REPORT ON ORGANISATIONAL STUDY AT FERTILISERS AND CHEMICALS TRAVANCORE Ltd.

Vivek Menon
(Reg. No: 85270050)

Under the Guidance of

Dr. Sarada S
Reader

Submitted in partial fulfillment of the requirement for the award of the degree of

MASTER OF BUSINESS ADMINISTRATION

to the Cochin University of Science and technology

School Of Management Studies

Kochi-682022, Kerala, India Year-2008

CERTIFICATE

This is to certify that this REPORT ON ORGAINSATIONAL STUDY AT FERTILISERS AND CHEMICALS TRAVANCORE LTD. is a bonafide study of Vivek Menon of the third Semester MBA student of School of Management Studies at the Cochin University of Science and technology.

Place: Date:

Dr. Sarada. S Reader

DECLARATION

I Vivek Menon, third semester MBA student of school of management studies at the Cochin university of science and technology do hereby declare that this report on ORGANISATIONAL CHEMICALS STUDY AT FERTILISERS Ltd. under AND the

TRAVANCORE

COCHIN

guidance of Dr. Sarada. S, Reader, School of Management Studies in partial fulfillment of the requirement for the award of the degree of Master of business administration is a bonafide study I have done in the organisation. I also declare that this report has not been previously formed the basis of award of any Degree, Diploma, Associate ship, Fellowship or any other similar title of this or any other university or institution.

Place: Date: Vivek Menon

ACKNOWLEGEMENT

I would like to acknowledge my profound sense of gratitude to:

the Almighty for giving me strength and ability to successfully complete the study and make this report on time

Dr.

Sarada,

Reader,

School

of

Management,

Cochin

University of science and technology, my guide for this study, who guided me with her valuable suggestion. She was a source of inspiration for me to complete the study and make this report on time and was instrumental in shaping this report.

Mr. John R Daniel, Chief Manager (Training) FACT, for his guidance and support which he rendered throughout the study and he was instrumental in shaping this report

this great institution of excellence which has encouraged me to undertake such an organization study. I also extend my sincere gratitude to our Director, Prof. (Dr.) Mary Joseph, of School of Management Studies of the Cochin university of science and technology.

to all employees of FACT for their kind cooperation for completion of this work.

ABSTRACT

I underwent an organizational study at FACT to acquaint myself with the business environment for a period of one month from May 15, 2008 to June 14, 2008 as a part of the MBA curriculum at the school of management studies of the Cochin University of Science and Technology.

The study was conducted to understand the structure, function and processes of various departments and their interdependence. During the course of study I was able to successfully interact with the employees of the organization. They were happy to give me all possible information. They also took me to the plants and worksites where I got the first hand information functions. about the organizational processes and its

The methodology consists of data collection through interview, observation and literature review. The data collected from different sources are classified, analyzed and interpreted. Based on which an organizational structure, its functions and various departments are identified. The various departmental functions are clearly identified and their processes & activities carried out are recorded. An in-depth analysis is made us to understand the departmental process based on which a process chart is prepared. The analysis further formed the basis for identifying the departmental interdependence. The study further revealed some of the challenges faced by the

departments. The study helped us to obtain an exact picture of FACT based on which, a slot analysis is done. Finally, with the help of latest statistics available from the organization, the present trend and current scenario of FACT is clearly revealed.

LIST OF CHART, TABLES AND FIGURES Chart

Chart No. Particulars Page No:

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21

Organizational chart Organizational chart of Finance department Organizational chart of Materials department Raw Material procurement process Equipment and spares procurement process Process flow in stores department Process flow in traffic department Organizational chart of production department Production process Organizational chart of market department Process chart of market department Organizational chart of quality control department Organizational chart of R & D department Organizational chart of fire & safety department Organizational chart of computer division Organizational chart of HR division Organizational chart of training division Training process chart Organizational chart of vigilance department Vigilance department process flow Organizational chart of company secretariat

20 21 29 31 33 36 40 42 43 47 51 55 59 64 68 70 78 79 82 83 85

Tables
Table No. Particulars Page No:

1 2 3 4 5 6 7 8 9 10 11

Performance at NSE Distribution of shareholdings Brief picture of FACT Milestone of FACT Products of FACT Areas and regions of distribution Marketing operations Sales turnover Expenditure on R & D Welfare scheme Division wise staff strength

10 11 12 15 45 50 51 54 62 72 76

Diagrams
Diagram No. Particulars Page No:

1 2

Process flow in computer department Interdependence of department

68 86

CONTENTS

Topic

Page No:

Certificate from organization Certificate from guide Declaration Acknowledgement Abstract List of figures, tables and chart

i ii iii iv v vi

Chapter No: 1. 2. 3. 4. About the study History of FACT About FACT Functional departments 4.1. Finance department 4.2. Materials department 4.3. Production department 21 29 42 1 3 8

4.4. Marketing department 4.5. Quality control department 4.6. R & D department 4.7. Fire & Safety department 4.8. Computer service department 4.9. Human resource department 4.10.Training department 4.11.Vigilance department 4.12.Company secretariat 5. 6. 7. 8. Functional interdependence of departments Corporate social responsibility Environment analysis SLOT analysis

47 55 58 63 67 70 77 82 85 86 89 91 94

Conclusion Bibliography

96

Chapter 1

About the study

1. OBJECTIVE OF THE STUDY

The organizational study was carried out at FACT Ltd. Udyogamandalam to achieve the following specific objectives:1.1. To understand the organizational framework & its functioning. 1.2. To gain knowledge about different departments of the organization and the functions. 1.3. To study the interdependence of different departments. 1.4. To make a SLOT analysis of the organization

2. METHODOLOGY OF THE STUDY

2.1. Observation By observing the general surrounding, the functional process, interactions of employees etc. Work site and plants were visited were the actual process of production and activities of various department were seen and understood. 2.2. Data collection 2.2.1. Direct method Through Interview & discussion We interacted with the employees and understood the work and responsibility carried by each of them. This helped us to understand the various department and their functions clearly. Further discussion with them revealed some key functions and process carried by each department and the departmental interdependence. 2.2.2. Indirect method Literature review Companys internal records, Publication, Annual report, Journal, statutory report, website (official site & others). The data collected companys departmental manual added key information to this report and help us to understand the process carried by each department in detail. Annual reports are used as statistics to reveal the present scenario of the organization.
1

Previous report on organizational study formed basis for shaping this report. 2.2.3 Data Authentication The process chart prepared for each department was given to the respective department heads for correction. The rough report prepared was also given to the organizational guide for correction.

3. LIMITATIONS OF STUDY
3.1. 3.2. 3.3. Time was a major limiting factor. Secondary data available from company manuals were outdated (the manuals are being updated). Lack of co-operation from certain departments due to their work load.

Chapter 2

History of FACT

HISTORY OF FACT
Mans history is replete with revolutions, responsible for molding his system of thought and shaping his modes of living. Revolutions have, more often than not, emerged out of crisis-situations it was one such crisis situation that guided the enlightened perception of a far sighted visionary to form FACT. Yes! The FERTILISER AND CHEMICALS TRAVANCORE LIMITED-popularly known as FACT-was indeed a revolution when it was established as the first large scale fertilizer factory in the country. Since then, it has played a major role in creating fertilizer consciousness among our farmers, and giving a positive direction to the modernization of agriculture in India. And that, of course is an interesting story-a story of never ending challenges and constructive responses. The beginning The 1940,s were a time of critical food shortage in our country. The traditional approach to cultivation was not of much help in finding a solution to this problem. And nitrogenous fertilizer had not yet arrived on the agriculture scene in sufficient quantities to make any perceptible impact. A revolution was indeed necessary to change the status quo. And when it came, it did through the vision of Dr. C.P. Ramaswami Aiyar, the Dewan of the former Travancore State, who mooted the idea of increasing food production by the application of fertilizer as a long term solution to food problem. To give concrete shape to his idea, he sought the help of Seshayee Brothers Ltd. Industrialist known for their pioneering work. And Indias 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 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 byproduct, chlorine, as hydrochloric acid to produce Ammonium Chloride. These by-products produced by FACT paved the way for setting up of other industrial units around the FACT complex viz. Hindustan Insecticide Ltd., Indian Rare Earth Ltd., etc. Expansion In the late 50s, the Udyogamandalam Division launched its first expansion with an outlay of Rs. 3 crores. Highlights of the period were the installation of two plants to produce Phosphoric Acid and Ammonium Phosphate (16:20 Grade). The second stage of expansion involving Rs. 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. FACT became a Kerala State Public Sector Enterprise on 15th August 1960. On 21st November 1962, the Government of India became the major shareholder. The 2nd stage of expansion of FACT was completed in 1962.

The 3rd stage of expansion of FACT was completed in 1965 with setting up of a new Ammonium Sulphate Plant. FACT has been a pace-setter in marketing evolving a continuous and comprehensive package of effective communication with farmers and promotional programmes to increase the fertilizer consciousness among our farmers. In fact, FACT was the first fertilizer manufacturer in India to introduce the village adoption concept since 1968 to improve agricultural productivity and enhance the overall socio-economic status of farmers. FACT has a well organized marking net work, capable of distribution over a million tones of fertilizers. With the licensing of Cochin Division in 1966 FACT further expanded and by 1976 the production of sulphuric acid, phosphoric acid and Urea was started. In 1979 Production of NPK was commercialized. Technical Divisions FACT Engineering and Design Organization (FEDO) was established in 1965 to meet the emerging need for indigenous capabilities in vital areas of engineering, design and consultancy for establishing large and modern fertilizer plants. FEDO has since then diversified into Petrochemicals and other areas also. It offers multifarious services from project identification and evaluation stage to plant design, procurement project management, site supervision, commissioning and operating new plants as well as revamping and modernization of old plants. FEDO received international accreditation ISO 9001 2004 for quality system standards covering areas of consultancy, design & engineering services for construction of large fertilizer, petrochemicals, chemicals and related projects including purchasing, construction, supervisor, inspection and expediting services. FACT Engineering Works (FEW) was established on 13th April 1966 as a unit to fabricate and install equipment for fertilizer plants. FEW was originally conceived as a unit to fabricate and install equipment for FACTs
5

own plants. Over the year it developed capabilities in the manufacture of class I pressure vessels, heat exchangers, rail mounted LPG tank wagons etc. It has a well equipped workshop approved by Lloyds Register of Shipping, further; this division has excelled in laying cross country piping fabrication and installation of large penstocks for hydel units in Kerala. The Cochin Division of FACT, the 2nd production unit was set up at Ambalamedu and the 1st phase was commissioned in 1973. The 2nd phase of FACT Cochin Division was commissioned in 1976. The project was designed to produce Ammonia which would be converted to Urea and also to produce high analysis, water soluble NP fertilizers. This division comprises of a number of large capacity plants to produce Ammonia, Urea, Sulphuric Acid, Phosphoric Acid and Fertilizers like FACTAMPHOS 20-20 and DAP 18-46. FACT has also a Research & development Department which carries out research related to fertilizers. This Division is also capable of doing fundamental research in areas of fertilizers and chemicals technology. So far FACT R & D has taken 17 patents in areas like Sodium Fluoride, Sulphuric Acid and Ammonium Phosphate. Breakthrough FACT took a major breakthrough, when its 50,000 TPA plant of Caprolactum was commissioned in 1990 as a major diversification plan from our traditional field of fertilizers and allied chemicals. The plant with a capacity outlay of Rs. 368 crores utilizes the most modern technology and the product is acknowledge as one of the best in the world. It also produces 2, 25,000 tonnes per Ammonium Sulphate as co-product.

