Organisational Study in FACT, Ernakulam

8/10/2019 Organisational Study in FACT, Ernakulam

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CHAPTER 1

INTRODUCTION


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INTRODUCTION TO THE STUDY

All organisations are required to handle multiple problems and procedures. The intention of

an organisation is to overcome these hurdles. Different techniques are being employed by

every organisation to accomplish a favourable organisation climate. According to Oliver

Sheldon, Organisation is the process of combining the work which individuals or group have

to perform with the facility necessary for its execution, that the duties so performed provide

the best channels for the efficient, systematic, positive and coordinating application of

available effort.

The study is to know the functions of the organisation. It is conducted in The Fertilisers and

Chemicals Travancore Ltd. The company Thepopularly known as FACT-was indeed a

revolution when it was established as the first large scale fertilizer factory in the country.

Since then, it has played a major role in creating fertilizer consciousness among our farmers,

and giving a positive direction to the modernization of agriculture in India.

The study mainly focuses on the industry, organisation and departments. The main purpose of

the study is to understand the history of the company, functioning of the organisation and its

structure etc. This study helps to get a full picture of the organisation. FACT is one of the

leading manufacturers of Fertilisers, Chemicals, and Oil & Gas Petrochemicals industries in

southern states.


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CHAPTER 2

DESIGN OF STUDY


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DESIGN OF THE STUDY

OBJECTIVES OF THE STUDY

The organizational study was carried out at FACT Ltd. Udyogamandalam to achieve the following

specific objectives:-

To understand the organizational framework & its functioning.

To gain knowledge about different departments of the organization andthe functions.

To study the interdependence of different departments..

To make a SLOT analysis of the organization

SCOPE OF THE STUDY

The study focuses on the overall structure of the organization. In this study, overall

functioning of the various departments of the firm and also their products are analysed. This

study would prove a base for future plans and it would help to get a full picture of the

organisation and the history of the company.

METHODOLOGY

1. PRIMARY DATA

Primary data were collected from discussions with the Managerial head of the various

departments.

2. SECONDARY DATA

Secondary data were obtained from the annual report, from the website and other

concerned books


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LIMITATIONS OF THE STUDY

Time was a major limiting factor.

Secondary data available from company manuals were outdated (the manuals are being

updated).

Lack of co-operation from certain departments due to their work load.


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CHAPTER 3

INDUSTRY PROFILE


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INDUSTRY PROFILE

Fertiliser is one of the key inputs in crop production. India is the second largest consumer of

fertilizers in the world next only to China. The Indian fertilizer companies produced around

37.6 million tones of fertilizers during the year 2012-13.The Indian fertilizer industry is most

efficient and bench marked at par with world plants. However, the fertiliser industry in India

is facing several challenges. Non-availability of sufficient funds and lack of new investment

in the sector is the most important challenge being faced by this industry. No new fertilizer

plants have been set up in India in the last 15 years. The existing plants have been

continuously investing to improve efficiency and increasing capacity through revamp.

Availability of natural gas and other raw materials such as Phosphoric acid is another

challenge being faced by the fertilizer industry. Due to non-availability of domestic Natural

Gas the industry resorts to import of gas. The high cost of imported gas is not affordable to

the industry. The Government of India is encouraging setting up of joint ventures in overseas

to ensure regular supply of raw materials and import of fertilizers. Attainment of self

sufficiency in food grain is vital for the food security of the nation. Agricultural

intensification, one of the basic strategies for enhanced food production is depended on

increased flows of plant nutrients to the crops for securing high yields. Fertiliser industry is

working hard to ensure food security in the country on a sustainable basis. For increasing the

average yield of crop, balanced use of fertilizers need to be given more emphasis. Sustainable

development of fertilizer industry is vital for the food security of the nation and the

overall economic growth of India.

Indian Agriculture is one of the most important sector in the economy of the country.

Agriculture in itself contributes more than 18.5 percent of the Gross Domestic Product of the

country and around 60 percent people of India are dependent on this sector.

The monsoon also has a very significant impact on the Indian agriculture. Because of the

shortage of irrigation system in Indian agriculture most of the farmers depend highly on

rainfalls which is uncertain. The amount of rain determines the nature of the crops and also

the production. Indian agriculture in the majority of the state is looked after by the State

Governments rather than the Central Government. Indian farmers dont get a sufficient

supply of chemical fertilizer for agriculture. The main objective of the fertilizer industry is to

ensure the supply of primary and secondary nutrients in the required quantities.


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India is primarily an agriculture based economy. The agricultural sector and its other

associated spheres provide employment to a large section of the country's population and

contribute about 25% to the GDP.

The Indian Fertilizer Industry is one of the allied sectors of the agricultural sphere. India has

emerged as the third largest producer of nitrogenous fertilizers. The adoption of back to back

Five Year plans has paved the way for self sufficiency in the production of food grains. In

fact production has gone up to an extent that there is scope for the export of food grains. This

surplus has been facilitated by the use of chemical fertilizers.

The Fertilizer Association of India (FAI) has set up a model which is based on several factors

that include fertilizer prices, high yielding areas, irrigated areas, fertilizer nutrient prices and

previous years' fertilizer consumption. An estimate of the demand and supply till the end of

the 11th five year plan is given in the chart below:

Year Supply

N+P

Demand

N+P+K

Demand

Supply

Gap

N+P+K

Demand

of K

2007-08 16950 23125 8835 2660

2008-09 17585 24085 9305 2805

2009-10 18595 25035 9405 2965

2010-11 19912 25960 9178 3130

2011-12 19965 26900 10235 3300

[ N = Nitrogen , P = Phosphate, K = Potassium ]

Today, India stands as the third largest fertilizer consumer and producer of the world. It has

been observed that the subsidies on Indian fertilizer have been rising at a constant rate. This

is due to the rise in the cost of production and the inability of the government to raise the

maximum retail price of the fertilizers.

The increase in the production of fertilizers and its consumption acts as a major contributor to

overall agricultural development.


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CHAPTER 4

COMPANY PROFILE


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COMPANY PROFILE

History of the company

Mans history is replete with revolutions, responsible for moulding his system of thought and

shaping his modes of living. Revolutions have, more often than not, emerged out of crisis-

situations it was one such crisis situation that guided the enlightened perception of a far

sighted visionary to form FACT. Yes! The FERTILISER AND CHEMICALS

TRAVANCORELIMITED-popularly known as FACT-was indeed a revolution when it was

established as the first large scale fertilizer factory in the country. Since then, it has played a

major role in creating fertilizer consciousness among our farmers, and giving a positive

direction to the modernization of agriculture in India. And that, of course is an interesting

story-a story of never ending challenges and constructive responses.

