organisational study in fact, ernakulam
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CHAPTER 1
INTRODUCTION
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INTRODUCTION TO THE STUDY
All organisations are required to handle multiple problems and procedures. The intention of
an organisation is to overcome these hurdles. Different techniques are being employed by
every organisation to accomplish a favourable organisation climate. According to Oliver
Sheldon, Organisation is the process of combining the work which individuals or group have
to perform with the facility necessary for its execution, that the duties so performed provide
the best channels for the efficient, systematic, positive and coordinating application of
available effort.
The study is to know the functions of the organisation. It is conducted in The Fertilisers and
Chemicals Travancore Ltd. The company Thepopularly 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.
The study mainly focuses on the industry, organisation and departments. The main purpose of
the study is to understand the history of the company, functioning of the organisation and its
structure etc. This study helps to get a full picture of the organisation. FACT is one of the
leading manufacturers of Fertilisers, Chemicals, and Oil & Gas Petrochemicals industries in
southern states.
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CHAPTER 2
DESIGN OF STUDY
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DESIGN OF THE STUDY
OBJECTIVES OF THE STUDY
The organizational study was carried out at FACT Ltd. Udyogamandalam to achieve the following
specific objectives:-
To understand the organizational framework & its functioning.
To gain knowledge about different departments of the organization andthe functions.
To study the interdependence of different departments..
To make a SLOT analysis of the organization
SCOPE OF THE STUDY
The study focuses on the overall structure of the organization. In this study, overall
functioning of the various departments of the firm and also their products are analysed. This
study would prove a base for future plans and it would help to get a full picture of the
organisation and the history of the company.
METHODOLOGY
1. PRIMARY DATA
Primary data were collected from discussions with the Managerial head of the various
departments.
2. SECONDARY DATA
Secondary data were obtained from the annual report, from the website and other
concerned books
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LIMITATIONS OF THE STUDY
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.
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CHAPTER 3
INDUSTRY PROFILE
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INDUSTRY PROFILE
Fertiliser is one of the key inputs in crop production. India is the second largest consumer of
fertilizers in the world next only to China. The Indian fertilizer companies produced around
37.6 million tones of fertilizers during the year 2012-13.The Indian fertilizer industry is most
efficient and bench marked at par with world plants. However, the fertiliser industry in India
is facing several challenges. Non-availability of sufficient funds and lack of new investment
in the sector is the most important challenge being faced by this industry. No new fertilizer
plants have been set up in India in the last 15 years. The existing plants have been
continuously investing to improve efficiency and increasing capacity through revamp.
Availability of natural gas and other raw materials such as Phosphoric acid is another
challenge being faced by the fertilizer industry. Due to non-availability of domestic Natural
Gas the industry resorts to import of gas. The high cost of imported gas is not affordable to
the industry. The Government of India is encouraging setting up of joint ventures in overseas
to ensure regular supply of raw materials and import of fertilizers. Attainment of self
sufficiency in food grain is vital for the food security of the nation. Agricultural
intensification, one of the basic strategies for enhanced food production is depended on
increased flows of plant nutrients to the crops for securing high yields. Fertiliser industry is
working hard to ensure food security in the country on a sustainable basis. For increasing the
average yield of crop, balanced use of fertilizers need to be given more emphasis. Sustainable
development of fertilizer industry is vital for the food security of the nation and the
overall economic growth of India.
Indian Agriculture is one of the most important sector in the economy of the country.
Agriculture in itself contributes more than 18.5 percent of the Gross Domestic Product of the
country and around 60 percent people of India are dependent on this sector.
The monsoon also has a very significant impact on the Indian agriculture. Because of the
shortage of irrigation system in Indian agriculture most of the farmers depend highly on
rainfalls which is uncertain. The amount of rain determines the nature of the crops and also
the production. Indian agriculture in the majority of the state is looked after by the State
Governments rather than the Central Government. Indian farmers dont get a sufficient
supply of chemical fertilizer for agriculture. The main objective of the fertilizer industry is to
ensure the supply of primary and secondary nutrients in the required quantities.
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India is primarily an agriculture based economy. The agricultural sector and its other
associated spheres provide employment to a large section of the country's population and
contribute about 25% to the GDP.
The Indian Fertilizer Industry is one of the allied sectors of the agricultural sphere. India has
emerged as the third largest producer of nitrogenous fertilizers. The adoption of back to back
Five Year plans has paved the way for self sufficiency in the production of food grains. In
fact production has gone up to an extent that there is scope for the export of food grains. This
surplus has been facilitated by the use of chemical fertilizers.
The Fertilizer Association of India (FAI) has set up a model which is based on several factors
that include fertilizer prices, high yielding areas, irrigated areas, fertilizer nutrient prices and
previous years' fertilizer consumption. An estimate of the demand and supply till the end of
the 11th five year plan is given in the chart below:
Year Supply
N+P
Demand
N+P+K
Demand
Supply
Gap
N+P+K
Demand
of K
2007-08 16950 23125 8835 2660
2008-09 17585 24085 9305 2805
2009-10 18595 25035 9405 2965
2010-11 19912 25960 9178 3130
2011-12 19965 26900 10235 3300
[ N = Nitrogen , P = Phosphate, K = Potassium ]
Today, India stands as the third largest fertilizer consumer and producer of the world. It has
been observed that the subsidies on Indian fertilizer have been rising at a constant rate. This
is due to the rise in the cost of production and the inability of the government to raise the
maximum retail price of the fertilizers.
The increase in the production of fertilizers and its consumption acts as a major contributor to
overall agricultural development.
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CHAPTER 4
COMPANY PROFILE
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COMPANY PROFILE
History of the company
Mans history is replete with revolutions, responsible for moulding 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
TRAVANCORELIMITED-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
Indias first large-scale fertilizer plant was set up in 1944 at Udyogamandalon 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 saltswere not available in the state. But this deficiency was overcome by adopting a revolutionary
method known as the FIREWOOD GASIFICATION PROCESS.
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
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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 todays
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 by-product, 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. 3crores. 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. 2crores 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 August1960. On 21st
November 1962, the Government of India became the major shareholder. The 2nd stage of
expansion of FACT was completed in 1962.