Subsequently, FACT set up a 900 TPD Ammonia plant at Udyogamandal with an investment of Rs 618 crores. This replaced the old Ammonia plant of Udyogamandal Division. The plant commissioned in 1998. FACT has been entering into a Memorandum of Understanding, (MOU) with the ministry of chemicals and fertilizers every year. This is as per the guidelines of DPE, Ministry of finance GOI. The objective of FACT is to achieve excellence in performance as per the MOU agreement.

Chapter 3

About FACT

1. VISION & MISSION OF FACT

1.1. Mission of FACT
To function as a dependable and globally competitive producer of fertilizer and other allied products and to develop self reliance in the field of engineering and technology, especially in the field of fertilizers, chemicals, petrochemical, oil & gas industries

1.2. Vision of FACT

To emerge as a leading company in the business of providing quality agriculture and industrial inputs and providing engineering services for industrial and infrastructural facilities.

2.

CORPORATE OBJECTIVES
well being and growth through the production and marketing of fertilizers and chemicals and through the acquisitions/development and dissemination of engineering technology know-how and skills.

2.1. To be of service to the nation and to contribute effectively to its economic

2.2. To sustain and improve its pioneering role in the development of indigenous development. 2.3. To improve productivity and maintain high standards of quality and adopt effective measures for controlling cost and minimizing dependence on imports. 2.4. To ensure for its customers the availability of its products and services on reasonable terms, for its shareholders a fair return on capital invested and, for itself, development of adequate internal resources for continual growth and expansion. 2.5. To actively work for rural uplift through guidance, advice and service to the farmers in co-operation with all other agencies working for agriculture development and allied activities. 2.6. To develop, train and maintain a team of motivated and disciplined personnel with required skills and abilities, and to encourage innovation
8

engineering

and

technology

through

research

and

and to create a condition for their functioning and career development so as to improve their overall quality of life 2.7. To project a favorable image of the company and its operations, in the society in which it operates, amongst its customers and suppliers and amongst the public in general. 2.8. To continuously plan its future operations for sustained growth and stability for meeting the needs of the country.

3.

CORPORATE GOALS
crore by the year of 2010

3.1. To achieve a net profit of 200 crore per year with a turnover of Rs.2100 3.2. To focus on cost reduction and technology up gradation in order to become competitive in each line of business. 3.3. To constantly innovate and develop new products and services to satisfy customer requirements. 3.4. To invest in new business lines, where profit can be made on sustainable basis over the long term. 3.5. To compete through speed, agility and flexibility in recognizing and capturing opportunities in existing markets. 3.6. To invest sufficiently to stay in the game but avoid premature commitments.

4. LEGAL FRAME WORK OF THE COMPANY

FACT is a public limited company registered under the Companies act 1956. As a major industrial Organisation, FACT complies with all laws and statutes which govern industries in general. 1. 2. 3. 4. 5. 6. Factories Act, 1948 Excise Act, 1944 Sales tax Act, 1959 Industrial Disputes Act, 1947 Employee Staff welfare Act, 1948 Workmen Compensation Act, 1923
9

7. 8. 9.

The Payment of Gratuity Act, 1972 The Payment of Wages Act, 1936 Trade Unions Act, 1926

10. Standing Orders Act, 1946 11. Payment of Gratuity Act, 1972 12. Provident Fund and Miscellaneous Provisions Act, 195

5. OWNERSHIP PATTERN
The Fertilizers and Chemicals Travancore Ltd (FACT), is a Schedule A category Government of India enterprise, under the administrative control of department of fertilizers in the Ministry of Chemicals and Fertilizers. FACT was incorporated in 22/09/1943 and in 1960s the Government of India became the major shareholder. A Board of Directors manage the Organisation. The chairman of the Board of Directors is the Managing Director. FACt has a full time Finance Director, a Technical Director and a Marketing Director. There are also six part time Directors on the Board, nominees of Central and State Government. Shares of the company are listed at National stock exchange of India (N.S.E) PERFORMANCE OF SHARES AT NSE Month April May June July August September October High (Rs) 33.85 34.00 27.50 30.90 27.35 26.80 26.15 Low (Rs) 28.35 27.50 21.25 23.00 21.70 24.70 24.10

10

November December January February March

23.90 24.80 26.85 26.40 23.00

Table No: 1

22.15 21.75 23.75 23.75 20.55

Source: Annual Report 2006-07

DISTRIBUTION OF SHAREHOLDING Category Government holding Government of India State Government Sub total Non promoter holding Insurance companies Sub total Others Private corporate Bodies Indian public NRIs or OCBs Clearing member Sub total Grand total 473597 2187434 14316 19573 2694926 3554771974 0.14 0.62 0.76 100.00 4026854 4026854 1.14 1.14 345465200 2585000 348050200 97.38 0.72 98.10 Number of shares Percentage of shareholding

Source: Annual Report 2006-07

Table No: 2

11

6. BRIEF PICTURE OF FACT

Name Slogan Established in the year Location Promoters Production units of Fertilizers Caprolactum Fabrication Division FEW Consultancy Division FEDO Marketing Division Head office Area offices Liaison Offices Marketing Territory

Fertilizers And Chemicals Travancore Ltd (FACT) Pioneers in progress 1944 Udyogamandal, Cochin, Kerala Government of India

Udyogamandal & Ambalamedu Udyogamandal Palluruthy, cochin Udyogamandal

Udyogamandal Trivandrum, Chennai, Bangalore and Hydrabad Trivandrum, Chennai, Mumbai, New Delhi South India: Kerala, TamilNadu, Karnataka, Andhra Pradesh
Table No: 3

12

7. DIVISIONS OF F.A.C.T
7.1. Udyogamandal Division FACT commenced operation at Udyogamandal with the commissioning of a 50,000 tonnes per annum Ammonium Sulphate Plant in 1947. In the decades that followed multi stage expansion programs were undertaken bringing in the latest technologies of the day which were quickly mastered and successfully implemented. Today the division is 40 year old small capacity plants and 10 year old state of the art technology plants. The latest addition to this unit was a 900 tonnes per day Ammonia Complex set up with an investment of RS 618 crores. FACT Udyogamandal division is certified to ISO 14001, the environmental system standards. 7.2. Cochin Division FACT Cochin Division was set up in the 1970's at Ambalamedu, 30 km from Udyogamandal and adjacent to the Cochin Refineries. Phase-I of the division saw the setting up of an integrated Ammonia urea complex utilizing Indian Engineering skills. A large scale complex fertilizer plant of 485,000 TPA was set up as phase-II. Sulphuric acid and Phosphoric acid plant of economy scale were also set up. 7.3. Petrochemical Division FACT diversified into petrochemicals in 1990 with the production of Caprolactum. This versatile petrochemical product is the raw material for the manufacture of nylone-6, which finds extensive application in textiles, tyre cord and engineering products. Thanks to its high quality, the product has been acknowledged as among the best in the world. The division is located adjacent to the Udyogamandal division. Co-product Ammonium Sulphate is transferred to the fertilizer plant of Udyogamandal division for processing.

13

7.4. FACT Engineering & Design Organization (FEDO) FACT Engineering & Design Organization (FEDO) was established in 1965 for utilizing the considerable indigenous plant building expertise accumulated by FACT in its process of nurturing the nascent chemical fertilizer industry. FEDO is today one of India's premier project engineering organization, catering to a wide spectrum of industries like petrochemicals, refining, pharmaceuticals, hydrometallurgy etc as well as petroleum storage, environmental engineering, offsite facilities etc. The division undertakes project execution on consultancy and turnkey basis, handling the intricacies of the technology sourcing, design and engineering, hardware procurement and construction with practiced ease. FEDO is ISO 9001 certified. 7.5. FACT Engineering Works (FEW) Established in 1966, FACT Engineering Works was originally conceived as a unit to fabricate and erect equipment for fertilizer plants. Over the years, it developed capabilities in the manufacture of Class I Pressure Vessels, Heat Exchangers, Columns, Towers etc. required for the fertilizer, petrochemical and petroleum industries. FEW received ISO 9002 Certification in 1998.