The beginning

The 1940,s were a time of critical food shortage in our country. The traditional approach to

cultivation was not of much help in finding a solution to this problem. And nitrogenous

fertilizer had not yet arrived on the agriculture scene in sufficient quantities to make any

perceptible impact. A revolution was indeed necessary to change the status quo. And when it

came, it did through the vision of Dr. C.P. Ramaswami Aiyar, the Dewan of the former

Travancore State, who mooted the idea of increasing food production by the application of

fertilizer as a long term solution to food problem. To give concrete shape to his idea, he

sought the help of Seshayee Brothers Ltd. Industrialist known for their pioneering work. And

Indias first large-scale fertilizer plant was set up in 1944 at Udyogamandalon the banks of

the river periyar in Kerala State. The new venture of course had to go through many teething

troubles. For instance, the raw materials necessary for the production of ammonium saltswere not available in the state. But this deficiency was overcome by adopting a revolutionary

method known as the FIREWOOD GASIFICATION PROCESS.

However, initial difficulties notwithstanding, the plant at Udyogamandal went into

commercial production in 1947, with the slated capacity to manufacture 50,000 tonnes of

Ammonium Sulphate (10,000 tonnes of N). This was followed by the production of

SUPERPHOSPHATE in a new plant with a capacity of 44,000 tonnes. A sulphuric acid plant


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of 75 tonnes per day was also installed which was considered large going standard at that

time. Meanwhile the inner dynamics of FACT was finding another expression in the

formation of new unit with the help of the State Government and Methur Chemical &

Industrial Corporation Ltd., for the production of caustic soda which later become todays

Travancore-Cochin Chemical Ltd., a Kerala Government undertaking. This indeed was a big

leap forward as it replaced all the imports of that product, saving a considerable amount of

foreign exchange. FACT was the first to use its by-product, chlorine, as hydrochloric acid to

produce Ammonium Chloride. These by-products produced by FACT paved the way for

setting up of other industrial units around the FACT complex viz. Hindustan Insecticide

Ltd.,Indian Rare Earth Ltd., etc.

Expansion

In the late 50s, the Udyogamandalam Division launched its first expansion with an outlay of

Rs. 3crores. Highlights of the period were the installation of two plants to produce

Phosphoric Acid and Ammonium Phosphate (16:20 Grade). The second stage of expansion

involving Rs. 2crores saw the replacement of the Firewood Gasification Process and the

Electrolytic Process by the Texaco Oil Gasification Process for which a new plant was set up.

FACT became a Kerala State Public Sector Enterprise on 15th August1960. On 21st

November 1962, the Government of India became the major shareholder. The 2nd stage of

expansion of FACT was completed in 1962.

The 3rd stage of expansion of FACT was completed in 1965 with setting up of a new

Ammonium Sulphate Plant. FACT has been a pace-setter in marketing evolving a continuous

and comprehensive package of effective communication with farmers and promotional

programmes to increase the fertilizer consciousness among our farmers. In fact, FACT was

the first fertilizer manufacturer in India to introduce the village adoption concept since 1968

to improve agricultural productivity and enhance the overall socio-economic status of

farmers. FACT has a well organized marking net work, capable of distribution over a million

tones of fertilizers. With the licensing of Cochin Division in 1966 FACT further expanded

and by 1976 the production of sulphuric acid, phosphoric acid and Urea was started. In 1979

Production of NPK was commercialized.


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Technical Divisions

FACT Engineering and Design Organization (FEDO) was established in1965 to meet

the emerging need for indigenous capabilities in vital areas of engineering, design and

consultancy for establishing large and modern fertilizer plants. FEDO has since then

diversified into Petrochemicals and other areas also. It offers multifarious services from

project identification and evaluation stage to plant design, procurement project management,

site supervision, commissioning and operating new plants as well as revamping and

modernization of old plants. FEDO received international accreditation ISO 9001 2004 for

quality system standards covering areas of consultancy, design & engineering services for

construction of large fertilizer, petrochemicals, chemicals and related projects including

purchasing, construction, supervisor, inspection and expediting services. FACT Engineering

Works (FEW) was established on 13th April 1966 as a unit to fabricate and install equipment

for fertilizer plants. FEW was originally conceived as a unit to fabricate and install equipment

for FACTs


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THE VISION

To emerge as a leading company in the business of providing quality agriculture and

industrial inputs and providing engineering services for industrial and infrastructural facilities

THE MISSION

To function as a dependable and globally competitive producer of fertilizerand other allied

products and to develop self reliance in the field of engineering and technology, especially in

the field of fertilizers, chemicals,petrochemical, oil & gas industries

OBJECTIVES OF THE COMPANY

The main objectives of the company are:-

To be of service to the nation and to contribute effectively to its economic well being and

growth through the production and marketing of fertilizers and chemicals and through

the acquisitions/development and dissemination of engineering technology know-how

and skills.

To sustain and improve its pioneering role in the development of indigenous engineering

and technology through research and development. To improve productivity and maintain high standards of quality and adopt effective

measures for controlling cost and minimizing dependence on imports.

To ensure for its customers the availability of its products and services on reasonable

terms, for its shareholders a fair return on capital invested and, for itself, development of

adequate internal resources for continual growth and expansion.

To actively work for rural uplift through guidance, advice and service to the farmers in

co-operation with all other agencies working for agriculture development and alliedactivities.

To develop, train and maintain a team of motivated and disciplined personnel with

required skills and abilities, and to encourageinnovation and to create a condition for

their functioning and career development so as to improve their overall quality of life.

To project a favourable image of the company and its operations, in the society in which

it operates, amongst its customers and suppliers and amongst the public in general.


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To continuously plan its future operations for sustained growth and stability for

meeting the needs of the country.

LEGAL FRAME WORK OF THE COMPANYFACT is a public limited company registered under the Companies act1956. As amajor industrial

Organisation, FACT complies with all laws and statutes which govern industries in general.1.

Factories Act, 1948.

Excise Act, 1944.

Sales tax Act, 1959.

Industrial Disputes Act, 1947.

Employee Staff welfare Act, 1948.

Workmen Compensation Act, 1923

The Payment of Gratuity Act, 19728.

The Payment of Wages Act, 19369.

Trade Unions Act, 1926.

Standing Orders Act, 1946.

Payment of Gratuity Act, 1972.

