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GROUP MEMBERS

LATIF UR REHMAN (BSME 01113008)


M.HASSAN TAHIR (BSME 01113078)
RAWAIL HASEEM (BSME 01113039)
NAUMAN RAZZAQ (BSME 01113086)

INTRODUCTION
It was 12th June, 1962 when a company named National Gas Fertilizers Factory was established by
Pakistan Industrial Development Corporation (PIDC) in Multan, with Ammonia and Nitric Acid plants of
200 & l00 Metric Tons per day respectively.
Ammonium Nitrate & Urea are the final products having daily production of 330 and 180 M Tons
respectively.
The plant was not able to achieve the rated capacity and it was supplemented with an Ammonia unit in
1988, with daily production of 60 Metric Tons of Ammonia. This unit was not also able to fulfill the
guarantee tests.
In pursuance of the above mentioned decisions, a treaty was signed between Pakistan Industrial
Development Corporation (now NFC) and ADNOC (Abu Dhabi National Oil Company) on March 7,
1973 and an agreement was made on 1st November 1973, to establish a new company named
PAKARAB FERTILIZERS (Pvt.) LTD. in the public sector, as a joint venture for the expansion and
modification of the old National Gas Fertilizers

Pakarab Fertilizers Limited was established as protocol concluded and signed on the 15th November
1972 by the Federal Government to further strengthen and develop internal ties between Islamic
Republic of Pakistan and the State of Abu-Dhabi to cooperate in the fields of Petroleum industries and
National resources for the mutual benefits
The company was incorporated on 12 November 1973 with total authorized capital of Rs 1000 Million
Pakarab had equity share capital participation of Pakistan through NFC & Abu-Dhabi through ADNOC in
the ratio of 52% and 48% respectively, with a paid up capital of Rs 743.061 Million.
The project was completed at a total cost of RS 2511.44 Million with a foreign exchange of Rs 1292.25
Million .It is the largest project of its type in the country. It is the project producing compound fertilizers
such as Nitro-phosphate, Calcium Ammonium Nitrate & Urea.

On July 14, 2005 Pakarab Fertilizer was privatized at a cost of Rs14.125 billion under privatization policy
of Government of Pakistan, acquired by Reliance Exports (Private) Limited under the umbrella of Fatima
Group and Arif Habib Group.

GENERAL INFORMATION
Registered Name:
Pakarab Fertilizers (private) limited.
Status:
A private limited company having only two partners.
Factory Location:
Pakarab Fertilizer, Khanewal Road Multan.
Main Products:
Calcium Ammonium Nitrate
Nitro phosphate
Urea
Area Factory: 172 Acres
Housing colony: 130 Acres

Plants Starting on
Power Plant June 24, 1978
Nitric Acid plant Sep11, 1978
Ammonia plant Sep 27, 1978
Urea plant Oct 01,1978
CAN plant Nov 26,1978
NP pant Jan12, 1979
Capacities:
Ammonia Gas 313500 metric tons
Nitric Acid 441600 metric tons
CAN 450000 metric tons
Urea 2400 metric tons
Raw Material Requirements:
Natural Gas 52.5 M.cubic feet (per day)
Rock Phosphate 710 tons (per day)

No. Of employees:
Executives:
151
Office workers: 181
Daily Wages workers: 4140 (According to the requirements)
Auditors: Mr. Riaz Ahmed & Co.
Foreign Sources of Finance:

ADNOC

World Bank

Asian Development Bank

OPEC Special Fund

City Corporation International Bank

M.HASSAN TAHIR (BSME 01113078)

PLANTS IN OPERATION
The plants that are working efficiently are:
Urea Plant
Ammonia Plant
Nitro phosphate Plant
Nitric Acid Pant
Calcium Ammonium Nitrate Plant
Power House
Along with the fertilizers plants, Pakarab has its
own Powerhouse, which has the capacity to
produce 27 Mega Watts (Turbo Generators of 9
MW each) of electricity.

