SUMMER TRAINING

In Partial Fulfillment of the

Master of Business Administration (M.B.A.),
For the Session 2005-2007

Institute of Engineering & Emerging Technology

Baddi.

1
 Nangal Plant

SUBMITTED TO: SUBMITTED BY:

HRD Department Deepshikha
Roll No. 09
M.B.A. 3RD Sem.

Education becomes more meaningful when its theoretical aspects are

combined with practical experience. This provides an opportunity to the
students to improve their understanding of the studies.

2
MBA is a course, which combines both its theory and application as its
content of study in the field of management as a part of this course, every
aspirant has to undergo at least six to eight weeks “Industrial Training” in an
organization of repute. The purpose of this training is to expose the students
or management sciences to real business situation and to provide insight into
the various functions carried out within the organization.

In order to use the theoretical knowledge I get the opportunity of “Industrial

Training” in National Fertilizers Limited Naya Nangal.

As complementary to training, I have prepared and submitted a project report

on working capital management of NFL. It is an attempt to present on
account of practical knowledge and observations gathered during the
vocational training.
DEEPSHIKHA

3
No job or task can be completed without the co-operation and support of
people around us. I being no exception had to seek the help of others to make
this project successful.

I would like to thank NFL for providing me with an opportunity to undertake

industrial training, which has been a learning experience for me.

A lot of individuals have contributed in the preparation of this project. I am

thankful to all of them for their timely help encouragement, support,
valuable comments, suggestions and many innovative ideas in carrying out
these projects. It is my proud privilege and pleasure to express deep sense of
gratitude to these people.

Shri H.C. Thakral, Manager (F&A), NFL, Nangal Unit, and various Heads
of different Departments. I thank my parents for their love, encouragement
and comfort in my career.

My project would not have been completed without the guidance of staff
members of the NFL’s, Finance, Store, and Human Resource Development
Department.

4
 INTRODUCTION TO FERTILIZERS

FERTILIZERS

FERTILIZERS are chemicals given to plants with the intention of

promoting growth. Fertilizer is defined as “ Any material , organic or
inorganic , natural or synthetic , which supplies one or more of the chemical
elements required for the plant growth’’.
Sixteen elements listed in table 1.1are identified as essential elements
for plant growth , of which nine are required in macro quantities and seven
in micro quantities . Of the elements listed in Table1.1 ,carbon , oxygen and
hydrogen are supplies by air and water and are, therefore ,not treated as
nutrients by the fertilizer industry . The main aim of the industry is to
provide the secondary and primary nutrients , which are required in macro
quantities.

PRIMARY NUTRIENTS

The primary nutrients are nitrogen , phosphorus, calcium and potassium.

Primary nutrients are normally supplied through chemical fertilizers. They
are chemical compounds containing one or more of the primary nutrients and
are generally produced by chemical reactions. Whatever may be the
chemical compounds, its most important ingredient for plant growth is the
nutrients content. The three primary ingredients of fertilizers are listed on the
fertilizer bags as nitrogen, phosphate and potash as three numbers, indicating

5
the ratios in that order. Thus a 5-10-5 fertilizer would have 10% phosphate in
its ingredients.

SECONDARY NUTRIENTS

Secondary nutrients calcium, magnesium and sulphur are called the

secondary nutrients. It is required for plant growth in relatively smaller
quantities than primary nutrients. Any deficiency of the secondary nutrients
and other essential elements reduce the efficiency of primary nutrient by
restricting the yield to low levels. Therefore, to obtain optimum results,
crops have to be supplied with secondary nutrients in addition to primary
nutrients.

MICRONUTRIENTS

Micronutrients are a group of nutrients, which are essential for plant

growth but are required by plants in small quantities. Intensive cropping
depletes all nutrients including micronutrients from the soil at a fast rate.
Therefore selective use of micronutrients is necessary for increasing
agricultural production. Iron, zinc, manganese, copper, boron, molybdenum
and chlorine fall under this category. Ten micronutrients namely zinc
Sulphate (monohydrate & heptahydrate) manganese Sulphate, borax,
solubor, copper Sulphate , ammonium molybdate, chelated zinc, and
chealted iron have been incorparted in the Fertilizer (control) order (FCO).
Fortified fertilizers like Zincated urea and boronated single superphosphate
have also been notified under FCO.

6
7
8
 FERTILIZER INDUSTRY

INTRODUCTION

Indian economy is an agriculturist economy. Agriculture production

plays a very important role In the prosperity of the country. As the limited
and the production is increasing at a tremendous rate, it is very necessary to
increase production and only way to increase the production is to do
intensive cultivation with the use of chemical fertilizers.
The development of the fertilizer industry is of great importance to our
National economy as; the primary occupation of 70% of the Countrymen is
agriculture. And for a good yield, Fertilizer play, an important role. The
increase in the Fertilizer industry shall lead to the development of agriculture
which will further lead to rise in per capital income of the people due to
increased yield and high quality. The efficiency of this industry would help
the country to earn more of foreign exchange by exporting more and high
quality of grains and other agricultural products.
Fertilizer industry in our country has expanded significance to fulfill
Nation’s hopes and aspirations for self-efficiency in food grains by trotting
path of planned industrialization. Govt. of India has directed conscious
efforts since the early 50’s to the present level that today Indian fertilizer
industry meets country’s major requirements of plant nutrients and
contributes remarkably in increasing agriculture yields manifold. The
fertilizer industry has played a key role in rushing an era of plenty of food
grains by translating into realty “Green Revolution” in the country from an
utterly unsatisfactory situation prevailing on the food grains font India

9
continues to be the third largest producer and consumer of in the world. Urea
production in the country for the year 2002-2003 was 105.54 lakh tones of
Nitrogen.

COMPANY PROFILE

National Fertilizers Limited (N.F.L) was registered on 23.08.1974

with an authorized capital of 500 crores. NFL set up two fertilizer plant in
Bathinda (Punjab) and Panipat (Haryana), NFL has emerged as an industrial
giant in the fertilizer sector. Over the years company has expanded into a
multi unit company with four manufacturing units with varied technology.
Three of these units are strategically located in the high consumption areas
of Punjab & Haryana. The company has an installed capacity of 35.49 lack
MT of Nitrogenous fertilizers.
The plants at Nangal, Bathinda and Panipat are based on partial
oxidation of fuel oil/high petroleum stock, where as Vijaipur unit is based on
natural gas as feedstock/ raw material. All the plants are running at more
than rated capacities. The company is indulged in manufacturing chemicals
& bio-products as well as to provide the allied services. NFL schedule-A &
Mini Ratna category-1 Company, is a market leader in the fertilizer industry
in India with 16.9% share in Urea production during 2003-2004.The
company has an installed capacity of 35.49 lakhs MT nitrogenous fertilizers
and has recorded an annual sales turnover of Rs. 3,395 crores during 2003-
04.

Registered office:-
Scope Complex, core-111, 7 – instiutional area, Lodhi road,
New Delhi- 110003
10
Corporate office
A-11, sector –24, District Gautam Budh Nager,
Noida (U.P) 201301

MANAGEMENT TEAM

BOARD LEVEL
G.S. Mangat Chairman and Managing Director
S.C Chatwal Dirctor (Finance)
G.S Mangat Dirctor (Marketing)
R.Jayamani Dirctor (Technical)

UNITS HEADS

Nangal Unit Shri Binay Kumr, Chief General

Manager
Bathinda Unit V.K. Sharma, Chief General Manager
Panipat Unit V.K.Bansal (Chief General Manager)
Vijaipur Unit-1&11 V.K.Grover (Chief General Manager)

OWNERSHIP

N.F.L is wholly owned by government of India till 1992 when

Government of India (GOI) disinvested the company’s shares along with that
of some other public sector undertaking. The shareholder pattern of the
company is as under: -

11
Share Holding Pattern as on : 30.09.2005
Face Value
Share Holder No.of shares % Holding
PROMTERS
HOLDING
Froeign Primoters 0 0.00
Indian Promoters 47900500 97.64
Person Acting in Contcert 0 0.00
Sub Total 47900500 97.64
NON PROMOTERS
Institutional Invester
Mutul Funds and UTI 860252 0.18
Banks Fin. Inst. And Insurance 8804286 1.79
FII’s 129910 0.03
Sub Total 9794448 2.00
Other Investor
Private Corporate Bodies 524343 0.11
NRI’s/OCB’s/Foreign Others 4730 0.00
GDR/ADR 0 0.00
Dirctors/Employee 0 0.00
Government 0 0.00
Others 0 0.00
Sub Total 529073 0.11
General Public 1254379 0.26
GRAND TOTAL 490578400 100.00

12
 ISO CERTIFICATIONS

ISO CERTIFICATIONS

PLANTS / OFFICE CERTIFICATION AWARDED SINCE

  Vijaipur Plant  ISO-9002/ISO-14001    1997-98/98-99

 ISO 9001:2000    2003-04

  Panipat Plant   ISO-9002/ISO-14001    1999-00/2000-01

 ISO 9001:2000    2003-04

 OHSAS-18001    2004-05

  Bathinda Plants   ISO-9002/14001/18001    2000-01/2001-02/03-04

 ISO 9001:2000    2003-04

 OHSAS-18001    2003-04

  Nangal Plant   ISO 9001: 2000    2002-03

13
  ISO-14001    2001-02

  CO/CMO  ISO 9001:2000    2002-03

14
LOCATION OF NFL PLANTS

15
 NFL OPERATING PLANTS AREA
PLANTS AT A GLANCE

The company has its units in various places like Nangal, Panipat Bathinda
& Vijaipur. The Government of India has approved the Impliment ation of
Vijaipur Expansion project with an outlay of 987 Crores. Three of the Units are
strategically located in the high consumption areas of Punjab
Company’s strength lies in its sizeable presence, professional marketing and strong
distribution network nationwide.
National Fertilizers Limited,
Vijaipur, Distt. Guna,
Madhya Pradesh-473111.
Email : cc@nfl.co.in
Fax    : 07544 - 273089, 273109
Tel.    : 91- 7544 - 273101, 273090
Vijaipur Plant

