REPORT ON ORGANISATIONAL STUDY AT FERTILISERS AND CHEMICALS TRAVANCORE Ltd. Vivek Menon (Reg. No: 85270050) Under the Guidance of Dr.
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Sarada S Reader Submitted in partial fulfillment of the requirement for the award of the degree of MASTER OF BUSINESS ADMINISTRATION to the Cochin University of Science and technology School Of Management Studies Kochi-682022, Kerala, India Year-2008 CERTIFICATE This is to certify that this REPORT ON ORGAINSATIONAL STUDY AT FERTILISERS AND CHEMICALS TRAVANCORE LTD. s a bonafide study of Vivek Menon of the third Semester MBA student of School of Management Studies at the Cochin University of Science and technology. Place: Date: Dr. Sarada. S Reader DECLARATION I Vivek Menon, third semester MBA student of school of management studies at the Cochin university of science and technology do hereby declare that this report on ORGANISATIONAL CHEMICALS STUDY AT FERTILISERS Ltd. under AND the TRAVANCORE COCHIN guidance of Dr. Sarada.
S, Reader, School of Management Studies in partial fulfillment of the requirement for the award of the degree of Master of business administration is a bonafide study I have done in the organisation. I also declare that this report has not been previously formed the basis of award of any Degree, Diploma, Associate ship, Fellowship or any other similar title of this or any other university or institution. Place: Date: Vivek Menon ACKNOWLEGEMENT I would like to acknowledge my profound sense of gratitude to: the Almighty for giving me strength and ability to successfully complete the study and make this report on time
Dr. S Sarada, Reader, School of Management, Cochin University of science and technology, my guide for this study, who guided me with her valuable suggestion. She was a source of inspiration for me to complete the study and make this report on time and was instrumental in shaping this report. Mr. John R Daniel, Chief Manager (Training) FACT, for his guidance and support which he rendered throughout the study and he was instrumental in shaping this report this great institution of excellence which has encouraged me to undertake such an organization study.
I also extend my sincere gratitude to our Director, Prof. (Dr. ) Mary Joseph, of School of Management Studies of the Cochin university of science and technology. to all employees of FACT for their kind cooperation for completion of this work. ABSTRACT I underwent an organizational study at FACT to acquaint myself with the business environment for a period of one month from May 15, 2008 to June 14, 2008 as a part of the MBA curriculum at the school of management studies of the Cochin University of Science and Technology.
The study was conducted to understand the structure, function and processes of various departments and their interdependence. During the course of study I was able to successfully interact with the employees of the organization. They were happy to give me all possible information. They also took me to the plants and worksites where I got the first hand information functions. about the organizational processes and its The methodology consists of data collection through interview, observation and literature review.
The data collected from different sources are classified, analyzed and interpreted. Based on which an organizational structure, its functions and various departments are identified. The various departmental functions are clearly identified and their processes & activities carried out are recorded. An in-depth analysis is made us to understand the departmental process based on which a process chart is prepared. The analysis further formed the basis for identifying the departmental interdependence.
The study further revealed some of the challenges faced by the departments. The study helped us to obtain an exact picture of FACT based on which, a slot analysis is done. Finally, with the help of latest statistics available from the organization, the present trend and current scenario of FACT is clearly revealed. LIST OF CHART, TABLES AND FIGURES Chart Chart No. Particulars Page No: 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21
Organizational chart Organizational chart of Finance department Organizational chart of Materials department Raw Material procurement process Equipment and spares procurement process Process flow in stores department Process flow in traffic department Organizational chart of production department Production process Organizational chart of market department Process chart of market department Organizational chart of quality control department Organizational chart of R & D department Organizational chart of fire & safety department Organizational chart of computer division Organizational chart of HR division Organizational chart of training division Training process chart Organizational chart of vigilance department Vigilance department process flow Organizational chart of company secretariat 20 21 29 31 33 36 40 42 43 47 51 55 59 64 68 70 78 79 82 83 85 Tables Table No. Particulars Page No: 1 2 3 4 5 6 7 8 9 10 11 Performance at NSE Distribution of shareholdings Brief picture of FACT Milestone of FACT Products of FACT Areas and regions of distribution Marketing operations Sales turnover Expenditure on R & D Welfare scheme Division wise staff strength 10 11 12 15 45 50 51 54 62 72 76 Diagrams Diagram No. Particulars Page No: 1 2
Process flow in computer department Interdependence of department 68 86 CONTENTS Topic Page No: Certificate from organization Certificate from guide Declaration Acknowledgement Abstract List of figures, tables and chart i ii iii iv v vi Chapter No: 1. 2. 3. 4. About the study History of FACT About FACT Functional departments 4. 1. Finance department 4. 2. Materials department 4. 3. Production department 21 29 42 1 3 8 4. 4. Marketing department 4. 5. Quality control department 4. 6. R & D department 4. 7. Fire & Safety department 4. 8. Computer service department 4. 9. Human resource department 4. 10. Training department 4. 11. Vigilance department 4. 12. Company secretariat 5. 6. . 8. Functional interdependence of departments Corporate social responsibility Environment analysis SLOT analysis 47 55 58 63 67 70 77 82 85 86 89 91 94 Conclusion Bibliography 96 Chapter 1 About the study 1.OBJECTIVE OF THE STUDY The organizational study was carried out at FACT Ltd. Udyogamandalam to achieve the following specific objectives:1. 1. To understand the organizational framework & it’s functioning. 1. 2. To gain knowledge about different departments of the organization and the functions. 1. 3. To study the interdependence of different departments. 1. 4. To make a SLOT analysis of the organization 2. METHODOLOGY OF THE STUDY 2. 1.
Observation By observing the general surrounding, the functional process, interactions of employees etc. Work site and plants were visited were the actual process of production and activities of various department were seen and understood. 2. 2. Data collection 2. 2. 1. Direct method Through Interview & discussion We interacted with the employees and understood the work and responsibility carried by each of them. This helped us to understand the various department and their functions clearly. Further discussion with them revealed some key functions and process carried by each department and the departmental interdependence. 2. 2. 2. Indirect method
Literature review Company’s internal records, Publication, Annual report, Journal, statutory report, website (official site & others). The data collected company’s departmental manual added key information to this report and help us to understand the process carried by each department in detail. Annual reports are used as statistics to reveal the present scenario of the organization. 1 Previous report on organizational study formed basis for shaping this report. 2. 2. 3 Data Authentication The process chart prepared for each department was given to the respective department heads for correction. The rough report prepared was also given to the organizational guide for correction. 3. LIMITATIONS OF STUDY 3. 1. 3. 2. 3. 3. Time was a major limiting factor.
Secondary data available from company manuals were outdated (the manuals are being updated). Lack of co-operation from certain departments due to their work load. 2 Chapter 2 History of FACT HISTORY OF FACT Man’s history is replete with revolutions, responsible for molding his system of thought and shaping his modes of living. Revolutions have, more often than not, emerged out of crisis-situations it was one such crisis situation that guided the enlightened perception of a far sighted visionary to form FACT. Yes! The FERTILISER AND CHEMICALS TRAVANCORE LIMITED-popularly known as FACT-was indeed a revolution when it was established as the first large scale fertilizer factory in the country.