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.
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Technical Divisions
FACT Engineering and Design Organization (FEDO) was established in1965 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 FACTs
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THE VISION
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
THE MISSION
To function as a dependable and globally competitive producer of fertilizerand 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
OBJECTIVES OF THE COMPANY
The main objectives of the company are:-
To be of service to the nation and to contribute effectively to its economic 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.
To sustain and improve its pioneering role in the development of indigenous engineering
and technology through research and development. To improve productivity and maintain high standards of quality and adopt effective
measures for controlling cost and minimizing dependence on imports.
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.
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 alliedactivities.
To develop, train and maintain a team of motivated and disciplined personnel with
required skills and abilities, and to encourageinnovation and to create a condition for
their functioning and career development so as to improve their overall quality of life.
To project a favourable 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.
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To continuously plan its future operations for sustained growth and stability for
meeting the needs of the country.
LEGAL FRAME WORK OF THE COMPANYFACT is a public limited company registered under the Companies act1956. As amajor industrial
Organisation, FACT complies with all laws and statutes which govern industries in general.1.
Factories Act, 1948.
Excise Act, 1944.
Sales tax Act, 1959.
Industrial Disputes Act, 1947.
Employee Staff welfare Act, 1948.
Workmen Compensation Act, 1923
The Payment of Gratuity Act, 19728.
The Payment of Wages Act, 19369.
Trade Unions Act, 1926.
Standing Orders Act, 1946.
Payment of Gratuity Act, 1972.
Provident Fund and Miscellaneous Provisions Act, 1952
OWNERSHIP PATTERNThe 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
1960s the Government ofIndia 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)
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PERFORMANCE OF SHARES AT NSE
Source :-Annual report 2012-2013 TABLE NO:1
DISTRIBUTION OF SHAREHOLDING AS ON 31-03-2013
Shareholding of
nominal value of Rs10/-
Shareholders Amount
Rs/-
Number % to Total
Upto 5000 14195 89.96 16729530
MONTH HIGH(Rs) LOW(Rs)
April 2012 33.80 31.00
May 2012 32.40 28.65
June 2012 29.50 27.80
July 2012 33.90 27.15
August 2012 29.50 26.20
September 2012 31.50 26.20
October 2012 31.90 27.80
November 2012 28.65 27.20
December 2012 33.20 27.50
January 2013 34.00 29.25
February 2013 29.70 27.40
March 2013 27.65 21.50
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5001-10000 875 5.55 7410810
10001-20000 355 2.25 5626750
20001-30000 122 0.77 3186950
30001-40000 53 0.34 1945370
40001-50000 56 0.35 2696500
50001-100000 74 0.47 5577230
100001 and above 49 0.31 6427546600
Total 15779 100 6470719740
Source :-Annual report 2012-2013 TABLE NO:2
BRIEF PICTURE ABOUT FACT
Name FertilizersAndChemicalsTravancore Ltd
(FACT)Slogan Pioneers in progress
Established in the year 1944
Location Udyogamandal,Cochin, Kerala
Promoters Government of India
Production units of Fertilizers Udyogamandal & Ambalamedu
Caprolactum Udyogamandal
Fabrication Division FEW Palluruthy, cochin
Consultancy Division FEDO Udyogamandal
Marketing Division Head officeUdyogamandal
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Area offices Trivandrum, Chennai, Bangalore and
Hyderabad
Liaison Offices Trivandrum, Chennai, Mumbai, New Delhi
Marketing Territory South India Kerala, TamilNadu, Karnataka, Andhra
Pradesh
TABLE NO:3
DIVISIONS OF F.A.C.T
Udyogamandal Division
FACT commenced operation at Udyogamandal with the commissioning of a50,000 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.
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.
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
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located adjacent to the Udyogamandal division. Co-product Ammonium Sulphate is
transferred to the fertilizer plant of Udyogamandal division for processing.
FACT Engineering & Design Organization (FEDO)
FACT Engineering & Design Organization (FEDO) was established in 1965for 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
petroleumstorage, environmental engineering, offsite facilities etc. The divisionundertakes
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 ISO9001 certified.
FACT Engineering Works (FEW)
Established in 1966, FACT Engineering Works was originally conceived asa 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 9002Certificationin 1998.
BOARD OF DIRECTORS
Shri Jaiveer Srivastava Chairman & Managing Director
Shri P.Muthusamy Director (Finance)
Shri V.K.Anil Director(Technical)
Shri V.K.Subburaj, Govt. of India Nominee Director
Shri S.C.Gupta Govt. of India Nominee Director
Shri Sham Lal Goyal Chairman & Managing Director
Dr..V.Rajagopalan Govt. of India Nominee Director
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Shri.P.K.Chandrasekharan Director(Marketing)
TABLE NO:4
MILESTONES OF FACT+
22-09-1943 - Incorporation
26-06-1947 - Production started
15-08-1960 - FACT came under Public Sector
21-11-1962 - Govt. of India major share holder
1959-1960 - UD 1st stage expansion completed
1962 - UD 2nd stage expansion completed
16-03-1964 - ICMA Award for utilizing by-product gypsum
15-10-1966 - UD 3rd stage expansion completed
1971 - ICMA Award for technology transfer
01-10-1971 - UD 4th stage Ammonia Plant
01-10-1973 - UD 4th stage 150TPD Ammonium Phosphate
24-07-1965 - FACT Engineering and Design Organisation
13-04-1966 - FACT Engineering Works
07-06-1966 - CD Phase-I License issued
27-04-1973 - CD I Urea Plant commissioned
10-11-1976 - CD II Sulphuric Acid Plant commissioned
10-12-1976 - CD II Phosphoric Acid Plant commissioned
10-01-1977 - CD II NPK trial run started
01-04-1976 - CD II NPK commercial production started
18-05-1984 - PD Caprolactam technical collaboration agreement14-09-1984 - PD Zero date of ASCL Project
06-08-1985 - PD Caprolactam License issued
13-12-1989 - FEW shifted to Palluruthy
26-07-1989 - Award for excellence in performance 1986/7 from the Prime Minister of
India
20-12-1990 - CD-12MW Captive Power Plant
01-03-1991 - PD Caprolactam commercial production started
01-03-1991 - UD New Ammonium Sulphate commercial production started
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25-09-1993 - Foundation stone - 900 TPD Ammonia Plant
23-03-1998 - 900 TPD Ammonia plant commercial production started
09-11-1998 - Test run
FACT PRODUCTS
STRAIGHT FERTILISERS:-AMMONIUM SULPHATE: Ammonium Sulphate is a
nitrogenous fertiliser containing 20.6% nitrogen, entirely in ammonical form. It has excellent
physical properties; non-hygroscopic, crystalline and free flowing. It is ideal as a straight
nitrogenous fertiliser and also as an ingredient in fertiliser mixtures. It is the most widely
preferred nitrogenous fertiliser for top dressing on all crops. Another unique advantage is that
it contains 24% sulphur, an important secondary nutrient.