National Fertilizers Limited,

Gohana Road,
Panipat,
Haryana-132106.
Email : nflpanipat@nfl.co.in
Fax    : 0180- 2652515
Tel.    : 0180- 2652481 to 485, &
0180- 2655570

Panipat Plant
National Fertilizers Limited,
Sibian Road,
Bathinda,
Punjab-151003.
Email :  nfladm@nfl.co.in
Fax    : 0164- 2270463;  0164- 2271270
Tel.    : 0164- 2270220/2271200  

Bathinda Plant

National Fertilizers Limited,

Naya Nangal,
Distt. Ropar,
Punjab-140126.
Email :   nangal@nfl.co.in
Fax    :  0187-220541
Tel.    :  0187-220543

Nangal Expansion Plant

16
  

Plants Capital Feed Stock Existing Capacity MT/Year

Cost(Rs. ( Lakh MT/Yr.)
Crore) Ammonia Urea Can Bio-Fert
Nangal-I 91.26 Naptha 0.66 - 3.181 -
Nangal-II 299.19 F.Oil/LSHS 2.97 4.785 - -
Panipat 338.41 F.Oil/LSHS 2.97 5.115 - -
Bathinda 349.41 F.Oil/LSHS 2.97 5.115 - -
Vijaipur-I 516.00 Natural Gas 5.016 8.646 - -
Vijaipur-II 1071.00 Natural Gas 5.016 8.646 - -
Indore 1.42 Strains - - 100
Total 2666.55 19.602 32.307 3.181 100

PRODUCTS

KISAN UREA AND KISAN KHAD

Kisan Urea & Kisan khad NFL’s popular brands are sold over a
large marketing territory spanning the length and breadth of the country.
Kisan Urea is an essential commodity under the Essential Commodities Act,
1955. The Department of Fertilizer plans and monitors production, import
and distribution of fertilizer and management of subsidy for indigenous and
imported fertilizers in the country. Kisan Khad is produced at the Nangal
Unit in Punjab, NFL’s. Kisan Khad is Calcium Ammonia Nitrate (CAN)
Nitrogenous fertilizer, contains 25% nitrogen, half of which is Ammonical
form and half in Nitrate form. Availability of nitrogen in two forms in kisan
khad help crops to meet its initial and long-term Nitrogen requirements and
is unique feature.

17
NFL DEVELOPMES NEEM-COATED UREA

The Company has developed Neem coated Urea which on

demonstration has improved the crop yield by 4-5%. N.F.L. has made strides
in developing a process for manufacture of Neem-Coated Urea on
commercial scale. The company is focusing its thrust to widen the marketing
operations of Neem coated Urea.

NFL has made efforts to harness unique properties of Neem is

regulating release of Nitrogen to crops when mixed into soil and making
available to farmers a more efficient Nitrogenous fertilizers in the form of its
Neem-coated Urea primarily based upon research work conducted by
scientists of Indian Agriculture Research Institute, New Delhi.

After carrying out extensive laboratory as well as field studies. NFL

has found out that Neem-Coated urea produced with a thin film of Neem oil-
water emulsion of specified concentration has resulted in enhanced shelf life.
Reducing caking of material during storage and increased nitrogen
18
availability to corps at the time of their growth and hence significantly
contributing towards better crops yield. It has further been reported that the
process developed by NFL in producing Neem-Coated Urea involves
marginally higher cost.

Process of coating urea with Neem

The process is based on the use of neem in form of neem –oil water
emulsion, which is prepared in suit and used as such for spraying over urea
prills. Neem oil used in the preparation of emulsion is in very small quantity.
The coating of neem oil on the urea prills is in the ratio of 500 ppm (0.5 Kg.
Neem oil per 1000 Kgs. of urea prills i.e. 0.05%). The urea produced by this
process has better shelf life in respect of tendency to cake during storage.
Thin layer of neem oil formed on the urea prills imparts slow dissolution in
water properly. This makes neem-coated urea to release nitrogen to the
plants slowly and over longer period

In order to test the efficiency of Neem-coated urea so developed,

under the field conditions. NFL has laid 50 fields demonstrations on paddy
crop kharif – 2002 season, covering extensive area spreading up to Panipat,
Rothak and Karnal in the state of Haryana, Meerut and Muzaffarnagar in
U.P. and Bathinda in Punjab. At Merrut / Muzaffarnagar, Panipat and
Bathinda demonstration were laid under the expert guidance and supervision
of extension wing / KSKs of respective Agriculture Universities. The results
obtained under the general parameters, including increase in yield, insect
pest control and general crops stand have been very encouraging with an
average saving to the farmers to the extent of around Rs. 700/- per Acre by

19
way of increased yields and reduction in expenses towards use of
insecticides in paddy crop.*

20
INDUSTRIAL PRODUCTS
Industrial products are certain by products, which are produced during
manufacturing of fertilizers. NFL manufactures and markets the following
industrial products : -
Sr. No. Product Chamical
formula
1 Methanol(CH3OH)
2 Nitric Acid Dilute
(HNO3)
3 Ammonium Nitrate
(NH4NO3)
4 Sulphur (S)
5 Industrial Grade Urea
(NH2CONH2)
6 Liquid Oxygen (O2)
Used for/industry
 Formaldehyde
 Automotive antifreeze
 Chemical Synthesis
 Aviation Fuel
 Rocket Fuel
 Dehydrator for natural Gas
 Organic Synthesis
 Photo engraving
 Medicine
 Preparation of Nitro
 Refining of Silver
 Explosive, Pyrotechnics
 Nitrous Oxide
 Absorbent for Nitrogen Oxides
 Ingredient for freezing mixture
 Oxidiser in solid rocket properties
 Nutrient for Antibiotics
 Catalyst
 Sulphuric Acid
 Sugar Industry
 Rubber & Tyre Industry
 Animal Feed
 Synthetic resins
 Textile Finishes
 Melamine resins
 Paints and Dyes
 Drugs and Pharmaceuticals
 Steel Manufacturing
21
  Copper Manufacturing
 Welding and Cutting
 Medical purposes
7 Liquid Nitrogen (N2)  Animal Husbandry for Semen
preservation
 Electronic Industry
8 Carbon Slurry(C)  Rubber Industry
 Ink making industry
9 Carbon dioxide Gas  Aerated Water
(CO2)  Dry Ice
10 Anhydrous Ammonia  Nitric Acid production
(NH3)  Urea production
 Nitriding of Steel
 Refrigerant Solvent
 Yeast Nutrient
 Rocket Fuel
 Reducing Agent for Ores
11 Sodium Nitrite  Organic Synthesis
(NaNO2)  Rubber additives
 Chemical reagent
 Pharmaceuticals
 Photographic reagent
 Pickling meat
 Dyeing and printing of fabrics
 Rust proofing and medicines etc.
12 Sodium Nitrate  Oxidizing agent
(NaNO3)  Oxidizer in solid rocket
propellants
 Fertilizers
 Glass Manfacturing
 Chemical reagent
 Dynamits/Matches
 Military Explosives
 Referigerant/Medicines
13 Liquid Argon (Ar)  Arc Welding
 Plasma cutting
 Lamp industries
 Aircraft and Missile industry
 Copper refining

22
  Metal refining
14 Liquid CO2  Aerated Water
 Dry Ice
15 Off Grade Methanol 
(CH3OH)

MAJOR AWARDS AND RECOGNITION

NFL IS THE PROUD RECIPIENT OF SEVERAL AWARDS IN

VARIOUS AREAS       

PRODUCTIVITY AWARDS
  AWARDS  YEAR     UNIT

Certificate for Productivity 1991-92 Bathinda

Improvement by National Productivity
Council

Second Best Productivity Award by 1993-94 Panipat

Fertilizer Association of India

Second Best National Productivity 1993-94 Panipat

Award by National Productivity Council
(NPC)

Certificate of Merit by NPC 1996 Nangal

Commendation certificate for 1996 Vijaipur

outstanding work in Energy
Conservation by the Ministry of Power,
Govt. of India

Productivity Award by NPC 1997-98 Bathinda

Certificate of Merit from NPC 1997-98 Bathinda

FAI Award for Best Overall 1999-00 Vijaipur

Performance of an Operating
Nitrogenous Fertilizer unit

National Productivity Award for Bio- 2002-03 Vijaipur

Fertilizers

23
 OTHER PRESTIGIOUS
AWARDS & RECOGNITIONS
  AWARDS  YEAR  UNIT

First Prize in Excellence in Project Mgt. 1989 Vijaipur

By Ministry of Program
Implementation.

Corporate Performance Award by 1993-94 NFL

Economic Times.

National Energy Conservation Award 1995 Vijaipur

by
Ministry of Power, G.o.I

Udyog Excellence Gold Medal and 1995 Bathinda

Citation by
Industrial Economic Forum, G.o.I

Best Energy Conservation 1999-00 Panipat

Implementation Gold Award by
Institutional Green Land Society,
Hyderabad.

Energy Conservation Award from the 2000 Vijaipur

Ministry of Power, G.o.I.