Provident Fund and Miscellaneous Provisions Act, 1952

OWNERSHIP PATTERNThe Fertilizers and Chemicals Travancore Ltd (FACT), is a Schedule A category

Government of India enterprise, under the administrative control of department of fertilizers

in the Ministry of Chemicals and Fertilizers. FACT was incorporated in 22/09/1943 and in

1960s the Government ofIndia became the major shareholder. A Board of Directors manage

the Organisation. The chairman of the Board of Directors is the Managing Director. Fact has

a full time Finance Director, a Technical Director and a Marketing Director. There are also

six part time Directors on the Board, nominees of Central and State Government. Shares of

the company are listed at National stock exchange of India(N.S.E)


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PERFORMANCE OF SHARES AT NSE

Source :-Annual report 2012-2013 TABLE NO:1

DISTRIBUTION OF SHAREHOLDING AS ON 31-03-2013

Shareholding of

nominal value of Rs10/-

Shareholders Amount

Rs/-

Number % to Total

Upto 5000 14195 89.96 16729530

MONTH HIGH(Rs) LOW(Rs)

April 2012 33.80 31.00

May 2012 32.40 28.65

June 2012 29.50 27.80

July 2012 33.90 27.15

August 2012 29.50 26.20

September 2012 31.50 26.20

October 2012 31.90 27.80

November 2012 28.65 27.20

December 2012 33.20 27.50

January 2013 34.00 29.25

February 2013 29.70 27.40

March 2013 27.65 21.50


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5001-10000 875 5.55 7410810

10001-20000 355 2.25 5626750

20001-30000 122 0.77 3186950

30001-40000 53 0.34 1945370

40001-50000 56 0.35 2696500

50001-100000 74 0.47 5577230

100001 and above 49 0.31 6427546600

Total 15779 100 6470719740

Source :-Annual report 2012-2013 TABLE NO:2

BRIEF PICTURE ABOUT FACT

Name FertilizersAndChemicalsTravancore Ltd

(FACT)Slogan Pioneers in progress

Established in the year 1944

Location Udyogamandal,Cochin, Kerala

Promoters Government of India

Production units of Fertilizers Udyogamandal & Ambalamedu

Caprolactum Udyogamandal

Fabrication Division FEW Palluruthy, cochin

Consultancy Division FEDO Udyogamandal

Marketing Division Head officeUdyogamandal


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Area offices Trivandrum, Chennai, Bangalore and

Hyderabad

Liaison Offices Trivandrum, Chennai, Mumbai, New Delhi

Marketing Territory South India Kerala, TamilNadu, Karnataka, Andhra

Pradesh

TABLE NO:3

DIVISIONS OF F.A.C.T

Udyogamandal Division

FACT commenced operation at Udyogamandal with the commissioning of a50,000 tonnes

per annum Ammonium Sulphate Plant in 1947.In the decades that followed multi stage

expansion programs were undertaken bringing in the latest technologies of the day which

were quickly mastered and successfully implemented. Today the division is 40 year old small

capacity plants and 10 year old state of the art technology plants. The latest addition to this

unit was a 900 tonnes per day Ammonia Complex set up with an investment of RS 618

crores. FACT Udyogamandal division is certified to ISO 14001, the environmental system

standards.

Cochin Division

FACT Cochin Division was set up in the 1970's at Ambalamedu, 30 km from Udyogamandal

and adjacent to the Cochin Refineries. Phase-I of the division saw the setting up of an

integrated Ammonia urea complex utilizing Indian Engineering skills. A large scale complex

fertilizer plant of 485,000 TPA was set up as phase-II. Sulphuric acid and Phosphoric acid

plant of economy scale were also set up.

Petrochemical Division

FACT diversified into petrochemicals in 1990 with the production of Caprolactum. This

versatile petrochemical product is the raw material for the manufacture of nylone-6, which

finds extensive application in textiles, tyre cord and engineering products. Thanks to its high

quality, the product has been acknowledged as among the best in the world. The division is


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located adjacent to the Udyogamandal division. Co-product Ammonium Sulphate is

transferred to the fertilizer plant of Udyogamandal division for processing.

FACT Engineering & Design Organization (FEDO)

FACT Engineering & Design Organization (FEDO) was established in 1965for utilizing the

considerable indigenous plant building expertise accumulated by FACT in its process of

nurturing the nascent chemical fertilizer industry. FEDO is today one of India's premier

project engineering organization, catering to a wide spectrum of industries like

petrochemicals, refining, pharmaceuticals, hydrometallurgy etc as well as

petroleumstorage, environmental engineering, offsite facilities etc. The divisionundertakes

project execution on consultancy and turnkey basis, handling the intricacies of the technology

sourcing, design and engineering, hardware procurement and construction with practiced

ease. FEDO is ISO9001 certified.

FACT Engineering Works (FEW)

Established in 1966, FACT Engineering Works was originally conceived asa unit to fabricate

and erect equipment for fertilizer plants. Over the years, it developed capabilities in the

manufacture of Class I Pressure Vessels, Heat Exchangers, Columns, Towers etc. required for

the fertilizer, petrochemical and petroleum industries. FEW received ISO 9002Certificationin 1998.

BOARD OF DIRECTORS

Shri Jaiveer Srivastava Chairman & Managing Director

Shri P.Muthusamy Director (Finance)

Shri V.K.Anil Director(Technical)

Shri V.K.Subburaj, Govt. of India Nominee Director

Shri S.C.Gupta Govt. of India Nominee Director

Shri Sham Lal Goyal Chairman & Managing Director

Dr..V.Rajagopalan Govt. of India Nominee Director


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Shri.P.K.Chandrasekharan Director(Marketing)

TABLE NO:4

MILESTONES OF FACT+

22-09-1943 - Incorporation

26-06-1947 - Production started

15-08-1960 - FACT came under Public Sector

21-11-1962 - Govt. of India major share holder

1959-1960 - UD 1st stage expansion completed

1962 - UD 2nd stage expansion completed

16-03-1964 - ICMA Award for utilizing by-product gypsum

15-10-1966 - UD 3rd stage expansion completed

1971 - ICMA Award for technology transfer

01-10-1971 - UD 4th stage Ammonia Plant

01-10-1973 - UD 4th stage 150TPD Ammonium Phosphate

24-07-1965 - FACT Engineering and Design Organisation

13-04-1966 - FACT Engineering Works

07-06-1966 - CD Phase-I License issued

27-04-1973 - CD I Urea Plant commissioned

10-11-1976 - CD II Sulphuric Acid Plant commissioned

10-12-1976 - CD II Phosphoric Acid Plant commissioned

10-01-1977 - CD II NPK trial run started

01-04-1976 - CD II NPK commercial production started

18-05-1984 - PD Caprolactam technical collaboration agreement14-09-1984 - PD Zero date of ASCL Project