COMPLEX FERTILISERS:-FACTAMFOS (AMMONIUM PHOSPHATE SULPHATE):
FACTAMFOS 20:20:0:13 is a chemical blend of 40 parts of ammonium phosphate and 60
parts of ammonium sulphate. It contains 20% N and 20% P2O5. The entire N is in ammonical
form and P is completely water soluble. In addition, FACTAMFOS contains 13% sulphur, a
secondary plant nutrient which is now attaining great importance in the agricultural
scene.FACTAMFOS 20:20:0:13, with the granular form and non-hydroscopic and freeflowing nature, have excellent physical properties. It is ideal for application on all soils and all
crops. FACTAMFOS 20:20:0:13 can also be used for foliar application
FACTMIX:-FACT prepares on a very large scale all the standard NPK mixtures under the
brand name 'FACTMIX' for different crops for Kerala as stipulated by the Department of
Agriculture. In addition, FACT prepares special tailor made fertiliser mixtures of any required
grade for plantation crops like coffee, tea, rubber, etc. FACT mixtures are superior in quality
with the presence of ammonia cal nitrogen, water soluble phosphorus, and other major
nutrients like sulphur, calcium, etc.
GYPSUM:-A by product of phosphoric acid, is a rich and cost effective source of 16%
sulphur and 22% calcium. FACT is marketing bagged gypsum in brand name FACT Gypsum
all 4 southern states as a soil conditioner with fertilising properties.
IMPORTED FERTILISERS:-FACT markets imported Urea and Potash from Gulf Countries
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consumption in all 4 southern states as per requirement. Urea with 46% Nitrogen in the granular/prilled form
with 60% K20 serves the nutritional requirement in the 4 southern states.
ZINCATED FACTAMFOS:-This special product containing 0.3% Zinc in FACTAMFOS
has been launched to address the widespread deficiency of Zinc in most soils of South India.
ZINCATED GYPSUM:-This soil amendment and ameliorant contains 2% Zinc in addition to
16% Sulphur and 22% Calcium for rectifying alkaline soils and improving soil fertility and
physical properties.
FACT ORGANIC:-FACT is also marketing organic manure produced from city compost, in
brand name Fact organic
CAPROLACTAM :- It is the raw material for Nylon-6. The product quality of FACT
Caprolactam is among the best available in the world.
Nitric Acid and SodaAsh - Small quantities of these are obtained from Caprolactam
Plant as by-product.
Nitric Acid (55%)
Capacity - 3800 TPA
Concentration (by weight) - 55% (min.)
Ammonium Nitrate (by weight) - 1% (max.)
Specific gravity at 20 Deg.C - 1.339
Delivery - Ex-factory - tanker load
Soda Ash (off grade)
Capacity - 4750 TPA
Total alkalinity (as Na2CO3) (by wt) - 95% (min.)
Sulphate (as Na2SO4) (by weight) - 1.5 to 3%
Bulk density (g/L) - 1.35 to 1.50
Delivery - Ex-factory bulk
BIO- FERTILISER:-R&D produces bio-fertiliser such as Rhizobium, Azospirillum, and
Phosphobacter (Bacillus Magatherium) from its 150 TPD plant. The Fertiliser Control Order
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1985 has specified the bio-fertiliser quality requirement first time in its amended version of
June 2006.
PRODUCT MIX
Straight Fertilizers
Ammonium Sulphate:- Containing 20.6% N in Ammonical form and24% sulphur, an
important secondary nutrient.
Ultraphos: - FACT markets imported Rock Phosphate containing 32%P2O5
under the brand name "Ultraphos". This high analysis fertilizer is found suitable for
application especially in Coconut/ Rubber/ Oil Palm/ Tea Plantation. .
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.
NPK Mixtures
NPK Mixtures:- FACT prepares crop specific standard mixtures for allcrops 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.
Imported/ Traded products
- FACT has entered into direct import of MOP and also trading of Imported Urea.
Bio fertilizer
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- FACT produces and markets 'N' fixing Bio fertilizers -Rhizobium, Azospirillium and 'P'
solubilising bio fertilizer -Phosphobactor.
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
by product.