Energy Conservation Award from the 2005 Vijaipur-I

Ministry of Power

POLLUTION CONTROL AWARDS

  AWARDS  YEAR  UNIT

Environment Protection Award by 1995-96 Vijaipur

Fertilizer Association of India

11th Indira Gandhi Memorial National 1998-99 Vijaipur

Gold Award for Environmental &
Ecological Implementation

Best Pollution Control Implementation 1998-99 Vijaipur

Gold Award from International Green

24
land Society, Hyderabad

25
 SAFETY AWARDS
  AWARDS  YEAR  UNIT

Award of Honour by NSC,USA 1996 Nangal

British Safety Council Award 1996 Nangal

Award from National Safety Council, 1997 Panipat

USA

British Safety Council Safety Award 1997 Nangal

Award for Excellence in Safety by FAI 1997-98 Nangal

Yogata Praman Patra by NSC, Mumbai 1998-99 Vijaipur

Safety awards (5 Nos.) by Punjab Govt. 1998 & 99 Bathinda

Haryana State Safety & Welfare Award 1999-00 Panipat

National Safety Award 1999 & 2000 Bathinda

Prashansa Puraskar – 2000 award by 2000 Bathinda

NSC

Yogyata Praman Patra – 2001 award by 2003-04 Bathinda

NSC

National Safety Award – 2002 2003-04 Nangal

National Safety Award – 2002(Runner 2003-04 Bathinda

up)

Punjab State Safety Award – 2003 2003-04 Nangal

Yogyata Praman Patra – 2003 2003 Bathinda

26
 EMPLOYEES SKILL AWARDS
  AWARDS  YEAR  UNIT

Prime Minister’s Shramvir Award to  1984 Panipat

four employees for Unconventional
repairs of Air Compressor Blades

Vishwakarma Rashtriya Puraskar to one 1992 Nangal

Employee by Ministry of Labour, G.o.I

Krit Vir Award to 5 employees by 1992 Nangal

Punjab State Labour Deptt.

Vishwakarma Rashtriya Puraskar to 1993 Bathinda

three employees.

Krit Award to 6 Employees by Punjab 1993 Bathinda

State Labour Deptt.

Krit Vir awards to 13 employees by 1995 & 1996 Nangal

Punjab Govt.

Krit Vir awards to 13 employees by 1995, 96 & 98 Bathinda

Punjab Govt.

Vishwakarma Rashtriya Puraskar from 1999 Bathinda

the Ministry of Labour & Employment,
G.o.I

Krit Veer Award to 1 employee by 2002 Nangal

Punjab Govt.

Punjab State Krit Veer Award 2003 Bathinda

27
 BIO FERTILIZERS

NFL also manufactures and markets three types of bio-fertilizers,

Rhizobium, Solublesing bacteria (PSB) and Azecpobacpor. Starting with a
mere 23 MT production in 1995-96, the production has risen to 173 MT’s in
2002-03. The company presently markets its bio-fertilizers in Madhya
Pradesh, Maharashtra, Orissa, Rajasthan and Punjab.

MAJOR CUSTOMERS OF NFL

COMPANY NAME PLACE PRODUCT

1. Ammonia Supply Co. Delhi Ammonia
2. Bhushan Ltd. Chandigarh Ammonia
3. Gabrid India Ltd. Parwanoo Ammonia
4. Auro Saler Co. Raigarh Lumps
5. Goyal Gases Pvt.Ltd. Naya Nangal Liquid Nitrogen
6. Shri Ganesh Chamical Jodhpur Nitric Acid
7. Up Chamical Co. Ludhiana Nitric Acid
8. India Explosive Ltd. Baroda Lumps
9. Power Drugs Ltd. Dera Bassi Ammonia
10. Transport India Pvt. Ltd. Delhi Sodium
11. Metro Chemical Ltd. Delhi Sodium

MARKETING

NFL A Govt. of India undertaking, is regarded in the manufacturing &

marketing of fertilizer & various industrial products in the country.

The complete farmer satisfaction through best services is the drawing

force NFL’s marketing strategy. The company has expanded its Programme
from improving then crop productivity at farm level to the over all

28
development of the farming community. To provide to the farmers high
quality products in the right time. NFL has an extensive and integrated
network.

The Market

The State of Punjab, Haryana, Rajasthan, H.P., J& K, MP & Union

Territories of Delhi & Chandigarh presently from the marketing area of the
company.

Among the state of Punjab has the highest fertilizer consumption of

170 kg per hectare. In view of the high rate of irrigation coupled with
progressive attitude of the farmers, the state still has a large potenial for
fertilizer consumption.

The states of Haryana & U.P. also make rapid development in

agriculture. The state of Haryana is still at a development stagehand it is
expected the rate of fertilizer consumption shall further increase of irrigation.
The U.P. on the other hand has a good potential for fertilizer consumption as
account of its witness.

The states of Rajasthan& M.P. through geographically very large

remained agriculturally due to a variety of reason. But the agricultural scene
in these states is fast changing especially with the launching of various minor
irrigation projects in both the states. Minor irrigation Schemes will help in
widening the base of fertilizer consumption & thus states will offer a great
potential in fertilizer consumption, which will be in NFL’s interest in the
long run.
29
 The growth in fertilizer consumption in the states of H.P. & J&K
remain quite low owing to inadequate infrastructure backwardness of the
farmers, logistics problem etc. Both the states have a temperate climate,
which is conductive for fruit crops.
The system of marketing of urea has undergone a change w.e.f.
01.04.2005 when company has been allowed to market 25% of its produce
outside ECA was raised to 50% in Rabi 2005-06; the same portion prevails
for Kharif 2005-06.

The company provides comprehensive capsules of various fertilizers

promotion activities, which includes agronomical programs, use of extension
media, publicity and farmer development programmes.

RATING AS PER MOU

N.F.L. has been rated “EXCELLENT” for the year 2001-02 under
MOU signed with Government of India. Rating for 2002-03 is also expected
to be excellent based on the provisional assessment. NFL operates under the
administrative control of Department of Fertilizers in the Ministry of
Chemicals and Fertilizers. NFL enters in to a MOU with the Government for
each year under which the Government undertakes to assist NFL with regard
to availability of inputs, obtaining ECA allocations commensurate with the
availability of Fertilizers from NFL Plants etc.

HUMAN RESOURCES

Company recognizes employees as its most valuable assets. The high

level of performance of the company lies on the contribution and dedication

30
of the employees. Harmonious and cordial relations with the employees were
maintained throughout the year under review. In the changed scenario of
high technology, the company has been continuously following the
rightsizing and putting the available manpower to the best advantage of the
organization.

Voluntary retirement scheme was introduced during the year. The

manpower of the company has come down tom 5003 as on 30-6-2003 as
compared with 5751 as on 31-3-2002. With the retirement of 748 employees
the company has able to achieve reduction of 13% in the manpower.
Presidential directive and government Guidelines with regard to reservation
for different categories of employees were complied with.

MANPOWER STATUS AS ON 30-6-2003

Non executivesSC STOBCWomenEXSMPHMinorityUnit

NangalT
otal
No.of 1677 236 1414 504 53 130 87 74 13 226
Emp.Exe
cutives
Bathinda 903 267 636 216 34 42 55 25 10 62
Vijaipur 869 234 635 251 40 48 32 14 15 231
Panipat 941 336 605 177 145 41 30 10 2 36
CMO 464 282 182 98 15 35 27 1 7 22
CO 149 105 44 26 4 1 30 1 3 7
Total 5003 1460 3516 1272 291 297 261 125 50 584

NFLNFLN
NFL over the years has developed a team of dedicated professionals in
the areas of production, maintenance and project management, safety and

31
environment control. These professionals are sought after in the industry
both in India and abroad for their specialized services.

32
ISO CERTIFICATIONS

NFL is known in the industry for its work culture, value added human
resources, safety, environment, concern for ecology and its commitment to
social upliftment. All NFL plants have been certified for ISO-9002 for
conforming to international quality standards and international
environmental standard i.e. ISO-14001. With the certification of Corporate
Office/Marketing operations under ISO-9001 : 2000, NFL has become the
first Fertilizer Company in the country to have its total business covered
under ISO-9001 Certification.

INFORMATION TECHNOLOGY

Company in its continued endeavor towards achieving on-line sharing

of information for effective decision-making and paperless environment,
implemented local area network(LAN) during 2002-03 at all its units and
zonal offices. The company has also initiated for on-line Material
Management System at all units and Cooperate Office.

ORGANISATION STRUCTURE

Organization is the backbone of the management. Without efficient

organization, no management can perform its function smoothly. Sound
organistion contributed greatly to the continuity and success of an enterprise.
It is the framework of relationships of persons operating at various levels
with vertical or horizontal dimensions. Type or organistion in a company
depends on its size, technology and the range of production.
33
 Being a manufacturing organization N.F.L. is an organized on
functional level and its organizational setup is very well designed. There is a
clearly defined line of authority. The responsibility of higher level, for the
acts of its subordinates is absolute. The structure is simple and flexible.
There is a unity of production. The employers and employees work in
harmony and cooperation without creating any confusion and conflicts.

34
 Chief Mgr. (F&A)
Sh. S. L. Basran

Sr. Mgr. (F&A) Mgr. (F&A)

Sh. Gurdev Singh H. C. Thakral

Dy. Mgr. (F&A) Dy. Mgr. (F&A)

Ganga Ram Bharm Kishore

AMFA (Sales) AMFA AO (Store) Sr. AM AMFA (Pers) AO AO (Estate)

P. K. Kaushal (Purchase) N. P. (Works) I. M. Puri (Concurrance) R. K. Jain
J. S. Bhatti Sharma S. C. Luthra R. D. Bhardwaj

35
36
CORPORATE OBJECTIVES

NFL is instrument of society. It has to service the needs of people with

in the scope of its basic objectives. To achieve this NFL must:

 Select capable people and improve their knowledge and skills on

organized basis.
 Motivate and enthuse the employees to achieve higher productivity
with team spirit.
 Lay down integrated objectives, define individual goals and maintain
an atmosphere conducive to achievement of these goals.
The corporate objectives of NFL are:

BASIC CORPORATE OBJECTIVES

In terms of Memorandum of Association, NFL was setup to

manufacture and market chemical fertilizers, other chemicals and by-
products as well as to provide the allied services. In order to achieve and
maintain a leading position in the production and marketing of fertilizers, the
following Micro Objectives have been identified: -

MICRO OBJECTIVES

1. Productivity

To achieve the best possible levels of production and economy in

the use of inputs while insuring safety and proper maintenance of
plant and machinery and pollution control. More specifically

37
 (a) To strive to raise capacity utilization

(b) To improve upon consumption norms consistently

2. Research and Development

To carry out R&D activities for : -
(a) Increasing plant ability
(b) Saving use of energy in different forms,
(c) Better recovery of saleable by-products,
(d) Process improvement/development, and
(e) Increasing efficiency utilization on a sustained basis in
the application of chemical fertilizers in combination
with other agricultural input.
3. Profitability
To manage the assets, men and material in most effective and
efficient manner ensuring :-
(a) Reasonable return on investment commensurate with the
principles laid down by the government from time to
time, and
(b) Generation of increasing internal resources.

