Professional Documents
Culture Documents
Vivek Menon
(Reg. No: 85270050)
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
Year-2008
CERTIFICATE
Place:
Chart
1 Organizational chart 20
2 Organizational chart of Finance department 21
3 Organizational chart of Materials department 29
4 Raw Material procurement process 31
5 Equipment and spares procurement process 33
6 Process flow in stores department 36
7 Process flow in traffic department 40
8 Organizational chart of production department 42
9 Production process 43
10 Organizational chart of market department 47
11 Process chart of market department 51
12 Organizational chart of quality control department 55
13 Organizational chart of R & D department 59
14 Organizational chart of fire & safety department 64
15 Organizational chart of computer division 68
16 Organizational chart of HR division 70
17 Organizational chart of training division 78
18 Training process chart 79
19 Organizational chart of vigilance department 82
20 Vigilance department process flow 83
21 Organizational chart of company secretariat 85
Tables
1 Performance at NSE 10
2 Distribution of shareholdings 11
3 Brief picture of FACT 12
4 Milestone of FACT 15
5 Products of FACT 45
6 Areas and regions of distribution 50
7 Marketing operations 51
8 Sales turnover 54
9 Expenditure on R & D 62
10 Welfare scheme 72
11 Division wise staff strength 76
Diagrams
Declaration iii
Acknowledgement iv
Abstract v
Chapter No:
2. History of FACT 3
3. About FACT 8
4. Functional departments
4.10.Training department 77
4.11.Vigilance department 82
4.12.Company secretariat 85
7. Environment analysis 91
8. SLOT analysis 94
Conclusion 96
Bibliography
Chapter 1
3. LIMITATIONS OF STUDY
3.1. Time was a major limiting factor.
3.2. Secondary data available from company manuals were outdated (the
manuals are being updated).
3.3. Lack of co-operation from certain departments due to their work load.
2
Chapter 2
History of FACT
HISTORY OF FACT
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 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. 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. 2 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.
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
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
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.
7
Chapter 3
About FACT
1. VISION & MISSION OF FACT
2. CORPORATE OBJECTIVES
2.1. 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.
2.2. To sustain and improve its pioneering role in the development of
indigenous engineering and technology through research and
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
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
3.1. To achieve a net profit of 200 crore per year with a turnover of Rs.2100
crore by the year of 2010
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.
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.
10
November 23.90 22.15
December 24.80 21.75
January 26.85 23.75
February 26.40 23.75
March 23.00 20.55
Source: Annual Report 2006-07
Table No: 1
DISTRIBUTION OF SHAREHOLDING
Percentage of
Category Number of shares
shareholding
Government holding
Government of India 345465200 97.38
State Government 2585000 0.72
Sub total 348050200 98.10
Non promoter
holding
Insurance
4026854 1.14
companies
Sub total 4026854 1.14
Others
Private corporate
473597 0.14
Bodies
Indian public 2187434 0.62
NRI’s or OCB’s 14316 -
Clearing member 19573 -
Sub total 2694926 0.76
Grand total 3554771974 100.00
Source: Annual Report 2006-07
Table No: 2
11
6. BRIEF PICTURE OF FACT
Production units of
Fertilizers Udyogamandal & Ambalamedu
Caprolactum Udyogamandal
Fabrication
Palluruthy, cochin
Division FEW
Marketing Division
Head office Udyogamandal
Trivandrum, Chennai,
Area offices
Bangalore and Hydrabad
Trivandrum, Chennai, Mumbai,
Liaison Offices
New Delhi
South India: Kerala, TamilNadu,
Marketing Territory
Karnataka, Andhra Pradesh
Table No: 3
12
7. DIVISIONS OF F.A.C.T
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.
BOARD OF DIRECTORS
Dr. George Sleeba Chairman & Managing Director
Sri. Asokan A. Director (Marketing)
Sri. Vijay Chhibber Part-time Director (Nominee of Govt. of
India)
Dr. Jivtesh Singh Maini Part-time Director (Nominee of Govt. of
India)
Dr. R. Kannan PhD. I.A.S Chief Vigilance Officer
14
EXECUTIVE DIRECTOR
Sri. Venkatakrishnan.S Executive Director (Finance)
In Charge
Sri. K. V. Balakrishnan Company Secretary
Source: Annual report 2006-07
9. MILESTONES OF FACT
22/09/1943- Incorporation
15
10/12/1976- CD-II, Phosphoric acid plant
commissioned
10/01/1977- CD-II, NPK trial run started
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
10.2.1.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
18
Nitric acid (55%)
Capacity : 3800 TPA
Concentration (by weight) : 55% (min.)