8. BOARD OF DIRECTORS & EXECUTIVE DIRECTOR

BOARD OF DIRECTORS
Dr. George Sleeba Sri. Asokan A. Sri. Vijay Chhibber Dr. Jivtesh Singh Maini Dr. R. Kannan PhD. I.A.S Chairman & Managing Director Director (Marketing) Part-time Director (Nominee of Govt. of India) Part-time Director (Nominee of Govt. of India) Chief Vigilance Officer
14

EXECUTIVE DIRECTOR
Sri. Venkatakrishnan.S Sri. K. V. Balakrishnan Source: Annual report 2006-07 Executive Director (Finance) In Charge Company Secretary

9. MILESTONES OF FACT
22/09/194326/06/19471959-6015/08/1960196221/11/196224/07/196513/04/196607/06/196615/10/196601/10/197127/04/197301/10/197310/11/1976Incorporation Production started UD-1st stage expansion completed FACT came under public sector4 UD-2nd stage expansion completed Govt. of India became major shareholder6 FACT Engineering & Design Organization FACT Engineering works CD-Phase I License issued UD 3rd stage expansion completed UD 4th stage expansion completed CD I, Urea plant commissioned UD 4th stage 150 TPD Ammonium phosphate CD-II, Sulphuric acid plant commissioned

15

10/12/197610/01/197701/04/1979198118/05/198414/09/198406/08/198509/11/198826/07/198913/12/198921/09/199020/12/199001/03/199101/03/199122/03/199825/09/199303/11/199809/11/1998-

CD-II, Phosphoric acid plant commissioned CD-II, NPK trial run started CD-II NPK Commercialized 450 TPD Sulphuric acid plant modified to DCDA process PD-Caprolactum technical collaboration agreement PD-Zero date of ASCC project PD-Caprolactum license issued SO2 Acid plant Commissioned Award for excellence in performance FEW shifted to Palluruthy Oleum production commenced CD-12 MW captive power plant PD-Caprolactum commercial production started UD-New Ammonium Sulphate Commercial production started 900 TPD Ammonia plant commercial production started Foundation stone-900 TPD Ammonia plant 900 TPD Ammonia plant guarantee test run
Table No: 4

16

10. PRODUCTS & PRODUCT MIX

10.1. PRODUCTS
10.1.1.Finished products Ammonium Sulphate - Udyogamandal Division Ammonium Phosphate / Complex fertilizers / Factamfos - Udyogamandal Division & Cochin Division Caprolactum - Petrochemical Division Biofertilizers - Research & Development Division 10.1.2. Exported Products Caprolactum - Petrochemical Division Ammonium Sulphate - Udyogamandal Division 10.1.3.Byproducts Nitric Acid & Soda Ash - Petrochemical Division Gypsum - Udyogamandal Division & Cochin Division Carbon Dioxide Gas - Udyogamandal 10.1.4. Intermediary Products Ammonia - Udyogamandal & Cochin Division Synthesis Gas - Udyogamandal Division Sulphuric Acid - Udyogamandal & Cochin Division Oleum - Udyogamandal Division SO2 Gas - Udyogamandal Division Phosphoric Acid - Udyogamandal & Cochin Division

10.2. PRODUCT MIX

10.2.1.Straight Fertilizers Ammonium Sulphate - Containing 20.6% N in Ammonical form and 24% sulphur, an important secondary nutrient. Ultraphos - FACT markets imported Rock Phosphate containing 32% P2O5 under the brand name "Ultraphos". This high analysis fertilizer is
17

found suitable for application especially in Coconut/ Rubber/ Oil Plam/ Tea Plantation. 10.2.2. Complex Fertilizers Factamfos 20:20:0:15 - NPK complex fertilizer - Factamfos or Ammonium Phosphate contains 20% N in ammonical form, 20% P in water soluble form and 15% sulphur; a secondary plant nutrient, which is now attaining great importance in agriculture. Factamfos also can be used for foliar spraying. 10.2.3. NPK Mixtures NPK Mixtures - FACT prepares crop specific standard mixtures for all crops in Kerala and also special NPK mixtures for plantation crops like Tea, Coffee, Cardamom, Rubber etc. Rose Mixture - A fertilizer tonic for Roses. Vegetable Mixture - A special blend exclusively prepared for vegetable. Garden Mixture - A special nutrient combination for both flowering and foliage ornamental plants. 10.2.4.Imported/ Traded products - FACT has entered into direct import of MOP and also trading of Imported Urea. Bio fertilizer - FACT produces and markets 'N' fixing Bio fertilizers Rhizobium, Azospirillium and 'P' solubilising bio fertilizer Phosphobactor.

10.3. CHEMICALS
Anhydrous Ammonia - FACT produces Ammonia of over 99.96% purity. Sulphuric Acid - FACT has one of the largest plants in Asia and it manufactures Sulphuric acid of 98% purity. Caprolactum - It is the raw material for Nylon-6. The product quality of FACT Caprolactum is among the best available in the world. Nitric Acid and Soda Ash - Small qualities of these are obtained from Caprolactum plant as byproduct.

18

Nitric acid (55%) Capacity Concentration (by weight) Ammonium Nitrate (by weight) Specific gravity at 20 0C Delivery Soda ash (off grade) Capacity Total alkalinity (as Na2CO3) (by wt) Sulphate (as Na2SO4) (by weight) Bulk density (g/L) Delivery : : : : : 4750 TPA 95% (min.) 1.5 to 3% 1.35 to 1.50 Ex-factory - bulk : : : : : 3800 TPA 55% (min.) 1% (max.) 1.339 Ex-factory - tanker load

19

CMD
DIR FINANCE DIR TECH C.V.O

DIR MARKETING

GM MARKETING

GM HR

GM (CP & PC)

GM MATERIAL

GM (CD)

GM (UC)

GM (F&F)

JGM (UD)

JGM (PD)

CM SALE CM MAINTENANCE

CM DISTRUBUTION

CM AGRONOMY

CM PRODUCTION

CM FEDO

CM FEW

CM PURCHASE

KL

TN

AP

KAR

CSP

CME

MGR STORES

MGR QUALITY

MGR SAFETY

MGR R&D

MGR TRAFFIC

MGR STORES

COMPANY SECRETARY

TRAFFIC

AMMONIUM SULPHATE

AMMONIUM PHOSPHATE

PHOSPHORIC ACID

SULPHURIC ACID

AMMONIA

PE

PE

PE

ABBREVATIONS OF ORGANISATION CHART DIRTECHC.V.OC.PP.CCDUCF & FJGMUDPDCMC.S.PC.M.EMGRP.EDIRECTOR TECHNICAL CHIEF VIGILANCE OFFICER CORPORATE PLANING PRODUCTION COORDINATION COCHIN DIVISION UDYOGAMANDAL COMPLEX FEDO & FEW JUNIOR GENERAL MANAGER UDYOGAMANDAL DIVISION PETROCHEMICAL DIVISION CHIEF MANAGER CHIEF SUPERINTENDANT PRODUCTION CHIEF MECHANICAL ENGINEER MANAGER PLANT ENGINEER

20

Chapter 4

Functional Departments

FINANCE DEPARTMENT
1. OBJECTIVES
forecast its requirement in the future and plan accordingly and to check for deviation. 1.2. Report the financial performance of the company to Management, stakeholders & and to comply with the Govt. rules and regulations

1.1. To Manage & account for the financial resource of the Organization, to

2. ORGANISATIONAL CHART OF FINANCE DEPARTMENT

Director (Finance)

DGM (IA)

DGM (Finance)

CM (Bills & Mat)

CM (Sales)

CM (Costing, MIS, Budget)

CM (Gen A/c)

Mgr (IA)

Mgr (cash, Bank & Payroll)

Mgr (Tax & Duties)

Chart no: 1

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.

21

4.

PROCESS OF FINANCE DEPARTMENT

Finance department in FACT is divided into five sections for carrying out its process. They are: 1. 2. 3. 4. 5. Bills & Materials Sales Costing, MIS, Budget Cash, bank & Payroll and Tax & duties

4.1. BILLS & MATERIALS-The main functions are Stores accounting and Receiving, Dispatch and holding of bills 4.1.1. Bills section Bills section deals with the contract account for execution of civil works and other construction/erection, maintenance and services. It includes: 1. 2. 3. 4. 5. 6. 7. Sale of tender form Remittance of EMD Remittance of security deposit Issue of materials to the extractors Receipts to certified bill in the specified format Security on running account bills and final bill Statutory procedures and formalities in works contract

4.1.2. Stores accounting Main functions of stores accounting are: 1. 2. 3. 4. 5. 6. Receipts of stores Issue of stores Returns of stores Value adjustments Reconciliation with control accounts Unconsumed materials lying at site at the close of financial year

22

4.2. SALES ACCOUNTING

Some of the functions are 1. 2. 3. 4. Accountability for selling and distribution of products & byproducts Recording the transaction Transfer of information from depots to HO Compilation of reports

4.3. THE COSTING, MIS AND BUDGET SECTION is concerned with ascertaining the cost of production, providing information, helping to prepare a budget, forecasting the performance and finally making a plan. 4.3.1. Cost accounting Identification of the cost centre - Direct expenses is recorded to the respective cost centre. Indirect expenses are separately booked and allocated at the end of the year. Cost sheet is prepared in two ways. The item in the cost sheet is compiled on the basis of process of the products or on the basis of elements of the product. Cost centre in Ugyogamandal Division Process water, DM water, Steam, CPP, Ammonia, Sulphuric Acid, So2/ Oleum, Phosphoric acid, Pollution Control, Ammonium Sulphate, Ammonium Phosphate Classification of cost Variable cost-Raw Materials, Intermediate products, Consumable, Products, Utilities, Packing materials, Pollution control expenses. Fixed cost-Fixed cost of a product mainly consists of conversion cost of the product of Salaries and wages (Direct, Indirect, Administration & Maintenance),Staff welfare expenses, Insurance, Plant maintenance, Depreciation, Factory overheads, Administrative overheads, Head office overheads, Gratuity and bonus, Interest on term loans and working capital.
23

4.3.2. MIS (Management information system) To provide the management with vital facts which affects the efficient running of the business for decision making on planning, organizing and controlling the major activities of the organization and initiating suitable action. MIS Briefly consists of: 1. 2. 3. 4. 5. 6. Divisional Reports- Two monthly reports for each division - one for the finance department and another for the GMs office P & L Account-Statement and its analysis Production performance of the division Inventory position Cost of production-Actual and budget for the month Specific information important for the management-Major projects, man-hour utilisation etc. 4.3.3. Budgeting Two types of budget-Revenue and Capital budget Two types of estimates- Budget estimate and revised estimate Revenue Budget Every year early in August detailed production targets and norms for consumption of materials for remaining portion of the current year and also for the next financial year are prepared by the head of Divisions. Capital Expenditure Shows all items of capital expenditure to be undertaken during the budget period like expenditure on acquisition of new assets like machinery, furniture and office equipments which have reasonable life; expansion of existing facilities and modification and improvements to plant and machinery resulting in i) increase in capacity ii) Increase in useful life iii) Improvement in quality of output and iv) reduction in cost of output is treated as capital expenditure.