Since then, it has played a major role in creating fertilizer consciousness among our farmers, and giving a positive direction to the modernization of agriculture in India. And that, of course is an interesting story-a story of never ending challenges and constructive responses. The beginning The 1940,s were a time of critical food shortage in our country. The traditional approach to cultivation was not of much help in finding a solution to this problem. And nitrogenous fertilizer had not yet arrived on the agriculture scene in sufficient quantities to make any perceptible impact. A revolution was indeed necessary to change the status quo. And when it came, it did through the vision of Dr. C. P.
Ramaswami Aiyar, the Dewan of the former Travancore State, who mooted the idea of increasing food production by the application of fertilizer as a long term solution to food problem. To give concrete shape to his idea, he sought the help of Seshayee Brothers Ltd. Industrialist known for their pioneering work. And India’s first large-scale fertilizer plant was set up in 1944 at Udyogamandal on the banks of the river periyar in Kerala State. The new venture of course had to go through many teething troubles. For instance, the raw materials necessary for the production of ammonium salts were not available in the state. But this deficiency was overcome by adopting a revolutionary method known as the FIREWOOD GASIFICATION PROCESS. 3
However, initial difficulties notwithstanding, the plant at Udyogamandal went into commercial production in 1947, with the slated capacity to manufacture 50,000 tonnes of Ammonium Sulphate (10,000 tonnes of N). This was followed by the production of SUPERPHOSPHATE in a new plant with a capacity of 44,000 tonnes. A sulphuric acid plant of 75 tonnes per day was also installed which was considered large going standard at that time. Meanwhile the inner dynamics of FACT was finding another expression in the formation of new unit with the help of the State Government and Methur Chemical & Industrial Corporation Ltd. , for the production of caustic soda which later become today’s Travancore-Cochin Chemical Ltd. , a Kerala Government undertaking.
This indeed was a big leap forward as it replaced all the imports of that product, saving a considerable amount of foreign exchange. FACT was the first to use its byproduct, chlorine, as hydrochloric acid to produce Ammonium Chloride. These by-products produced by FACT paved the way for setting up of other industrial units around the FACT complex viz. Hindustan Insecticide Ltd. , Indian Rare Earth Ltd. , etc. Expansion In the late 50s, the Udyogamandalam Division launched its first expansion with an outlay of Rs. 3 crores. Highlights of the period were the installation of two plants to produce Phosphoric Acid and Ammonium Phosphate (16:20 Grade). The second stage of expansion involving Rs. crores saw the replacement of the Firewood Gasification Process and the Electrolytic Process by the Texaco Oil Gasification Process for which a new plant was set up. FACT became a Kerala State Public Sector Enterprise on 15th August 1960. On 21st November 1962, the Government of India became the major shareholder. The 2nd stage of expansion of FACT was completed in 1962. 4 The 3rd stage of expansion of FACT was completed in 1965 with setting up of a new Ammonium Sulphate Plant. FACT has been a pace-setter in marketing evolving a continuous and comprehensive package of effective communication with farmers and promotional programmes to increase the fertilizer consciousness among our farmers.
In fact, FACT was the first fertilizer manufacturer in India to introduce the village adoption concept since 1968 to improve agricultural productivity and enhance the overall socio-economic status of farmers. FACT has a well organized marking net work, capable of distribution over a million tones of fertilizers. With the licensing of Cochin Division in 1966 FACT further expanded and by 1976 the production of sulphuric acid, phosphoric acid and Urea was started. In 1979 Production of NPK was commercialized. Technical Divisions FACT Engineering and Design Organization (FEDO) was established in 1965 to meet the emerging need for indigenous capabilities in vital areas of engineering, design and consultancy for establishing large and modern fertilizer plants. FEDO has since then diversified into Petrochemicals and other areas also.
It offers multifarious services from project identification and evaluation stage to plant design, procurement project management, site supervision, commissioning and operating new plants as well as revamping and modernization of old plants. FEDO received international accreditation ISO 9001 2004 for quality system standards covering areas of consultancy, design & engineering services for construction of large fertilizer, petrochemicals, chemicals and related projects including purchasing, construction, supervisor, inspection and expediting services. FACT Engineering Works (FEW) was established on 13th April 1966 as a unit to fabricate and install equipment for fertilizer plants. FEW was originally conceived as a unit to fabricate and install equipment for FACT’s 5 own plants.
Over the year it developed capabilities in the manufacture of class I pressure vessels, heat exchangers, rail mounted LPG tank wagons etc. It has a well equipped workshop approved by Lloyds Register of Shipping, further; this division has excelled in laying cross country piping fabrication and installation of large penstocks for hydel units in Kerala. The Cochin Division of FACT, the 2nd production unit was set up at Ambalamedu and the 1st phase was commissioned in 1973. The 2nd phase of FACT Cochin Division was commissioned in 1976. The project was designed to produce Ammonia which would be converted to Urea and also to produce high analysis, water soluble NP fertilizers.
This division comprises of a number of large capacity plants to produce Ammonia, Urea, Sulphuric Acid, Phosphoric Acid and Fertilizers like FACTAMPHOS 20-20 and DAP 18-46. FACT has also a Research & development Department which carries out research related to fertilizers. This Division is also capable of doing fundamental research in areas of fertilizers and chemicals technology. So far FACT R & D has taken 17 patents in areas like Sodium Fluoride, Sulphuric Acid and Ammonium Phosphate. Breakthrough FACT took a major breakthrough, when its 50,000 TPA plant of Caprolactum was commissioned in 1990 as a major diversification plan from our traditional field of fertilizers and allied chemicals. The plant with a capacity outlay of Rs. 68 crores utilizes the most modern technology and the product is acknowledge as one of the best in the world. It also produces 2, 25,000 tonnes per Ammonium Sulphate as co-product. 6 Subsequently, FACT set up a 900 TPD Ammonia plant at Udyogamandal with an investment of Rs 618 crores. This replaced the old Ammonia plant of Udyogamandal Division. The plant commissioned in 1998. FACT has been entering into a ‘Memorandum of Understanding, (MOU) with the ministry of chemicals and fertilizers every year. This is as per the guidelines of DPE, Ministry of finance GOI. The objective of FACT is to achieve excellence in performance as per the MOU agreement. 7 Chapter 3 About FACT 1. VISION & MISSION OF FACT 1. 1. Mission of FACT
To function as a dependable and globally competitive producer of fertilizer and other allied products and to develop self reliance in the field of engineering and technology, especially in the field of fertilizers, chemicals, petrochemical, oil & gas industries 1. 2. Vision of FACT To emerge as a leading company in the business of providing quality agriculture and industrial inputs and providing engineering services for industrial and infrastructural facilities. 2. CORPORATE OBJECTIVES well being and growth through the production and marketing of fertilizers and chemicals and through the acquisitions/development and dissemination of engineering technology know-how and skills. 2. 1. To be of service to the nation and to contribute effectively to its economic 2. 2.
To sustain and improve its pioneering role in the development of indigenous development. 2. 3. To improve productivity and maintain high standards of quality and adopt effective measures for controlling cost and minimizing dependence on imports. 2. 4. To ensure for its customers the availability of its products and services on reasonable terms, for its shareholders a fair return on capital invested and, for itself, development of adequate internal resources for continual growth and expansion. 2. 5. To actively work for rural uplift through guidance, advice and service to the farmers in co-operation with all other agencies working for agriculture development and allied activities. 2. 6.