Ammonium Nitrate (by weight) : 1% (max.)
Specific gravity at 20 0C : 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
19
CMD
KL TN AP KAR CSP CME MGR MGR MGR MGR MGR MGR COMPANY
STORES QUALITY SAFETY R&D TRAFFIC STORES SECRETARY
DIR- DIRECTOR
TECH- TECHNICAL
C.V.O- CHIEF VIGILANCE OFFICER
C.P- CORPORATE PLANING
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
20
Chapter 4
Functional Departments
FINANCE DEPARTMENT
1. OBJECTIVES
1.1. 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.
1.2. Report the financial performance of the company to Management,
stakeholders & and to comply with the Govt. rules and regulations
Director (Finance)
Chart no: 1
21
4. PROCESS OF FINANCE DEPARTMENT
Finance department in FACT is divided into five sections for carrying out
its process. They are:
1. Bills & Materials
2. Sales
3. Costing, MIS, Budget
4. Cash, bank & Payroll and
5. Tax & duties
4.1. BILLS & MATERIALS-The main functions are Stores accounting and
Receiving, Dispatch and holding of bills
22
4.2. SALES ACCOUNTING
Some of the functions are
1. Accountability for selling and distribution of products & byproducts
2. Recording the transaction
3. Transfer of information from depots to HO
4. Compilation of reports
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. Divisional Reports- Two monthly reports for each division - one for the
finance department and another for the GM’s office
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.
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. 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
4.5. TAX & DUTIES SECTION is concerned with calculation & payment of
various taxes and duties to the Government.
26
beginning 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.
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.
28
MATERIALS DEPARTMENT
1. OBJECTIVES
1. To control and account for the materials in the organisation.
2. To ensure the availability of materials and its quality.
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
29
This department is divided into 3 Sub Departments. They are:
1. Purchase
2. Stores
3. Traffic (Logistics)
Objectives
1. Purchase of materials for production, from India and abroad
2. Make available adequate amount of material at the right time
3. 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 order
5. Pre & post dispatch Inspections
30
6. Insurance
7. Payment
Purchase order
Raw material
requirement
Raw material
Transporting
Production
Plan
Chart no: 3
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
31
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 commissioning
Functions
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
32
User Department Raw material Payment Inspections
Requirement Procurement
Material
Validating Procurement
Requirement
Bid evaluation
YES Available NO Vendor
at stores & Financial
Development
Concurrence
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.
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.
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.
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. Approval of Bids on the basis of lowest quotation where sometimes
quality is compromised
2. Low working capital to maintain sufficient stock of goods
Functions
1. Receiving
2. Holding
3. Inventory Control
4. Issuing
5. Disposal
Disposal Issue
Chart no: 5
36
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.
38
non-availability does not resulting in any significant production down time
loss. The list is reviewed once in 2 years.
Objectives
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
39
Depot Transportation
Marketing division
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.
Optimisation Techniques
1. Transportation by railway
14 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.
41
PRODUCTION PLANNING DEPARTMENT
1. OBJECTIVES
1. Production planning
2. Co-ordination of production function
3. Co-ordination with Maintenance and Production department.
JGM (UD)
CM (Production)
MAINTENANCE
Production
C.M.E C.S.P
Chart no: 7
42
4. PRODUCTION PROCESS
Start here
Production Plant
targets Maintenance
Raw Material
Availability (RM Monitoring production
Dept.)
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.
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.
7. PRODUCTS
1. Ammonium Phosphate/ FACTAMFOS
2. Ammonium Sulphate
3. FACT urea
4. Muriate of potash
NP 20:20
450 1,60,000
(FACTAMFOS)
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.
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.
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
GM (Marketing)
47
4. 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
1. Sales Department
2. Distribution Department
3. Agronomy
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. Mass Communication Techniques
2. Personal Contact Method
49
novel education programs like village adoption of FACT have gained
national recognition.