06-08-1985 - PD Caprolactam License issued

13-12-1989 - FEW shifted to Palluruthy

26-07-1989 - Award for excellence in performance 1986/7 from the Prime Minister of

India

20-12-1990 - CD-12MW Captive Power Plant

01-03-1991 - PD Caprolactam commercial production started

01-03-1991 - UD New Ammonium Sulphate commercial production started


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25-09-1993 - Foundation stone - 900 TPD Ammonia Plant

23-03-1998 - 900 TPD Ammonia plant commercial production started

09-11-1998 - Test run

FACT PRODUCTS

STRAIGHT FERTILISERS:-AMMONIUM SULPHATE: Ammonium Sulphate is a

nitrogenous fertiliser containing 20.6% nitrogen, entirely in ammonical form. It has excellent

physical properties; non-hygroscopic, crystalline and free flowing. It is ideal as a straight

nitrogenous fertiliser and also as an ingredient in fertiliser mixtures. It is the most widely

preferred nitrogenous fertiliser for top dressing on all crops. Another unique advantage is that

it contains 24% sulphur, an important secondary nutrient.

COMPLEX FERTILISERS:-FACTAMFOS (AMMONIUM PHOSPHATE SULPHATE):

FACTAMFOS 20:20:0:13 is a chemical blend of 40 parts of ammonium phosphate and 60

parts of ammonium sulphate. It contains 20% N and 20% P2O5. The entire N is in ammonical

form and P is completely water soluble. In addition, FACTAMFOS contains 13% sulphur, a

secondary plant nutrient which is now attaining great importance in the agricultural

scene.FACTAMFOS 20:20:0:13, with the granular form and non-hydroscopic and freeflowing nature, have excellent physical properties. It is ideal for application on all soils and all

crops. FACTAMFOS 20:20:0:13 can also be used for foliar application

FACTMIX:-FACT prepares on a very large scale all the standard NPK mixtures under the

brand name 'FACTMIX' for different crops for Kerala as stipulated by the Department of

Agriculture. In addition, FACT prepares special tailor made fertiliser mixtures of any required

grade for plantation crops like coffee, tea, rubber, etc. FACT mixtures are superior in quality

with the presence of ammonia cal nitrogen, water soluble phosphorus, and other major

nutrients like sulphur, calcium, etc.

GYPSUM:-A by product of phosphoric acid, is a rich and cost effective source of 16%

sulphur and 22% calcium. FACT is marketing bagged gypsum in brand name FACT Gypsum

all 4 southern states as a soil conditioner with fertilising properties.

IMPORTED FERTILISERS:-FACT markets imported Urea and Potash from Gulf Countries


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consumption in all 4 southern states as per requirement. Urea with 46% Nitrogen in the granular/prilled form

with 60% K20 serves the nutritional requirement in the 4 southern states.

ZINCATED FACTAMFOS:-This special product containing 0.3% Zinc in FACTAMFOS

has been launched to address the widespread deficiency of Zinc in most soils of South India.

ZINCATED GYPSUM:-This soil amendment and ameliorant contains 2% Zinc in addition to

16% Sulphur and 22% Calcium for rectifying alkaline soils and improving soil fertility and

physical properties.

FACT ORGANIC:-FACT is also marketing organic manure produced from city compost, in

brand name Fact organic

CAPROLACTAM :- It is the raw material for Nylon-6. The product quality of FACT

Caprolactam is among the best available in the world.

Nitric Acid and SodaAsh - Small quantities of these are obtained from Caprolactam

Plant as by-product.

Nitric Acid (55%)

Capacity - 3800 TPA

Concentration (by weight) - 55% (min.)

Ammonium Nitrate (by weight) - 1% (max.)

Specific gravity at 20 Deg.C - 1.339

Delivery - Ex-factory - tanker load

Soda Ash (off grade)

Capacity - 4750 TPA

Total alkalinity (as Na2CO3) (by wt) - 95% (min.)

Sulphate (as Na2SO4) (by weight) - 1.5 to 3%

Bulk density (g/L) - 1.35 to 1.50

Delivery - Ex-factory bulk

BIO- FERTILISER:-R&D produces bio-fertiliser such as Rhizobium, Azospirillum, and

Phosphobacter (Bacillus Magatherium) from its 150 TPD plant. The Fertiliser Control Order


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1985 has specified the bio-fertiliser quality requirement first time in its amended version of

June 2006.

PRODUCT MIX

Straight Fertilizers

Ammonium Sulphate:- Containing 20.6% N in Ammonical form and24% sulphur, an

important secondary nutrient.

Ultraphos: - FACT markets imported Rock Phosphate containing 32%P2O5

under the brand name "Ultraphos". This high analysis fertilizer is found suitable for

application especially in Coconut/ Rubber/ Oil Palm/ Tea Plantation. .

Complex Fertilizers

Factamfos 20:20:0:15 :- NPK complex fertilizer - Factamfos or Ammonium Phosphate

contains 20% N in ammonical form, 20% P in water soluble form and 15% sulphur; a

secondary plant nutrient, which is now attaining great importance in agriculture. Factamfos

also can be used for foliar spraying.

NPK Mixtures

NPK Mixtures:- FACT prepares crop specific standard mixtures for allcrops in Kerala and

also special NPK mixtures for plantation crops like Tea, Coffee, Cardamom, Rubber etc.

Rose Mixture :- A fertilizer tonic for Roses.Vegetable Mixture :- A special blend exclusively prepared for vegetable.

Garden Mixture- A special nutrient combination for both flowering and foliage ornamental

plants.

Imported/ Traded products

- FACT has entered into direct import of MOP and also trading of Imported Urea.

Bio fertilizer


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- FACT produces and markets 'N' fixing Bio fertilizers -Rhizobium, Azospirillium and 'P'

solubilising bio fertilizer -Phosphobactor.

CHEMICALS

Anhydrous Ammonia :- FACT produces Ammonia of over 99.96% purity.

Sulphuric Acid - FACT has one of the largest plants in Asia and it manufactures Sulphuric

acid of 98% purity.

Caprolactum :- It is the raw material for Nylon-6. The product quality of FACT Caprolactum

is among the best available in the world.

Nitric Acid and Soda Ash - Small qualities of these are obtained from Caprolactum plant as

by product.

