968, as amended from time to time. Such
records shall be reconciled with the returns submitted to the Excise Department and other
Government authorities from time to time.

Other Governing Bodies

Fauji Fertilizer Company Limited (FFCL), is a listed company on the stock exchenage,
incorporated in 1978. It was a joint venture between Fauji Foundation Pakistan and M/S Haldor
Topsoe A/S Denmark. Fauji Foundation holds the majority shares (44.35%) and has management
control of the company.

Board of Directors
Syed Tariq Nadeem Gilani,

LT GEN HI (M), (Retired)

Chairman

Lt Gen Tariq Khan,

HI (M) (Retired)

Chief Executive and Managing Director

Dr Nadeem Inayat

Non-Executive Director

Farhad Shaikh Mohammad

Non-Executive Director

Per Kristian Bakkerud

Independent Director

Brig Raashid Wali Janjua,

HI (M) (Retired)

Non-Executive Director

Brig Dr Gulfam Alam,

SI (M) (Retired)

Non-Executive Director

Mr Shahid Ghaffar

Independent Director

Ms Nargis Ghaloo

Independent Director

Maj Gen Mumtaz Ahmad Bajwa,

HI(M) (Retired)

Non-Executive Director

Mr Muhammad Arif Azim

Non-Executive Director

Mr Per Kristian Bakkerud

Non-Executive Director

Code Of Ethics And Standards Of Conduct

It is the policy of FFC to follow the highest business ethics and standards of conduct. All the
employees are obligated to act responsibly i.e. to be honest, trustworthy, conscientious and
dedicated to the highest standards of ethical business practice. The company’s reputation
depends on the conduct of its employees therefore each employee must endeavor to act
according to the highest ethical standards and abide by the rules and regulations. FFC enforces
its Code of Business Ethics and Standards of Conduct at all levels fairly and without any
prejudice or bias. All the employees and directors of the organization are morally as well as
legally bound to follow these rules.

Shortcomings
 Governing philosophy
Problems in governance (strategy or decision making phase)
 Fouji fertilizer is facing some problems in governance which is because of large size and
wide network of their company.
 They have lengthy organizational hierarchy which includes many executives and non-
executives that causes many conflicts.
 They have many army background executives who don’t have expertise in their field
which stops company from growing.
 There are many problems that organizations face in their operations because bad planning
in their strategy making phase.
 They do less marketing which has reduced their growth.
 They use narrow production line methods.
 Compliance (Implementation)
High transportation costs
 Sales force faced a tough time when being moved to distant areas in other provinces to
ensure they were spread equally.
 This also contributed to high transportation costs for the company.
Reliance on depleting Natural resources
 The fertilizer sector has been deprived of gas since April 2010 and gets limited gas
supply making it one of the worst affected industries due to the prevailing gas crisis.
 FFC is heavily reliant on gas supply for its production while switching to alternative
sources could mitigate this risk.
 CHAPTER 4
ARTICLES
1) TITLE: Good Corporate Governance – the relevance for companies and investors

Author: By Christian Strenger year: 2005

2) Title: Corporate Governance and Performance by Qaiser Rafique Yasser

International Journal of Trade, Economics and Finance, Vol. 2, No. 3, June 2011

3) Title: Corporate Governance and Performance: An Analysis of Pakistani Listed

Firms By Qaiser Rafique Yasser
Global Journal of Management and Business Research Volume 11 Issue 10 October
2011

Key Governance Issues:

 Large Size and inefficiency of the Supervisory Board

This is negatively impacted by the effects of poor co-determination – mainly with respect to the
inefficiency of the supervisory board. Political issues were responsible that the Government
Commission so far could not deal with the system of co-determination. The inefficiency caused
by this structure remains problematical, particularly for internationally operating companies.

 Conflicts of interest

All employees but especially the members of the management and supervisory board often face
conflict of interest-situations. Companies should define the non-competition obligations, prohibit
the pursuit of personal interests in company decisions.

 Disclosure

Conflicts of interest are also lessened by increases in disclosure. Any temptation might not arise
if the matter has to be put in the open beforehand.

 Sensible and long term-oriented remuneration structures

Many of the recent corporate scandals resulted from the short-term orientation of top managers
caused by compensation packages that were not aligned with longer-term shareholder interests.

 Auditing matters

In many companies auditing is not considered an essential part for the success of the
company. Companies don’t hire the independent auditor for check and balance of records.

 Shareholder rights
 Many companies still do not give their shareholders the possibility to exercise their
shareholder rights in the Annual Meeting.