The states offices are called area and their sub- divisions are called
regions.
Areas Regions
Kerala Alleppy Palakkad Kottayam Kannur
Tamil Nadu Coimbatore Trichy Madurai Vellore
Karnataka Mangalore Bangalore Belgaum Hospet
Andhra Pradesh Hyderabad Vijayawada Kakinada Nellore
Table No: 6
50
MARKETING OPERATIONS
AGRO SERVICE CENTRES 100
SWC / CWC POINTS 43
SOIL TESTING LABORATORIES 3
AREA & REGIONAL OFFICES 20
FIELD SALES OFFICES 100
DEALER POINTS 7759
Table No: 7
Start here
Chart no: 10
51
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 products
for providing information to management on achievement against the
target. The distribution department finds out the various depots as per the
information given by sales and sells the products and subsequently sales
report is prepared.
6. 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.
6.1. Functions
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 performa
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.
52
7. Performance of the Marketing Division during the financial year
2006-2007 as compared to the financial year 2005-2006.
The overall performance of the marketing division was satisfactory. The
financial performance of the division during the year 2006-2007 has been
seriously affected by the unprecedented increase in the cost of raw
materials compared to last year. FACT also had a decrease in the sales
when compared to the last sales. Sale of FACTAMFOS during the year was
11.93% which is less compared to that of 2005-2006. Total sales for the
year was 9, 47,004 MT compared to 9, 83,001 MT during 2005-2006. The
decrease in sales was 35,997 MT, i.e. 3.66% compared to 2005-2006. The
FACTAMFOS sales decreased from 7, 89,257 MT to 6, 95,104 MT during
the year i.e. a decrease of 94,153 MT which corresponds to a decrease of
11.93% during the year. Urea, Ammonia sulphate, MOP and mixture sales
shows an increase in sales compared to last year. About 3,407 tons of
Biofertilizers (Azospirillum, Rizobium, and phosphobactor) were sold
during the period a decrease of 52.28% when compared with last year
sales (2005-2006).
53
SALES TURNOVER
Subsidy
Quantity
Year Sales Value Total
( lakh tones )
( Rs lakhs )
1988-1989 11.58 27,614 15,126 42,740
Table no: 8
54
QUALITY CONTROL DEPARTMENT
Mgr (Q.C)
Shift-In Charge
Chemist
Lab Assistant
Chart no: 11
55
Product Quality check
Byproduct Quality check-only in case of byproducts sold
[R & D counter checks quality]
57
RESEARCH AND DEVELOPMENT
1. 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.
FACT has won Indian Chemical Manufacturers Association award twice for
outstanding performance in Development of technology & Export of
technology.
58
2. 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 biofertilizers.
Mgr (R & D)
Asst Mgr
Officer
Staffs
Chart no: 12
59
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.
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.
6. BENEFITS DERIVED
1. During the year 2006-07, R & D centre has produced 3.91 MT of Bio-
fertilizer and supplied to various Agro service centres and thereby
meeting the entire requirement of the Marketing Division.
2. Functioning of quality control cell enabled to maintain good quality of
products and to reduce considerably the P205 loss due to extra
nutrient content in NP 20:20
61
7. ENVISAGED ACTIVITIES
1. R & D centre plans to conduct research to know the effect of particle
size of vermiculite, a carrier material, on the growth of Bio-fertilizer
inoculants
2. R & D centre plans to conduct studies on the incorporation of Zinc as
Micronutrient in NP fertilizers
3. Development and field testing of suitable Biofertilizers for the acidic
soil especially of Kerala
4. Development of liquid fertilizer solution
5. Development of a closed circuit pollution free process for the
manufacture of weak nitric acid
8. EXPENDITURE ON R & D
Expenditure on R & D
Rs. in Lakh
Year Capital Revenue Total As % of Turnover
Table No: 9
62
FIRE AND SAFETY DEPARTMENT
1. GENERAL INFORMATION
As per the factory’s ACT 1948, any organization with more than 1000
employees or for Industries classified as Major hazardous unit (MHU) by
the Govt. of India, requires a safety department.