To develop, train and maintain a team of motivated and disciplined personnel with required skills and abilities, and to encourage innovation 8 engineering and technology through research and and to create a condition for their functioning and career development so as to improve their overall quality of life 2. 7. To project a favorable image of the company and its operations, in the society in which it operates, amongst its customers and suppliers and amongst the public in general. 2. 8. To continuously plan its future operations for sustained growth and stability for meeting the needs of the country. 3. CORPORATE GOALS crore by the year of 2010 3. 1. To achieve a net profit of 200 crore per year with a turnover of Rs. 2100 3. 2.
To focus on cost reduction and technology up gradation in order to become competitive in each line of business. 3. 3. To constantly innovate and develop new products and services to satisfy customer requirements. 3. 4. To invest in new business lines, where profit can be made on sustainable basis over the long term. 3. 5. To compete through speed, agility and flexibility in recognizing and capturing opportunities in existing markets. 3. 6. To invest sufficiently to stay in the game but avoid premature commitments. 4. LEGAL FRAME WORK OF THE COMPANY FACT is a public limited company registered under the Companies’ act 1956. As a major industrial Organisation, FACT complies with all laws and statutes which govern industries in general. 1. 2. 3. 4. 5. 6.
Factories Act, 1948 Excise Act, 1944 Sales tax Act, 1959 Industrial Disputes Act, 1947 Employee Staff welfare Act, 1948 Workmen Compensation Act, 1923 9 7. 8. 9. The Payment of Gratuity Act, 1972 The Payment of Wages Act, 1936 Trade Unions Act, 1926 10. Standing Orders Act, 1946 11. Payment of Gratuity Act, 1972 12. Provident Fund and Miscellaneous Provisions Act, 195 5. OWNERSHIP PATTERN The Fertilizers and Chemicals Travancore Ltd (FACT), is a Schedule ‘A’ category Government of India enterprise, under the administrative control of department of fertilizers in the Ministry of Chemicals and Fertilizers. FACT was incorporated in 22/09/1943 and in 1960’s the Government of India became the major shareholder. A Board of Directors manage the Organisation.
The chairman of the Board of Directors is the Managing Director. FACt has a full time Finance Director, a Technical Director and a Marketing Director. There are also six part time Directors on the Board, nominees of Central and State Government. Shares of the company are listed at National stock exchange of India (N. S. E) PERFORMANCE OF SHARES AT NSE Month April May June July August September October High (Rs) 33. 85 34. 00 27. 50 30. 90 27. 35 26. 80 26. 15 Low (Rs) 28. 35 27. 50 21. 25 23. 00 21. 70 24. 70 24. 10 10 November December January February March 23. 90 24. 80 26. 85 26. 40 23. 00 Table No: 1 22. 15 21. 75 23. 75 23. 75 20. 55 Source: Annual Report 2006-07
DISTRIBUTION OF SHAREHOLDING Category Government holding Government of India State Government Sub total Non promoter holding Insurance companies Sub total Others Private corporate Bodies Indian public NRI’s or OCB’s Clearing member Sub total Grand total 473597 2187434 14316 19573 2694926 3554771974 0. 14 0. 62 0. 76 100. 00 4026854 4026854 1. 14 1. 14 345465200 2585000 348050200 97. 38 0. 72 98. 10 Number of shares Percentage of shareholding Source: Annual Report 2006-07 Table No: 2 11 6. BRIEF PICTURE OF FACT Name Slogan Established in the year Location Promoters Production units of Fertilizers Caprolactum Fabrication Division FEW Consultancy Division FEDO Marketing Division Head office Area offices Liaison Offices Marketing Territory Fertilizers And Chemicals Travancore Ltd (FACT) Pioneers in progress 1944 Udyogamandal, Cochin, Kerala Government of India
Udyogamandal & Ambalamedu Udyogamandal Palluruthy, cochin Udyogamandal Udyogamandal Trivandrum, Chennai, Bangalore and Hydrabad Trivandrum, Chennai, Mumbai, New Delhi South India: Kerala, TamilNadu, Karnataka, Andhra Pradesh Table No: 3 12 7. DIVISIONS OF F. A. C. T 7. 1. Udyogamandal Division FACT commenced operation at Udyogamandal with the commissioning of a 50,000 tonnes per annum Ammonium Sulphate Plant in 1947. In the decades that followed multi stage expansion programs were undertaken bringing in the latest technologies of the day which were quickly mastered and successfully implemented. Today the division is 40 year old small capacity plants and 10 year old state of the art technology plants.
The latest addition to this unit was a 900 tonnes per day Ammonia Complex set up with an investment of RS 618 crores. FACT Udyogamandal division is certified to ISO 14001, the environmental system standards. 7. 2. Cochin Division FACT Cochin Division was set up in the 1970’s at Ambalamedu, 30 km from Udyogamandal and adjacent to the Cochin Refineries. Phase-I of the division saw the setting up of an integrated Ammonia urea complex utilizing Indian Engineering skills. A large scale complex fertilizer plant of 485,000 TPA was set up as phase-II. Sulphuric acid and Phosphoric acid plant of economy scale were also set up. 7. 3. Petrochemical Division FACT diversified into petrochemicals in 1990 with the production of Caprolactum.
This versatile petrochemical product is the raw material for the manufacture of nylone-6, which finds extensive application in textiles, tyre cord and engineering products. Thanks to its high quality, the product has been acknowledged as among the best in the world. The division is located adjacent to the Udyogamandal division. Co-product Ammonium Sulphate is transferred to the fertilizer plant of Udyogamandal division for processing. 13 7. 4. FACT Engineering & Design Organization (FEDO) FACT Engineering & Design Organization (FEDO) was established in 1965 for utilizing the considerable indigenous plant building expertise accumulated by FACT in its process of nurturing the nascent chemical fertilizer industry.
FEDO is today one of India’s premier project engineering organization, catering to a wide spectrum of industries like petrochemicals, refining, pharmaceuticals, hydrometallurgy etc as well as petroleum storage, environmental engineering, offsite facilities etc. The division undertakes project execution on consultancy and turnkey basis, handling the intricacies of the technology sourcing, design and engineering, hardware procurement and construction with practiced ease. FEDO is ISO 9001 certified. 7. 5. FACT Engineering Works (FEW) Established in 1966, FACT Engineering Works was originally conceived as a unit to fabricate and erect equipment for fertilizer plants.