CHOICE OF LOCATION
The reason for its particular location selection were
:
Near the grid station
Abundant supply of natural gas (which is the
raw material for the fertilizer)
Close to main highway (transportation access)

Out of city due to pollution hazards


Easy safety and drainage

ORGANIZATIONAL STRUCTURE
The board of directors has appointed a full time chairman and a managing director, who is vested with
adequate powers to manage the day to day affairs of the company on sound commercial lines. The
Managing Director as Chief Executive is assisted by divisional heads i.e. General Manager (Mfg.),
General Manager (Finance), and General Manager corporate & commercial (Company Secretary) and
General Manager (Engineering). The Managing Director administers and is responsible for the efficient
management and working of Plants
There are four major Divisions
Manufacturing Division
Internal Audit Division
Finance Division
Corporate Affairs & Commercial Division

MANUFACTURING DIVISION
Safe Operation & Environment Department
Production (Plant and their relative storage areas)
Materials Department
Inspection Cell
Technical & Planning Department

Personnel & Industrial Relation Department


Security Department
General Administration Department
Procurement / commercial Department

FINANCE DIVISION
Management system Department
Education Department
Finance Department
Accounts Department

Internal Audit and commercial divisions are not further divided into sections
or departments

OPERATION STRATEGY
Operation strategy in PAKARAB is product focused. It is producing standardized products. In this strategy,
equipment and work force are organized around the product.
This strategy fits high volume production of products.
Product focus manufacturing firms follow make to stock' strategy in which firms hold items in stock for
immediate delivery.
This strategy is feasible because most product focus firms produce high volumes of products.
Operation strategy for PAKARAB is product focused so based on this strategy make to stock strategy is
adopted.
There is mass production in this organization so 'make to stock' is feasible.

PRODUCT / ORGANIZATION LIFE CYCLE


In 1937 PFL was in introduction stage, it grew by the time and in 1986, when they
expanded Urea plant they were at growth stage. Now they are at maturity stage.
Both in terms of organization and products (CAN, NP, UREA)

OPERATIONS COMPETITIVE CYCLE

RAWAIL HASEEM
ROLL #
BSME (01113039)

INVENTORY MANAGEMENT SYSTEM


Inventory management system of Pakarab Fertilizer limited is an on line
system- The system is meant to update the inventory of the organization
and maintain records properly that help management to take decisions
about the availability of items to keep the operations running smoothly
It has the following functions: Making file inquires
Entering item movement or corrections
Managing stocks
Maintaining files

FORECASTING SYSTEM
This system is also employed in Pakarab and used to classify the items on the
inventory list on the consumption and current stock basis into A, B and C
categories. Also the system forecast the new order point and order quantity
after reviewing the order points of all the items on inventory list: based on the
lead time and purchase period.
CLASSIFCATION OF ITEMS ON CONSUMPTION BASIS
Slow Moving Items
Normal-Moving Items
Fast-moving Items

CAPACITIES FOR PRODUCTION

Nitric Acid (old plant) = 180 MTPD (max. tolerable period of disruption)
Nitric Acid (new plant) = 1200 MTPD
Ammonia = 960 1000 MTPD
Ammonia Nitrate Crystals= on demand

MATERIAL/INVENTORY MANAGEMENT
STORE SECTION
Procurement of material from foreign countries is a time consuming and
expensive job. So Pakarab has maintained a stock of essential spares of different
machines; which are stored in the warehouses or stores. For the Inventory
handling there is separate store section that regulate inventory to provide smooth
running operation. The main stores are:

Spare parts store

General stores
And zero area is allocated to the old plants such as Nitric Acid and NH3 filling etc.
Catalyst like rhodium, platinum etc. which are of very high value are kept near to
the concerned plant and are issued.

BUFFER STOCK
IT AIMS TO:
stabilize prices
Ensure supply
Prevents producers from going out of business because of drop in prices
In Pakarab buffer stock for intermediate product is also maintained for smooth
running of operations.
Buffer stock of NH3 is maintained

To avoid any disturbance in the production of Urea.

Sometimes Ammonia produced is not entirely utilized

So it is stored. There is capacity of storing 5000 tons of NH3 in Pakarab.


Min buffer level for foreign item is 40 weeks

Min buffer level for a local item is 12 weeks.