FACT has well established safety departments to look after the needs of
respective divisions. It is the firm policy of the company that no operation
is so important and no job is so urgent that one cannot find time to
perform it safely. Further, it aims to see that an employee remain as
healthy as he entered the plant, by providing safe environment and safe
working conditions, safe tools and procedures to carry out all operations.
2. OBJECTIVES
2.1. To ensure safety of the organization and of its employees and to act
under emergency
2.2. Train the employees for ensuring safety and to prevent accidents.
98% of the accidents are due to unsafe conditions. Therefore, they are
avoidable and only 2% accidents are unavoidable. The department aims at
avoiding unsafe condition and reducing unavoidable accidents.
3. FUNCTIONS
1. Training Activity
2. Checking compliance with the safety measures
3. Acting in case of emergency
63
4. ORGANISATIONAL CHART OF THE DEPARTMENT
JGM (UD)
Assistants
Inspectors Inspectors
Fireman
Chart no: 13
5.1. Training
5.1.1. Taking safety measures by training
Employees: Permanent as well as contract workers is trained to adhere to
the safety measures. Office staff is also given necessary training to react in
case of emergency and about the preliminary precautions to be taken
during their stay in the organization premises.
Barge operators: Barge transports hazardous materials like phosphorous
and sulphur through the inland water ways. Operators are trained to
handle raw materials with care and ensure their own personnel safety.
Lorry drivers: Training is given on handling hazardous materials while
transporting.
Plant operators: Training is given to plant operators, to act in case of
emergency and in handling safety equipments.
5.1.2. Emergency action (safety drill)
Mock drills are conducted for employees and for Fire team to improve the
operational efficiency.
64
5.2. Checking compliance with safety standards
5.2.1. Departmental Inspection
Inspectors are posted to production sites and premises on shift basis. They
continuously monitor the safety measures taken and checks for deviation.
The maximum permissible limit for each chemical in the environment,
working condition & noise pollution level is checked.
Ammonia 25ppm
So2 2ppm
Chlorine 2ppm
Noise: maximum 115 db -3 mts from machine. Permissible 90-105 db
When any deviation from the above said level is noticed then inspectors
inform the matter to the concerned plant manager or department head. If
the deviation is beyond the permissible limit, then production/process is
stopped and resumes only after the defects are cleared.
5.2.2. Measurement with sensors
Plant has inbuilt systems to measure deviations and is reported to the
control room and safety department.
6. SAFETY MEASURES
1. Bringing up all levels of working to a correct safety attitude through
training and interaction
2. Safe production by prompt attention on built-in- safety or integrated
safety
65
3. effective effluent treatment system in operation to render it harmless
before letting it out of the factory
4. in addition to the safety department prevalence of safety committee is
set up to promote active participation at all levels which meets once
in two months
5. Housekeeping inspection committee is set up to inspect the whole
factory area at least thrice in a year and decides inter departmental
housekeeping awards
6. A safety manual highlighting safety practices/ instruction is
distributed among employees as guideline
7. Routine plant inspection by safety fire staff and other staff in the line
function notices unsafe condition to take corrective measures
8. Display of safety cartoon or caution boards at important locations
9. Preparation of valuable information of safety and distribution among
employees
10. Organizing and conduct of mock drills based on onsite emergency
plan to further improve upon the emergency plan
66
COMPUTER SERVICE DEPARTMENT
1. GENERAL INFORMATION
The computer department of fact was launched in the year 1965, with the
introduction of first generation computers in finance to meet the growing
need for the speedy data processing. This multi system computer
department is constantly updating its hardware and software. They started
online computing in1986.The centre is equipped with servers in all its
divisions connected by FACT NET. A complete implementation and
interlinking of various departments were completed in 2004.
2. OBJECTIVES
2.1. To keep the management abreast of the fast paced technological
changes in the field of information technology and recommending
timely enhancements of the IT resources in the enterprise.
2.2. To project FACT into the promising area of e-commerce as soon as the
technology is adopted in a big way in the Indian business sector.