24

Budget revision While preparing the next years revenue budget, the revenue budget for the current year is revised, based on the actuals from April to September and the anticipated trend for the remaining period. Monthly report On closing of the accounts of the months a monthly P & L account is prepared for each Division and the same is send it to the Division Head, FD and CMD. This report would give a comparison of the actuals for every month against budgeted performance. 4.4. THE CASH, BANK AND PAYROLL SECTION is concerned more with the day to day activities and less of future forecasting & planning. 4.4.1. Cash and Bank Accounts Section The various functions include: 1. 2. 3. 4. 5. 6. 7. 8. 9. Receipt of cash, cheques, bank drafts, and postal money orders Payment of cash, cheques, bank drafts, and letters of authority Handling of bank deposits/withdrawals, custody of cash and inter unit transfer of funds Maintenance of petty cash books and cash books Reconciliation of bank accounts Security arrangement of cash handling Safe custody of valuable documents Cash interests calculation Any other duties assigned by authorized officer

4.4.2. Payroll Section Functions of the section are: 1. 2. 3. Preparation and disbursement of salaries and wages to managerial and non-managerial employees Effect various recoveries through payroll and remit the same to concerned agencies Processing of various personal payments advances
25

4.

Keeps books of account for the above transaction

4.5. TAX & DUTIES SECTION is concerned with calculation & payment of various taxes and duties to the Government.

5.

SOME KEY INFORMATION

Insurance schemes have undergone a drastic change in FACT due shortage in working capital and lack of profit. From the earlier view of insuring everything under all, FACT prefers selective coverage. E.g. Fire insurance is done only in departments or plants prone to fire. Deciding on insurance scheme is not the prerogative of finance department alone. The engineering department has to approve the plan and after the department wise approval, the corporate level approval has to be obtained. The various insurance schemes are: 1. 2. 3. 4. 5. 6. 7. 8. 9. Fire Insurance. Machine break down insurance. Electronic equipment insurance. Fidelity insurance and cash in transaction/cash at safe/payroll insurance. Insurance for vehicles and heavy equipment. Open transit risk for all inland and all foreign purchases. Loss on profit insurance. Personal accident insurance. Storage insurance.

5.1. Insurance schemes

10. Insurance for stock of finished goods, raw materials, industrial stores. 5.2. Corporate plan Corporate plan is prepared by taking estimates and future projections for 5 years. The corporate plan is revised every year by deleting one year in the

26

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 5 years. 5.3. Foreign Currency Management A Committee is formed to look into and take decisions on a periodic basis relating to the foreign currency. The committee has been constituted with chief of internal audit as chairman and members being the chief of finance, head of Cochin division, petrochemical division and head office. 5.4. Working Capital management The Working capital is essential for any Organization to meet its day to day requirements. Working capital may be specified as the 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. 2. 3. 4. 5. 6. 7. State Bank of Travancore State Bank of Hyderabad State Bank of India Bank of Baroda Bank of India Canara Bank Dena Bank

At present FACT has availed cash credit facility up to an amount of Rs. 188 crores and letter of credit up to Rs. 100 crores and bank guarantee up to limit of Rs. 15 crores.
27

5.5. Auditing Various types of audits in FACT are: Statutory audit, Government audit, Cost audit, Income tax audit, Sales tax audit and Internal audit. Internal Audit Section Some of the main functions are 1. 2. 3. 4. 5. Operational/ systems/ management audit Proprietary audit and audit of sanctions Routine audit Surprise verification of physical stocks Special audits and studies

6.

CHALLENGES OF FINANCE DEPARTMENT

Due to which 6.1.1. Upgradation of plants & machinery is not possible 6.1.2. High quality equipment cannot be purchased. For the same reason, FACT goes for the lowest quoting bid. 6.1.3. Cannot maintain adequate stock of fertilizer for combating shortage 6.1.4. Lack of flexibility in production

6.1. Working capital crunch

6.2. Low availability of credit due to nonpayment of loans & security to keep for loans. Due to which the organization: 6.2.1. Cannot grow and therefore stagnates 6.2.2. Cannot compete with other fertilizer companies due to lack of fund

28

MATERIALS DEPARTMENT
1. OBJECTIVES
1. 2. To control and account for the materials in the organisation. To ensure the availability of materials and its quality.

2.

ORGANISATIONAL STRUCTURE OF MATERIALS DEPARTMENT

GM Material

CM Purchase RM

Dy. CM Raw Materials Mgr E.S.S Mgr F.F.T.S Mgr Stores Mgr Traffic

Chart no: 2

3.

FUNCTIONS OF MATERIALS DEPARTMENT include:

1. 2. 3. 4. 5. 6. 7. 8. Importing raw materials under the approval of safe purchase committee constituted by the Board of Directors Maintaining adequate raw materials needed for production Procurement of Machineries, Intermediaries, equipment & spares Inspection of Materials Transportation of Raw materials, Products and Byproducts Accountability for materials Purchase of stationary, and other Equipment needed by individual department Vendor Development
29

This department is divided into 3 Sub Departments. They are: 1. 2. 3. Purchase Stores Traffic (Logistics)

3.1. PURCHASE DEPARTMENT

The purchase procedure covers the following areas of procurement of goods and services for the company. 1. 2. 3. 4. Capital items (For project and other purposes). Equipment and spares. Raw material & Intermediary materials Package items involving design, supply, erection and commissioning.

Purchase Department is again divided into 3 sections. They are: 1. 2. 3. Raw materials Equipment spares and supplies FEDO & FEW Transport, Contracts and Stores

3.1.1. RAW MATERIALS SECTION

Objectives
1. 2. 3. Purchase of materials for production, from India and abroad Make available adequate amount of material at the right time Follow a fair & transparent procedure in the above activities

Functions
1. 2. 3. 4. 5. Importing raw materials under the approval of safe purchase committee constituted by the Board of Directors Procurement of Materials needed for production Determination of quantity of materials required Issue of Purchase order Pre & post dispatch Inspections
30

6. 7.

Insurance Payment

Raw materials are Sulphur, Rock phosphate, Furnace oil, Naphtha, Ammonia, Benzene, Phosphoric Acid, Caustic soda and Sulpuric Acid. RAW MATERIAL PROCUREMENT PROCESS
Purchase Requisition Vendor Development Bid evaluation & Financial Concurrence Entering into Contracts Purchase order Raw material requirement

Raw material Transporting

Raw Materials Department

Raw material Storing

Payment

Inspections

Production Plan Chart no: 3

CHALLENGES TO RAW MATERIAL PROCUREMENT 1. 2. 3. 4. Scarcity of Raw materials Sky rocketing prices Shipping Problems Working Capital crunch

3.1.2. EQUIPMENT & SPARES SECTION

Objectives
1. 2. 3. Purchase of Equipment & spares from India or abroad Make available spares at the right time Follow a fair & transparent procedure in the above activities
31

Equipment & Spares Include

1. 2. 3. Capital items like heavy machinery or plant (For project and other purposes) Equipment and spares Package items involving design, supply, erection and commissioning

Functions
1. 2. 3. 4. 5. 6. 7. 8. 9. Importing materials under the approval of safe purchase committee constituted by the Board of Directors Determination of actual requirement by checking with stores, technical department, management and giving specifications Vendor Development Bid evaluation & financial Concurrences Entering into Contracts Issue of Purchase order for equipment & spares Inspections of materials and stores Insurance Payment

EQUIPMENT & SPARES PROCUREMENT PROCESS The User departments give their requirement which is validated by the Technical department and is finally approved by the management for issue of purchase requisition. The purchase requisition is checked with the stores stock. If the store already has the item then it is supplied to the concerned department; otherwise items are procured with the help of a vendor. In case of specific goods such as tube light, bulb and fan vendor are already specified by the technical department and approved by the management. Whenever the user department needs them the store department moves forward to procure them. The process can be diagrammatically as follows:

32

User Department Requirement

Raw material Procurement

Payment

Inspections

Validating Requirement Despatch Purchase Requisition

Material Procurement Purchase order

Entering into Contracts Bid evaluation & Financial Concurrence

YES

Available at stores

NO

Vendor Development

Chart no: 4

Purchase order Detailed purchase order is issued soon after the letter of intent and normally within 30 days of issue of letter of intent. Inspection & Monitoring The materials department performs expediting of orders. In certain cases other agencies appointed for the purpose. Materials department continuously monitors vendor's performance to ensure timely delivery and periodic status reports is made available to all concerned departments. Inspection may be carried out by FACT or by third party inspection agencies, 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
33

section of the stores department or department authorized for this purpose. In case of bulk materials like stationeries, the consuming department directly receives raw materials/intermediates the goods. Materials received against turnkey jobs awarded to agencies responsible for supply, transport, storage and erection are not taken into stock by stores department. Rejection/Damage of Materials Rejected consignment is kept separate and the stores/receiving department send a first information report to the supplier with the copy to finance and purchase department. In all cases of rejection / shortage/ damage other than for reasons attributable to supplier, the stores department takes up the matter with the insurers under advice to finance department. Follow up of the claims and settlement with insurer is done by finance department.