4. Marketing & Consumer Service

(a) To provide tom the farmers high quality products in right time
and in adequate quantities and with a package of modern
agricultural practices, at the same time, maintaining reputation
for fair business practices.
(b) To further intensify promotional efforts for increased use of
fertilizers and to maximize distribution of Company’s products

38
 within the areas covered by the company, consistent with
Government Policy.

5. Organization
To develop and maintain an organizational environment for
encouraging individual and group initiative, innovation and
productivity and also sustain fair deal and humane approach.

6. Growth

(a) To achieve reasonable and consistent growth in the business of

manufacture and marketing of fertilizers and chemicals compatible
with needs of the market.

(c) To work out diversification/expansion schemes to increase

profitability of the Company and meet the changing needs
costumers.

7. Obligation to society

To promote development of ancillary industries.

39
40
 SWOT ANALYSIS
STRENGTH

 High capacity to produce.

 Percentage of profit in Industrial products is very high.
 The company with an excellent track record of high profits.
 The NFL plants are located in virgin market for some of the industrial
products.
 An easy starter – more than 25 years experience in the states of
Punjab, Haryana and Madhya Pardesh.
 Lower capital cost – plant at Bathinda, Panipat and Nangal. Fully
depreciated Vijaipur plant with an investment of Rs. 533 crores and
Vijaipur expansion plant with an investment of Rs. 1071 crores
against the present glass root plant cost of about Rs. 1500 crores.

WEAKNESS

 Large equity base.

 Old and energy intensive fuel oil based at plant at Nangal, Panipat and
Bathinda requiring high maintenance.
 High cost production in fuel oil based plants.
 High investment for revamp/replacement and changeover of feedstock
from fuel oil/LSHS to LNG.
 Single nutrient product base.
 Socio-political compulsions.
 Highly centralized system.
 Lack of sufficient promotional & publicity activities.
 Requirement is seasonal.

41
OPPORTUNITIES

 Growth in fertilizer consumption in the eastern markets of the country.

 Marketing of Neem Coated Urea on large scale.
 Marketing of agricultural inputs/services under one roof.
 Marketing of other fertilizers like DAP, MOP, SSP to harness existing
imbalance in nutrient base and to move towards NPK ratio of 4:2:1.
 Marketing of seeds and pesticides.
 Marketing of specialized services and association in joint ventures in
India/abroad.
 Growth in the production and consumption of bio-fertilizers.

THREATS

 Declining in the consumption of nitrogenous fertilizers in predominant

market areas.
 Energy intensive i.e. Fuel Oil based plants could face closure due to
new policy on fertilizers unless technology modifications are
implemented.
 Dismantling of distribution system.
 Availability of cheaper improved fertilizers.
 Increasing prices of inputs i.e. Fuel Oil/LSHS/Naphtha/Gas in India.
 Requirement of large investments for modernization of Fuel Oil/LSHS
based plants.

42
SALIENT FEATURES OF COMPANY

► The Company has an excellent track and high profits, with highly
motivated and dedicated workers and officers-no industrial relation
problem.

► N.F.L. was given the “Mini Ratna Category-1” by the government of

India in 1998 based on the companies over all performance during the
preceding years.
► The company was ranked 27th in the terms of sales according to
Business India Super-100 in 1998.
► International Greenland Society, Hyderabad awarded NFL “Best
Environment & Ecologist Implementation Award” for the year 1995-96.
► Recently NFL has been “A” in Public Sector Undertaking because of
its constant good performance.
► NFL is the first company in Pubic Sector having the certification of
ISO-9002, ISO-9001 and ISO-14001.
► The Company has signed a memorandum of understanding with the
Union Government for 32.25-Lakh tone production in 2001-02.
►NFL has signed memorandum of association for 2004-05 with the
Department of Fertilizers.
►National Fertilizer Limited, Ranbaxy Laboratories Limited and Indo
Rama Synthetics Limited have secured the National Safety Awards for
the year 2001-02.

43
44
INTRODUCTION TO NFL, NANGAL UNIT

As you cross the sutlej barrage,s west end, you start breathing a
different air – an air of hope. Your eyes certainly can’t miss a prosperous
township on the right and a gigantic fertilizer factory of National Fertilizer
Limited on the left, which are the sign of progress that India has achieved
since independence.

With coming up of Bhakra dam and surplus power available

from the project, it was decided by the government of India to set up a
fertilizer factory at Naya Nangal, which went into production in 1961.
The plant was envisaged to produce Calcium Ammonium Nitrate (CAN)-
a nitrogenous fertilizer with 20.5% Nitrogen with 164 MV power
consumption. This product was subsequently upgraded to 25% nitrogen.
Initially production route was power intensive electrolysis process for the
generation of hydrogen followed by high-pressure ammonia synthesis.
Subsequently in 1978, went on stream, another Ammonia Plant based on
fuel oil gasification, which added urea – a nitrogenous fertilizer with 46%
nitrogen to its range of production. In 1984, Menthanol plant with
capacity of 50 MTPD was added, which was later on raised to 67MTPD.
In 1990, Electrolysis plant was replaced with Front-end Hydrogen plant
(NMP-1) based upon reforming of Naphtha for production of Hydrogen
thus reducing the electrical power consumption.

On February 17, 1956 the proposed Nangal Factory was incorporated

under the name of “Nangal Fertilizers and Chemicals limited” (NFCL)
with its registered at Nangal having and authorized of 31 Cores. The
name of changed to “Hindustan Chemicals and Fertilizers
Limited”(HFCL) with effect from July 15, 1959.
45
 The FCL Ltd. was incorporated on Jan. 1st 1961 by proclamation of
the fertilizers and chemicals companies amalgamation order 1960, having
authorized capital of 75 crores. On 19 Jan., 1961 Nangal Unit becomes
the constituents of “Fertilizers Corporation of India”.

With the re-organisation fertilizers co-operation of India with effect

from 1st April 1978. The Nangal Unit becomes a constituent unit of the
National Fertilizers Limited, which has already two units under it, located
at Bathinda (PUNJAB) & Panipat (HARYANA). 4th plant of National
Fertilizers Limited, at Vijaipur (M.P.) was commissioned in 1987.

MISSION STATEMENT

To produce targeted quantity of fertilizer efficiency and economically

by optimum utilization of resources with due regard to safety and
production control.

Journey towards excellence

The Nangal unit of NFL acted as paragon of excellence in the

field of development of Fertilizer industry in India after being
commissioned in 1961. The luxuriant growth of NFL Nangal Unit beings
with the commissioning of first fuel oil based Fertilizer plant in India
with rated capacity of 900 MTPD Ammonia and 1000 MTPD Urea. A
unique synthesis of technologies from M/S SHELL, M/S LURGI
(Germany) & M/S TECHNIMONT (Italy) give Nangal Unit an edge over
the contemporary technologies. The adoption of versatile technologies
and desire for related diversification led to the manufacture of various

46
 industrial products and byproducts like Nitric Acid, Ammonium Nitrate,
Liquid Nitrogen, Liquid Oxygen, Industrial gases etc.

Future Expansion

To meet the challenges of the ensuing millennium, the goal of

achieving a group turnover of Rs. 10,000/- crores from diverse business and
a net profit of Rs. 1200 crores has been projected. NFL has revamped its
urea plant at Nangal for raising the annual with installed capacity from
330000 MT to 495000 MT per annum with the additional Capital Cost of Rs.
167 crores. Significant feature of this project would be towards optimum
utilization of Ammonia available within plants bsides enhancement in
Product Quality & Environment improvement. As Revamp of Nangal Urea
Plant has already started and planes are in the pipeline to revamp, replace the
existing fuel oil based plants with change in feedback to LNG/Naphtha. To
retain the loyalty of the customers and to add value to their brand, NFL has
been planned to setup single window outlets for the farmers to carry out one
stop shopping for total input to the farmer.

INVESTMENTS

 Unit group of plants for CAN products = Rs. 31 crores(1960-61)

 Expn. group of plants for urea production = Rs.132 crores 1976-77)
 Methonal plant = Rs. 7.2 crores (1983-84)
 NMP-1 for hydrogen production = Rs.60 crores (1989-90)
 Methonal revamp = Rs.6.89 crores (1998-99)
 Urea revamp = Rs. 161 crores (1998-2001)

47
  Pollution control = Rs. 27 crores (1989-2000)

SALLIENT FEATURE OF NFL, NANGAL UNIT

 Nangal Unit awarded ISO-9001: 2000 certification Nangal Unit

awarded ISO-9001: 2000 certification.
 Nangal Unit has been accredited with ISO-9001: 2000 the latest
version of quality certification by M/S. KPMG. NFL, Nangal Unit is
the first fertilizer plant in the country to be awarded ISO-901: 2000
certification.