67
4. ORGANISATIONAL CHART OF COMPUTER DEPARTMENT
Chief Manager
Manager
System administrator
Staffs
Chart no: 14
Diagram No: 1
68
Today, CSC is equipped with Divisional database servers (SUN Enterprise
250) at each of the 3 production divisions and around 700 PC nodes. The
computing nodes are connected via WAN (Wide Area Network) at inter
divisional level through 64 Kbps/ 2Mbps BSNL leased lines / fibre optic
link and Ethernet LAN (Local Area Network) at department level. A
corporate Intranet on Windows NT platform provides e-mail access to
officers, besides hosting web pages containing daily updates of key
production and financial figures. Major applications are on INGRES
platform and being migrated to Oracle 8.
The On-line Integrated Information System (OIIS) that links all the
functional areas of the enterprise had been jointly developed and
implemented by M/s Tata Consultancy Services and CSC. The integrated
system, which runs on Oracle-8i database platform optimizes business
processes of the enterprise and provides information for decision-making.
Main modules of Online Integrated Information System (OIIS) are
finance, human resource, production, traffic/logistics, Maintenance,
Materials, Marketing and sales. Major software systems in the organization
are developed and maintained in-house by the skilled workforce at CSC.
6. ENVISAGED ACTIVITIES
1. Upgradation of WAN and LAN through OFC (optical fibre cable) by
2009
2. Web based connectivity for OIIS across various depots
3. Real time information transfer across depots to head office
69
1. HUMAN RESOURCE DEPARTMENT
2. GENERAL INFORMATION
Human resource management is one of the most complex and challenging
fields of endeavor. It is considered to be the most expensive and important
resource of every organization. In FACT the scope of Human Resource
Department is very vast.
3. OBJECTIVE OF HR DEPARTMENT
3.1. To maintain the optimum manpower required to sustain the growth of
Organization.
3.2. To motivate & manage human resource and train them to ensure their
personal and organizational development.
CMD (F.A.C.T)
GM (HR)
DGM (Admin)
CM CM CM (Est.) CM CM CE (Ind.
(Welfare) (IR) (Legal) (Trg) Eng.)
Mgr
(Public
Relation)
Chart no: 15
70
5. FUNCTIONS OF HR DEPARTMENT
1. Organizational human resource planning & development
2. Retirement & selection
3. Wage & Salary administration
4. Employee records maintaining
5. Performance appraisal
6. Welfare programme
7. Job evaluation
8. Handling employee grievances
9. Handling the legal issues within & outside the Organization
6. PROCESS OF HR DEPARTMENT
The human resource department has 3 blocks which are:
1. Establishment
2. Industrial relation
3. Welfare
71
The main functions are:
1. Communication between management and trade unions
2. Grievance handling
3. Settlement of dispute
4. Handling disciplinary action
5. Safeguarding Employee rights
6. Career related issues like promotion, transfer & rotation
7. Resolving daily petty issues
6.3. Welfare
Welfare schemes can be divided into Statutory, Agreement, Voluntary and
Incentives
72
Voluntary Scheme Incentives scheme
1. Contributory health scheme 1. Incentives for employees
2. Group personnel accident insurance scheme acquiring higher qualification
3. Aid towards funeral expenses while service
4. EX-gratia payment for accident deaths 2. Incentives to promote Hindi
5. Gratuity payment-company scheme 3. Incentive to promote family
6. Vehicle loan planning
7. Work clothes 4. FACT merit award
8. Rain coats & Umbrellas 5. FACT service award
9. Free milk supply 6. Attendance bonus
10. Supply of coconut oil, soaps, and towel 7. Suggestion scheme
11. Conveyance allowance for physically 8. Incentive for blood donation
handicapped 9. Incentives to promote sports &
12. Special Tiffin for fire and safety personnel players
13. Laundering of special clothes 10. Merit scholarship scheme for
14. Sports & Recreation employee’s children
15. Lalith kala Kendra
16. Fact employee’s consumer cooperative
society
17. Fact employees housing cooperative society
18. School facilities
19. Company accommodation
Table No: 10
7. INDUSTRIAL ENGINEERING
9. LEGAL SECTION
The department looks after the Legal affairs of the organization. It is
entrusted with the duty of handling cases within and outside the
organization in which the company is involved.