Nitric acid (55%)

Capacity : 3800 TPAConcentration (by weight) : 55% (min.)Ammonium Nitrate (by weight)

: 1% (max.)Specific gravity at 200C : 1.339Delivery : Ex-factory - tanker load

Soda ash (off grade)

Capacity : 4750 TPA Total alkalinity (as Na2CO3) (by wt) : 95% (min.)Sulphate (as Na2SO4

) (by weight) : 1.5 to 3%Bulk density (g/L) : 1.35 to 1.50Delivery : Ex-factory -bulk


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ORGANISATIONAL STRUCTURE

CHART NO:1

ABBREVATIONS OF ORGANISATION CHARTDIR- DIRECTOR

TECH- TECHNICAL

C.V.O- CHIEF VIGILANCE OFFICER

C.P- CORPORATE PLANING

CMD

DIR MARKETING

G.M.MARKETING

CM SALECM

DISTRIBUTION

CMAGRONOMY

DIR FINANCE DIR TECH

G.M.CP & PC

GM CD GM UC

JGM UD

CMPRODUCTION

CSP

TRAFFIC AMMONIUMSULPHATE

AMMONIUMPHOSPHATE

PHOSPHORICACID

SULPHURIC ACID AMMONIA

CMMAINTENENC

E

CME

PE PE

PE

MGR STORESMGR

QUALITY

MGR SAFETY MGR R&D

JGM PD

GM F&F

CM FEDO CM FEW

C.V.O

G.M.MATERIAL

CM PURCHASE

MGR TRAFFIC

MGR STORES

GM HRCOMPANY

SECRETARY

KERALA

TAMIL

NADU

ANDHRA

PRADESH

KARNATA

KA


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P.C- PRODUCTION COORDINATION

CD- COCHIN DIVISION

UC- UDYOGAMANDAL COMPLEX

F & F- FEDO & FEW

JGM- JUNIOR GENERAL MANAGER

UD- UDYOGAMANDAL DIVISION

PD- PETROCHEMICAL DIVISION

CM- CHIEF MANAGER

C.S.P- CHIEF SUPERINTENDANT PRODUCTION

C.M.E- CHIEF MECHANICAL ENGINEER

MGR- MANAGER

P.E- PLANT ENGINEER


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CHAPTER 5

FUNCTIONAL DEPARTMENTS


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FINANCE DEPARTMENT

1.OBJECTIVES

To Manage & account for the financial resource of the Organization, to forecast its

requirement in the future and plan accordingly and to check for deviation.

Report the financial performance of the company to Management, stakeholders & and to

comply with the Govt. rules and regulations

2. ORGANISATIONAL CHART OF FINANCE DEPARTMENT

CHART NO:2

3.FUNCTIONS OF FINANCE DEPARTMENT

Some of the main functions are Payroll, billing, Preparation of journal, ledger and trial

balance, Banking, Financial resources & materials accounting, Budget preparation, Cost

accounting, Auditing, Preparation of financial statements & reports, Corporate Planning.

\

DIR FINANCE

DGM IA

MGR IA

DGN FINANCE

CM BILLS & MAT CM SALESCM COSTINGBUDGET,MIS

CM GEN A/C

MGR CASH BANK

& PAYROL

MGR(TAX &

DUTIES)


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4.PROCESS OF FINANCE DEPARTMENT

Finance department in FACT is divided into five sections for carrying outfits process. They

are:

1.Bills & Materials

2.Sales

3.Costing, MIS, Budget

4.Cash, bank & Payroll and

5.Tax & duties

BILLS & MATERIALS-The main functions are Stores accounting and Receiving, Dispatch

and holding of bills

Bills section

Bills section deals with the contract account for execution of civil works and

other construction/erection, maintenance and services.

It includes:

1.Sale of tender form

2.Remittance of EMD

3.Remittance of security deposit

4.Issue of materials to the extractors

5.Receipts to certified bill in the specified format

6.Security on running account bills and final bill

7.Statutory procedures and formalities in works contract

Stores accounting

Main functions of stores accounting are

1.Receipts of stores

2.Issue of stores

3.Returns of stores

4.Value adjustments

5.Reconciliation with control accounts

6.Unconsumed materials lying at site at the close of financial year

SALES ACCOUNTINGSome of the functions are


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1.Accountability for selling and distribution of products & by-products

2.Recording the transaction

3.Transfer of information from depots to HO

4.Compilation of reports.

THE COSTING, MIS AND BUDGET SECTIONis concerned with ascertaining the cost

of production, providing information, helping to prepare a budget, forecasting the

performance and finally making a plan.

Cost accounting

Identification of the cost centre - Direct expenses is recorded to the respective cost centre.

Indirect expenses are separately booked and allocated at the end of the year. Cost sheet is

prepared in two ways. The item in the cost sheet is compiled on the basis of process of the

products or on the basis of elements of the product.

Cost centre in Ugyogamandal Division

Process water, DM water, Steam, CPP, Ammonia, Sulphuric Acid, So2/Oleum, Phosphoric

acid, Pollution Control, Ammonium Sulphate, Ammonium Phosphate

Classification of cost

Variable cost

-Raw Materials, Intermediate products, Consumable, Products, Utilities, Packing materials,

Pollution control expenses.

Fixed cost

-Fixed cost of a product mainly consists of conversion cost of the product of Salaries and

wages (Direct, Indirect, Administration &Maintenance),Staff welfare expenses, Insurance,

Plant maintenance, Depreciation, Factory overheads, Administrative overheads, Head office

overheads, Gratuity and bonus, Interest on term loans and working capital.

MIS (Management information system)

To provide the management with vital facts which affects the efficient running of the

business for decision making on planning, organizing and controlling the major activities of

the organization and initiating suitable action.

MIS Briefly consists of:

1.Divisional Reports- Two monthly reports for each division - one for the finance department

and another for the GMs office


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2.P & L Account-Statement and its analysis

3.Production performance of the division

4.Inventory position

5.Cost of production-Actual and budget for the month

6.Specific information important for the management-Major projects, man-hour utilisation

etc.

Budgeting

Two types of budget-Revenue and Capital budget Two types of estimates- Budget estimate

and revised estimate

Revenue Budget

Every year early in August detailed production targets and norms for consumption of

materials for remaining portion of the current year and also for the next financial year are

prepared by the head of Divisions.

Capital Expenditure

Shows all items of capital expenditure to be undertaken during the budget period like

expenditure on acquisition of new assets like machinery, furniture and office equipments

which have reasonable life; expansion of existing facilities and modification and

improvements to plant and machinery resulting in i) increase in capacity ii) Increase in useful

life iii)Improvement in quality of output and iv) reduction in cost of output istreated as capital

expenditure.