Installed Capacity (Annual)

Calcium Ammonium Nitrate 3,18,000 MT
Urea 4,78,500 MT
Methanol 22,110 Tonnes
Nitrogen 2,31,340 Tonnes
Ammonia I 66,000 MT
Ammonia II 2,97,000 MT
Ammonia 3,63,000 Tonnes
Date Of Commissioning
Calcium Ammonium Nitrate 22.02.1961
Urea 12.12.1977
Methanol 17.08.1984
Raw Material Requirement
Electricity 44MW
Water 80 millions gallons per day
Fuel Oil/LSHS 720 Tonnes per day
Coal 900 Tonnes per day
48
Naphtha 170 Tonnes per day

PLANTS AT NANGAL UNIT

There are two types of plants in the Nangal Unit: -
1. Unit Plants
2. Expansion Plants

1. Unit Plants: -

I. Water Treatment Plant

II. NMP (Nangal Modernization Plant)
III. Ammonia I
IV. Nitric Acid Plant
V. CAN Plant
VI. Bagging Plant

2. Expansion Plant

Gradual reduction in the power supply to the fertilizer plant badly effects
the production, as also augment the fertilizer production. The Govt. of India
decided to establish new fertilizer plant, which came to be known as Nangal
expansion project with an additional Nitrogen capacity of 152000 tonnes by
using fuel oil as a feed stock. This plant not only increased production
capacity from 232000 tonnes of nitrogen per annum, but also reduced the
dependence on bulk supply of electric power.
I. Steam Generation Plant
2. Ammonia-11

49
Urea Group of Plants

i. Urea Plant
ii. BEW Plant
iii. HWP
iv. Hydrolyser Plant
v. Ammonia Storage
vi. Chromate and HCN Treatment Plant
vii. Cooling Towers

POLLUTION CONTROL

NFL has a long tradition of nurturing the environment in and around

its manufacturing units. At NFL, we believe in sustainable development
without degrading the environment and are fully committed to our
responsibility to the Society. In line with our commitment to this object, we
have installed with state of art effluent treatment facilities at all our Units. At
NFL Vijaipur the company has adopted cleaner technology to minimized
generation of pollutants.

All the pollutants generated in the manufacturing process are treated at

source and pollution control schemes have been incorporated at the inception
stage itself.

On environment and pollution control, NFL has been taking adequate

measure so as to control the emission level within the standards prescribed
by the State Govt. and Minimal National Standards (MINAS). Right from
the beginning special care has been taken by the Nangal Unit in this

50
connection. The Unit has the following Affluent Treatments Plants, the
expenses of which are directly allocated to the cost center.

i. HCN Chromate Treatment Plant

ii. NOX Abatement Plant
iii. Urea Hydrolyser Plant
iv. Electrostatic Precipitator Plant
v. Affluent Plants
vi. Sulphur Recovery Plant

EVER BEST PRODUCTION RECORDS

Production
Period Ammonia Plant Urea Plant
Daily 1,045 (27.01.2000) 1,654 (08.11.2001
Monthly 30,117 (Dec. 1998) 49,171 (Oct., 2002)
Yearly 3,00,840 (2003-04) 4,78,500 (2002-03)

EVER BEST DISPATCH RECORDS

Production
Period Ammonia Plant Urea Plant
Daily 3,440.400 (13.11.1997) 2,364.700 (31.01.1984)
Monthly 51,868.350 (June 2002) 38364.250 (Sep 1975)
Yearly 4,78,514 (2001-02) 3,33,147.055 (1976-77)

51
52
 INTRODUCTION TO WORKING CAPITAL

Working capital is simply current asset minus current liabilities and

the amount can be positive or negative. Working capital is basically an
expression of how much in liquid assets the company currently has to build
its business, fund its growth and product value for the owner. The faster a
business expand, the more cash it will need for working capital and
investment the cheapest and best sources of cash exist as working capital
right within the business . Good management of working capital is very
important because the term is used for the capital needed for day-to-day
operations.

According to gerstenberg working capital means current assets of a

company that are changed in ordinary course of business from one to
another.”E.g. cash to inventory to receivable to cash.

KINDS OF WORKING CAPITAL

On the basis of concept On the basis of time

Gross working Net working Permanent Temporary

capital capital working capital working capital

53
  ON THE BASIS OF CONCEPT

1.GROSS WORKING CAPITAL:-

Gross working capital is the total of all the current assets of a business.

2. NET WORKING CAPITAL:-

Net working capital means the excess of current assets over current
liabilities. I.e. net working capital=current assets –current liabilities.

CONSTITUENT OF CURRENT ASSETS AND CURRENT LIABILITIES

CURRENT ASSETS

This is any cash that can be quickly turned into cash. This includes:-
Cash in hand and bank balance
a. prepaid expenses
b. accounts receivable
c. sundry debtors most securities
d. inventory
e. accrued incomes

CURRENT LIABILITIES

This is a liability in the immediate future. This includes

a. sundry creditors
b. accounts payable
c. outstanding expenses
d. short term loan, advances and deposits
e. bank overdraft
f. provision for taxation
54
  ON THE BASIS OF TIME

3.PERMANENT WORKING CAPITAL :-

To carry on day-to-day cooperation of the business without any
obstacles, a certain minimum level of raw material work in progress,
finished goods and cash must be maintained in a continuous basis. The
amount needed to maintain current asserts in this minimum level is called
permanent working capital.

4.TEMPORARY WORKING CAPITAL:-

Valuable working capital on the other hand represents the
amount needed over and above the permanent working capital to take care of
seasonal shifts in sales or activity levels.

FACTORS DETERMINING THE WORKING CAPITAL:-

A firm should have neither too much nor too little working capital.
The working capital requirement is determined by a large no. of factors but,
in general, the following factors influence the working capital needs of an
enterprise: -

(1) Nature Of Business

Public utility undertaking like electricity; water supply etc.

requires less working capital than the trading concerns and
financial firms, which further require less working capital than
the manufacturing concerns.

55
(2) Size Of Business

Large the size of business enterprise grows, greater would be

the need for working capital. The size of business may be
measured in the terms of scale of its business operations.

(3) Production Policy

Production cycle means the time-span between the purchase of

raw materials and its conversion in to finished goods. The
longer the production cycle, the longer will be the need of
working capital because the funds will be tied up for a longer
period in work in process. If the production cycle is small, the
need for working capital will also be small.

(4) Operating Cycle

In a manufacturing concern, the operating cycle starts with the

purchase of raw material and ends with the realization of cash
from the sale of finished products. The larger the cycle the
larger is the operating cycle.

Debtors

Cash Finished Goods

Raw Material Work-in-progress

56
 (5) Credit Policy

The credit policy of a concern in its dealing with debtors and

creditors influence considerably the working capital
requirement. Average debt collection period of NFL is 30 days
so it require sizeable amount of working capital.

(6) Price Level Changes

Changes in price level also affects the working capital

requirements. If the price level is rising, more funds will be
required to maintain the existing level of production.
(7) Miscellaneous Factors

 Operating efficiency.
 Management ability.
 Irregularity of supply.
 Import Policy.
 Assets structure.
 Banking facilities.
Working capital includes the following

1) Cash Management
2) Receivable Management
3) Inventory Management

CASH MANAGEMENT

57
 Cash is one of the current assets of a business. It is needed at all times
to keep the business going.A business concern should always keep sufficient
cash meeting its obligations. Any shortage of cash will hamper the
operations of a concern and any excess of it will be unproductive. Cash is
most unproductive of all the assets. While fixed assets like machinery, plant,
etc. and current assets such as inventory will help the business in increasing
its earning capacity, cash in hand will not add anything to the concern. It is
in this context that cash management assumed much importance.

MOTIVES FOR HOLDING CASH

Transaction Motive

A firm needs cash for making transactions in the day-to-day

operations. The cash is needed to make purchases, pay expenses, taxes,
dividend, etc. the cash needs arise due to fact there is no complete
synchronization between cash receipt and payment.

Precautionary Motive

A firm is required to keep cash for meeting various contingencies.

Though cash inflow and cash outflow are anticipated but there may be
variations in these estimates.

Speculative Motive

The speculative motive relates to holding of cash for

investing in profitable opportunities as and when they arise. Such
opportunity do not come regular manner. These opportunities cannot be
58
scientifically predicted but only conjectures can be made about their
occurrence.

59
CASH MANAGEMENT
Cash management has been assumed importance it is most
significant of all the current assets. It is required to meet business obligations
and it is unproductive when not used. Cash management deals with
following:
1. cash in flows and cash outflows
2. Cash flow with in the firms.
3. Cash balances held by the firm at a point of time.

MANAGING CASH FLOWS

1. Prompt payment by customers.
2. Quick conversion of payment into cash.
3. Decentralised collections.

METHODS OF SLOWING CASH OUTFLOWS

1. Paying on last date.

2. Payment through drafts.
3. Adjusting payroll funds.
4. Centralization of payments.
5. Inter-bank transfer.

1. RECEIVABLE MANAGEMENT

Receivables results from credit sales, a concern is required to

all sales in order to expand its sales column. Receivables represent amount
owned to the firm as a result of sales of goods or in ordinary course of
business. The period of credit and extent of receivable depends upon the

60
credit policy followed by the firm. The purpose of maintaining is investing
in receivables is to meet the competition and to increase the sales and profit.
Receivable management is the process of making decisions relating to
investment in trade debtors. The objective if receivables management is to
make sound decision as regard to investment in debtors and to promote sales
and profit until that point is reached where the return on investment in
further funding of receivables is less than the cost of fund raised to finance
that additional credit but it includes the risk of bad debts.

KEY DECISION AREAS IN MANAGEMENT

IF RECEIVABLES

CREDIT POLICY:-
`The first decision area is the determination if the credit
policy it has two broader dimensions:
1. Credit standards
2. Credit analysis
3. Credit standard

It represents the basic criteria for the expansion of credit of

customers. The quantities bases of establishing credit standards are factors
such as credit ratings, credit references, average payments period &certain
financial ratios.

CREDIT ANALYSIS

61
 The second aspects of credit policy are credit analysis or
investing. It is one of the basis of credit analysis that the decisions to
grant credit to a customer as well the quantum of credits would be
taken. This Aims at:

OBTAINING CREDIT INFORMATION

Credit information is taken from both internal and external

sources. Trade references &records of the firms contemplating an extension
of credit are important sources of internal information. Whereas, external
sources like financial statements &bank references & specialist credit bureau
reports help in establishing the credit worthiness of the customers.