As part of cost reduction measures, from 1998 onwards FACT reduced its
employee strength. FACT had more than 9000 employees earlier, but it is
now reduced to less than 4000 employees by the successful
implementation of VRS. FACT has several divisions, which all together
consist of 3817 employees now. The following table shows the division
wise employee strength of FACT during April - 2008
75
Division wise Staff Strength - April -2008
Division
Strength Avg. Strength Avg.age Strength Avg.age
age
116 47 209 49 325 49
HO
FEDO 28 48 71 49 99 49
FEW 23 50 22 50 45 50
Table No: 11
76
TRAINING DEPARTMENT
1. GENERAL INFORMATION
Training Centre of FACT has started job-oriented courses in Fire & Safety
Engineering. New courses in Heavy Equipment operation & maintenance,
Welding technology and Process Plant operation are being organized. These
courses are planned to be offered in association with Governmental
agencies and statutory bodies. The objective is to convert the training
centre in to a “Skill Development Academy” with a view to provide facilities
for skills development and making educated youth employable.
2. OBJECTIVES OF TRAINING
2.1. To identify training needs of the employees as a whole on the basis of
uniform criteria
2.2. To impart required training, which equip the employees consisting of
officers and workers of the company with knowledge and skill,
required for improved performance
2.3. To meet training needs with specific reference to ISO 9001:2000 and
ISO 14001:2004 standard requirements
2.4. To maintain a database of training details and development activities
77
3. ORGANISATIONAL CHART OF TRAINING DEPARTMENT
CM (Training)
Mgr (TRG)
Officer (TRG)
Instructors
Staffs
Chart no: 16
5. TRAINING PROCESS
5.1. Identification of training needs, trainees & programmes
5.1.1. Department-wise identification of people to be trained
5.1.2. Suggestion of programmes by department head
5.1.3. Final selection of programmes by training department
5.1.4. Preparing detailed programme schedule by training department
78
The training activity plan prepared is generally for a period of three years
i.e. one cycle. During the period, the plan may however be revised. At least
7 different programmes are conducted in a cycle.
Impart Training
Validate Evaluate
Feedback
Chart no: 17
79
5.2. After the training plan is prepared, the programmes, facilities, method of
conducting and trainers are identified. Non-technical training programmes
are conducted in FACT Training hall at the Training Centre.
80
internal or external faculty on the basis of their availability and suitability.
Examples of programmes conducted by internal faculty are fire fighting
training, employee development programme, fire and industrial hygiene,
safety etc. Some of the external organizations which provide training
programme in FACT include National Productivity Council, Confederation
of Indian Industries, National Safety Council and Regional Labour
Institute. Some of the technical programmes conducted are innovative
approach in industrial pollution control, instrumentation and energy
conservation of boiler operations and maintenance of bearings.
Apart from the training conducted at training centre for the employees &
students there are external training conducted for the corporate cadre
managers i.e. for chief Managers and above. External training programs
are mostly conducted outside FACT.
5.4. Feedback
The important aspect of training is feedback since it checks the validity
and effectiveness of training. Feedback is usually obtained department
wise from the department heads, prepared by the immediate supervisors of
the trained employee. The change in work behavior or general behavior
forms the feedback.
6. CHALLENGES TO TRAINING
81
VIGILANCE DEPARTMENT
1. GENERAL INFORMATION
2. OBJECTIVE
CVO (FACT)
Chief Manager
DY Chief Manager
Inspector
Chart no: 18
The CVO has the power of dual reporting either to the CMD or directly to
CVC of Govt. of India.
82
4. FUNCTIONS OF VIGILANCE DEPARTMENT
4.1. Acting on complaints
4.2. Inspecting high value files
4.3. Maintaining transparency and accountability of jobs
4.4. Department-wise monitoring of frauds and malpractices
Start here
Start here
Dept-Wise monitoring
for frauds and Receipts of complaints
malpractices
YES
Take action
Chart no: 19
Vigilance Notice boards have been installed in all the offices all over the
company displaying the address and telephone numbers of the CMD, CVO,
and CVC. These authorities can be approached on complaints of
corruption. They can be accessed by e-mail also.
83
and on getting reliable information their names are included in the agreed
list for keeping a close vigil on their activities.
84
COMPANY SECRETARIAT
1. GENERAL INFORMATION
Company secretariat is a statutory requirement for all companies having
more than Rs. 2 Crores worth assets.