These findings confirm that the pursuit of good governance has significant value potential:

 Companies can reduce their cost of equity capital by a higher market valuation.
 Investors, particularly professional asset managers which face increased performance
demands from their clients and media attention, look to realize the higher stock price
potential for competitive reasons.
 Other stakeholders (employees, customers, suppliers, and the general public) can
substantially benefit from the key improvements brought about by higher transparency,
openness and adequate handling of possible conflicts.

SOLUTION MODEL
 Board composition & board independence

Effectively monitor and control the management. Internal controls and risk management
systems. Non-executive directors are needed on boards to monitor and control the actions of
executive directors due to their opportunistic behavior and act as the checks and balances in
enhancing boards’ effectiveness (Jensen & Meckling, 1976).

 Director’s qualification

The Code of Corporate Governance (2002) recommends that directors should use their
qualities (skills, knowledge and experience, professionalism and integrity) in carrying out
their duties.

 Increase transparency

A good way to improve transparency is the Publication of company specific corporate

governance guidelines

 Independent director’s with professional qualification

Board committees (particularly an audit committee with at least a majority of independent

directors) are a governance necessity.

Independent directors’ background and competency are essential factors as they contribute
positively to the family companies (Johannisson and Huse, 2000).

 Independent auditor
 Independence of the auditor and a regular auditor change combined with the prohibition of
most non-auditing services are important.

 Reduce conflicts of interest

Define an authorization framework for outside activities, and require immediate disclosure of

potential conflicts of interest.

 Better Leadership Structure

The corporate governance perspective views the CEO duality to arise when the post of the
CEO and Chairman are managed by one person. The agency theory claims that there must be
a separation between ownership and control. The separate leadership structure can control
agency problems, and enhance the firm’s value (Fama & Jensen, 1983).

 Board Meetings

The corporate governance view is that board should meet regularly to discuss matters that
arise.

 Better utilization of resources

Good governance should provide proper incentives for the board and management to pursue
objectives that are in the interests of the company and shareholders and should facilitate
effective monitoring, thereby encouraging firms to use resources more efficiently.

ARTICLE
Title: UTILIZATION OF NATURAL RESOURCES FOR THE
BETTERMENT OF PAKISTAN
Author: Khurram Awais Sulehria, lived in Islamabad, Pakistan year: (1980-2012)

PROBLEM STATEMENT (ISSUE AREAS)

 40% Natural Gas is losses in pipeline every year according to SNGPL.
 A large number of users are not paying gas bills and hundreds of factories and other
manufacturing plants are using gas without meters including heavy weight industrialists
and politicians.
SOLUTION MODEL
 We can prevent this loss by changing the strategy.
 We can terminate the system of pipeline in Pakistan as other parts of world are also not
delivering gas through pipelines. LNG can be shipped by boat or truck.
 In this way, the 40% immediate line losses will be resolved and no gas without billing
will be faced by the gas providing companies.
 We can install some LNG (Liquid Natural Gas) plants to liquefy our “Sui Gas”.
  In this way, those who will pay for a cylinder of gas will buy gas on company outlets or
private stores and in the result Pakistan will get rid of a big problem.

Solutions for shortcomings of FFC: (compliance strategy)

These are some solutions for problems of FFC:

Out sourcing

They should outsource their sales working or distribution of distant areas because their
transportation cost is high and by outsourcing they should be able to reduce cost.

Trainings:

They should provide trainings to their army executives about the nature of business because
they come from totally different field and they did not know all about this so we help them to
learn then they could make better decisions. They have to hire qualified executives to run the
operations of their business. They should hire those executives who have technical expertise,
knowledge or skills related to their field.

Reduce conflicts:

They should try to reduce the conflicts between executives by reducing their large size of
executives or non-executives.

Reduce error:

They must have needed to build good decision making strategies to reduce errors in
production phase. Good decisions at top management reduce many problems in their
implementation. They must hire independent auditor for check and balance of their records to
boost up growth or to improve their production department.

Marketing:

They need to make good marketing strategies or promotions through advertisements on TV

channels or social media and any other source of promotion to increase their sales or expand
globally. Marketing mix or 4 P’s of marketing strategies are used. These all decisions are
taken by top management than well communicate all these plans to lower management,
supervisors or any other kind of staff.

Communication:

Better communication between all departments of company may reduce work conflicts.
Company should be the part to save natural resources of Pakistan.
 Recommendations:
These are some recommendations for FFC:

Units in different areas

FFCL should be needed to move their units to different areas so they can move their product
easily

Administrative problems

They should be needed to reduce their administrative problem to enhance their business these
problems have very bad impact on organization. These things have impact on organizations
growth and its goodwill.