Over the years, it developed capabilities in the manufacture of Class I Pressure Vessels, Heat Exchangers, Columns, Towers etc. required for the fertilizer, petrochemical and petroleum industries. FEW received ISO 9002 Certification in 1998. 8. BOARD OF DIRECTORS & EXECUTIVE DIRECTOR BOARD OF DIRECTORS Dr. George Sleeba Sri. Asokan A. Sri. Vijay Chhibber Dr. Jivtesh Singh Maini Dr. R. Kannan PhD. I. A. S Chairman & Managing Director Director (Marketing) Part-time Director (Nominee of Govt. of India) Part-time Director (Nominee of Govt. of India) Chief Vigilance Officer 14 EXECUTIVE DIRECTOR Sri. Venkatakrishnan. S Sri. K. V. Balakrishnan Source: Annual report 2006-07 Executive Director (Finance) In Charge Company Secretary 9. MILESTONES OF FACT 2/09/194326/06/19471959-6015/08/1960196221/11/196224/07/196513/04/196607/06/196615/10/196601/10/197127/04/197301/10/197310/11/1976Incorporation Production started UD-1st stage expansion completed FACT came under public sector4 UD-2nd stage expansion completed Govt. of India became major shareholder6 FACT Engineering & Design Organization FACT Engineering works CD-Phase I License issued UD 3rd stage expansion completed UD 4th stage expansion completed CD I, Urea plant commissioned UD 4th stage 150 TPD Ammonium phosphate CD-II, Sulphuric acid plant commissioned 15 10/12/197610/01/197701/04/1979198118/05/198414/09/198406/08/198509/11/198826/07/198913/12/198921/09/199020/12/199001/03/199101/03/199122/03/199825/09/199303/11/199809/11/1998-
CD-II, Phosphoric acid plant commissioned CD-II, NPK trial run started CD-II NPK Commercialized 450 TPD Sulphuric acid plant modified to DCDA process PD-Caprolactum technical collaboration agreement PD-Zero date of ASCC project PD-Caprolactum license issued SO2 Acid plant Commissioned Award for excellence in performance FEW shifted to Palluruthy Oleum production commenced CD-12 MW captive power plant PD-Caprolactum commercial production started UD-New Ammonium Sulphate Commercial production started 900 TPD Ammonia plant commercial production started Foundation stone-900 TPD Ammonia plant 900 TPD Ammonia plant guarantee test run Table No: 4 16 10. PRODUCTS & PRODUCT MIX 10. 1. PRODUCTS 10. 1. 1. Finished products Ammonium Sulphate – Udyogamandal Division Ammonium Phosphate / Complex fertilizers / Factamfos – Udyogamandal Division & Cochin Division Caprolactum – Petrochemical Division Biofertilizers – Research & Development Division 10. 1. 2. Exported Products Caprolactum – Petrochemical Division Ammonium Sulphate – Udyogamandal Division 10. 1. 3. Byproducts Nitric Acid & Soda Ash – Petrochemical Division Gypsum – Udyogamandal Division & Cochin Division Carbon Dioxide Gas – Udyogamandal 10. 1. 4.
Intermediary Products Ammonia – Udyogamandal & Cochin Division Synthesis Gas – Udyogamandal Division Sulphuric Acid – Udyogamandal & Cochin Division Oleum – Udyogamandal Division SO2 Gas – Udyogamandal Division Phosphoric Acid – Udyogamandal & Cochin Division 10. 2. PRODUCT MIX 10. 2. 1. Straight Fertilizers Ammonium Sulphate – Containing 20. 6% N in Ammonical form and 24% sulphur, an important secondary nutrient. Ultraphos – FACT markets imported Rock Phosphate containing 32% P2O5 under the brand name “Ultraphos”. This high analysis fertilizer is 17 found suitable for application especially in Coconut/ Rubber/ Oil Plam/ Tea Plantation. 10. 2. 2.
Complex Fertilizers Factamfos 20:20:0:15 – NPK complex fertilizer – Factamfos or Ammonium Phosphate contains 20% N in ammonical form, 20% P in water soluble form and 15% sulphur; a secondary plant nutrient, which is now attaining great importance in agriculture. Factamfos also can be used for foliar spraying. 10. 2. 3. NPK Mixtures NPK Mixtures – FACT prepares crop specific standard mixtures for all crops in Kerala and also special NPK mixtures for plantation crops like Tea, Coffee, Cardamom, Rubber etc. Rose Mixture – A fertilizer tonic for Roses. Vegetable Mixture – A special blend exclusively prepared for vegetable. Garden Mixture – A special nutrient combination for both flowering and foliage ornamental plants. 10. 2. 4.
Imported/ Traded products – FACT has entered into direct import of MOP and also trading of Imported Urea. Bio fertilizer – FACT produces and markets ‘N’ fixing Bio fertilizers Rhizobium, Azospirillium and ‘P’ solubilising bio fertilizer Phosphobactor. 10. 3. CHEMICALS Anhydrous Ammonia – FACT produces Ammonia of over 99. 96% purity. Sulphuric Acid – FACT has one of the largest plants in Asia and it manufactures Sulphuric acid of 98% purity. Caprolactum – It is the raw material for Nylon-6. The product quality of FACT Caprolactum is among the best available in the world. Nitric Acid and Soda Ash – Small qualities of these are obtained from Caprolactum plant as byproduct. 18
Nitric acid (55%) Capacity Concentration (by weight) Ammonium Nitrate (by weight) Specific gravity at 20 0C Delivery Soda ash (off grade) Capacity Total alkalinity (as Na2CO3) (by wt) Sulphate (as Na2SO4) (by weight) Bulk density (g/L) Delivery : : : : : 4750 TPA 95% (min. ) 1. 5 to 3% 1. 35 to 1. 50 Ex-factory – bulk : : : : : 3800 TPA 55% (min. ) 1% (max. ) 1. 339 Ex-factory – tanker load 19 CMD DIR FINANCE DIR TECH C. V. O DIR MARKETING GM MARKETING GM HR GM (CP & PC) GM MATERIAL GM (CD) GM (UC) GM (F&F) JGM (UD) JGM (PD) CM SALE CM MAINTENANCE CM DISTRUBUTION CM AGRONOMY CM PRODUCTION CM FEDO CM FEW CM PURCHASE KL TN AP KAR CSP CME MGR STORES MGR QUALITY MGR SAFETY MGR R&D MGR TRAFFIC MGR STORES COMPANY SECRETARY TRAFFIC AMMONIUM SULPHATE AMMONIUM PHOSPHATE PHOSPHORIC ACID SULPHURIC ACID AMMONIA PE PE PE ABBREVATIONS OF ORGANISATION CHART DIRTECHC. V. OC. PP. CCDUCF & FJGMUDPDCMC. S. PC. M. EMGRP.
EDIRECTOR TECHNICAL CHIEF VIGILANCE OFFICER CORPORATE PLANING PRODUCTION COORDINATION COCHIN DIVISION UDYOGAMANDAL COMPLEX FEDO & FEW JUNIOR GENERAL MANAGER UDYOGAMANDAL DIVISION PETROCHEMICAL DIVISION CHIEF MANAGER CHIEF SUPERINTENDANT PRODUCTION CHIEF MECHANICAL ENGINEER MANAGER PLANT ENGINEER 20 Chapter 4 Functional Departments FINANCE DEPARTMENT 1. OBJECTIVES forecast its requirement in the future and plan accordingly and to check for deviation. 1. 2. Report the financial performance of the company to Management, stakeholders & and to comply with the Govt. rules and regulations 1. 1. To Manage & account for the financial resource of the Organization, to 2. ORGANISATIONAL CHART OF FINANCE DEPARTMENT Director (Finance) DGM (IA) DGM (Finance) CM (Bills & Mat) CM (Sales) CM (Costing, MIS, Budget) CM (Gen A/c) Mgr (IA) Mgr (cash, Bank & Payroll) Mgr (Tax & Duties) Chart no: 1 . FUNCTIONS OF FINANCE DEPARTMENT Some of the main functions are Payroll, billing, Preparation of journal, ledger and trial balance, Banking, Financial resources & materials accounting, Budget preparation, Cost accounting, Auditing, Preparation of financial statements & reports, Corporate Planning. 21 4. PROCESS OF FINANCE DEPARTMENT Finance department in FACT is divided into five sections for carrying out its process. They are: 1. 2. 3. 4. 5. Bills & Materials Sales Costing, MIS, Budget Cash, bank & Payroll and Tax & duties 4. 1. BILLS & MATERIALS-The main functions are Stores accounting and Receiving, Dispatch and holding of bills 4. 1. 1.