2. OBJECTIVE
To carry out the company affairs as directed by the Board of Directors and
to act as a link between B.O.D and the company.
CMD (FACT)
Company Secretary
Asst. Secretary
Officer
Staffs
Chart no: 20
4. FUNCTIONS
4.1. To act as the principal officer of the company
4.2. Carries out Board Director’s instructions
4.3. Public information officer complying with Right To Information
Act(RTI Act)
4.4. Compliance or adherence to the legal requirement of the organization
4.5. Supervision of share transfer/depository agents
85
Chapter 5
Functional Interdependence of
Departments
FUNCTIONAL INTERDEPENDENCE OF DEPARTMENTS
H
U
M
Fire & Safety A
N
R
E
S
O
U
R
C
E
M
A
N
Computer Centre A
G
E
M
E
N
T
R&D
Quality
Check
Vigilance
Diagram No: 2
86
1. Finance & Materials
Finance department procures fund for production and accounts for it.
With these funds materials are brought. During purchase the company
has to enter into contract, give letter of credit and other necessary
documents, which is done by the finance department. The traffic section of
the materials department helps the finance department in rising of fund by
providing a link in production and marketing its products. Finance
department plays a major role in vendor development by opening the bids
and deciding the feasibility of vendors.
6. H.R
H.R department ensures the development of human resource and its
productive utilization by directing it in the right channel.
87
7. Computer service centre
The department enhances inter-departmental and intra-departmental flow
of information and speedy data processing. Data access is controlled
within and between departments. Constant updating is done to catch up
with the modern developments.
All departments are interdependent and interrelated to each other for their
functioning. One department cannot operate without the absence of the
other. The performance of the company depends on the interdepartmental
functioning rather than the department wise functioning.
88
Chapter 6
1. Dealer Network
The dealer network plays a very crucial role in marketing of fertilizer in the
country. In most cases dealer, not only gives the fertilizer but also imparts
substantial knowledge and information on the use of fertilizer and
improved agricultural practices.
2. Community Awareness
Community awareness programs on safety, pollution control measure in
plants, onsite emergency plan and so forth are being carried out through
the public relations department.
3. Social welfare
The company has implemented the reservation policy of the government of
India for scheduled castes and scheduled tribes as well as for the other
backwards classes. It is presently employing 1855 SC/ST/OBC employees,
and has been actively implementing the special recruitment drive for the
employment of SC and ST. Consequent to this drive; the company has
been implementing the directives of the government of India on reservation
for other backward classes.
4. Hospitals
There are two full-fledged hospitals, one each at Udyogamandal complex
and Ambalamedu respectively. These hospitals provide both inpatient and
outpatient treatment to the company employees who are members of the
contributory health scheme. The hospitals also extend their service to
those who are not members.
89
5. School
Schools are established both at Udyogamandal complex and at
Ambalamedu. Schools provide free education to the children of company
employees and on payment basis to children of neighboring public sector
employees and for general public. The curriculum ranges from ICSE, Plus
2 and SSLC.
90
Chapter 7
Environmental Analysis
Environment Analysis
1. INTERNATIONAL SCENARIO
Around 95 percent of the fertilizer produced in the world is used for farm
crop. Fertilizers include both natural and artificial substances that
increase the productivity of agricultural land. It is clear that the rapidly
growing population of the world will increasingly depend on commercial
fertilizers for its food and fiber.
The world’s leading fertilizer producers are the Soviet Union and United
States. Other leading producers are China, Canada, France and India. The
world’s leading producer of phosphate rocks is the United States. The
Soviet Union and Morocco has the largest resources phosphate rock. The
largest deposits of potassium chloride, the major source of potassium
fertilizer, occur in Canada and Soviet Union. The fertilizer industry of the
United States is organized into separate segments for producing and
marketing Nitrogen, Phosphate or Potash intermediaries and products.
Some European countries are following the elemental system, N and K and
it is likely that rest of the world will adopt this system.
2. NATIONAL SCENARIO
3. STATE SCENARIO
Kerala has high degree of land use and cropping intensity. The state’s
agricultural productivity is decreasing year by year. The production and
cultivation of rice is decreasing and the farmers are concentrating on
commercial crops like rubber and coconut. Due to the decrease in the
cultivation of rice, the consumption of nitrate and potash has come down.