Resources

Use their resources efficiently to compete with their competitors and try to wipeout them from
market to get control on market be aware from their strategies and try to expand their market.

Marketing

FFCL needed increase their marketing to increase sales and business. FFCL use very low budget
on its marketing which one off main factor for the growth of the business.
 CHAPTER 6
WORKSHOP ON CORPORATE GOVERNANCE
 Guest speakers
Mr. Faisal shabir

Mr. Rizwan siddique

Mr.Syed M Salman Mehdi

Mr. Faisal shabir

He shared with us his personal experiences.

There must be No fear of failure. We have to utilize our talent.

Try our best at every stage. Success is knocking at our door so take challenges.

Know our goal. This must be SMART. We must have strong spirit.

Continue struggles
Mr. Rizwan Siddique

There is no difference between our country’s education and abroad countries’ education.

If you have many skills there is beneficial for you to utilize them in positive way.

He is telling us about:

Benefits of technology on your business (direct benefits or indirect benefits).

How to implement IT Governance

Examples of CG using technology

Introduction of IT and E-Governance

Importance of E-Governance and IT
Exchange of communication transactions
Integration of various systems:
 Government-to-citizen (G2C)
 Government-to-business (G2B)
 Government-to-government (G2G)
 Government-to-employees (G2E)
 Define the target groups
Mr. Syed M Salman Mehdi

He is most motivational speaker. He is one of the best speaker from all of them.

We know about:

Self-awareness: Emotional stability, Emotional intelligence, feelings, confidence level, takes an

honest look at ourselves. Know our strengths and weaknesses. Do our SWOT

Motivation: about speak good about ourselves, count our blessings, stay positive, positive
affirmation

Empathy: examines how our actions will affect others

Recognizing the feelings, wants and needs of others

Social skills: tells us that we must have strong social skills

Observe how you react to people put yourself in their place

 Never underestimate yourself

 Do you know you are important
 Self-Concept
 Corporate Governance (Taan ki dunya)
 Emotional intelligence (Maan ki dunya)
 Never underestimate yourself
 Self-regulation
 Learning Outcomes
Overall workshop is good in which we learn something new other than book knowledge. We
have to increase our confidence level. We learn that be good to other peoples. Never
underestimates ourselves. We have to continue struggles in our lives to achieve success. There is
no fair of failure adopt opportunities if we find near ourselves. Improve our skills. We must have
Self-awareness in ourselves. Be a job provider not a job seeker. Boost your minds with new
ideas. Everyone must have self-motivation, empathy and social skills. Thinks that we are
important we are the best. We must have knowledge about IT, E Governance, e Government.
Positive affirmation or think good that makes us happy. Inner satisfaction must be necessary for
achievement of success or for refreshing minds that gives us encouragement to go ahead. We
have to utilize our talent or increase our skills.
 CHAPTER 7
Learning outcomes (project)
Also we learn how to make project content.
We also learn about fertilizers sector.
We learned much about FOUJI FERTILIZERS CO history, mission, vision, SWOT, BCG
Matrix etc. And how FFC work to compete in the market?
We learn that how to search articles or how to read them. Find problems, reasons or
solutions from articles. And then compliance of those solutions with companies problems.
We learned that if we start our work on time than we will be able to complete it on its time
effectively.
We learn from this project is that how to coordinate or how to work with our group
members in every situation.
Through this project we learn how to manage a stake holder with the help of governance
body and compliance. We learn about the hierarchy of FFCL and problems. We learn how to
overcome with these issues in this and how corporate governance helps us. We study about
the pest analysis of FFCL.
 References

http://jcrvis.com.pk/docs/Fertilizer201612.pdf

http://www.mca.gov.in/Ministry/PDFs/Fertilizer.pdf

file:///C:/Users/Tariq/Downloads/873216c6-8639-48f4-9253-496de41015cf-141215085530-
conversion-gate02.pdf

http://www.fauji.org.pk/fauji/businesses/associated-companies/fauji-fertilizer-company-limited

http://www.fauji.org.pk/fauji/about-us/governance-structure

http://www.ffc.com.pk/wp-content/uploads/ar_2015.pdf

https://www.ffc.com.pk/wp-content/uploads/ar_2017.pdf

https://www.scribd.com/doc/298150057/Fauji-Fertilizer-Company-Ltd-Finance-Department

https://scholar.google.com.pk

https://onlinelibrary.wiley.com/doi/abs/10.1002/ep.12519