Nitric acid (55%)
Capacity : 3800 TPAConcentration (by weight) : 55% (min.)Ammonium Nitrate (by weight)
: 1% (max.)Specific gravity at 200C : 1.339Delivery : Ex-factory - tanker load
Soda ash (off grade)
Capacity : 4750 TPA Total alkalinity (as Na2CO3) (by wt) : 95% (min.)Sulphate (as Na2SO4
) (by weight) : 1.5 to 3%Bulk density (g/L) : 1.35 to 1.50Delivery : Ex-factory -bulk
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ORGANISATIONAL STRUCTURE
CHART NO:1
ABBREVATIONS OF ORGANISATION CHARTDIR- DIRECTOR
TECH- TECHNICAL
C.V.O- CHIEF VIGILANCE OFFICER
C.P- CORPORATE PLANING
CMD
DIR MARKETING
G.M.MARKETING
CM SALECM
DISTRIBUTION
CMAGRONOMY
DIR FINANCE DIR TECH
G.M.CP & PC
GM CD GM UC
JGM UD
CMPRODUCTION
CSP
TRAFFIC AMMONIUMSULPHATE
AMMONIUMPHOSPHATE
PHOSPHORICACID
SULPHURIC ACID AMMONIA
CMMAINTENENC
E
CME
PE PE
PE
MGR STORESMGR
QUALITY
MGR SAFETY MGR R&D
JGM PD
GM F&F
CM FEDO CM FEW
C.V.O
G.M.MATERIAL
CM PURCHASE
MGR TRAFFIC
MGR STORES
GM HRCOMPANY
SECRETARY
KERALA
TAMIL
NADU
ANDHRA
PRADESH
KARNATA
KA
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P.C- PRODUCTION COORDINATION
CD- COCHIN DIVISION
UC- UDYOGAMANDAL COMPLEX
F & F- FEDO & FEW
JGM- JUNIOR GENERAL MANAGER
UD- UDYOGAMANDAL DIVISION
PD- PETROCHEMICAL DIVISION
CM- CHIEF MANAGER
C.S.P- CHIEF SUPERINTENDANT PRODUCTION
C.M.E- CHIEF MECHANICAL ENGINEER
MGR- MANAGER
P.E- PLANT ENGINEER
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CHAPTER 5
FUNCTIONAL DEPARTMENTS
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FINANCE DEPARTMENT
1.OBJECTIVES
To Manage & account for the financial resource of the Organization, to forecast its
requirement in the future and plan accordingly and to check for deviation.
Report the financial performance of the company to Management, stakeholders & and to
comply with the Govt. rules and regulations
2. ORGANISATIONAL CHART OF FINANCE DEPARTMENT
CHART NO:2
3.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.
\
DIR FINANCE
DGM IA
MGR IA
DGN FINANCE
CM BILLS & MAT CM SALESCM COSTINGBUDGET,MIS
CM GEN A/C
MGR CASH BANK
& PAYROL
MGR(TAX &
DUTIES)
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4.PROCESS OF FINANCE DEPARTMENT
Finance department in FACT is divided into five sections for carrying outfits process. They
are:
1.Bills & Materials
2.Sales
3.Costing, MIS, Budget
4.Cash, bank & Payroll and
5.Tax & duties
BILLS & MATERIALS-The main functions are Stores accounting and Receiving, Dispatch
and holding of bills
Bills section
Bills section deals with the contract account for execution of civil works and
other construction/erection, maintenance and services.
It includes:
1.Sale of tender form
2.Remittance of EMD
3.Remittance of security deposit
4.Issue of materials to the extractors
5.Receipts to certified bill in the specified format
6.Security on running account bills and final bill
7.Statutory procedures and formalities in works contract
Stores accounting
Main functions of stores accounting are
1.Receipts of stores
2.Issue of stores
3.Returns of stores
4.Value adjustments
5.Reconciliation with control accounts
6.Unconsumed materials lying at site at the close of financial year
SALES ACCOUNTINGSome of the functions are
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1.Accountability for selling and distribution of products & by-products
2.Recording the transaction
3.Transfer of information from depots to HO
4.Compilation of reports.
THE COSTING, MIS AND BUDGET SECTIONis concerned with ascertaining the cost
of production, providing information, helping to prepare a budget, forecasting the
performance and finally making a plan.
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.
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.Divisional Reports- Two monthly reports for each division - one for the finance department
and another for the GMs office
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2.P & L Account-Statement and its analysis
3.Production performance of the division
4.Inventory position
5.Cost of production-Actual and budget for the month
6.Specific information important for the management-Major projects, man-hour utilisation
etc.
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 istreated as capital
expenditure.
Budget revision
While preparing the next years revenue budget, the revenue budgetfor the current year is
revised, based on the actual 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 actual for every month against budgeted performance.
THE CASH, BANK AND PAYROLL SECTIONis concerned more with the day to
day activities and less of future forecasting & planning.
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Cash and Bank Accounts Section
The various functions include:
1.Receipt of cash, cheques, bank drafts, and postal money orders
2.Payment of cash, cheques, bank drafts, and letters of authority
3.Handling of bank deposits/withdrawals, custody of cash and inter unit transfer of funds
4.Maintenance of petty cash books and cash books
5.Reconciliation of bank accounts
6.Security arrangement of cash handling
7.Safe custody of valuable documents
8.Cash interests calculation
9.Any other duties assigned by authorized officer
Payroll Section
Functions of the section are:
1.Preparation and disbursement of salaries and wages to managerialand non-managerial
employees
2.Effect various recoveries through payroll and remit the same toconcerned agencies
3.Processing of various personal payments advances
4.Keeps books of account for the above transaction
TAX & DUTIES SECTION
is concerned with calculation & payment of various taxes and duties to the Government.
SOME KEY INFORMATION
Insurance schemes
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.Fire Insurance.
2.Machine break down insurance.
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3.Electronic equipment insurance.
4.Fidelity insurance and cash in transaction/cash at safe/payroll insurance.
5.Insurance for vehicles and heavy equipment.
6.Open transit risk for all inland and all foreign purchases.
7.Loss on profit insurance.
8.Personal accident insurance.
9.Storage insurance.
10.Insurance for stock of finished goods, raw materials, industrial stores.
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
beginning and adding one year at the end, keeping the total budget period as 5 years. This
plan projects the companys position for the next 5years.
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.
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 firms 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.State Bank of Travancore
2.State Bank of Hyderabad
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3.State Bank of India
4.Bank of Baroda
5.Bank of India
6.Canara Bank
7.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. 100 crores and bank guarantee upto limit of Rs. 15 crores.
Auditing
Various types of audits in FACT are:
Statutory audit,Government audit, Cost audit ,Income tax audit, Sales tax audit an Internal
audit.
Internal Audit Section
Some of the main functions are
1.Operational/ systems/ management audit
2.Proprietary audit and audit of sanctions
3.Routine audit
4.Surprise verification of physical stocks
5.Special audits and studies
CHALLENGES OF FINANCE DEPARTMENT
Working capital crunch Due to which
Up gradation of plants & machinery is not possible
High quality equipment cannot be purchased. For the same reason, FACT goes for the
lowest quoting bid.
Cannot maintain adequate stock of fertilizer for combating shortage
Lack of flexibility in production
Low availability of credit due to non-payment of loans & security to keep for loans.