VENDOR DEVELOPMENT
Vendor Pre-qualification Pre qualified vendor list shall be maintained by materials department. The vendor list comprise of all pre-qualified vendors under each category stating clearly the respective capability in terms of volume of work, specification, level of technology, etc with rating of the vendors. Addition/deletion to vendor's lists is made on a continuous basis on the above criteria. There are three types of Purchase Requisition (PR) as follows: 1. 2. 3. For projects and major capital equipment For stores, including stationary and office supplies, spares For services

34

Inviting Bid Bids are invited by giving Advertisements in news paper, magazines, media, website etc. The Purchase Manager invites the bid. Normally, 30 days from the date of enquiry is given for submission of bids in limited tenders. For open tenders, 30 days from the date of appearance of advertisement is prescribed. Receipt and opening of bids Bids are opened by officers from finance, administration and purchase Department. Bidders representatives read the Bid which consists of Prices, taxes and duties, payment terms, delivery period, performance guarantee and brief description whichever is relevant. Bid evaluation and financial concurrence The technical part is forwarded to the indenting department by the purchase department as soon as the bid opening formalities have been completed. The steps involved in bid evaluation are: 1. 2. 3. Technical evaluation by indenter in consultation with other technical experts, where necessary Commercial evaluation by the purchase department in consultation with other concerned departments Review and approval of technical and commercial evaluation by the competent authority to determine the bids, which are technically and commercially suitable 4. Comparison of prices and financial evaluation by purchase department in consultation with other concerned departments Financial Concurrence For purchases above Rs. 25000, the purchase recommendation is forwarded to finance department. Sanctioning authority is formed as per the delegation of powers. After financial concurrence, the proposal is forwarded to the sanctioning authority through purchase order.
35

CHALLENGES OF EQUIPMENT & SPARE SECTION 1. 2. Approval of Bids on the basis of lowest quotation where sometimes quality is compromised Low working capital to maintain sufficient stock of goods

3.1.3. FEDO & FEW, Transportation & Stores (FFTS) Section The Functions of the section are: 1. 2. 3. 4. Project related procurement for FEDO & FEW In-house procurement for FEDO & FEW Storage of Raw materials Raw material transportation & Technical assistance for handling

3.2. STORES DEPARTMENT Objectives

1. 2. 3. 4. Collection and receiving of materials purchased Inventory Management & Control Issuing materials to user departments Disposal of surplus and obsolete materials

Functions
1. 2. 3. 4. 5. Receiving Holding Inventory Control Issuing Disposal

PROCESS FLOW IN STORES DEPARTMENT

Receiving Inspecting Holding Inventory Management

Chart no: 5 36

Disposal

Issue

Codification and classification All stocks items bears a 9 digit code prepared on a significant numbering system. First digit is allocation for UD, CD and PD. Second to sixth digit classifies materials to mechanical, electrical and general items. The materials received are classified and arranged into 6 compartments-A, B, C, D, E and F, each consisting of 20 shelves numbered from 1 to 20. According to the above classification, the shelves are allocated for each material. Procedure followed When a material is received, the stores officer inspects the items and is approved by the stores manger for holding in the stores after verification. The store in charge allocates materials to the specified shelf and records the data in the Bin card. The store officer updates the data in the MIS. And for issue of materials, the requirements forwarded by the departments is verified and approved by the manager for dispatch. The issue is and recorded in the MIS. However, for disposal the list of items to be disposed is forwarded to the management by the stores. Approved items are disposed or sold for scrap value and recorded in the MIS. Store is responsible for all activities for ensuring inventory control, commissioning of codes and disposal of scrap. Materials move into store only after inspection conducted by store employees. Technical department help is sort wherever required. Obsolete items are disposed. MIS The stores maintain all its data in the computer and are updated every time movement of materials takes place. The MIS gives the current status of inventory and helps in the speedy replenishment of stock when required. The MIS used is the OIIS (online integrated system). Items in the stores are known to the management and other departments which need that information. During the stock verification, the figures in the MIS and physical stock are tallied.
37

Stock verification Stock verification is done by physical stock verification Team (PSVT) are attached to finance department. A and B items are verified once in a year and C items once in 2 years. For those which are not covered under ABC analysis XYZ is taken and frequency of verification is once in a year for X & Y Items and once in 2 years for Z items. Along with this officer, stock holding in-charge verifies stock daily and submits the report to PSVT and when they come for inspection, the deviations in the report are clarified. INVENTORY ANALYSIS DONE IN FACT A-B-C Analysis ABC analysis is prepared by the computer centre based on the value limits of: A Items > Rs 50,000, B Items < Rs 50,000 and > 5,000 and C Items < Rs 5,000. more control. F-S-N Analysis Here, analysis is based on the consumption rate. Items moved within the last 5 years may be classified as Fast moving(F), and those moved between last 5 to 10 years are slow moving(S) and those not moved within last 10 years are non-moving(N). The last two groups are reviewed further to decide on disposal. X-Y-Z Analysis This analysis is done on the basis of stock in hand at the end of the financial year. 80% value of total inventory is labeled as X, 15% value of total inventory as Y, 5% value of total inventory as Z. For spares V-E-D Analysis - Vital (V), Essential (E), and Desirable (D) Vital are those spares whose non-availability results in very high production down-time loss and/or entails very high cost due to emergency purchase. Essential spares are those whose non-availability is expected to cause moderate production down-time. Desirable spares are those whose
38

Computer centre prepares the list on basis of annual

consumption. Accordingly, items A are given more attention and require

non-availability does not resulting in any significant production down time loss. The list is reviewed once in 2 years. CHALLENGES FOR STORES 1. 2. Maintenance due to shortage of labour Low stock of goods maintained due to shortage of Funds

3.3. TRAFFIC DEPARTMENT

Objectives
1. 2. To ensure Loading and despatch of products To ensure right quantity and right product to right vehicle and to the right destination

Functions
1. 2. 3. Loading Arrangement Movement

Traffic department is responsible for the dispatch of products to various markets. They maintain contacts with market department and production departments. The dispatch section of marketing division gives the demand of various depots in each state to the traffic department. Based on this, schedules are formed and product is dispatched.

Process flow in traffic department

The marketing division selects the depots where fertilizer has to be transported and gives the dispatch information to the traffic department. The traffic department selects the vendor for transport. Depots are allotted to vendors by the department.
39

Marketing division

Depot

Transportation

Despatch information

MDA Issue

Traffic department

Signed MDA

Weighing

Payment
Vendor (Transport) Vehicle in slip issue Loading

Chart no: 6

The vendors are issued a vehicle in slip which is a slip for the vehicle to go into the loading site in which the destination, vehicle no, product or byproduct to be loaded are recorded. Before loading the empty weight of the vehicle is taken and after the loading the weight with the load is taken by the C.I.S.F Security men. If deviation more than the specified limit is noticed, the goods are either unloaded or reloaded. A copy of MDA (Material Dispatch Advice) is given to the lorry driver for dispatching to the concerned depot. When the goods arrive at the depot message is passed to the department. And the signed copy of MDA is returned to the department by the Vendors so as to enable him to collect payment. If the load dispatch is found damaged, loss in quantity noticed, penalty is charged from the vendor. FACT has permanent workers for loading activity. The department engages contracts to transport finished products from the plants to different depots or to the customers. Packing the materials in the bag is also the responsibility of the department. The product is bagged in HTPG bags. The product is transported by, trucks and railway wagons. There is a private railway siding for FACT at Kalamassery and also at Cochin Division. A full
40

rail wagon takes 2200 tones of product. A godown at Kalamassery stores fertilizer. Lorries and trucks for the transportation are chosen based on the tender. Major Transport Contracts A.S.R.TB.TCOSMOE.L.FL.R.LJ & PM.R.DP.K.AP & PS.K.L.S S.P.MU.RA.S.R transport Bharat Transport COSMO Carriers Expert Liner Enterprise Lucky Road line J & P Enterprise M.R.D Transport P.K Aboobacker & Co P & P Logistics Sree Krishna Lorry Service S.P Muthuraman Union Road ways Limited

Optimisation Techniques 1. 2. Transportation by railway 14 wagons of train booked at a time helps reduction of cost. Outsourcing of Logistics Certain issues like labour, vehicle repair can be overcome. This helps in preserving the core competence of the department. CHALLENGES OF TRAFFIC DEPARTMENT 1. 2. 3. Lack of fleet management system Labour issues Vendors Performance & Review

41

PRODUCTION PLANNING DEPARTMENT

1. OBJECTIVES
1. 2. 3. Production planning Co-ordination of production function Co-ordination with Maintenance and Production department.

2. ORGANISATIONAL CHART OF PRODUCTION DEPARTMENT

JGM (UD)

CM (Production)

MAINTENANCE

Production

C.M.E

C.S.P

Traffic

Ammonium

Ammonium Sulphate

Ammonium Phosphate

Sulphuric Acid

Phosphoric Acid

Chart no: 7

3. FUNCTIONS OF PRODUCTION DEPARTMENT

1. 2. 3. 4. 5. Planning daily production according to annual target Submitting Plan to govt. and getting approval Monitoring actual production & checking any deviation Making revision plans according to actual production Maintenance of plants

42

4. PRODUCTION PROCESS
Start here

Production targets

Plant Maintenance

Approval of production plan*

Checking Deviations from plan

Raw Material Availability (RM Dept.)

Monitoring production

Chart no: 8

Annual production targets for the next year are prepared based on installed production capacity of the plant and production data for the previous year. Necessary feedback is also taken from marketing department while fixing the production targets. The production targets thus fixed are presented to the corporate office for review and approval by CMD and the plant managers are informed of the same. The production and consumption ratios for the previous years are duly considered. All the data are compiled to form the production budget. A copy of the production budget is sent to the finance department for preparing finance budget. The production plan and budget are then presented to the govt. for approval. The production budget then acts as the basis for further performance monitoring. Based on the production plan, purchase department initiates action for procuring raw materials. In the event of any change in the annual production plan becoming necessary, the corresponding change in the raw material, requirements are intimated to the purchase department. Production planning department receives data from all the plant and other interfacing departments and compiles them. Various MIS reports consist of
43

daily production reports, monthly reports and yearly reports they are sent to the management.

5. FEATURES OF PRODUCTION PLAN

1. 2. 3. 4. 5. Production plan is based on the idea of producing the maximum with available raw material and production capacity of plant. Day- to-day production is planned according to raw material availability. Daily production plan is prepared and likewise annual plan is also prepared. Day wise production plan is monitored. Production plan is always flexible.