ANALYSIS OF INFORMATION’S
Once the credit information has been has been collected from different
sources, it should analyze to determine the credit worthiness of the applicant.
Although there are no established procedures to analyze the information, the
firm should devise which suit its needs. The analysis should cover two
aspects qualitative and qualitative

CREDIT PERIOD

It means the period allowed to customers for making the payments.

Hitachi disposes off whole quantity of wheat & paddy to FCI which is
required to make payment within 72 hours. In case of fertilizers those are
sold on cash basis, no credit period is provided to them.

CREDIT TERMS

62
 This is second area in the receivables management & is associated to
the stipulation under which goods are sold on credit. Credit terms are
composed of two components. Credit period, in terms of duration of time
for which credit is extended. Cash discount, if any, which can give
advantage to the customers.

63
COLLECTION POLICY

This refers to the procedure followed to collects the accounts

outstanding after the expiry of the credit period. These periods may include:
a. monitoring the state of receivables
b. dispatch of reminders to customers
c. telegraphic & telephonic advice to customers, when
payment becomes due
d. legal action to recover overdue accounts
Basically, it is concerned with the credit period allowed to
the customers. Delay may be caused due to inefficient management or may
be due to bad credit worthiness of the customer. In order to avoid it, it is
required to motivate or give various incentives to encourage them to make
payments.

INVENTORY MANAGEMENT

Inventory management is a topic of considerable and wide

interest. Inventory control keeps track of inventories. Through it may not be
treated as an exclusive function in an enterprise. The decision regarding
appropriate size of inventory is of paramount significance. It should base on
some sound principles and techniques.

INVENTORY

Inventory all the material, parts, supplies, expense tools and

in process or finished products recorded in bulks by an organization and kept
in its stocks or plant for some period of time. Inventory is an essentials part

64
of an organisation. Every business manufacturing organisation however, big
or small has to maintain some inventory.
In financial balance, inventory is defined as the sum of the
values of raw materials. Fuels and lubricants, spare parts, maintenance
consumables, semi-processed materials and finished stocks at any given
point of time. The operational definition of the inventory would be the
amount of raw material fuel and lubricants, spare parts and semi-processed
materials to be stocked for smooth running of the plants. Since these
resources are ideal when kept in stores, inventory is called as ideal resource
of any kind having an economic value.

65
66
 CLASSIFICATION OF INVENTORY

Inventory may be classified in four parts:-

1. Raw material inventory
2. Production components.
3. Work in progress.
4. finished goods inventory.

1.RAW MATERIAL INVENTORY

Raw materials are the major inputs into an organisation
and from the bulk, which gets convert into output. As any breaks in the
supply if raw material will keep the production lines idle. There importance
can be easily visualized. The function of raw material inventory is to act as
buffer between procurement and manufacturing. The size of inventory is
dependent on the factors such as internal lead time for purchases; supplier
lead time; vendor’s relations; availability of the material; the consumption of
the materials.

2.PRODUCTION INVENTORY
Similar to raw materials, production components are
purchased from outside. Production components are two types:
1. Those purchased from the market like spare parts.
2. Special parts or components manufactured in own
company and kept in store fir use.

67
 3. WORK IN PROGRESS INVENTORY

These are the semi finished products usually found in

the factory floor in various wastage of production. Work in progress
inventory might exist merely because of production cycle time the raw
material has to go through a combination of different operations, Before they
take shape as saleable product the rate of production at reach work section
will depend upon the technology, while the production executives tries his
best to balance the line, a perfect balance is almost impossible. In addition;
to this breaks low in certain work Centre can starve other down the line. To
overcome these difficulties work in progress inventory stored at work
Centre.

4.FINISHED GOODS INVENTORY

The finished goods inventory is maintained to ensure a

free flowing supply to the customer and for this marketing department insists
on sub stained finished good inventory. The size also depends on the ability
of the marketing department to push the product, the company’s ability to
stick to the delivery needle, the shelf life and the warehousing capacity.
Two factors which influence the inventory of all types are the accuracy and
detail of the final forecast- all the inventories are geared for future
requirement and are there for, sensitive to this factor the available storage
space, the logical sequence toothed factor is the self of the items stores, a
factor for consideration in the case of perishable goods.

INVENTORY MANAGEMENT

68
 Inventory management is the planning, organizing and control
activities focused on the flow of inventory into through, and from the
organization many decisions fall under the inventory management these are:-
a. When is the best time to purchased material
merchandise?
b. How purchasing agreement should be structured?
c. Which is the best way to handle materials otter
merchandise inventories, once they are received?
These questions are among the many that inventory
management seeks to answer. It is the management of inventories such a
way, which minimizes the idle time caused by shortage if raw material,
stores, or spares and keeping down capital investment in inventories.

OBJECTIVES OF INVENTORY MANAGEMENT

Objectives are the desired results. The objectives of inventory management

are:-
1. To ensure continuous and uninterrupted production.
Ditto achieved the above objectives in an effective and
economical manner.

2. To effect economies in the cost of materials by

purchasing materials of the right quality, in the right
quantity, at right time from right sources and the right
price.

3. To affect economies in the cost incurred on materials

after they have been purchased, through storage

69
 processing and warehousing toll the finished goods
ultimately reach the customer.
4. To reduce working capital requirement through proper
and scientific inventory control.

5. To improve the quality of manufactured goods by use of

bearer raw materials of components and thereby increase
the competitiveness of such goods put on sales.

To increase the competitiveness if manufactured goods by

reducing their price through cost reduction and value
analysis

6. To ensure cooperation among all the department of the

enterprise to meet inventory management objectives,
both at coordination in respect of such activities.

70
 NATIONAL FERTILIZER LIMITED,
NANGAL UNIT

 NET WORKING CAPITAL

 WORKING CAPITAL CYCLE

 CASH MANAGEMENT AT NFL

 RECEIVABLE MANAGEMENT AT

NFL

 INVENTORY MANAGEMENT AT

NFL

71
PARTICULARS 2005-06 2004-05 2003-04 2002-03
CURENT ASSETS

Inventories 752735888 814132488 1030960094 1249154640

Sundry debtors 20577330802 908096798 1083514520 2335844451

Cash & bank balance 117121 3297100 3128609 3138697

Loans & advances 170353817 147273879 169303465 194956156

Total (a) 2980939908 1872800265 2286906688 3783093944

Current liabilities

Sundry creditors 2936502204 1475224870 323125243 681755893

Provisions 100060238 104845093 235312856 223966333

Total (b) 1026562442 1580069963 558438099 905722226

Net working capital (a-b)

1954377466 292730302 1728468589 2877371718

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 WORKING CAPITAL TURNOVER RATIO

YEARS COST OF WORKING CAPITAL RATIO

GOODS SOLD

2001-02 3053027562 1257507529 2.43

2002-03 3640401729 2877371718 1.27

2003-04 3773570899 1728468589 2.18

HOW MUCH WORKING CAPITAL DO YOU NEED?

The key to judging the right amount of working capital requires on your
business is understanding your cash or operating cycle. This is the time it
takes from when cash is converted into goods and services, to when you
receive payment for them. This delay creates the need for working
capital. Each operating cycle generates a flow of income including a margin
of profit. Which should be sufficient to cover running expences and your
drawings? If you can get money to move faster around the cycle.

The business will generate more cash or it will need to borrow less money to
fund working capital. As a result you could reduce the cost of bank interest
or you will have additional free money available support extra sales growth
or investment.

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WORKING CAPITAL CYCLE

CASH flows in a cycle into, around and out of a business. It is

the business lifeblood and every manager’s primary task is to help it flowing
and to use the cash flow to generate profits. If a business is operating
profitably, then it should, in theory, generate cash surpluses. If it does not
generate surplus, the business eventually run out of cash

The faster a business expands the more cash it will need for
working capital and investment. The cheapest and best sources of cash exist
as working capital right with in business. Good management of working
capital will help to improve profits and reduce risks. Bear in mind that the
cost of providing credit to customers and holding stocks can represent a
substantial proportion of firm’s total profits.

There are two elements in the business cycle that absorb cash –
inventory (stocks and work in progress) and receivable (debtor owing your
money). The main sources of cash are payables (your creditors) and equity
and loans.
Each component of working capital (namely inventory,
receivable, and payables) has two dimensions TIME and MONEY. When it
comes to working capital- TIME IS MONEY. If you can get money to move
faster around the cycle (e.g. reduce inventory level relative to sales), the
business will generates more cash or it will need to borrow less money to
fund working capital. As a consequence you could reduce the cost of bank
interest or you’ll have additional free money available to support additional
sales growth or investment. Similarly, if you can negotiate improved terms

74
with suppliers e.g. get longer credit or an increased credit limit; you
efficiently create free finance to help fund for future sales.

SOURCES OF CASH

Sources of additional working capital include the following:

 Existing cash reserves
 Profits (when you secure as cash!)
 Payables (credit from suppliers)
 New equity or loan from shareholders
 Band overdrafts or lines of credit
 Long- term loans

If you have insufficient working capital and try to increase

sales, you easily over-stretch the financial resources of the business.
Exceptional cash generating activities e.g. offering
 High discounts for early cash payment
 Bank overdrafts exceeds authorized limit
 Seeking greater overdrafts or lines of credit
 Part paying suppliers or others creditors
 Paying bills in cash to secure additional supplies
 Management pre-occupation with surviving rather than managing
 Frequent short-term emergency requests to the bank (to help pay
wages, pending receipts of a cheque)

HANDLING RECEIVABLES (DEBTORS)

75
 Cash flow can be significantly enhanced if the amounts
owing to a business are collected faster. Every business needs to know…who
owes their money how much is owed.. How long it is owing… for what it is
owned
Slow payment has a crippling effect on business in particular on small
business that can least afford it. If you don’t manage debtors, the will begin
to manage their business as you will gradually lose control due reduced cash
flows and, of course, you could experience an increased incidence of bad
debt. The following measures will help manage your debtors:
1. have the right mental attitude to the control of credit and make sure
that it gets the priority if deserves
2. Establish clear practices as a matter of company policy.
3. Make sure that these practices are clearly understood by staff,
suppliers and customers.
4. Be professional when accepting new accounts, and especially large
ones.
5. Check out each customer thoroughly before you offer credit. Use
credit agencies, bank references, industry sources etc.
6. Establish credit limits for each customer and stick to them.
7. Continuously review these limits when you suspect fought times are
coming or if operating in a volatile sector.
8. Be very close to your large customers.
9. Invoice promptly and clearly.
10.Consider charging penalties on over dues accounts.
11.Consider accepting credit /debit cards as a payment option.