Due to which the organization:
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Cannot grow and therefore stagnates.
Cannot compete with other fertilizer companies due to lack of fund
MATERIALS DEPARTMENT
OBJECTIVES1.To control and account for the materials in the organisation
2.To ensure the availability of materials and its quality.
ORGANISATIONAL STRUCTURE OF MATERIALS DEPARTMENT
CHART NO:3
FUNCTIONS OF MATERIALS DEPARTMENT
include:
1.Importing raw materials under the approval of
safe purchase committeeconstituted by the Board of Directors
2.Maintaining adequate raw materials needed for production
3.Procurement of Machineries, Intermediaries, equipment & spares
GM MATERIAL
MGR TRAFFICCM PURCHASE
RM
DY CM RAWMATERIALS
MGR.F.F.T.S
MGR.E.S.S
MGR STORES
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4.Inspection of Materials
5. Transportation of Raw materials, Products and By-products
6.Accountability for materials
7.Purchase of stationary, and other Equipment needed by individual department
8.Vendor Development
This department is divided into 3 Sub Departments. They are:
1.Purchase
2.Stores
3.Traffic (Logistics)
PURCHASE DEPARTMENTThe purchase procedure covers the following areas of procurement of goods and services for
the company.
1.Capital items (For project and other purposes).
2.Equipment and spares.
3.Raw material & Intermediary materials
4.Package items involving design, supply, erection and commissioning.
Purchase Department is again divided into 3 sections. They are:
1.Raw materials
2.Equipment spares and supplies
3.FEDO & FEW Transport, Contracts and Stores.
RAW MATERIALS SECTION
Objectives
1.Purchase of materials for production, from India and abroad
2.Make available adequate amount of material at the right time3.Follow a fair & transparent procedure in the above activities
Functions
1.Importing raw materials under the approval of safe purchase committee constituted by the
Board of Directors
2.Procurement of Materials needed for production
3.Determination of quantity of materials required
4.Issue of Purchase order5.Pre & post dispatch Inspections
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6.Insurance
7.Payment
Raw materials areSulphur, Rock phosphate, Furnace oil, Naphtha, Ammonia, Benzene,
Phosphoric Acid, Caustic soda and Sulphuric Acid.
RAW MATERIAL PROCUREMENT PROCESS
CHART NO:4
CHALLENGES TO RAWMATERIAL PROCUREMENT
1.Scarcity of Raw materials
2.Sky rocketing prices
3.Shipping Problems
4.Working Capital crunch
EQUIPMENT & SPARES SECTION
Objectives
1.Purchase of Equipment & spares from India or abroad
2.Make available spares at the right time
3.Follow a fair & transparent procedure in the above activities
Equipment & Spares Include
1.Capital items like heavy machinery or plant (For project and other purposes)
2.Equipment and spares
3.Package items involving design, supply, erection and commissioningFunctions
PURCHASE
REQUISITION
PAYMENTRAW MATERIAL STORING
PRODUCTION PLAN
RAW MATERIALS
DEPARTMENT
RAW MATERIAL
REQUIREMENT
VENDOR DEVELOPMENT BID EVALUATION &
FINANCIAL
CONCERENCE
ENTERING INTO
CONTRACTS
PURCHASE ORDER
RAW MATERIAL
TRANSPORTING
INSPECTIONS
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1.Importing materials under the approval of
safe purchase committee constituted by the Board of Directors
2.Determination of actual requirement by checking with stores, technical department,
management and giving specifications
3.Vendor Development
4.Bid evaluation & financial Concurrences
5.Entering into Contracts
6.Issue of Purchase order for equipment & spares
7.Inspections of materials and stores
8.Insurance
9.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:
CHART NO:5
VALIDATING
REQUIREMENT
DESPATCH
USER DEPARTMENT
REQUIREMENT
AVAILABLE AT
STORES
PURCHASE
REQUISITION
NOYES
RAW MATERIAL
PROCUREMENT
PAYMENT INSPECTIONS
MATERIAL
PROCUREMENT
PURCHASE
ORDER
ENTERING INTOCONTRACTS
BID EVALUATION &
FINANCIAL
CONCURRENCE
VENDOR
DEVELOPMENT
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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,
depending 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
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 bystores 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.For projects and major capital equipment
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2.For stores, including stationary and office supplies, spares
3.For services
Inviting Bid
Bids are invited by giving Advertisements in news paper, magazines, media, website etc. The
Purchase Manager invites the bid. Normally, 30days 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. Technical evaluation by indenter in consultation with other technical experts, where
necessary
2.Commercial evaluation by the purchase department in consultation with other concerned
departments
3.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.
CHALLENGES OF EQUIPMENT & SPARE SECTION
1.Approval of Bids on the basis of lowest quotation where sometimes quality is compromised
2.Low working capital to maintain sufficient stock of goods
FEDO & FEW, Transportation & Stores (FFTS) Section
The Functions of the section are:
1.Project related procurement for FEDO & FEW
2.In-house procurement for FEDO & FEW
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3.Storage of Raw materials
4.Raw material transportation & Technical assistance for handling
STORES DEPARTMENT Objectives
1.Collection and receiving of materials purchased
2.Inventory Management & Control
3.Issuing materials to user departments
4.Disposal of surplus and obsolete materials
Functions
1.Receiving
2.Holding
3.Inventory Control
4.Issuing
5.Disposal
PROCESS FLOW IN STORES DEPARTMENT
CHART NO:6
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
RECIEVING INSPECTING HOLDING INVENTORY
MANAGEMENT
DISPOSAL ISSUE
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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 irresponsible 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.
Stock verification
Stock verification is done by physical stock verification Team (PSVT) are attached to finance
department. A and B items are verifiedonce in a yearend 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, stockholding 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 FACTA-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
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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 labelled as X, 15% value of total inventory as Y, 5% value of total
inventory as Z.
For spares-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 whosenon-availability does not resulting
in any significant production down timeless. The list is reviewed once in 2 years.