6. PLANTS AT UDYOGAMANDAL DIVISION

1. 2. 3. 4. Ammonia plant Ammonium Sulphate plant Ammonium Phosphate plant/ FACTAMFOS Acid Plant

6.1. Ammonia plant The capacity of the Ammonia plant is 900 TPD. The investment for the plant was about Rs.618 Crores. The plant has economy scale size and employs state of Art technology for the process engineering and control systems. 6.2. Acid Plants 6.2.1. Sulphuric acid plant The Sulphuric acid plant is designed to produce 1000 TPD of monohydrate. The plant is based on the double conversion, double absorption process and was designed by FEDO in collaboration with Davy power gas Plant.

44

6.2.2. Phosphoric acid plant The Phosphoric acid plant is designed to produce 360 TPD of P205 through the dehydrate route. The plant designed by FEDO in collaboration with Messer society de prayon of Belgium employs the prayon convertible process to give a product having strength of 30% P205. A separate concentration section is provided to concentrate this weak acid to strong acid having strength of 45% P205. 6.3. Ammonium phosphate Plant The complex fertilizer plant was designed to produce quantities of N P K fertilizers of various grades. FACTAMFOS Consists of NPK and S in the ratio 20:20:0:13.

7. PRODUCTS
1. 2. 3. 4. Ammonium Phosphate/ FACTAMFOS Ammonium Sulphate FACT urea Muriate of potash

Products NP 20:20 (FACTAMFOS) Ammonium Sulphate Sulphuric Acid Phosphoric Acid

TPD (in MT) 450 667 1150 100

TPA (in MT) 1,60,000 2,10,000 3,38,570 18,000

TPD-Tonnes per day

TPA-Tonnes per annum Table No: 5

45

8. OPTIMIZATION OF PRODUCTION
The company is making all efforts to optimize production and reduce losses. Steps are being taken to enhance the procurement of sulphuric acid as well as phosphoric acid. Steps are also being taken to explore the possibility to import sulphuric acid.

9. ADHERENCE TO ISO IMPLEMENTATION

Do what you write or write what you do 1. 2. FACT has a well defined procedure for production. So according to ISO implementation it writes whatever it does. Production standards are also kept as per ISO standards.

10. CHALLENGES OF PRODUCTION DEPARTMENT

1. 2. Raw material scarcity is upsetting the entire production plant. Working capital shortage is affecting the smooth functioning.

Around the globe, 2008 has witnessed acute shortage of raw materials and various natural resources affecting various industries badly. Sulphur prices over the year have gone up 10 times and 5 times in case of naphtha. However, LNG can be substituted for naphtha which again is witnessing an acute shortage. Some raw materials like Rock phosphate and Sulphur are being imported, which again invites shipping problems for FACT being its demand for raw materials is in low quantity. In addition Fertilizer industry is being looked upon as a sick industry, even from the government side. The subsidy is not given by analyzing the real situation.

46

MAKETING DEPARTMENT
1. GENERAL INFORMATION
Fertilizer Marketing is different from other product marketing. Fertilizer has a high demand. Therefore, it can be termed as a 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.

2.

OBJECTIVES
2.1. Monitoring of sales & distribution 2.2. Study & respond adequately to the information from market research department and from field establishment 2.3. Liaison with bulk buyers, central and state government officials and officials of fertilizers association of India

3.

ORGANISATIONAL CHART OF MARKETING DEPARTMENT

DIR (Marketing)

GM (Marketing)

CM Sales

CM Distribution

C.Ag. Agronomy

AM (KL)

AM (TN)

AM (KAR)

AM (AP)

C.Ag-Chief Agronomist

AM-Area Manager
Chart no: 9 47

4.

FUNCTIONS OF MARKETING DEPARTMENT

1. 2. 3. 4. 5. 6. 7. Sales Market Research Agronomy Preparation of sales report Processing and sending replies to audit queries at the divisional level Liaison with bulk buyers, central and state government officials and officials of fertilizers association of India Sales force motivation through internal and external training programmes The marketing department consists of various sub departments organized on the basis of their function. They are: 1. 2. 3. Sales Department Distribution Department Agronomy

4.1. SALES DEPARTMENT

The sales department is headed by a Chief Manager who is responsible for sales coordination of function across various depots, conduct an effective market research for analyzing market and calculating the demand and finally promote the sales of FACT products. FACT today holds major market share in Kerala, 11% in Karnataka and 6% in other states. 4.1.1. Main products 1. 2. 3. 4. FACTAMFOS/Ammonium Phosphate Ammonium Sulphate FACT Urea Muriate of potash

48

4.1.2. Sales Promotion Tools of FACT FACT over the years have innovated various techniques of sales promotion. Many of them are recognized as effective tools of promotion by national and international agencies. These techniques are mainly grouped into two: 1. 2. Mass Communication Techniques Personal Contact Method

Mass Communication Techniques This method involves catering to a large number of people in the shortest time possible. Advertisement are done through Films, Exhibition 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 Vigyan Kendras (KVKS), crop campaigns, crop demonstrations etc., with an ideal blend of information and entertainment to drive home the message of balanced fertilizer use for increasing crop production. The creative and
49

Radio jingles, Hoardings, Posters, Farmers awareness programmes in AIR,

novel education programs like village adoption of FACT have gained national recognition. 4.2. 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, TamilNadu, 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 7900 retail 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 Kerala Tamil Nadu Karnataka Andhra Pradesh Alleppy Mangalore Hyderabad Palakkad Bangalore Coimbatore Trichy

Regions Kottayam Kannur Madurai Belgaum Vellore Hospet

Vijayawada Kakinada Nellore

Table No: 6

50

MARKETING OPERATIONS AGRO SERVICE CENTRES SWC / CWC POINTS SOIL TESTING LABORATORIES AREA & REGIONAL OFFICES FIELD SALES OFFICES DEALER POINTS Table No: 7 4.2.1. 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. 100 43 3 20 100 7759

5.

PROCESS OF MARKETING DEPARTMENT

Start here

Market Research

Sales Report

Agronomy

Selling Product

Finding the depots

Calculating Requirements Chart no: 10

Distribution

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. 2. 3. 4. Preparation of product wise, month wise annual sales plan for each area. Publication of annual report of division Monitoring and reporting of competitor's sales as per performa prescribed 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. 6. 7. Submission of monthly performance report of the division to the CMD Ensuring product availability, dispatch monitoring and inventory control Submission of various statements to FAI for publication in their fertilizer statistics yearbook.

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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).

8.

CHALLENGES OF MARKETING DEPARTMENT

8.1. Improper Subsidy policy Govt. 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. 8.2. Lack of fund for research activities 8.3. Narrow product range 8.4. Unnecessary intervention of state and central governments in distribution & sales 8.5. 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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SALES TURNOVER Subsidy Value ( Rs lakhs ) 15,126 14,128 17,360 24,047 12,649 10,878 9,990 7,897 9,890 15,166 11,586 27,474 31,422 2,699 16,616 15,236 19,712 36,578 40,216

Year 1988-1989 1989-1990 1990-1991 1991-1992 1992-1993 1993-1994 1994-1995 1995-1996 1996-1997 1997-1998 1998-1999 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007

Quantity ( lakh tones ) 11.58 8.99 10.75 11.02 10.72 11.25 12.02 13.30 11.10 12.61 12.09 13.16 14.80 12.26 10.45 7.78 7.84 9.83 9.47

Sales 27,614 20,902 26,705 33,628 44,011 48,204 63,4111 77,260 68,158 81,249 89,690 98,800 111,872 96,841 71,643 46,051 53,117 69,671 67,196
Table no: 8

Total 42,740 35,030 44,065 57,675 56,660 59,082 73,401 85,157 78,048 96,415 101,276 126,274 143,293 99,510 88,259 61,287 72,829 106,249 107,412

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QUALITY CONTROL DEPARTMENT

1. OBJECTIVES OF QUALITY CONTROL
1.1. Customer satisfaction through excellence in quality of production and services 1.2. Adherence to documented quality system 1.3. Promoting quality culture among employees 1.4. Continuous improvement in the quality Management System

2. ORGANISATIONAL CHART OF THE DEPARTMENT

Mgr (Q.C)

Shift-In Charge

Chemist

Lab Assistant
Chart no: 11

3. FUNCTIONS OF QUALITY CONTROL

1. 2. 3. Quality checking Process control assurance Pollution control

4. QUALITY CONTROL PROCESS

4.1. 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.
55

Product Quality check Byproduct Quality check-only in case of byproducts sold [R & D counter checks quality] 4.2. Process control assurance The samples are tested in the Lab. There is one Main Lab for UD division and Sub Labs for each plant. 4.3. 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)

5. POLLUTION CONTROL MEASURES

5.1. Hydrocarbon-detectors are placed in vulnerable areas in the plant for transmission to control room. 5.2. 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 a commitment to humanity, the company has taken all necessary safeguards to prevent water and atmosphere pollution caused by effluent gases and 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
56

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.

6. ACTIVITIES CARRIED OUT

1. 2. 3. 4. 5. 6. 7. 8. Reduction of air pollution from amophus plant and phosphoric acid plants Improving the quality of effluents on a continual basis Minimize dust problem in sulphur handling and prevention of sulphur spillage to river Reduction of contamination of raw effluents with vapour condensation from Hyam plant Reduction of noise level in SO2/Acid plant main air blower Reduction of SO2 emission during start up of sulphuric acid plant Minimize and recycle waste water from phosphate plant and sulphuric acid plant Improving housekeeping in phosphate and sulphuric acid plant

7. CHALLENGES TO QUALITY CONTROL

7.1. Lack of expertise to handle raw materials quality checking 7.2. Aged machinery Effluent discharge likely to exceed the permissible limit High noise pollution

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. FACTs well-equipped R&D section has advanced facilities equipped with pilot plants, modern equipment and accessories. It is backed by a team of highly motivated 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 biofertilizers 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.

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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.

3. ORGANISATIONAL CHART OF R&D DEPARTMENT Mgr (R & D)

Asst Mgr

Officer

Staffs
Chart no: 12

4. FUNCTIONS OF R & D DEPARTMENT

4.1. 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. 4.2. 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 Nfixing Biofertilizers like Rhizobium, Azospirillum and P-solubilising biofertilizer like Phosphobactor. The carrier material employed is exfoliated vermiculite.

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. 4.3. 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. 4.4. 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.