Budget revision

While preparing the next years revenue budget, the revenue budgetfor the current year is

revised, based on the actual from April to September and the anticipated trend for the

remaining period.

Monthly report

On closing of the accounts of the months a monthly P & L account is prepared for each

Division and the same is send it to the Division Head,FD and CMD. This report would give a

comparison of the actual for every month against budgeted performance.

THE CASH, BANK AND PAYROLL SECTIONis concerned more with the day to

day activities and less of future forecasting & planning.


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Cash and Bank Accounts Section

The various functions include:

1.Receipt of cash, cheques, bank drafts, and postal money orders

2.Payment of cash, cheques, bank drafts, and letters of authority

3.Handling of bank deposits/withdrawals, custody of cash and inter unit transfer of funds

4.Maintenance of petty cash books and cash books

5.Reconciliation of bank accounts

6.Security arrangement of cash handling

7.Safe custody of valuable documents

8.Cash interests calculation

9.Any other duties assigned by authorized officer

Payroll Section

Functions of the section are:

1.Preparation and disbursement of salaries and wages to managerialand non-managerial

employees

2.Effect various recoveries through payroll and remit the same toconcerned agencies

3.Processing of various personal payments advances

4.Keeps books of account for the above transaction

TAX & DUTIES SECTION

is concerned with calculation & payment of various taxes and duties to the Government.

SOME KEY INFORMATION

Insurance schemes

Insurance schemes have undergone a drastic change in FACT due shortage in working capital

and lack of profit. From the earlier view of insuring everything under all, FACT prefers

selective coverage.E.g. Fire insurance is done only in departments or plants prone to fire.

Deciding on insurance scheme is not the prerogative of finance department alone. The

engineering department has to approve the plan and after the department wise approval, the

corporate level approval has to be obtained.

The various insurance schemes are:

1.Fire Insurance.

2.Machine break down insurance.


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3.Electronic equipment insurance.

4.Fidelity insurance and cash in transaction/cash at safe/payroll insurance.

5.Insurance for vehicles and heavy equipment.

6.Open transit risk for all inland and all foreign purchases.

7.Loss on profit insurance.

8.Personal accident insurance.

9.Storage insurance.

10.Insurance for stock of finished goods, raw materials, industrial stores.

Corporate plan

Corporate plan is prepared by taking estimates and future projections for 5 years. The

corporate plan is revised every year by deleting one year in the

beginning and adding one year at the end, keeping the total budget period as 5 years. This

plan projects the companys position for the next 5years.

Foreign Currency Management

A Committee is formed to look into and take decisions on a periodic basis relating to the

foreign currency. The committee has been constituted with chief of internal audit as chairman

and members being the chief of finance, head of Cochin division, petrochemical division and

head office.

Working Capital management

The Working capital is essential for any Organization to meet its day to day requirements.

Working capital may be specified as the firms current assets over current liabilities. As a

large scale company, FACT also requires sufficient working capital to meet its daily

requirements.

FACT uses letter of credit and bank guarantee mainly for the purpose of financing the import

of raw material. If it has to avail more than the assigned quota the finance department will

have to take permission of Board of Directors. FACT approaches different banks to meet its

working capital requirement and FACT maintains a consortium of banks for the same. They

are:

BANKERS SUPPORTING FACT:

1.State Bank of Travancore

2.State Bank of Hyderabad


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3.State Bank of India

4.Bank of Baroda

5.Bank of India

6.Canara Bank

7.Dena Bank

At present FACT has availed cash credit facility up to an amount of Rs.188 crores and letter

of credit up to Rs. 100 crores and bank guarantee upto limit of Rs. 15 crores.

Auditing

Various types of audits in FACT are:

Statutory audit,Government audit, Cost audit ,Income tax audit, Sales tax audit an Internal

audit.

Internal Audit Section

Some of the main functions are

1.Operational/ systems/ management audit

2.Proprietary audit and audit of sanctions

3.Routine audit

4.Surprise verification of physical stocks

5.Special audits and studies

CHALLENGES OF FINANCE DEPARTMENT

Working capital crunch Due to which

Up gradation of plants & machinery is not possible

High quality equipment cannot be purchased. For the same reason, FACT goes for the

lowest quoting bid.

Cannot maintain adequate stock of fertilizer for combating shortage

Lack of flexibility in production

Low availability of credit due to non-payment of loans & security to keep for loans.

Due to which the organization:


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Cannot grow and therefore stagnates.

Cannot compete with other fertilizer companies due to lack of fund

MATERIALS DEPARTMENT

OBJECTIVES1.To control and account for the materials in the organisation

2.To ensure the availability of materials and its quality.

ORGANISATIONAL STRUCTURE OF MATERIALS DEPARTMENT

CHART NO:3

FUNCTIONS OF MATERIALS DEPARTMENT

include:

1.Importing raw materials under the approval of

safe purchase committeeconstituted by the Board of Directors

2.Maintaining adequate raw materials needed for production

3.Procurement of Machineries, Intermediaries, equipment & spares

GM MATERIAL

MGR TRAFFICCM PURCHASE

RM

DY CM RAWMATERIALS

MGR.F.F.T.S

MGR.E.S.S

MGR STORES


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4.Inspection of Materials

5. Transportation of Raw materials, Products and By-products

6.Accountability for materials

7.Purchase of stationary, and other Equipment needed by individual department

8.Vendor Development

This department is divided into 3 Sub Departments. They are:

1.Purchase

2.Stores

3.Traffic (Logistics)

PURCHASE DEPARTMENTThe purchase procedure covers the following areas of procurement of goods and services for

the company.

1.Capital items (For project and other purposes).

2.Equipment and spares.

3.Raw material & Intermediary materials

4.Package items involving design, supply, erection and commissioning.

Purchase Department is again divided into 3 sections. They are:

1.Raw materials

2.Equipment spares and supplies

3.FEDO & FEW Transport, Contracts and Stores.

RAW MATERIALS SECTION

Objectives

1.Purchase of materials for production, from India and abroad

2.Make available adequate amount of material at the right time3.Follow a fair & transparent procedure in the above activities

Functions

1.Importing raw materials under the approval of safe purchase committee constituted by the

Board of Directors

2.Procurement of Materials needed for production

3.Determination of quantity of materials required

4.Issue of Purchase order5.Pre & post dispatch Inspections


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6.Insurance

7.Payment

Raw materials areSulphur, Rock phosphate, Furnace oil, Naphtha, Ammonia, Benzene,

Phosphoric Acid, Caustic soda and Sulphuric Acid.