CHALLENGES FOR STORES
1.Maintenance due to shortage of labour
2.Low stock of goods maintained due to shortage of Funds
TRAFFIC DEPARTMENTObjectives
1. To ensure Loading and despatch of products
2.To ensure right quantity and right product to right vehicle and to the right destination
Functions
1.Loading
2.Arrangement
3.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 departmentThe 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.
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PAYMENT
CHART NO:7
The vendors are issued a vehicle inslip which is a slip for the vehicle to go into the loading
site in which the destination, vehicle no, product or by product 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 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.T- A.S.R transport
B.T- Bharat Transport
COSMO- COSMO Carriers
E.L.F- Expert Liner Enterprise
L.R.L- Lucky Road line
TRANSPORTATIONDEPOT
VEHICLE IN SLIP ISSUE
MDA ISSUE
LOADINGVENDOR(TRANSPORT)
DESPATCH INFORMATION
MARKETING DIVISION
TRAFFIC DEPARTMENT SIGNED MDA WEIGHING
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JGM(UD)
CM PRODUCTION
MAINTENANCE
C.M.E
PRODUCTION
C.S.P
TRAFFIC AMMONIUM
AMMONIUMSULPHATE
AMMONIUMPHOSPHATE
SULPHURIC ACIDPHOSPHORIC
ACID
J & P- J & P Enterprise
M.R.D- M.R.D Transport
P.K.A- P.K Aboobacker & Co
P & P- P & P Logistics S.K.L.S - Sree Krishna Lorry Service
S.P.M- S.P Muthuraman
U.R- Union Road ways Limited
Optimisation Techniques
1.Transportation by railway14 wagons of train booked at a time helps reduction of cost.
2.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.Lack of fleet management system
2.Labour issues
3.Vendors Performance & Review
PRODUCTION PLANNING DEPARTMENT
1.OBJECTIVES
1.Production planning
2.Co-ordination of production function
3.Co-ordination with Maintenance and Production department.
2.ORGANISATIONAL CHART OF PRODUCTION DEPARTMENT
CHART NO:8
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FUNCTIONS OF PRODUCTION DEPARTMENT
Planning daily production according to annual target
2.Submitting Plan to govt. and getting approval
3.Monitoring actual production & checking any deviation
4.Making revision plans according to actual production
5.Maintenance of plants
PRODUCTION PROCESS
START HERE
CHART NO:9
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
daily production reports,
monthly reports and yearly reports they are sent to the management.
PLANT MAINTENANCE
CHECKING DEVIATIONSFROM PLAN
MONITORING PRODUCTION
PRODUCTION TARGETS
RAW MATERIAL AVAILABILITY(RM
DEPT)
APPROVAL OF PRODUCTION
PLAN
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FEATURES OF PRODUCTION PLAN
1.Production plan is based on the idea of producing the maximum withavailable raw material
and production capacity of plant.
2.Day- to-day production is planned according to raw materialavailability.
3.Daily production plan is prepared and likewise annual plan is alsoprepared.
4.Day wise production plan is monitored.
5.Production plan is always flexible.
PLANTS AT UDYOGAMANDAL DIVISION
1.Ammonia plant
2.Ammonium Sulphate plant
3.Ammonium Phosphate plant/ FACTAMFOS4.
Acid Plant
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.
Acid Plants
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 Davypower gas Plant.
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
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. A separate concentration section is provided to concentrate this weak acid to strong acid
having strength of 45% P205
Ammonium phosphate Plant
The complex fertilizer plant was designed to produce quantities of N P Kfertilizers of
various grades. FACTAMFOS Consists of NPK and S in theratio 20:20:0:13.
PRODUCTS
1.Ammonium Phosphate/ FACTAMFOS
2.Ammonium Sulphate
3.FACT urea
4.Muriate of potash
PRODUCTS TPD (IN MT) TPA(IN MT)
NP:20:20(FACTOMFOS) 450 160000
AMMONIUM SULPHATE 667 210000
SULPHURIC ACID 1150 338570
PHOSPHORIC ACID 100 18000
TPD :-TONNES PER DAY TPA :-TONNES PER ANNUM TABLE NO:5
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.
ADHERENCE TO ISO IMPLEMENTATION
Do what you write or write what you do
1.FACT has a well defined procedure for production. So according to ISO implementation it
writes whatever it does.
2.Production standards are also kept as per ISO standards.
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CHALLENGES OF PRODUCTION DEPARTMENT
1.Raw material scarcity is upsetting the entire production plant.
2.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.
MARKETING DEPARTMENT
GENERAL INFORMATION
Fertilizer Marketing is different from other product marketing. Fertilizer has a high demand.Therefore, it can be termed as a
sellers 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
farmers awareness about fertilizers. All of these call for a planned marketing effort and huge
requirement of funds to meet the seasonal demand of fertilizer.
OBJECTIVES
Monitoring of sales & distribution
Study & respond adequately to the information from market research department and from
field establishment .
Liaison with bulk buyers, central and state government officials and officials of fertilizersassociation of India
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DIR(MARKETING)
GM(MARKETING)
CM SALES C.Ag.AGRONOMY
CMDISTRIBUTION
AM (KL) AM(T.N)
AM(KAR) AM(AP)
ORGANISATIONAL CHART OF MARKETING DEPARTMENT
CHART NO 10
C.Ag-CHIED AGRONOMIST, AM-AREA MANAGER
FUNCTIONS OF MARKETING DEPARTMENT
1.Sales
2.Market Research
3.Agronomy
4.Preparation of sales report
5.Processing and sending replies to audit queries at the divisional level
6.Liaison with bulk buyers, central and state government officials and officials of fertilizers
association of India
7.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.Sales Department
2.Distribution Department
3.Agronomy
SALES DEPARTMENT
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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.
Main products
1.FACTAMFOS/Ammonium Phosphate
2.Ammonium Sulphate
3.FACT Urea
4.Muriate of potash
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.Mass Communication Techniques
2.Personal Contact Method
Mass Communication Techniques
This method involves catering to a large number of people in the
shortesttime possible. Advertisement are done through Films, Exhibition ,Radio jingles,
Hoardings, Posters, Farmers awareness programmes in AIR, Wall Painting, Advertisement ,
Direct mail service etc.