5. 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 under PATSER scheme by
60

DSIR, New Delhi, for, Agronomical evaluation by Tamil Nadu Agricultural University, Coimbatore and Kerala Agricultural University, Trichur. Presently a collaborative project between FACT and Tamil Nadu Agricultural University for agronomic evaluation of these slow release fertilizers on cotton and turmeric is underway. A field trial on field is going on at Coimbatore, under the supervision of FACT marketing division. 2. 3. 4. Recovery of sulphur from the waste sulphur muck of sulphuric acid plants Utilization of the by-products of the company for value addition Corporate quality survey of our products from Udyogamandal and Cochin Division to ensure quality of products as per FCO and also to reduce nutrient loss. 5. Pollution monitoring in factory premises and in ambient air in Udyogamandalam, Ernakulam, Wellington Island and Ambalamugal to ensure emission are within the limit. 6. Rock phosphate Characterization R&D centre is having a bench scale Rock Phosphate testing facility, which is approved by MMTC. Management has constituted a technical committee for Rock Phosphate evaluation. R&D Centre conducts analysis and pilot plant studies for outside parties and MMTC.

6. BENEFITS DERIVED
1. During the year 2006-07, R & D centre has produced 3.91 MT of Biofertilizer 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

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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. 3. 4. 5. R & D centre plans to conduct studies on the incorporation of Zinc as Micronutrient in NP fertilizers Development and field testing of suitable Biofertilizers for the acidic soil especially of Kerala Development of liquid fertilizer solution Development of a closed circuit pollution free process for the manufacture of weak nitric acid

8. EXPENDITURE ON R & D
Details of expenditure on R & D are given separately.

Expenditure on R & D

Rs. in Lakh Year 2004-2005 2005-2006 2006-2007 Capital 0.00 0.00 0.00 Revenue 31.85 31.17 29.77 Total 31.85 31.17 29.77 As % of Turnover 0.026 0.022 0.020

Source: annual report 2007-08

Table No: 9

62

FIRE AND SAFETY DEPARTMENT

1. GENERAL INFORMATION
As per the factorys 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. 2. 3. Training Activity Checking compliance with the safety measures Acting in case of emergency

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4. ORGANISATIONAL CHART OF THE DEPARTMENT

JGM (UD)

Mgr (Fire)

Mgr (Safety)

Assistants

Inspectors

Inspectors

Fireman
Chart no: 13

5. PROCESS IN FIRE & SAFETY DEPARTMENT 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.

5.3. Acting in case of emergency

5.3.1. If major problems are detected, then either the whole plant is stopped or part of the plant is stopped. 5.3.2. In case of fire or smoke: Built in safety mechanism inside the plant generates automated extinguisher spray to put off the fire or excess smoke. If the fire could not be stopped by automated system the fire department starts their action. The fire crew consists of 1 inspector, 4 firemen & 1 driver

6. SAFETY MEASURES
1. 2. Bringing up all levels of working to a correct safety attitude through training and interaction Safe production by prompt attention on built-in- safety or integrated safety
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3. 4.

effective effluent treatment system in operation to render it harmless before letting it out of the factory 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. 7. 8. 9.

safety

manual

highlighting

safety

practices/

instruction

is

distributed among employees as guideline Routine plant inspection by safety fire staff and other staff in the line function notices unsafe condition to take corrective measures Display of safety cartoon or caution boards at important locations 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

7. CHALLENGES OF FIRE & SAFETY DEPARTMENT

7.1. Aged plant and machinery: 7.1.1.1. Prone to fire 7.1.1.2. Modern control precaution and control of fire through installation of sensors is not possible 7.2. Maintenance of safety equipments 7.2.1.1. Safety equipment brought with lowest coating bid 7.2.1.2. Constant need to renew safety equipments

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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.

3. FUNCTIONS OF COMPUTER DEPARTMENT

1. 2. 3. 4. 5. 6. 7. Planning and procurement of computer systems in all divisions Software development and system support to all divisions User training on computer awareness and applications Maintenance of FACTNET connecting all divisions Process data and prepare relevant information for various levels of management for appropriate and speedy decision making Prompt and efficient services for meeting information requirements of the employer, payment of wages and settlement of claims Access control of data between and within department

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4. ORGANISATIONAL CHART OF COMPUTER DEPARTMENT Chief Manager

Dy. Chief Manager

Manager

System administrator

Staffs
Chart no: 14

5. Process Flow In Computer Department

Diagram No: 1

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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. 2. 3. Upgradation of WAN and LAN through OFC (optical fibre cable) by 2009 Web based connectivity for OIIS across various depots Real time information transfer across depots to head office

7. CHALLENGES OF COMPUTER DEPARTMENT

7.1. Alarming rate of employee turnover 7.2. The online integrated system is not web based at present. Hence there is no online connectivity with depot.

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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.

4. ORGANISATIONAL CHART OF HR DEPARTMENT

CMD (F.A.C.T)

GM (HR)

DGM (Admin)

CM (Welfare)

CM (IR)

CM (Est.)

CM (Legal)

CM (Trg)

CE (Ind. Eng.) Mgr (Public Relation)

Chart no: 15 70

5. FUNCTIONS OF HR DEPARTMENT
1. 2. 3. 4. 5. 6. 7. 8. 9. Organizational human resource planning & development Retirement & selection Wage & Salary administration Employee records maintaining Performance appraisal Welfare programme Job evaluation Handling employee grievances Handling the legal issues within & outside the Organization

6. PROCESS OF HR DEPARTMENT
The human resource department has 3 blocks which are: 1. 2. 3. Establishment Industrial relation Welfare

6.1. Establishment Section

The main functions are: 1. 2. 3. 4. 5. Recruitment & selection Transfer, rotation and placement of employees in consultation with divisional heads Wage and salary administration Performance Appraisal Retrenchment

6.2. Industrial Relation

Industrial relation operates only within the Organization. The Interorganizational relation is handled by the corporate cadre. 60 to 70 % of management time is lost in resolving IR issues. Therefore the H.R department is of paramount importance.
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The main functions are: 1. 2. 3. 4. 5. 6. 7. Communication between management and trade unions Grievance handling Settlement of dispute Handling disciplinary action Safeguarding Employee rights Career related issues like promotion, transfer & rotation Resolving daily petty issues

6.3. Welfare
Welfare schemes can be divided into Statutory, Agreement, Voluntary and Incentives The main objective of welfare measures is to maintain healthy working environment and raise the standards of living of employees which create harmony to the society and finally to the organization. FACT has always maintained very healthy welfare measures.

Statutory scheme
1. Employees state insurance 2. Provident fund and miscellaneous provisions act, 1952-exempted scheme in FACT-FACT employees provident fund trust. 3. Payment of gratuity Act, 1972 4. Kerala labour welfare fund board rules, 1975 5. Industrial employment (standing orders) Act 1946 6. Factories Act, 1948-Covers (Health, safety, welfare)

Agreement scheme
1. Family relief fund 2. Superannuation benefit fund 3. Family pension scheme of company 4. Retirement benefit fund 5. Employees welfare fund 6. Transport subsidy 7. Local travel expenditure 8. Subsidized bus service facility 9. Special vehicle loan 10. Uniform & footwear 11. Leave travel concession 12. Evening snacks 13. Childrens education allowance 14. Interest subsidy 15. Free tea-twice a shift 16. Production incentives 17. Leave & holidays

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Voluntary Scheme
1. Contributory health scheme 2. Group personnel accident insurance scheme 3. Aid towards funeral expenses 4. EX-gratia payment for accident deaths 5. Gratuity payment-company scheme 6. Vehicle loan 7. Work clothes 8. Rain coats & Umbrellas 9. Free milk supply 10. Supply of coconut oil, soaps, and towel 11. Conveyance allowance for physically handicapped 12. Special Tiffin for fire and safety personnel 13. Laundering of special clothes 14. Sports & Recreation 15. Lalith kala Kendra 16. Fact employees consumer cooperative society 17. Fact employees housing cooperative society 18. School facilities 19. Company accommodation

Incentives scheme
1. Incentives for employees acquiring higher qualification while service 2. Incentives to promote Hindi 3. Incentive to promote family planning 4. FACT merit award 5. FACT service award 6. Attendance bonus 7. Suggestion scheme 8. Incentive for blood donation 9. Incentives to promote sports & players 10. Merit scholarship scheme for employees children

Table No: 10

7. INDUSTRIAL ENGINEERING
The main objective of this section is to make effective utilization of the manpower resources and restructure it for the benefit of the organization. The main functions are: 1. 2. 3. Manpower planning that compose of Manpower audit & Forecast future requirements Custodian of manpower inventory Work study a. Removing system bottlenecks b. Production incentive etc. 4. 5. 6. Maintenance scheduling Work environment study Employee problem analysis
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8. ADMINISTRATION WING
The wing is headed by DGM and maintains orderliness in internal affairs of the department. The main functions are: 1. 2. 3. 4. Checking the performance of each department Consolidating the reports of different HR sections Act as a linking chain between different sections Office and admin work of HR department

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.

10. SOME KEY INFORMATION

10.1. RECRIUTMENT POLICY The Recruitment policy is done as per prescribed recruitment specification with proper authority appointed by B.O.D. The following are the sources of recruitment. 1. 2. 3. 4. 5. 6. 7. 8. Confirmed employees within the division or company Employment exchange as per provisions of Employment Exchange Act Employees on deputation from Govt. of India Casual labours who were initially taken after employment exchange Transfer from public sector undertakings Apprentices who completed training in FACT Dependents of deceased employees who died in service External source

10.2. PERFORMANCE APPRAISAL Performance Appraisal in FACT started in 1962. In 1984, the system was further revised to include potential assessment, assessment of training needs and performance counseling.
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The main functions are: 1. 2. 3. 4. 5. 6. Self Appraisal for all management employees Reporting and receiving officers specified for each level of appraisal Assessment by the Assessment Committee Grading on the basis of assessment Communication of final rating to employees formally Provision for appeal by employees formally

10.3. WORKERS PARTICIPATION IN MANAGEMENT FACT is one of the pioneer industrial undertakings, which initiated action to promote worker participation in management. Even as early as 1959, when FACT had only one division, the idea of having the active association of employees in various aspects of productive operations in true participative spirit, creating a climate of involvement and commitment in order to motivate the work force to enable the work force to contribute their best to the sustained growth and prosperity of the organization was in the mind of management. It was with this idea that a Joint Council, Shop Council and Joint Labour Management Action Groups were formed.