RAW MATERIAL PROCUREMENT PROCESS

CHART NO:4

CHALLENGES TO RAWMATERIAL PROCUREMENT

1.Scarcity of Raw materials

2.Sky rocketing prices

3.Shipping Problems

4.Working Capital crunch

EQUIPMENT & SPARES SECTION

Objectives

1.Purchase of Equipment & spares from India or abroad

2.Make available spares at the right time

3.Follow a fair & transparent procedure in the above activities

Equipment & Spares Include

1.Capital items like heavy machinery or plant (For project and other purposes)

2.Equipment and spares

3.Package items involving design, supply, erection and commissioningFunctions

PURCHASE

REQUISITION

PAYMENTRAW MATERIAL STORING

PRODUCTION PLAN

RAW MATERIALS

DEPARTMENT

RAW MATERIAL

REQUIREMENT

VENDOR DEVELOPMENT BID EVALUATION &

FINANCIAL

CONCERENCE

ENTERING INTO

CONTRACTS

PURCHASE ORDER

RAW MATERIAL

TRANSPORTING

INSPECTIONS


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1.Importing materials under the approval of

safe purchase committee constituted by the Board of Directors

2.Determination of actual requirement by checking with stores, technical department,

management and giving specifications

3.Vendor Development

4.Bid evaluation & financial Concurrences

5.Entering into Contracts

6.Issue of Purchase order for equipment & spares

7.Inspections of materials and stores

8.Insurance

9.Payment

EQUIPMENT & SPARES PROCUREMENT PROCESS

The User departments give their requirement which is validated by the Technical department

and is finally approved by the management for issue of purchase requisition. The purchase

requisition is checked with the stores stock. If the store already has the item then it is supplied

to the concerned department; otherwise items are procured with the help of a vendor. In case

of specific goods such as tube light, bulb and fan vendor are already specified by the

technical department and approved by the management. Whenever the user department needs

them the store department moves forward to procure them. The process can be

diagrammatically as follows:

CHART NO:5

VALIDATING

REQUIREMENT

DESPATCH

USER DEPARTMENT

REQUIREMENT

AVAILABLE AT

STORES

PURCHASE

REQUISITION

NOYES

RAW MATERIAL

PROCUREMENT

PAYMENT INSPECTIONS

MATERIAL

PROCUREMENT

PURCHASE

ORDER

ENTERING INTOCONTRACTS

BID EVALUATION &

FINANCIAL

CONCURRENCE

VENDOR

DEVELOPMENT


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Purchase order

Detailed purchase order is issued soon after the letter of intent and normally within 30 days

of issue of letter of intent.

Inspection & Monitoring

The materials department performs expediting of orders. In certain cases other agencies

appointed for the purpose. Materials department continuously monitors vendor's performance

to ensure timely delivery and periodic status reports is made available to all concerned

departments. Inspection may be carried out by FACT or by third party inspection agencies,

depending on the nature of items and facilities available. Department authorized for the

inspection, receives the dispatch document. The department responsible for the clearance

maintains a register for dispatch documents and updates entries on a day-to-day basis.

Payment of freight/certification of freight bills

It is the responsibility of the department head entrusted with clearance of goods. All goods

cleared from the carrier are forwarded to the receiving

section of the stores department or department authorized for this purpose. In case of bulk

materials like stationeries, the consuming department directly receives raw

materials/intermediates the goods. Materials received against turnkey jobs awarded to

agencies responsible for supply, transport, storage and erection are not taken into stock bystores department.

Rejection/Damage of Materials

Rejected consignment is kept separate and the stores/receiving department send a first

information report to the supplier with the copy to finance and purchase department. In all

cases of rejection / shortage/damage other than for reasons attributable to supplier, the stores

department takes up the matter with the insurers under advice to finance department. Follow

up of the claims and settlement with insurer is done by finance department.

VENDOR DEVELOPMENT

Vendor Pre-qualification

Pre qualified vendor list shall be maintained by materials department. The vendor list

comprise of all pre-qualified vendors under each category stating clearly the respective

capability in terms of volume of work, specification, level of technology, etc with rating of

the vendors. Addition/deletion to vendor's lists is made on a continuous basis on the above

criteria. There are three types of Purchase Requisition (PR) as follows:

1.For projects and major capital equipment


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2.For stores, including stationary and office supplies, spares

3.For services

Inviting Bid

Bids are invited by giving Advertisements in news paper, magazines, media, website etc. The

Purchase Manager invites the bid. Normally, 30days from the date of enquiry is given for

submission of bids in limited tenders. For open tenders, 30 days from the date of appearance

of advertisement is prescribed.

Receipt and opening of bids

Bids are opened by officers from finance, administration and purchase Department. Bidders

representatives read the Bid which consists of Prices, taxes and duties, payment terms,

delivery period, performance guarantee and brief description whichever is relevant.

Bid evaluation and financial concurrence

The technical part is forwarded to the indenting department by the purchase department as

soon as the bid opening formalities have been completed. The steps involved in bid

evaluation are:

1. Technical evaluation by indenter in consultation with other technical experts, where

necessary

2.Commercial evaluation by the purchase department in consultation with other concerned

departments

3.Review and approval of technical and commercial evaluation by the competent authority to

determine the bids, which are technically and commercially suitable

4.Comparison of prices and financial evaluation by purchase department in consultation with

other concerned departments

Financial Concurrence

For purchases above Rs. 25000, the purchase recommendation is forwarded to finance

department. Sanctioning authority is formed as per the delegation of powers. After financial

concurrence, the proposal is forwarded to the sanctioning authority through purchase order.

CHALLENGES OF EQUIPMENT & SPARE SECTION

1.Approval of Bids on the basis of lowest quotation where sometimes quality is compromised

2.Low working capital to maintain sufficient stock of goods

FEDO & FEW, Transportation & Stores (FFTS) Section

The Functions of the section are:

1.Project related procurement for FEDO & FEW

2.In-house procurement for FEDO & FEW


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3.Storage of Raw materials

4.Raw material transportation & Technical assistance for handling

STORES DEPARTMENT Objectives

1.Collection and receiving of materials purchased

2.Inventory Management & Control

3.Issuing materials to user departments

4.Disposal of surplus and obsolete materials

Functions

1.Receiving

2.Holding

3.Inventory Control

4.Issuing

5.Disposal

PROCESS FLOW IN STORES DEPARTMENT

CHART NO:6

Codification and classification

All stocks items bears a 9 digit code prepared on a significant numbering system. First digit is

allocation for UD, CD and PD. Second to sixth digit classifies materials to mechanical,

electrical and general items. The materials received are classified and arranged into 6

compartments-A, B,C, D, E and F, each consisting of 20 shelves numbered from 1 to

20.According to the above classification, the shelves are allocated for each material.