Bills section Bills section deals with the contract account for execution of civil works and other construction/erection, maintenance and services. It includes: 1. 2. 3. 4. 5. 6. 7. Sale of tender form Remittance of EMD Remittance of security deposit Issue of materials to the extractors Receipts to certified bill in the specified format Security on running account bills and final bill Statutory procedures and formalities in works contract 4. 1. 2. Stores accounting Main functions of stores accounting are: 1. 2. 3. 4. 5. 6. Receipts of stores Issue of stores Returns of stores Value adjustments Reconciliation with control accounts Unconsumed materials lying at site at the close of financial year 22 4. 2. SALES ACCOUNTING Some of the functions are 1. 2. 3. 4.
Accountability for selling and distribution of products & byproducts Recording the transaction Transfer of information from depots to HO Compilation of reports 4. 3. THE COSTING, MIS AND BUDGET SECTION is concerned with ascertaining the cost of production, providing information, helping to prepare a budget, forecasting the performance and finally making a plan. 4. 3. 1. Cost accounting Identification of the cost centre – Direct expenses is recorded to the respective cost centre. Indirect expenses are separately booked and allocated at the end of the year. Cost sheet is prepared in two ways. The item in the cost sheet is compiled on the basis of process of the products or on the basis of elements of the product.
Cost centre in Ugyogamandal Division Process water, DM water, Steam, CPP, Ammonia, Sulphuric Acid, So2/ Oleum, Phosphoric acid, Pollution Control, Ammonium Sulphate, Ammonium Phosphate Classification of cost Variable cost-Raw Materials, Intermediate products, Consumable, Products, Utilities, Packing materials, Pollution control expenses. Fixed cost-Fixed cost of a product mainly consists of conversion cost of the product of Salaries and wages (Direct, Indirect, Administration & Maintenance),Staff welfare expenses, Insurance, Plant maintenance, Depreciation, Factory overheads, Administrative overheads, Head office overheads, Gratuity and bonus, Interest on term loans and working capital. 23 4. 3. 2.
MIS (Management information system) To provide the management with vital facts which affects the efficient running of the business for decision making on planning, organizing and controlling the major activities of the organization and initiating suitable action. MIS Briefly consists of: 1. 2. 3. 4. 5. 6. Divisional Reports- Two monthly reports for each division – one for the finance department and another for the GM’s office P & L Account-Statement and its analysis Production performance of the division Inventory position Cost of production-Actual and budget for the month Specific information important for the management-Major projects, man-hour utilisation etc. 4. 3. 3.
Budgeting Two types of budget-Revenue and Capital budget Two types of estimates- Budget estimate and revised estimate Revenue Budget Every year early in August detailed production targets and norms for consumption of materials for remaining portion of the current year and also for the next financial year are prepared by the head of Divisions. Capital Expenditure Shows all items of capital expenditure to be undertaken during the budget period like expenditure on acquisition of new assets like machinery, furniture and office equipments which have reasonable life; expansion of existing facilities and modification and improvements to plant and machinery resulting in i) increase in capacity ii) Increase in useful life iii) Improvement in quality of output and iv) reduction in cost of output is treated as capital expenditure. 24
Budget revision While preparing the next year’s revenue budget, the revenue budget for the current year is revised, based on the actuals from April to September and the anticipated trend for the remaining period. Monthly report On closing of the accounts of the months a monthly P & L account is prepared for each Division and the same is send it to the Division Head, FD and CMD. This report would give a comparison of the actuals for every month against budgeted performance. 4. 4. THE CASH, BANK AND PAYROLL SECTION is concerned more with the day to day activities and less of future forecasting & planning. 4. 4. 1. Cash and Bank Accounts Section The various functions include: 1. 2. 3. 4. 5. 6. 7. 8. 9.
Receipt of cash, cheques, bank drafts, and postal money orders Payment of cash, cheques, bank drafts, and letters of authority Handling of bank deposits/withdrawals, custody of cash and inter unit transfer of funds Maintenance of petty cash books and cash books Reconciliation of bank accounts Security arrangement of cash handling Safe custody of valuable documents Cash interests calculation Any other duties assigned by authorized officer 4. 4. 2. Payroll Section Functions of the section are: 1. 2. 3. Preparation and disbursement of salaries and wages to managerial and non-managerial employees Effect various recoveries through payroll and remit the same to concerned agencies Processing of various personal payments advances 25 4.
Keeps books of account for the above transaction 4. 5. TAX & DUTIES SECTION is concerned with calculation & payment of various taxes and duties to the Government. 5. SOME KEY INFORMATION Insurance schemes have undergone a drastic change in FACT due shortage in working capital and lack of profit. From the earlier view of insuring everything under all, FACT prefers selective coverage. E. g. Fire insurance is done only in departments or plants prone to fire. Deciding on insurance scheme is not the prerogative of finance department alone. The engineering department has to approve the plan and after the department wise approval, the corporate level approval has to be obtained.
The various insurance schemes are: 1. 2. 3. 4. 5. 6. 7. 8. 9. Fire Insurance. Machine break down insurance. Electronic equipment insurance. Fidelity insurance and cash in transaction/cash at safe/payroll insurance. Insurance for vehicles and heavy equipment. Open transit risk for all inland and all foreign purchases. Loss on profit insurance. Personal accident insurance. Storage insurance. 5. 1. Insurance schemes 10. Insurance for stock of finished goods, raw materials, industrial stores. 5. 2. Corporate plan Corporate plan is prepared by taking estimates and future projections for 5 years. The corporate plan is revised every year by deleting one year in the 26 eginning and adding one year at the end, keeping the total budget period as 5 years. This plan projects the company’s position for the next 5 years. 5. 3. Foreign Currency Management A Committee is formed to look into and take decisions on a periodic basis relating to the foreign currency. The committee has been constituted with chief of internal audit as chairman and members being the chief of finance, head of Cochin division, petrochemical division and head office. 5. 4. Working Capital management The Working capital is essential for any Organization to meet its day to day requirements. Working capital may be specified as the firm’s current assets over current liabilities.
As a large scale company, FACT also requires sufficient working capital to meet its daily requirements. FACT uses letter of credit and bank guarantee mainly for the purpose of financing the import of raw material. If it has to avail more than the assigned quota the finance department will have to take permission of Board of Directors. FACT approaches different banks to meet its working capital requirement and FACT maintains a consortium of banks for the same. They are: BANKERS SUPPORTING FACT: 1. 2. 3. 4. 5. 6. 7. State Bank of Travancore State Bank of Hyderabad State Bank of India Bank of Baroda Bank of India Canara Bank Dena Bank At present FACT has availed cash credit facility up to an amount of Rs. 188 crores and letter of credit up to Rs. 00 crores and bank guarantee up to limit of Rs. 15 crores. 27 5. 5. Auditing Various types of audits in FACT are: Statutory audit, Government audit, Cost audit, Income tax audit, Sales tax audit and Internal audit. Internal Audit Section Some of the main functions are 1. 2. 3. 4. 5. Operational/ systems/ management audit Proprietary audit and audit of sanctions Routine audit Surprise verification of physical stocks Special audits and studies 6. CHALLENGES OF FINANCE DEPARTMENT Due to which 6. 1. 1. Upgradation of plants & machinery is not possible 6. 1. 2. High quality equipment cannot be purchased. For the same reason, FACT goes for the lowest quoting bid. 6. 1. 3.