11. MANPOWER OF FACT

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

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Division wise Staff Strength - April -2008

Non managerial Division Strength Avg. age HO UD CD PD FEDO FEW 116 994 828 466 28 23 47 46 50 45 48 50 49 47

Managerial

Total

Strength Avg.age Strength Avg.age 209 294 310 204 71 22 107 1217 49 49 52 47 49 50 48 49 325 1288 1138 670 99 45 252 3817 49 47 50 46 49 50 49 48

Marketing 145 Total 2600

Table No: 11

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TRAINING DEPARTMENT
1. GENERAL INFORMATION
The training and development activities of the company have been centralized with effect from April 2004. With this arrangement, the management development centre (MDC), the training centres of Cochin division, Udyogamandal division and Petrochemical division have been centralized into one department called FACT Training Centre. Centralization was effected with a view to: 1.1. Utilize all resources efficiently and to ensure more productivity 1.2. Identify the training needs of all employees based on a uniform approach and imparting required training 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
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3. ORGANISATIONAL CHART OF TRAINING DEPARTMENT CM (Training)

Mgr (TRG)

Officer (TRG)

Instructors

Staffs
Chart no: 16

4. FUNCTIONS OF TRAINING DEPARTMENT

Training Centre is involved in four broad functions: 1. 2. 3. 4. Training officers and workers of the company as a whole in identified areas Meeting the obligation of Apprentice Act 1961/1973 Facilitating post qualification training, in plant training and project work to students Facility for employees to attend external training programmes

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

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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.

Identifying People to be trained

Identification of training need

Identifying the training Programmes

Prepare Training plans

Programmes

Facilities

Methods

Trainers

Impart Training

Measure and analyze Results

Validate

Evaluate

Feedback

Chart no: 17

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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. 5.3. Imparting training In FACT, there are two methods of training for employees. The method of training is decided on the basis of requirements. 5.3.1.On the job training This is specific to the job and concentrates on imparting knowledge and skill to the concerned employee. Induction training include introduction of an employee to the organization and job by giving him all the possible information about organizations culture, climate, objectives, policies, practices, products etc. In job instruction training, necessary instructions about the job are given by the concerned superiors. Instruction manual is also supplied for the same and it helps the employees to deal with work conditions. Job rotation is another on the job training in which an employee made to move from one job to another at certain intervals. Job rotation in FACT is intradepartmental, interdepartmental and interdivisional. Intra-departmental job rotation is done within the departments so that all employees are exposed to different functions carried out in their departments. Workers employed to different plants are rotated among the plants at periodical intervals. These rotations give skill and knowledge to the employees in different jobs. 5.3.2.Off the job training This method is employed to impart knowledge and skills in the employees in general areas which enable them to perform the job better. The main objective of this programme is personality development such as leadership quality, communication skills, attitude change etc. These methods consist of lectures, conference, group discussions, case studies, role playing and transactional analysis. Off the job training is carried out with the help of
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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
6.1. Improper feedback 6.2. Improper selection of employees from the various departments 6.3. Limited time available due to the pressure of production targets

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VIGILANCE DEPARTMENT
1. GENERAL INFORMATION
Vigilance is an integral part of the management function. The department is a statutory requirement for all public sector companies. The Department in FACT is headed by a chief vigilance officer (CVO).The incumbent CVO is an IPS or IAS officer. He or she possesses the status rank and perquisite of a functional director. Under him/her there are two Chief Managers from vigilance department posted at FACT head office at Udyogamandal.

2. OBJECTIVE
To act as a policeman and deter fraud or any unscrupulous activity in the organization and to punish such activity when takes place, thereby, creating an environment of mutual trust and fair play in the organization.

3. ORGANISATIONAL CHART OF VIGILANCE DEPARTMENT 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.
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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

5. PROCESS FLOW CHART

Start here Start here

Dept-Wise monitoring for frauds and malpractices

Receipts of complaints

Inspecting high value files

Suspicious Actions

NO

Fraud Detected YES Take action

Acting on complaints

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. 5.1. Acting on complaints Anonymous and pseudonymous complaints are not taken cognizance of survey of employees suspected of indulging in corruption is undertaken
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and on getting reliable information their names are included in the agreed list for keeping a close vigil on their activities. 5.2. Suspicious action of employees The names of employees who are charge sheeted in the court in a corruption case or have been punished or likely to be punished in departmental proceedings on charges of corruption and irregularities are included in the list of officers of doubtful integrity. Both the lists are sent to the CBI for keeping a watch on the activities of listed employees. Employees are also monitored if suspicious actions are detected. 5.3. Inspecting High value files Some of the high value files are: 1. 2. 3. 4. 5. Files of high financial importance such as Budgeting and payroll Susceptible Files: E.g. Stores accounting. Files of importance. E.g. Raw material procurement, traffic of materials Adherence to policies: Transfer, promotion, awards, incentives given to employees New projects & development related activities

5.4. Actions taken The cases of fraud charged against a department or an employee is circulated throughout all departments which act as a deterrence to malpractices for fear of being caught. If the case involves above Rs. 25 lakh, then the case is handed over to the CBI. The CBI can also take over the case from the department if paramount importance has been attached to the case. An employee is suspended from service during the period of trial and if found guilty from the court of law, then he or she is terminated from service considering the gravity of the case.

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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.

3. ORGANISATIONAL CHART OF COMPANY SECRETARIAT

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 Directors 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
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Chapter 5

Functional Interdependence of Departments

FUNCTIONAL INTERDEPENDENCE OF DEPARTMENTS

Fire & Safety

H U M A N R E S O U R C E M A N A G E M E N T

Computer Centre

R&D

Quality Check

Vigilance

Diagram No: 2

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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.

2.

Marketing, Materials and finance Marketing department sells the goods and raises the fund required by the finance department. Materials department transports the goods for the marketing department.

3.

Finance and Production Production targets are made on the basis of finance budget which checks the economical feasibility of the plan and finance budget cannot prepared without knowing the production plan.

4.

R & D and production R & D researches new technology for decreasing the production cost, and further by its manufacture of Biofertilizers.

5.

Quality, Marketing and R & D Quality preserves the customers delight by ensuring the quality of goods sold. R & D counter checks the quality. R & D further goes to the depots and check the products whether it reaches the market safely with quality.

6.

H.R H.R department ensures the development of human resource and its productive utilization by directing it in the right channel.
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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.

8.

Fire & Safety It operates all over the organization to ensure its safety and quickly responds to emergency cases. 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.

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Chapter 6

Corporate Social Responsibility

CORPORATE SOCIAL RESPONSIBILITY

Some of the measures taken by FACT as a part of its Corporate Social Responsibility are: 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.
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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.

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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 worlds leading fertilizer producers are the Soviet Union and United States. Other leading producers are China, Canada, France and India. The worlds 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
India is one of the worlds largest producers and consumer of both phosphorous and nitrogenous fertilizers. The pesticide in the country is also among the fast growing sector in the world. There are around 25 chemical fertilizers used in the country at present. The total fertilizer capacity in India is 12.02 million tonnes in nutrient terms, and consumption was is 13.05 million tones. Roughly a sum of Rs.130 million has been the total investment in this industry. The problem of the industry is the seasonal demand for its product and large working capital requirements. The Govt. of India has implemented
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and commissioned major fertilizer projects in 1998-1999 and invested 4122.02 crores. They will add 9.75 lacks of DAR (Di-ammonium phosphate and one lack tones of NP).It is unfortunate that fertilizer industry has been a victim in the recent past under the controlled piercing subsidy regime of the Government. 1. 2. 3. Government is contemplating complete decontrol in phased manner by 2006-07. Quantitative restrictions on fertilizer imports have been removed since April 1, 2001. The implication of present policy environment for fertilizer sector in India 4. 5. 6. 7. 8. is not promising. There are possibilities that domestic production and consumption of fertilizers may decline. The policy considerations which are likely to be implemented may result in making the domestic production of fertilizers unviable. At present there is no demand-supply gap in urea. A switch over in feed stock from naphtha to LNG for urea is envisaged depending on its availability and price. High energy cost does not permit further expansion in urea capacity within the country. Joint ventures abroad are likely to be developed. For phosphate and potash also, joint ventures abroad are likely to be developed as there is no potential reserve within the country.

3. STATE SCENARIO
Kerala has high degree of land use and cropping intensity. The states 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.

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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
SPIC- Southern Petrol Industrial Chemicals (Products-Urea, diAmmonium Phosphate and intermediaries) MFL- Madras Fertilizer Ltd. (products-NPK 17:17:17 and variants Vijay urea, Biofertilizers, Agro Chemicals). NFLNagarjuna Fertilizer Ltd. (Products-Urea) MFL- Manglore Fertilizer Ltd. (Products-Urea, Complex Fertilizers) RCF- Rastria Chemicals Fertilizers Ltd. (Products-Urea, di-ammonium phosphate, MOP, Complex fertilizers) IFFCO- Indian Farmers Fertilizer Co-operative (Products-Urea, Ammonium phosphate and complex fertilizer)

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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
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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. With commercialization of its production at Udyogamandal, it began its expansion stage to Cochin division and finally to petrochemical division. But the reigning period of FACT came to an end with the scarcity and skyrocketing prices of raw materials. It could hardly do anything to save its declining trend as the product pricing is done by the Govt. of India. The show case example has been the drift of the company to loss even after making a record production in 1999-2000. 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 companys situation and responding to its need. The future however looks bright when the opportunities and strengths of the organization are considered. FACTs 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. Governments new policy on subsidy may rewrite the history of FACT.

About the study FACT is divided into 3 main divisions Udyogamandal division (UD), Cochin division (CD) & Petrochemical division (PD). This study was conducted at Udyogamandal division. FACT has 12 main departments and are interdependent on each other as shown in Organizational chart (Chart No 1) & Diagram 2. 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. This study has improved my confidence by its successful completion to undertake such studies in the future.

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