ITEM COST RANGE


(In rupee)

A: 100,000 and above


B: 25,000 to 100,000
C: below 25000
A and B items represent 20% of inventory but 80% of total stock value- while
C items represents 80% of inventory and 20% at total stock -value A and B are
very costly items These items include insurable. items which are very costly
and so important that without them the whole operation can be disturbed

MANAGEMENT POLICY OF PAKARAB


Management policy means how the managers have established the
atmosphere in the organization.
How the subordinates are working in the office.
In Pakarab Fertilizers, the management style is the mixture of different
styles. On one side we can see the Management by Objectives that the all
work is done with the consent of workers.
All the targets and achievements during the year are set with the
collaboration of the staff members and workers, while on the other hands
we see that the system is centralized.
All the decisions are made at the top levels.
If we look towards the relationships between the management and
workers we find them informal up to some extent both the managers and
workers work with very close to each other.

The relationships are free and frank. Each of them can express his interests and can discuss his problems

with each other and the other realizes them. The disputes are settled with the mutual understandings and
dealings.
The policies are made at the top level of the management.
Higher management also makes all future decisions.
The policies are imposed in the organization but the resistance against the policies is very low.
The reason is that when the policies are framed at the top level, the all paper work is completed.
All those who will be effected by the policy are contacted and their opinion is received and then the policy is
made on the basis of these opinions.
That's why, the resistance is very Low The workers and staff members honor all the policies.

NAUMAN RAZZAQ (BSME 01113086)

OUTCOMES OF MANAGEMENT POLICY


Following are the outcomes of management policy prevailing in Pakarab Fertilizers. These are thesigns of its success. It also shows the trend of the managers towards effective management.
The outflow of workers is very low .The person, who joins the organization once almost never
leaves it.
The low degree of resistance is found against the policies of the management.
The working efficiency is also very high due to frankness and free relationship between the
management and workers.
The high production is also a yardstick showing the success of management policy because with
the poor management the workers are not satisfied and when the workers are not satisfied; the
production is also decreased.
There is a low rate of labor union and management clashes.

ANALYSIS
STRENGTHS:
Broad range of main and mid products
Central location of plant
Broad production range

Monopoly in Calcium Ammonium Nitrate & Nitro Phosphate production Support from
Ministry
Experience in production and marketing of product

ANALYSIS
WEAKNESSES:
Urea made by Pakarab is of more powdered form as compared to the urea made by
FFC
Obsolete plant with high operating cost
Govt. compellations especially for the pricing policy
Monetary sensitiveness to foreign exchange exposure
Dependence on imported feed stock suppliers and special repair/maintenance
facilities
Environmental problem & proximity to urban area
Limitation in achieving CAN plant design capacity
Limitation in achieving NITROPHOSPHATE product quality, design specifications

Unsatisfactory Product quality of urea

No proper sales promotion


Placement and number of warehouses
Lack of long term planning, decisions are made keeping in view the shortterm benefits.
Lack of financial budgets for implementation at decisions.
Too much cost consciousness that affects the long run impact and profits.
Too much centralization effects timely decision making

ANALYSIS
OPPORTUNITIES:

Improvement in product quality


Expansion of plants to meet the demand more efficiently
Proper sales promotion
Proper placement or warehouses
Delegation of authority so that decisions can be made at the spot without any delay
Long term profits or benefits should be preferred over short-term profits. Quality
should be improved gradually with the results and trends in market

ANALYSIS
THREATS:
Low product quality of competitive product (urea) is a major threat
Major competitors are FFC, ENGRO CHEMICALS. The sales figures and market shares for urea of the NFC FFC.
ENGRO and DHC are as follows
Market share threat for Urea
NFC
FFC
ENGRO
25-26%
48%
24-25%
In market the 50-kg bag of Pakarab is sold at RS.330 while ENGRO and DHC at RS.360 sell that bag but even they are
more effective
PFL is giving almost negligible incentives to the customers while FFC and ENGRO are running efficient promotional
schemes to attract the customer.

PFL is also lagging behind in providing the product at the right time and place Customer has to wait 3 to 4
days to load be second truck while at the warehouses of FFC and ENGRO-CHEMICAL customer

immediately get the product.


So the placement of warehouses is a threat. NEML has 6 warehouses in Multan region while FEC has 16
warehouses in that region
The packaging of FFC is also better than Pakarab.
Imported fertilizers are also a threat to Local Industry selling at RS.310 in the market for a 50kg bag.