CVP Analysis On ENGRO Fertilizers

Topics: Variable cost, Costs, Fixed cost Pages: 12 (1978 words) Published: November 23, 2014
 TABLE OF CONTENT
SR.NO
DETAILS
PAGE NO.
1
EXECUTIVE SUMMARY
2
2
INTRODUCTION TO COMPANY
3
4
CONTRIBUTION TOWARDS AGRICULTURE
4
5
CVP ANALYSIS
5
6
CONTRIBUTION INCOME STATEMENT
8
7
CONTRIBUTION INCOME RATIO
9
8
BREAKEVEN POINT
10
9
MARGIN OF SAFETY
11
11
BIBLIOGRAPHY
12

EXECUTIVE SUMMARY
This report examines the CVP analysis on ENGRO Fertilizer Company limited which is registered under SECP rule in stock exchange as a public company. For CVP analysis contribution income statement is made. Besides this, total fixed cost, total variable cost, contribution, contribution margin, contribution margin ratio, breakeven point of sales and margin of safety is computed form the data which is gathered from annual report of the company year 2013. Considering the importance of the agriculture sector in Pakistan, contributing up to 24% in GDP growth (Pakistan bureau of statistics), and fertilizer industry becomes an integral part in crop cultivation and ultimately excising the agriculture sector. The Fertilizer industry in Pakistan has not been able to get its due share in long term government policies. The private sector has come up with huge investment and its present infrastructure not only ensures sufficient cheap and good quality Fertilizer for domestic use but has the potential to earn foreign exchange. I made its contribution income statement and computed its net operating profit which shows that company is performing very well and is earning profit this is it growth period and it is very much success full to cover its fixed cost and is going in right direction. Its margin of safety is high which shows that company has no chance of loss yet and is performing its operations in a right direction.

INTRODUCTON TO COMPANY

Engro Fertilizers Limited is a subsidiary of Engro Corporation and a renowned name in Pakistan’s fertilizer industry. It is traded on the stock market under the symbol ‘EFERT. Engro holds a vast, nationwide production and marketing infrastructure and produces leading fertilizer brands optimized for local cultivation needs and demand. Engro is also a leading importer and seller of Phosphate products, which are marketed extensively across Pakistan as phospatic fertilizers. Its extensive market development activities have ensured a sustained pull for our primary and secondary fertilizer products and sellout productions since launch. Engro Fertilizers Limited enjoys loyal customer base across Pakistan owing to its trusted fertilizer brands and continual farmer assistance in training and education. Engro Fertilizers Limited was incorporated in June 2009, following a decision to demerge fertilizer concern from its parent company Engro Chemical Pakistan Limited. The continual expansions and diversifications in its enterprises necessitated a broad restructuring in Engro Chemical operations and management. To facilitate better oversight, Engro Chemical Pakistan was converted into a holding company named Engro Corporation, and its fertilizer business was subsequently demerged to a newly formed Engro subsidiary –Engro Fertilizers Limited. Engro’s fertilizer manufacturing facility at Daharki has been experiencing ongoing expansion. This, coupled with distinct dynamics of highly nuanced fertilizer industry warranted an independent and dedicated business entity and approach. The demerger of fertilizer concern was approved by High Court of Sind on December 9th, 2009, making it effective as of January 1st 2010. Engro Fertilizers is poised to become the leading urea manufacturer in the country following major upgrading of its manufacturing capabilities. ENVEN 1.3–a tremendous expansion in Engro’s urea manufacturing facility went into production in November 2010 and looks set to end Pakistan’s near-term urea imports,...

Bibliography: http://en.wikipedia.org/wiki/Cost%E2%80%93volume%E2%80%93profit_analysis
http://accountingexplained.com/managerial/cvp-analysis/
Annual report ENGRO fertilizer company 2013
http://engrofertilizers.com/our-company/
(Pakistan bureau of statistics)
http://www.cpaireland.ie/docs/default-source/Students/F2-Mgmt-Accounting/cost-volume-profit-%28cvp%29-analysis.pdf?sfvrsn=0
http://wps.prenhall.com/wps/media/objects/2033/2082045/student_study_guide/cost12_study03.pdf
http://www.lead.org.pk/cscc/attachments/case_studies/engro_water.pdf
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