WORKING CAPITAL CYCLE AT NFL

1. holding period of raw material =12days

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2. holding period of W.I.P =3days
3. holding period of finished goods =18days
4. average collection period =170days
5. average payment period = 33days
Working capital cycle at NFL (1+2+3+4-5)

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CASH MANAGEMENT IN NFL

Cash management in NFL includes following:

A.CASH INFLOW AND OUTFLOW

 CASH INFLOWS
1. Receives from corporate office Noida in sale of products.
2. Sales in canteen
3. Rent
4. Income from hospital

 OUT FLOWS
1. petty expenses
2. Payments of salaries

B.CASH BALANCE HELD BY THE FIRM

In NFL Nangal unit is a maximum limit of Rs. 150000 on daily basis. The
unit can withdraw maximum rs.200000from the bank.

C.CASH PLANNING IN NFL

As such there is not any provision of preparation of projected cash flow

statements either on daily or monthly basis.

D.CONVERSION OF PAYMENT IN CASH

In NFL collection are accepted through demand draft, favouring national

fertilizers limited Naya Nangal, distt ropar (pb)

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E. INTER BANK TRANSFER

NFL having accounts with various banks and branches of these banks in
various cities so the amount can be transferred easily to the bank where
disbursement is made. It helps in avoiding excess money in the bank. The
banks are state bank of India, Punjab national bank, bank of India, state bank
of Hyderabad, union bank of India.

F.PAYMENT OF SALARIES

In NFL all the workers in the factory are paid wages in cheque

CASH POSITION RATIO

YEARS CASH CURRENT RATIO

BALANCE LIABILITIES
2004-05 13348 60067 0.22
2003-04 19645 37147 0.52
2002-03 1816 74595 0.02
2001-02 2612 61416 0.04
2000-01 3991 75754 0.05

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80
RECEIVABLE MANAGEMENT IN NFL, NANGAL UNIT

`THE PRODUCTS IF NFL, UNIT ARE FERTILIQERS,

INDUSTARIAL PRODUCTS AND , then they send to production
department of specific unit & then sales section prepares the invoice for the
sold products along with the sales tax, excise, freight etc. then the products
delivered from the plant. At that time three copies are made. The buyer
keeps first copy & second copy. The third copy is kept by the sales the sales
department. The sales department checks the rates of sales tax, excise etc.
before sending the information to marketing department & finally the details
of the data are send to Delhi.

The second copy is very important as it ensures the convent finance

department at Delhi fixes the prices of the products for future on the basis of
the record of the marketing department & the checked consultations by the
sales action.

Industrial products: - industrial products are sold throughout the

country the marketing department is responsible for the sales of the products
of the company & the accounting of sales is done at the sales section. the
company at present is selling two main industrial products i.e. sodium nitrite
& sodium nitrate other intermediate products like methanol, urea & CAN are
also sold.

Urea: - urea can be sold only surrounding areas i.e. Jammu and
Kashmir haryana Punjab up and Rajasthan the same procedure is followed
for urea but no sales tax or excise is imposed on urea and the prices are
determined by ministry of fertilizers at Delhi and the prices of urea are same
81
every where. The unit at nangal is concerned with the production of urea
determination of cost of urea. to cover the difference between cost price and
market price ministry of fertilizers provides subsidy. They provide RS. 283
per ton as subsidy on urea

INCENTIVES

Two types of rebates are given in prices i.e. distance rebate & quantity rebate
to attract the consumers at distant places.

PENALITY

No penalty for delayed payments is imposed.

DEBTORS TURNOVER RATIOS

YEARS TOTAL SALES AVERAGE RATIO

DEBTOR’S
2004-05 17264 43505 3.96
2003-04 173045 47378 3.73
2002-03 159342 82114 1.94
2001-02 153180 45319 3.38
2000-01 146161 54047 2.70

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83
INVENTORY MANAGEMENT SYSTEM
IN NFL, NANGAL UNIT

The success of any organization depends upon the factor that grow
efficiently the resources are utilized. In this connection the inventory
management and control system of any organization have a vital role to play.
As far as the NFL is concerned a comprehensive procedure is laid down in
the stored manual of the company, for the purpose of inventory control and
management system is such a way, that resources of the organization are
properly utilized.

INTRODUCTION

The material department in Nangal unit is defined in two departments:

A. Purchase department.
B. Store department.

A. PURCHASE DEPARTMENT

The principal objectives of a purchase department are summarized as

the procurement of materials or supplies of the right quality, in the right
quantity. At the right time, from the right suppliers, at the right price.
In NFL purchase department deals with oil, and bags. For these NFL
corporate office has lined up the long term contracts with the concerned
suppliers. for jute/HDPE bags purchase order are being issued by NFL,
Corporate Office and necessary delivery of these bags delivery orders are
being issued by Nangal unit, as regard the purchase of import items
84
 procurement action is being taken by Nangal unit, however, the L.C.S
ARE being opened by the corporate office. a part from the purchase,
purchase department Nangal unit also complementary certain
complementary activities. These are:
A. Market research for new material and development of new source of
supply.
B. Follow up suppliers to insure proper delivery.
C. Quality assurance in respect of supplies made by vendors.
D. Inspections of material for quality with a view to ensure that
specification are compiled with.
E. Development of proper and streamline system and procedure relating
to purchasing function to ensure that work is carried out efficiently
and at lowest reasonable operating cost.
F. Coordination with others functions within the department like,
transportation, receiving, store keeping, inventory control, accounting
etc.
G. Coordination with the production, maintenance and finance
departments regarding alteration in production schedule presenting
breakdown or requirement of items etc in right time.

B.STORE DEPARTMENT

In NFL stores department deals with the receipt, inspection, storage

and issue of all items expect some bulks items like jute/HDPE bags
Sulphuric acid naphtha oil and coal which are being handled by directly by
user department, in the operations of NFL. They are in direct touch with the
department in its day to day activities: the most important purpose solved by
the stores is providing the uninterrupted service to the manufacturing
divisions. Further stores are often equated directly with money, as money is
85
licked up in the stores. The function of stores department in Nangal unit may
be classified as:

I. to receive the raw materials, components, tools, equipments and others

items and account for them.
II .to provides adequate and proper storage and preservation to various items.
III .to meets the demand of consuming department by proper issue and
account of the consumption.

IV .to minimize obsolesce surplus and scrap through proper codification,

preservation and handling.
V. to highlight stock accumulation, discrepancies and abnormal consumption
and effect control measure.
VI. To provide supporting information for effective purchase action.
Stores also have to keep liaison with purchase department as well as finance
department with regard to stores accounting. Physical stock verification
disposal of scrap and surplus materials, lodging of normal claims on the
underwriters/carriers etc.

CODIFICATION OF STORES

To facilitate computer processing and proper accounting all item of

stores shall be allotted 7 digits material code. The seven digits are allocated
in the following manner:

TYPE OF Primary 1st SECONDARY 3RD & THRITARY 5TH,6TH

MATERIAL &2nd DIGIT 4TH DIGIT & 7TH DIGIT

MAIN SUB CATEGORY Detailed

GENRAL CATEGORY E.G. hands tools, specifications
STORES e.g. tools, machines tools etc.
86
 hardware etc.

Deptt. / plant Major equipment or Exact

PLANT SPARES of section. assembly e.g. pump specification/parts
compressor, heat
exchanger etc.

A control register shall be maintained for allotting code number to

stores and spares. Considering the importance of this function a component
officer in the materials department shall allot new codes. It shall be ensured
that same item which difference nomenclatures are allocated the same code,
which will help on verity reduction and standardization. Few new receipts
24-characters nomenclature shall be fed to the computer periodically.

NORMS AND INVENTORY HOLDING

The inventory levels are determined keeping the following norms of

inventory holding in view or as per management policy from time to time.
CATEGORY NORMS IN NO. OF DAYS/MONTHS
HOLDING

RAW MATERIALS

LSHS/ F OIL 20 days

LIME STONE 30 days

FUEL
COAL 30 days

PACKING MATERIALS

UREAS BAGS 30 days

CAN BAGS 30 days

87
CHEMICALS
IMPORTED 9 months
INDEINOUS 2 months

CATALYST
IMPOTED
INDIGENOUS
OILS & LUBRICQANTS
INDIGENOUS 3 months
GENERAL STORES
INPORTED 15 months
INDIGENOUS 6 months

INSURANCE SPARES
IMPORTED 3% of the cost of plant and
machinery.

INDIGENOUS

GEN. CONSUMPTION no norms is notified.

SPARES

88
89
90
 RATIO ANALYSIS AND INTERPRETATION

Ratio analysis is a powerful tool of financial analysis. A ratio is

defined as “the indicated quotient of two mathematical expressions” and as
the relationship between two or more things. In financial analysis, a ratio is
used as an index or yardstick for evaluating the financial position and
performance of a company. The absolute accounting figures reported in the
financial statements do not provide a meaningful understanding of the
performance and financial position of a company. An accounting figure
conveys meaning when it is related to some other relevant information. The
ratio helps us to make quantitative judgment. The ratio analysis converts
figures into meaningful comparables forms & removes the difficulty of
drawing inferences tool it enables analysts to draw quantitative answers to
questions such as : -

Is the net profit adequate?