Cannot maintain adequate stock of fertilizer for combating shortage 6. 1. 4. Lack of flexibility in production 6. 1. Working capital crunch 6. 2. Low availability of credit due to nonpayment of loans & security to keep for loans. Due to which the organization: 6. 2. 1. Cannot grow and therefore stagnates 6. 2. 2. Cannot compete with other fertilizer companies due to lack of fund 28 MATERIALS DEPARTMENT 1. OBJECTIVES 1. 2. To control and account for the materials in the organisation. To ensure the availability of materials and its quality. 2. ORGANISATIONAL STRUCTURE OF MATERIALS DEPARTMENT GM Material CM Purchase RM Dy. CM Raw Materials Mgr E. S. S Mgr F. F. T.
S Mgr Stores Mgr Traffic Chart no: 2 3. FUNCTIONS OF MATERIALS DEPARTMENT include: 1. 2. 3. 4. 5. 6. 7. 8. Importing raw materials under the approval of safe purchase committee constituted by the Board of Directors Maintaining adequate raw materials needed for production Procurement of Machineries, Intermediaries, equipment & spares Inspection of Materials Transportation of Raw materials, Products and Byproducts Accountability for materials Purchase of stationary, and other Equipment needed by individual department Vendor Development 29 This department is divided into 3 Sub Departments. They are: 1. 2. 3. Purchase Stores Traffic (Logistics) 3. 1. PURCHASE DEPARTMENT
The purchase procedure covers the following areas of procurement of goods and services for the company. 1. 2. 3. 4. Capital items (For project and other purposes). Equipment and spares. Raw material & Intermediary materials Package items involving design, supply, erection and commissioning. Purchase Department is again divided into 3 sections. They are: 1. 2. 3. Raw materials Equipment spares and supplies FEDO & FEW Transport, Contracts and Stores 3. 1. 1. RAW MATERIALS SECTION Objectives 1. 2. 3. Purchase of materials for production, from India and abroad Make available adequate amount of material at the right time Follow a fair & transparent procedure in the above activities Functions 1. 2. 3. 4. 5.
Importing raw materials under the approval of safe purchase committee constituted by the Board of Directors Procurement of Materials needed for production Determination of quantity of materials required Issue of Purchase order Pre & post dispatch Inspections 30 6. 7. Insurance Payment Raw materials are Sulphur, Rock phosphate, Furnace oil, Naphtha, Ammonia, Benzene, Phosphoric Acid, Caustic soda and Sulpuric Acid. RAW MATERIAL PROCUREMENT PROCESS Purchase Requisition Vendor Development Bid evaluation & Financial Concurrence Entering into Contracts Purchase order Raw material requirement Raw material Transporting Raw Materials Department Raw material Storing Payment Inspections Production Plan Chart no: 3 CHALLENGES TO RAW MATERIAL PROCUREMENT 1. 2. 3. 4. Scarcity of Raw materials Sky rocketing prices Shipping Problems Working Capital crunch 3. 1. 2. EQUIPMENT & SPARES SECTION Objectives 1. 2. 3.
Purchase of Equipment & spares from India or abroad Make available spares at the right time Follow a fair & transparent procedure in the above activities 31 Equipment & Spares Include 1. 2. 3. Capital items like heavy machinery or plant (For project and other purposes) Equipment and spares Package items involving design, supply, erection and commissioning Functions 1. 2. 3. 4. 5. 6. 7. 8. 9. Importing materials under the approval of safe purchase committee constituted by the Board of Directors Determination of actual requirement by checking with stores, technical department, management and giving specifications Vendor Development Bid evaluation & financial Concurrences Entering into Contracts Issue of Purchase order for equipment & spares Inspections of materials and stores Insurance Payment
EQUIPMENT & SPARES PROCUREMENT PROCESS The User departments give their requirement which is validated by the Technical department and is finally approved by the management for issue of purchase requisition. The purchase requisition is checked with the stores stock. If the store already has the item then it is supplied to the concerned department; otherwise items are procured with the help of a vendor. In case of specific goods such as tube light, bulb and fan vendor are already specified by the technical department and approved by the management. Whenever the user department needs them the store department moves forward to procure them. The process can be diagrammatically as follows: 32 User Department Requirement Raw material Procurement Payment Inspections Validating Requirement Despatch Purchase Requisition
Material Procurement Purchase order Entering into Contracts Bid evaluation & Financial Concurrence YES Available at stores NO Vendor Development Chart no: 4 Purchase order Detailed purchase order is issued soon after the letter of intent and normally within 30 days of issue of letter of intent. Inspection & Monitoring The materials department performs expediting of orders. In certain cases other agencies appointed for the purpose. Materials department continuously monitors vendor’s performance to ensure timely delivery and periodic status reports is made available to all concerned departments. Inspection may be carried out by FACT or by third party inspection agencies, epending on the nature of items and facilities available. Department authorized for the inspection, receives the dispatch document. The department responsible for the clearance maintains a register for dispatch documents and updates entries on a day-to-day basis. Payment of freight/certification of freight bills It is the responsibility of the department head entrusted with clearance of goods. All goods cleared from the carrier are forwarded to the receiving 33 section of the stores department or department authorized for this purpose. In case of bulk materials like stationeries, the consuming department directly receives raw materials/intermediates the goods.
Materials received against turnkey jobs awarded to agencies responsible for supply, transport, storage and erection are not taken into stock by stores department. Rejection/Damage of Materials Rejected consignment is kept separate and the stores/receiving department send a first information report to the supplier with the copy to finance and purchase department. In all cases of rejection / shortage/ damage other than for reasons attributable to supplier, the stores department takes up the matter with the insurers under advice to finance department. Follow up of the claims and settlement with insurer is done by finance department. VENDOR DEVELOPMENT
Vendor Pre-qualification Pre qualified vendor list shall be maintained by materials department. The vendor list comprise of all pre-qualified vendors under each category stating clearly the respective capability in terms of volume of work, specification, level of technology, etc with rating of the vendors. Addition/deletion to vendor’s lists is made on a continuous basis on the above criteria. There are three types of Purchase Requisition (PR) as follows: 1. 2. 3. For projects and major capital equipment For stores, including stationary and office supplies, spares For services 34 Inviting Bid Bids are invited by giving Advertisements in news paper, magazines, media, website etc. The Purchase Manager invites the bid.
Normally, 30 days from the date of enquiry is given for submission of bids in limited tenders. For open tenders, 30 days from the date of appearance of advertisement is prescribed. Receipt and opening of bids Bids are opened by officers from finance, administration and purchase Department. Bidders representatives read the Bid which consists of Prices, taxes and duties, payment terms, delivery period, performance guarantee and brief description whichever is relevant. Bid evaluation and financial concurrence The technical part is forwarded to the indenting department by the purchase department as soon as the bid opening formalities have been completed. The steps involved in bid evaluation are: 1. 2. 3.