Personal Contact Methods
As the name implies, in this method, more personal and closer contact with farmers are
developed through promotional methods. The methods adopted by FACT are through
Demonstrations, Block demonstrations, Soil testing, Seminar, Study classes, Co-operative
training programmes, Dealer training, Squad programmes etc. Realizing the importance of
bringing the essential agricultural inputs and facilities for advisory service under single roof,
FACT has converted its major selling points into Agro Service Centres rendering service to
farmers. These centres advise the farmers on modern farm management techniques, credit
availability, marketing prospects etc. It also prepares detailed farm plans for each farmer
according to his agriculture pattern. FACT is the pioneer in fertilizer education and sales
promotion programs. These consist of fertilizer festivals, study classes, seminars, Krishi
VigyanKendras (KVKS), crop campaigns, crop demonstrations etc., with an ideal blend of
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information and entertainment to drive home the message of balanced fertilizer use for
increasing crop production. The creative and
novel education programs like village adoption of FACT have gained national recognition.
DISTRIBUTION DEPARTMENT
Physical distribution of products is a major function of the marketing division. Chief
Distribution Manager is entrusted with planning, monitoring and implementing of product
distribution and co-coordinating the movement from production units and ports. Marketing
operations of FACT in respect of fertilizers follow a completely centralized pattern. The
marketing network of FACT is spread over the southern states of Kerala, Tamil Nadu,
Pondichery, Karnataka and Andhra Pradesh. In each state there are 4 area office and 16
regional offices. The distribution network consists of 100 Agro Service Centres, 50 field
storage points and over 7900retail selling points in these states, and serves the farmers by the
supply of fertilizers and agronomy advice. Through innovative farmer education and fertilizer
promotion programmes, FACT has created awareness about scientific cultivation
and fertilizer use. The states offices are called area and their sub- divisions are called regions.
AREAS REGIONS
KERALA ALLEPY PALAKKAD KOTTAYAM KANNUR
TAMIL NADU COIMBATORE TRICHY MADURAI VELLORE
KARNATAKA MANGLORE BANGLORE BELGAUM HOSPET
ANDHRA PRADESH HYDERABAD VIJAYAWADA KAKINADA VELLORE
TABLE NO :6
MARKETING OPERATIONS
AGRO SERVICE CENTRES 100
SWC/CWC POINTS 43
SOIL TESTING LABORATARIES 3
AREA & REGIONAL OFFICES 20
FIELD SALES OFFICES 100
DEALER POINTS 7759
TABLE NO :7
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AGRONOMY DEPARTMENT
Fertilizer sales are highly dependent on farmers awareness on modern techniques of farming
by using fertilizer for high productivity. Awareness creation involves an elaborate and well-
planned farmer education and fertilizer promotion program, which in turn calls for a
multiplicity of activities. Chief Agronomist has overall charge of the agronomy department,
which renders technical guidance, and supervision of all agronomy services.
PROCESS OF MARKETING DEPARTMENT
START HERE
CHART NO 11
Market Research department takes care of collection, analysis and interpretation of data
pertaining to fertilizer market and preparation of product wise, month wise and annual sales
plan for each area. Agronomy prepares the farmers to buy fertilizers. The sales department
monitors and reports competitor's sales and collects, scrutinizes, analyzes and compiles
region wise and area wise sales of performance and purchased
productsfor providing information to management on achievement against thetarget. The
distribution department finds out the various depots as per the information given by sales andsells the products and subsequently sales report is prepared.
Marketing research
Marketing Research Department is essential for the success of marketing function. The main
function of marketing research is the collection, analysis and interpretation of data pertaining
to fertilizer market.
Functions
SALES REPORT
SELLING PRODUCT
DISTRIBUTIONCALCULATINGFINDING THE DEPOTS
AGRONOMY
MARKET RESEARCH
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1.Preparation of product wise, month wise annual sales plan for each area.
2.Publication of annual report of division
3.Monitoring and reporting of competitor's sales as per perform a prescribed
4.Collection, scrutiny, analysis and compilation of region wise, area wise sales performance
of own and purchased products for providing information to management on achievement
against the target on a daily basis.
5.Submission of monthly performance report of the division to the CMD
6.Ensuring product availability, dispatch monitoring and inventory control
7.Submission of various statements to FAI for publication in their fertilizer statistics
yearbook.
Performance of the Marketing Division during the financial year2012-2013 as compared
to the financial year 2011-2012.
During the financial year 2012-2013 the fertiliser sales was 7.40lakh MT as against 8.40 lakh
MT during the previous year. Sale of Factomfos during the year was 541966 MT as
compared to 582471 MT during the year 2011-2012 .The sale of Ammonium sulphate during
the year was 134720MT as compared 175524 MT during the previous year.
CHALLENGES OF MARKETING DEPARTMENT
8.1.
Improper Subsidy poli cyGovt. Subsidy policy does not take into account the technology used
for production & cost of raw materials, and comes to the organization after a long gap after
actual sales, which leads to acute shortage of working capital.
Lack of fund for research activities
Narrow product range
Unnecessary intervention of state and central governments in distribution & sales
Recurring losses have put the organization on the back foot looking for survival in the present
than long term plans & resulting research, leading
to low level of research activities and narrow product range.
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MGR(Q.C)
SHIFT INCHARGE
CHEMIST
LABASSISTANT
FINANCIAL
IN LAKHS
PRODUCTION
YEAR 2012-13 2011-12
Factamfos 20 : 20 537081 622256
Ammonium Sulphate 126286
163468
Caprolactam 15544 37854IN TONNES
SALESTABLE NO 8
YEAR 2012-13 2011-12
Fertilisers 740111 834580
Caprolactam 17695 40963IN TONNES
QUALITY CONTROL DEPARTMENT
OBJECTIVES OF QUALITY CONTROL
Customer satisfaction through excellence in quality of production andservices
Adherence to documented quality system
Promoting quality culture among employees
Continuous improvement in the quality Management System
ORGANISATIONAL CHART OF THE DEPARTMENT
CHART 12
YEAR 2012-13 2011-12
Turnover 239380.00 293657.00
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FUNCTIONS OF QUALITY CONTROL
1.Quality checking
2.Process control assurance
3.Pollution control
QUALITY CONTROL PROCESS
Quality checking
Raw material-Pre and post despatch check. It is usually done by FACT Quality control cell or
external agency if expertise is required.