Are the assets being used efficiently?
Is the company solvent?
Can the company meet its current obligations or so on?

There are four types of ratio

1. Liquidity ratios
2. Activity ratios
3. Profitability ratios
4. Solvency ratios

91
Following is the analysis and interpretation of balance sheet and income
statement of NFL.

LIQUIDITY RATIO

The liquidity position of the company is studied through the

current ratio, acid test ratio and absolute quick ratio.

Name Fromulla 2003-04 2004-05

Current ratio Curresnt assets/Current liabilities 3.08:1  1.68:1
Liquid ratio Liquid assets/Current liabilities  1.78:1  0.04:1
Absolute liquid Absolute Liquid assets/Current
ratio liabilities  0.52:1  0.22:1

INTERPRETATION :

The NFL Nangal unit shows relatively high value of current

ratio in the years 2003-04. It was 3.08:1 respectively. But in the year 2004-
05 it comes down to 1.68:1 which is very near to ideal ratio. The liquid ratio
is only absolute liquid ratio is low i.e. oil due high trade debtors and
inventory. Taking all liquidity ratios together, we can say that the liquidity.
Position of the company is satisfactory.

ACTIVITY RATIOS

These ratios also called turnover ratios. Turnover indicates the speed the capital
employed has been rotated in the business.

Name Formula 2004-05 2003-04

 15.21time
Inventory turnover Cost of goods sold/average s  8.47 times
ratio stock
Inventory No. of days/Inventory 24days   43 days
Conversion period turnover ratio

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Debtors turnover
ratio Credit sales/Average debtors  3.96times 3.73 times 

INTERPRETATION

The inventory turnover ratio has been increased form 8.47 to 15.21
times. The company converted efficient sales in the years. It reveals the
company had made some arrangement to control its inventory. The debtors
turnover ratio as computed from the given balance sheet of the NFL does not
show any variation for the year 2004-05 and 2003-04. the average collection
period is 9.2 days in2004-05 & 97 days in 2003-04.

PROFITABILTY RATIOS

Profitability ratios measure the performance of the company.

NAME FORMULA 2004-05 200304

Gross profit ratio Gross profit / sales 20.73% 19.02%
Net profit ratio Net profit / sales 9.32% 4.91%
Administration Administration 17.5% 18.10%
expenses ratio expense / sales
Selling & Selling & distribution 1.07% 1.04%
distribution expense expense / sales
ratio
Earning per share PAT / no. of shares 3.28 1.73

INTERPRETATION

Debt equity ratio shows that most of the funds is provided by shareholders. Equity ratio is
more than its ideal i.e. 0.33%. We can say that long term financial position of the
company is good.

The profitability of this company as shown by the financial statement is not very high.
The net profit are not very high partly because of high depreciation charged by the
company. Moreover the company pays comparatively high salaries to staff overall.

93
SOLVENCY RATIO

These ratios are calculated to assess the ability of the firm to meet its
long term liabilities as and when they become due.

Name Formula 2004-05 2003-04

Outsiders fund/Shareholders
Debt equity ratio fund  0.62:1 0.45:1 

Equity ratio Shareholders fund/total assets  1.18:1  0.94:1

Fixed assets to net
worth ratio Fixed assets/net worth  0.88:1  1.07:1
Total liabilities to outsiders /
Solvency ratio total assets  0.59:1  0.32:1
Current assets to Current assets/proprietors
proprietors fund ratio fund  2.48:1  3.08:1

94
95
96
RESEARCH METHODOLOGY

Research methodology is a design to systematically solve the problem.

In research methodology, we not only talk of research methods but also
consider the logic behind the methods. The purpose of the methodology
section is to describe the research procedure. It includes the overall research
design, the sampling procedures, the data collection method, the field
methods and analysis procedures.

RESEARCH SITE

National Fertilizers Limited- Nangal Unit.

OBJECTIVES OF THE STUDY

“Good better best, never let it rest till your good is better and your
better is best”.

The objectives of the study are as follows:

a. To study the working capital position of NFL.

b. To study their cash, receivable and inventory management.
c. To find out length of there working capital cycle.
d. To analyze performance and position of the company.

RESEARCH DESIGN

Exploratory and descriptive research design. The data is analyzed in a

tabular form and in well and easy to understand manner.

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DATA COLLECTION

Both Primary and Secondary data has been used in this study.

Primary data

Most of the has been collected through personally interact with senior
officers. Colleagues and staff of finance departments of NFL-Nangal unit.

Secondary source

Secondary data includes financial reports and manuals of the NFL’s

Nangal Unit and company’s annual reports. It also includes journal and
books on the topic under study. To get information about industry and
company, many web sites were also visited.

LIMITATIONS

Although full efforts have been made in this study, still because of
following limitations a more detailed research is required to reach to the
effective conclusion.
1. The element of personal because can not be avoided.
2. As data taken is secondary, so it cannot be said to give constant
conclusions, as it’s not revised to present situation.
3. The time of research was not that much sufficient that could be
regarded as opportunity to analyze WCM of such a large
organization.

98
99
EXECUTIVE SUMMARY

Fertilizer are chemicals given to plants with the intention of promoting

growth. There are different type of fertilizers like Calcium Ammonium
Nitrate, Single Super Phosphate. Urea Ammonium Phosphate., Ammonium
phosphate Sulphate etc.

The development of the fertilizers industry is of great importance to

our National company as; the primary occupation of 70% of the Countrymen
is agriculture. And for a good yield. Fertilizer Play, an important role. The
increase in the Fertilizer Industry shall lead to the development of agriculture
which will further lead to rise in per capita income of the people due to
increased yield and high quality. The efficiency of this industry would help
the country to earn more of foreign exchange by exporting more and high
quality of grains and other agricultural products.

Fertilizer industry in our country has expanded significantly to fulfil

Nation’s hopes and aspirations for self-sufficiency in food grains by trotting
path of planned industrialization. India continues to be the third largest
producer and consumer in the world. There are 63 large size fertilizer units
in the country, manufacturing a wide range of nitrogenous and
phosphoric/complex fertilizers.

National Fertilizers Ltd., is the main Fertilizer producing company in

India. This Company has its four Units, situated at Bathinda, Panipat,

100
Vijaipur and Nangal. This Unit has 16.9% market share of urea in the
country.

Nangal unit, which was taken up for this study has made enormous
contribution of the overall agricultural development in the region. Since its
inception the factory has had remarkable performance with positive finance
results and sustained high level of production. The major objective the
project was to analyze working capital of the NFL, Nangal Unit. The other
objectives of the study are as follows:

1. To study the working capital potion of NFL.

2. To study their cash, receivable and inventory management.
3. To find out length of their working capital cycle.
4. To analyze performance and position of the company.
Exploratory and descriptive research design. The data is analyzed in
tabular form and in well and easy to understand manner. Both Primary
and Secondary data has been used in this study.
After analyzing the working capital of NFL, Nangal Unit, some draw
important conclusions are drawn about the working of this firm.
 The short-term financial position of the firm is not very
satisfactory. The liquidity position of the company is other wise
satisfactory.
 The company sells most of its products to the co-operative
societies on cash basis. The debt collection period occurs because
of delay in transfer of funds.
 The Head Office raises all the equities and debts and the Head
Office allocates the funds to the different units. So the owner and
outsider’s funds are not clearly known. And in fact, the interest

101
 covered in the profit and loss account is what has been allocated by
the Head Office to this particular Unit.
 The cost of production of this company being high, it has been
observed that the subsidy enjoyed by the company in very high.
The company gets advantage of the subsidy from the Govt. of
India.
 The company should follow a strict policy for depreciation, as
depreciation charged by this company is in a very lump sum
amount.

102
103
 SUMMARY AND CONCLUSION

Presently National Fertilizers Ltd. is the main Fertilizer production

company in India. This Company ;has its four Units situated at Bathinda,
Panipat, Vijaipur and Nangal This unit has 16.9% market share of urea in the
country.

Nangal Unit, which was taken up for this study has made enormous
contribution of the overall agricultural development in the region. Since its
inception the factory has had remarkable performance with positive finance
results and sustained high level of production.

After analyzing the working capital of NFL, Nangal Unit, some draw
important conclusions are drawn about the working of this firm. The short-
term financial position of the firm is not very satisfactory. The liquidity
position of the company is otherwise satisfactory.

Coming to the receivable management it is found that the debtors

turnover was quite high with a simultaneous effect on low collection period
of the Company. The company sells most of its products to the co-operative
societies on cash basis. The debt collection period occurs because of delay
in transfer of funds. LCA policies are adopted where banks are giving
guarantee in cash of non-payment from these cooperative societies. But
payments through Bank engage a lot of time in debt collection as seen from
debtor collection table.

104
 Besides all this, the company is not adopting high credit extension
policies. While selling to the private concerns the company is adopting a
method of taking advances and securities from them.
The book value of the net fixed assets of the company are declining
rapidly as the company is charging depreciation at a very high rate which
will soon lead it zero value of net value of net fixed assets in the books of
accounts of the Company.

The profitability of this company as shown by the financial statements

is not very high. The net profits are not very high, partly because of high
depreciation charged by the company. Moreover, the company pays
comparatively high salaries to its staff. An average worker of this company
receives of Rs.330/- per day and in addition to the many more facilities of
accommodation, hospital, schooling etc.

The Head office raises all the equities and debts and the Head office
allocates the funds to the different units. So the owner and outsider’s funds
are not clearly known. And in fact, the interest covered in the profit and loss
account is what has been allocated by the Head Office to this particular Unit.

The cost of production of this company being high, it has been

observed that the subsidy enjoyed by the company in very high The
company gets advantage of the subsidy from the Govt. of India.

105
 REENA

106