Technical evaluation by indenter in consultation with other technical experts, where necessary Commercial evaluation by the purchase department in consultation with other concerned departments Review and approval of technical and commercial evaluation by the competent authority to determine the bids, which are technically and commercially suitable 4. Comparison of prices and financial evaluation by purchase department in consultation with other concerned departments Financial Concurrence For purchases above Rs. 25000, the purchase recommendation is forwarded to finance department. Sanctioning authority is formed as per the delegation of powers. After financial concurrence, the proposal is forwarded to the sanctioning authority through purchase order. 35 CHALLENGES OF EQUIPMENT & SPARE SECTION 1. 2. Approval of Bids on the basis of lowest quotation where sometimes quality is compromised Low working capital to maintain sufficient stock of goods 3. 1. 3.
FEDO & FEW, Transportation & Stores (FFTS) Section The Functions of the section are: 1. 2. 3. 4. Project related procurement for FEDO & FEW In-house procurement for FEDO & FEW Storage of Raw materials Raw material transportation & Technical assistance for handling 3. 2. STORES DEPARTMENT Objectives 1. 2. 3. 4. Collection and receiving of materials purchased Inventory Management & Control Issuing materials to user departments Disposal of surplus and obsolete materials Functions 1. 2. 3. 4. 5. Receiving Holding Inventory Control Issuing Disposal PROCESS FLOW IN STORES DEPARTMENT Receiving Inspecting Holding Inventory Management Chart no: 5 36 Disposal
Issue Codification and classification All stocks items bears a 9 digit code prepared on a significant numbering system. First digit is allocation for UD, CD and PD. Second to sixth digit classifies materials to mechanical, electrical and general items. The materials received are classified and arranged into 6 compartments-A, B, C, D, E and F, each consisting of 20 shelves numbered from 1 to 20. According to the above classification, the shelves are allocated for each material. Procedure followed When a material is received, the stores officer inspects the items and is approved by the stores manger for holding in the stores after verification.
The store in charge allocates materials to the specified shelf and records the data in the Bin card. The store officer updates the data in the MIS. And for issue of materials, the requirements forwarded by the departments is verified and approved by the manager for dispatch. The issue is and recorded in the MIS. However, for disposal the list of items to be disposed is forwarded to the management by the stores. Approved items are disposed or sold for scrap value and recorded in the MIS. Store is responsible for all activities for ensuring inventory control, commissioning of codes and disposal of scrap. Materials move into store only after inspection conducted by store employees.
Technical department help is sort wherever required. Obsolete items are disposed. MIS The stores maintain all its data in the computer and are updated every time movement of materials takes place. The MIS gives the current status of inventory and helps in the speedy replenishment of stock when required. The MIS used is the OIIS (online integrated system). Items in the stores are known to the management and other departments which need that information. During the stock verification, the figures in the MIS and physical stock are tallied. 37 Stock verification Stock verification is done by physical stock verification Team (PSVT) are attached to finance department. A’ and ‘B’ items are verified once in a year and ‘C’ items once in 2 years. For those which are not covered under ABC analysis XYZ is taken and frequency of verification is once in a year for ‘X’ & ‘Y’ Items and once in 2 years for ‘Z’ items. Along with this officer, stock holding in-charge verifies stock daily and submits the report to PSVT and when they come for inspection, the deviations in the report are clarified. INVENTORY ANALYSIS DONE IN FACT A-B-C Analysis ABC analysis is prepared by the computer centre based on the value limits of: ‘A’ Items > Rs 50,000, ‘B’ Items < Rs 50,000 and > 5,000 and ‘C’ Items < Rs 5,000. more control. F-S-N Analysis Here, analysis is based on the consumption rate.
Items moved within the last 5 years may be classified as Fast moving(F), and those moved between last 5 to 10 years are slow moving(S) and those not moved within last 10 years are non-moving(N). The last two groups are reviewed further to decide on disposal. X-Y-Z Analysis This analysis is done on the basis of stock in hand at the end of the financial year. 80% value of total inventory is labeled as X, 15% value of total inventory as Y, 5% value of total inventory as Z. For spares V-E-D Analysis – Vital (V), Essential (E), and Desirable (D) Vital are those spares whose non-availability results in very high production down-time loss and/or entails very high cost due to emergency purchase. Essential spares are those whose non-availability is expected to cause moderate production down-time. Desirable spares are those whose 38
Computer centre prepares the list on basis of annual consumption. Accordingly, items ‘A’ are given more attention and require non-availability does not resulting in any significant production down time loss. The list is reviewed once in 2 years. CHALLENGES FOR STORES 1. 2. Maintenance due to shortage of labour Low stock of goods maintained due to shortage of Funds 3. 3. TRAFFIC DEPARTMENT Objectives 1. 2. To ensure Loading and despatch of products To ensure right quantity and right product to right vehicle and to the right destination Functions 1. 2. 3. Loading Arrangement Movement Traffic department is responsible for the dispatch of products to various markets.
They maintain contacts with market department and production departments. The dispatch section of marketing division gives the demand of various depots in each state to the traffic department. Based on this, schedules are formed and product is dispatched. Process flow in traffic department The marketing division selects the depots where fertilizer has to be transported and gives the dispatch information to the traffic department. The traffic department selects the vendor for transport. Depots are allotted to vendors by the department. 39 Marketing division Depot Transportation Despatch information MDA Issue Traffic department Signed MDA Weighing Payment
Vendor (Transport) Vehicle in slip issue Loading Chart no: 6 The vendors are issued a vehicle ‘in’ slip which is a slip for the vehicle to go into the loading site in which the destination, vehicle no, product or byproduct to be loaded are recorded. Before loading the empty weight of the vehicle is taken and after the loading the weight with the load is taken by the C. I. S. F Security men. If deviation more than the specified limit is noticed, the goods are either unloaded or reloaded. A copy of MDA (Material Dispatch Advice) is given to the lorry driver for dispatching to the concerned depot. When the goods arrive at the depot message is passed to the department.
And the signed copy of MDA is returned to the department by the Vendors so as to enable him to collect payment. If the load dispatch is found damaged, loss in quantity noticed, penalty is charged from the vendor. FACT has permanent workers for loading activity. The department engages contracts to transport finished products from the plants to different depots or to the customers. Packing the materials in the bag is also the responsibility of the department. The product is bagged in HTPG bags. The product is transported by, trucks and railway wagons. There is a private railway siding for FACT at Kalamassery and also at Cochin Division. A full 40 rail wagon takes 2200 tones of product.
A godown at Kalamassery stores fertilizer. Lorries and trucks for the transportation are chosen based on the tender. Major Transport Contracts A. S. R. TB. TCOSMOE. L. FL. R. LJ & PM. R. DP. K. AP & PS. K. L. S S. P. MU. RA. S. R transport Bharat Transport COSMO Carriers Expert Liner Enterprise Lucky Road line J & P Enterprise M. R. D Transport P. K Aboobacker & Co P & P Logistics Sree Krishna Lorry Service S. P Muthuraman Union Road ways Limited Optimisation Techniques 1. 2. Transportation by railway 14 wagons of train booked at a time helps reduction of cost. Outsourcing of Logistics Certain issues like labour, vehicle repair can be overcome.