Product Quality check By-product Quality check-only in case of by-products sold[R &
D counter checks quality]
Process control assurance
The samples are tested in the Lab. There is one Main Lab for UD division and Sub Labs for
each plant.
Pollution control
By taking air and water samples. If samples contain more than required level of effluent, then
the matter is reported to the plant manager, Quality department and GM (UC)
POLLUTION CONTROL MEASURES
Hydrocarbon-detectors are placed in vulnerable areas in the plant for transmission to
control room..
Computerized automatic ambient air monitoring system is placed at stations, inside
the plant and two in the township to monitor ammonia, carbon monoxide, non-methane
hydrocarbon, sulphur dioxide and oxides of nitrogen on a continuous basis.
The company continues to give top priority to pollution control activities. It has
already invested lot of money especially for setting up pollution control plants at
Udyogamandal, Cochin and petrochemical divisions. FACT Udyogamandal, Cochin Division
are ISO 14000 certified units. As commitment to humanity, the company has taken all
necessary safeguards to prevent water and atmosphere pollution caused by effluent gases and
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liquids thrown out from the factory. The company could maintain all effluent parameters
within limits as prescribed by the statutory authority. Treated liquid effluent and gas emission
from plants conform to the Kerala State Pollution Control Board norms. The guidelines
specified by Kerala State pollution control board are followed in the disposal of all hazardous
wastes generated. The ambient air quality monitoring stations continuously monitor the level
of pollutants like sulphur dioxide, Oxides of Nitrogen, Ammonia, Carbon Monoxide,
Hydrocarbons and Suspended Particulate matters.
ACTIVITIES CARRIED OUT
1.Reduction of air pollution from amorphous plant and phosphoric acid plants
2.Improving the quality of effluents on a continual basis
3.Minimize dust problem in sulphur handling and prevention of sulphur spillage to river
4.Reduction of contamination of raw effluents with vapour condensation from Hyam plant
5.Reduction of noise level in SO2/Acid plant main air blower
6.Reduction of SO2emission during start up of sulphuric acid plant
7.Minimize and recycle waste water from phosphate plant and sulphuric acid plan
t8.Improving housekeeping in phosphate and sulphuric acid plant
CHALLENGES TO QUALITY CONTROL
Lack of expertise to handle raw materials quality checking7
Aged machinery Effluent discharge likely to exceed the permissible limit High noise
pollution
RESEARCH AND DEVELOPMENT
GENERAL INFORMATION
FACT began research in a modest scale in 1962 with just four scientists. Over the years this
nucleus has grown in to a full-fledged but compact integrated division with a team of about
12 personnel. The division is recognized by the ministry of science and technology for in
house research and by the ministry of environment and forests, Govt. of India. R&D plays a
vital role in giving the company and its products the cutting edge in a competitive
environment. FACTswell-equipped R&D section has advanced facilities equipped withpilot plants, modern equipment and accessories. It is backed by a team of highly motivated
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MGR(R.D)
ASSTMANAGER
OFFICER
STAFFS
research scientists. Various processes have been developed and patented by FACT R&D
division of which several have been commercialized successfully. Field trials on slow release
fertilizers developed by the division have been successful. Production of bio-fertilizers has
commenced with an installed capacity of 150tonnes per annum. FACT R&D division has got
modern and sophisticated laboratory and the facilities are continuously expanded and
updated. A wide variety of tests conforming to Indian and international standards are carried
out. FACT R&D division has a unique mobile laboratory equipped with state of the
art instruments for monitoring, assessing, computing and recording air data. FACT has won
Indian Chemical Manufacturers Association award twice for outstanding performance in
Development of technology & Export of technology.
OBJECTIVES
To carry out in-depth research, to provide specialized services to other divisions of the
organization, and is involved in the production of environment friendly bio fertilizers.
ORGANISATIONAL CHART OF R&D DEPARTMENT
CHART NO 13
FUNCTIONS OF R & D DEPARTMENT
Quality assurance /Quality control cell
As per the directive from Ministry of Agriculture, Government of India, a Quality control cell
has been set up in R & D centre, for efficient monitoring of quality of fertilizer products at
the dispatch and selling points.
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Bio-fertilizer research and development
FACT has set up a 150 TPA bio-fertilizer plant at R&D premises. The plant was
commissioned during the end of 1999, to take up the production of N-fixing Bio fertilizers
like Rhizobium, Azospirillum and P-solubilising bio-fertilizer like Phosphobactor. The
carrier material employed is exfoliated vermiculite
The Biofertilizers plant at R & D centre is capable of producing three kinds of Biofertilizers
namely Rhizobium, Azospirillum and Bacillus Megatherium under the trade name BIO-
FACT. Owing to the short shelf life, production of these Biofertilizers is based on specific
demands of marketing Division. Efforts are underway to changeover to a new carrier material
called Lignite that conforms to the recently laid down FCO regulation.
Quality maintenance of product at various depots across the states
Corporate Quality Survey
FACT is committed to provide quality products to consumers. As a part of this strategy,
FACT R&D Centre has been entrusted with checking the quality of fertilizer samples from
production divisions. The Quality check is usually period wise; sometimes surprise visits
are also conducted.
Consultancy work especially for clients such as Govt. of India
Nyrip Process
FACT & IIT Chennai have signed an MOU for setting up of pilot plant to produce fiber
reinforced polymer matrix composites from caprolactum and carrying out scale up studies.
Pilot plant studies at IIT Chennai are continuing. This project has been funded by planning
commission, Govt. of India under Technology mission programme.
ACTIVITIES CARRIED OUT
1.Development and filed testing of slow release fertilizer
Slow fertilizer release
R&D Centre of FACT has formulated slow release fertilizers in order to increase the efficient
use of plant nutrients. The slow release fertilizer project has been selected for partial funding
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under PATSER scheme by DSIR, New Delhi, for, Agronomical evaluation by Tamil Nadu
Agricultural University, Coimbatore and
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