92
Kerala has one of the lowest consumption of fertilizer in the country per
hectare of land area. FACT has the major market share in Kerala. To gain
the market share FACT is planning to increase its marketing programs in
several areas of the Kerala state.
4. COMPETITORS OF FACT
93
Chapter 8
SLOT Analysis
SLOT ANALYSIS OF FACT
1. STRENGTH
1.1. High capacity utilization.
1.2. High quality products. FACTAMFOS is a premium product in complex
fertilizer containing Sulphur
1.3. Sustained operating parameters of the plant at good level and
productivity of plant at good level
1.4. Well-qualified and technically skilled manpower
1.5. Good support with farmers/end segment
1.6. One of the two producers of Caprolactum in India with world-class
quality
1.7. ISO Certification to most of the divisions
1.8. Strong dealer network in South India
1.9. Good engineering and consultancy design, perhaps one among the
best in Indian Fertilizer segment
1.10. FEDO has own process know-how for hydrogen, Sulphuric Acid,
Ammonium Sulphate, DAP and complex fertilizers
1.11. FEDO has worked in association with many international process
licensors, and has acquired the capacity of customizing and designing
projects to the requirements of the Indian consumers.
1.12. FEDO is an approved center of surveyors and audit for portliness,
installation, non-destructive testing energy audits, ISO audits and so
on.
2. LIMITATIONS
2.1. The government controls the prices of finished goods, but the prices
of raw materials are uncontrolled. So it is forced to operate in an
uneconomic situation
2.2. The average age of employee is very high (49 Yrs). The number of
younger professionals is decreasing and some managerial personnel
94
are forced to handle more than one position due to freeze on
recruitment.
2.3. Lack of product line diversification
2.4. Lack of working capital resources
2.5. Several unskilled jobs, which could be sub contracted are undertaken
by the permanent employees at high cost
3. OPPORTUNITIES
3.1. Less expensive alternative sources of energy and other inputs
3.2. Acquiring technology to utilize other available resources
3.3. Expanding production capacity to drive benefits of scale
3.4. FACT ammonium sulphate has greater demand in foreign countries
3.5. Opportunities for product diversification
3.6. Very large asset base
4. THREATS
4.1. Unfavorable policy of the Government
4.2. Diminishing market for Caprolactum
4.3. Infiltration of more fertilizer products to the southern markets from
other producers
4.4. Inherent bottlenecks in infrastructure facilities
4.5. Lack of product differentiation
4.6. High pricing and scarcity of raw materials
4.7. Severe liquidity crunch leading to non-operation of plant at higher
capacity
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CONCLUSION
About FACT
FACT is the pioneer in fertilizer production which paved the way for
increased productivity in agricultural sector. It started with a vision to
become a dependable global player in agriculture and provide self reliance
in engineering and technology especially in fertilizers. With this vision it
navigated through all difficulties which came on its way in the initial
stages of growth. Setting up of R & D centre was an envisaged activity to
keep abreast with the latest development, especially for Biofertilizers
manufacture.
Today, the organization runs at loss and is short of working capital. The
working capital crunch has stopped most of its envisaged activities. The
organization as of now is stagnating and is in a difficult stage of
production. The immediate impact is seen in its low funding to R & D
department, reluctance in adopting new technologies, revising the
corporate plans to the bare minimum targets and reduction in welfare
measures of the company. The trend has badly affected its market share
and has stepped behind in competing with its contemporary organizations.
However, even in this tragic situation, the company is operating above 90%
capacity utilization. The management and its staff are putting their best to
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sustain the company. Trade unions are cooperating with the management
by understanding the company’s situation and responding to its need.
The future however looks bright when the opportunities and strengths of
the organization are considered. FACT’s real strength is its experienced
employees who have tasted the different stages of its growth. Further, it
tries to acquire new technology for cutting the cost of production.
Government’s new policy on subsidy may rewrite the history of FACT.
The study was conducted with a view to understand the functions of FACT
and its department. During the course of study I was successful in
achieving these objectives and could familiarize with an organization and
its environment.
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