This helps in preserving the core competence of the department. CHALLENGES OF TRAFFIC DEPARTMENT 1. 2. 3. Lack of fleet management system Labour issues Vendors Performance & Review 41 PRODUCTION PLANNING DEPARTMENT 1. OBJECTIVES 1. 2. 3. Production planning Co-ordination of production function Co-ordination with Maintenance and Production department. 2. ORGANISATIONAL CHART OF PRODUCTION DEPARTMENT JGM (UD) CM (Production) MAINTENANCE Production C. M. E C. S. P Traffic Ammonium Ammonium Sulphate Ammonium Phosphate Sulphuric Acid Phosphoric Acid Chart no: 7 3. FUNCTIONS OF PRODUCTION DEPARTMENT 1. 2. 3. 4. 5. Planning daily production according to annual target Submitting Plan to govt. nd getting approval Monitoring actual production & checking any deviation Making revision plans according to actual production Maintenance of plants 42 4. PRODUCTION PROCESS Start here Production targets Plant Maintenance Approval of production plan* Checking Deviations from plan Raw Material Availability (RM Dept. ) Monitoring production Chart no: 8 Annual production targets for the next year are prepared based on installed production capacity of the plant and production data for the previous year. Necessary feedback is also taken from marketing department while fixing the production targets. The production targets thus fixed are presented to the corporate office for review and approval by CMD and the plant managers are informed of the same.
The production and consumption ratios for the previous years are duly considered. All the data are compiled to form the production budget. A copy of the production budget is sent to the finance department for preparing finance budget. The production plan and budget are then presented to the govt. for approval. The production budget then acts as the basis for further performance monitoring. Based on the production plan, purchase department initiates action for procuring raw materials. In the event of any change in the annual production plan becoming necessary, the corresponding change in the raw material, requirements are intimated to the purchase department.
Production planning department receives data from all the plant and other interfacing departments and compiles them. Various MIS reports consist of 43 daily production reports, monthly reports and yearly reports they are sent to the management. 5. FEATURES OF PRODUCTION PLAN 1. 2. 3. 4. 5. Production plan is based on the idea of producing the maximum with available raw material and production capacity of plant. Day- to-day production is planned according to raw material availability. Daily production plan is prepared and likewise annual plan is also prepared. Day wise production plan is monitored. Production plan is always flexible. 6. PLANTS AT UDYOGAMANDAL DIVISION 1. 2. 3. 4.
Ammonia plant Ammonium Sulphate plant Ammonium Phosphate plant/ FACTAMFOS Acid Plant 6. 1. Ammonia plant The capacity of the Ammonia plant is 900 TPD. The investment for the plant was about Rs. 618 Crores. The plant has economy scale size and employs state of Art technology for the process engineering and control systems. 6. 2. Acid Plants 6. 2. 1. Sulphuric acid plant The Sulphuric acid plant is designed to produce 1000 TPD of monohydrate. The plant is based on the double conversion, double absorption process and was designed by FEDO in collaboration with Davy power gas Plant. 44 6. 2. 2. Phosphoric acid plant The Phosphoric acid plant is designed to produce 360 TPD of P205 through the dehydrate route.
The plant designed by FEDO in collaboration with Messer society de prayon of Belgium employs the prayon convertible process to give a product having strength of 30% P205. A separate concentration section is provided to concentrate this weak acid to strong acid having strength of 45% P205. 6. 3. Ammonium phosphate Plant The complex fertilizer plant was designed to produce quantities of N P K fertilizers of various grades. FACTAMFOS Consists of NPK and S in the ratio 20:20:0:13. 7. PRODUCTS 1. 2. 3. 4. Ammonium Phosphate/ FACTAMFOS Ammonium Sulphate FACT urea Muriate of potash Products NP 20:20 (FACTAMFOS) Ammonium Sulphate Sulphuric Acid Phosphoric Acid
TPD (in MT) 450 667 1150 100 TPA (in MT) 1,60,000 2,10,000 3,38,570 18,000 TPD-Tonnes per day TPA-Tonnes per annum Table No: 5 45 8. OPTIMIZATION OF PRODUCTION The company is making all efforts to optimize production and reduce losses. Steps are being taken to enhance the procurement of sulphuric acid as well as phosphoric acid. Steps are also being taken to explore the possibility to import sulphuric acid. 9. ADHERENCE TO ISO IMPLEMENTATION Do what you write or write what you do 1. 2. FACT has a well defined procedure for production. So according to ISO implementation it writes whatever it does. Production standards are also kept as per ISO standards. 0. CHALLENGES OF PRODUCTION DEPARTMENT 1. 2. Raw material scarcity is upsetting the entire production plant. Working capital shortage is affecting the smooth functioning. Around the globe, 2008 has witnessed acute shortage of raw materials and various natural resources affecting various industries badly. Sulphur prices over the year have gone up 10 times and 5 times in case of naphtha. However, LNG can be substituted for naphtha which again is witnessing an acute shortage. Some raw materials like Rock phosphate and Sulphur are being imported, which again invites shipping problems for FACT being its demand for raw materials is in low quantity.
In addition Fertilizer industry is being looked upon as a sick industry, even from the government side. The subsidy is not given by analyzing the real situation. 46 MAKETING DEPARTMENT 1. GENERAL INFORMATION Fertilizer Marketing is different from other product marketing. Fertilizer has a high demand. Therefore, it can be termed as a seller’s market. However, its demand is seasonal and is very much dependent on the Monsoon. Market penetration is very difficult, and once a company captures a market its brand is substituted for the product. The brand image plays an important role. The whole market is also dependent on farmer’s awareness about fertilizers.
All of these call for a planned marketing effort and huge requirement of funds to meet the seasonal demand of fertilizer. 2. OBJECTIVES 2. 1. Monitoring of sales & distribution 2. 2. Study & respond adequately to the information from market research department and from field establishment 2. 3. Liaison with bulk buyers, central and state government officials and officials of fertilizers association of India 3. ORGANISATIONAL CHART OF MARKETING DEPARTMENT DIR (Marketing) GM (Marketing) CM Sales CM Distribution C. Ag. Agronomy AM (KL) AM (TN) AM (KAR) AM (AP) C. Ag-Chief Agronomist AM-Area Manager Chart no: 9 47 4. FUNCTIONS OF MARKETING DEPARTMENT 1. 2. 3. 4. 5. 6. 7. Sales Market Research Agronomy Preparation of sales eport Processing and sending replies to audit queries at the divisional level Liaison with bulk buyers, central and state government officials and officials of fertilizers association of India Sales force motivation through internal and external training programmes The marketing department consists of various sub departments organized on the basis of their function. They are: 1. 2. 3. Sales Department Distribution Department Agronomy 4. 1. SALES DEPARTMENT The sales department is headed by a Chief Manager who is responsible for sales coordination of function across various depots, conduct an effective market research for analyzing market and calculating the demand and finally promote the sales of FACT products. FACT today holds major market share in Kerala, 11% in Karnataka and 6% in other states. 4. . 1. Main products 1. 2. 3. 4. FACTAMFOS/Ammonium Phosphate Ammonium Sulphate FACT Urea Muriate of potash 48 4. 1. 2. Sales Promotion Tools of FACT FACT over the years have innovated various techniques of sales promotion. Many of them are recognized as effective tools of promotion by national and international agencies. These techniques are mainly grouped into two: 1. 2. Mass Communication Techniques Personal Contact Method Mass Communication Techniques This