Procedure followed

When a material is received, the stores officer inspects the items and is approved by the

stores manger for holding in the stores after verification. The store in charge allocates

materials to the specified shelf and records the data in the Bin card. The store officer updates

the data in the MIS. And for issue of materials, the requirements forwarded by the

RECIEVING INSPECTING HOLDING INVENTORY

MANAGEMENT

DISPOSAL ISSUE


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departments is verified and approved by the manager for dispatch. The issue is and recorded

in the MIS. However, for disposal the list of items to be disposed is forwarded to the

management by the stores. Approved items are disposed or sold for scrap value and recorded

in the MIS. Store irresponsible for all activities for ensuring inventory control,

commissioning of codes and disposal of scrap. Materials move into store only after inspection

conducted by store employees. Technical department help is sort wherever required. Obsolete

items are disposed.

MIS

The stores maintain all its data in the computer and are updated every time movement of

materials takes place. The MIS gives the current status of inventory and helps in the speedy

replenishment of stock when required. The MIS used is the OIIS (online integrated system).

Items in the stores are known to the management and other departments which need that

information. During the stock verification, the figures in the MIS and physical stock are

tallied.

Stock verification

Stock verification is done by physical stock verification Team (PSVT) are attached to finance

department. A and B items are verifiedonce in a yearend C items once in 2 years. For

those which are not covered under ABC analysis XYZ is taken and frequency of verification

is once in a year for X& Y Items and once in 2 years for Z items. Along with this

officer, stockholding in-charge verifies stock daily and submits the report to PSVT and when

they come for inspection, the deviations in the report are clarified.

INVENTORY ANALYSIS DONE IN FACTA-B-C Analysis

ABC analysis is prepared by the computer centre based on the value limits of: A Items > Rs

50,000, B Items < Rs 50,000 and > 5,000 and C Items


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X-Y-Z Analysis

This analysis is done on the basis of stock in hand at the end of the financial year. 80% value

of total inventory is labelled as X, 15% value of total inventory as Y, 5% value of total

inventory as Z.

For spares-E-D Analysis -

Vital (V), Essential (E), and Desirable (D)Vital are those spares whose non-availability

results in very high production down-time loss and/or entails very high cost due to emergency

purchase. Essential spares are those whose non-availability is expected to cause moderate

production down-time. Desirable spares are those whosenon-availability does not resulting

in any significant production down timeless. The list is reviewed once in 2 years.

CHALLENGES FOR STORES

1.Maintenance due to shortage of labour

2.Low stock of goods maintained due to shortage of Funds

TRAFFIC DEPARTMENTObjectives

1. To ensure Loading and despatch of products

2.To ensure right quantity and right product to right vehicle and to the right destination

Functions

1.Loading

2.Arrangement

3.Movement Traffic department is responsible for the dispatch of products to various

markets. They maintain contacts with market department and production departments. The

dispatch section of marketing division gives the demand of various depots in each state to the

traffic department. Based on this, schedules are formed and product is dispatched.

Process flow in traffic departmentThe marketing division selects the depots where fertilizer has to be transported and gives the

dispatch information to the traffic department. The traffic department selects the vendor for

transport. Depots are allotted to vendors by the department.


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PAYMENT

CHART NO:7

The vendors are issued a vehicle inslip which is a slip for the vehicle to go into the loading

site in which the destination, vehicle no, product or by product to be loaded are recorded.

Before loading the empty weight of the vehicle is taken and after the loading the weight with

the load is taken by the C.I.S.F Security men. If deviation more than the specified limit is

noticed, the goods are either unloaded or reloaded. A copy of MDA(Material Dispatch

Advice) is given to the lorry driver for dispatching to the concerned depot. When the goods

arrive at the depot message is passed to the department. And the signed copy of MDA is

returned to the department by the Vendors so as to enable him to collect payment. If the load

dispatch is found damaged, loss in quantity noticed, penalty is charged from the vendor.

FACT has permanent workers for loading activity. The department engages contracts to

transport finished products from the plants to different depots or to the customers. Packing

the materials in the bag is also the responsibility of the department. The product is bagged in

HTPG bags. The product is transported by, trucks and railway wagons. There is a private

railway siding for FACT at Kalamassery and also at Cochin Division. A full rail wagon takes

2200 tones of product. A godown at Kalamassery stores fertilizer. Lorries and trucks for the

transportation are chosen based on the tender.

Major Transport Contracts

A.S.R.T- A.S.R transport

B.T- Bharat Transport

COSMO- COSMO Carriers

E.L.F- Expert Liner Enterprise

L.R.L- Lucky Road line

TRANSPORTATIONDEPOT

VEHICLE IN SLIP ISSUE

MDA ISSUE

LOADINGVENDOR(TRANSPORT)

DESPATCH INFORMATION

MARKETING DIVISION

TRAFFIC DEPARTMENT SIGNED MDA WEIGHING


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JGM(UD)

CM PRODUCTION

MAINTENANCE

C.M.E

PRODUCTION

C.S.P

TRAFFIC AMMONIUM

AMMONIUMSULPHATE

AMMONIUMPHOSPHATE

SULPHURIC ACIDPHOSPHORIC

ACID

J & P- J & P Enterprise

M.R.D- M.R.D Transport

P.K.A- P.K Aboobacker & Co

P & P- P & P Logistics S.K.L.S - Sree Krishna Lorry Service

S.P.M- S.P Muthuraman

U.R- Union Road ways Limited

Optimisation Techniques

1.Transportation by railway14 wagons of train booked at a time helps reduction of cost.

2.Outsourcing of Logistics Certain issues like labour, vehicle repair can be overcome. This helps

in preserving the core competence of the department.

CHALLENGES OF TRAFFIC DEPARTMENT

1.Lack of fleet management system

2.Labour issues

3.Vendors Performance & Review

PRODUCTION PLANNING DEPARTMENT

1.OBJECTIVES

1.Production planning

2.Co-ordination of production function

3.Co-ordination with Maintenance and Production department.

2.ORGANISATIONAL CHART OF PRODUCTION DEPARTMENT

CHART NO:8


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FUNCTIONS OF PRODUCTION DEPARTMENT

Planning daily production according to annual target

2.Submitting Plan to govt. and getting approval

3.Monitoring actual production & checking any deviation

4.Making revision plans according to actual production

5.Maintenance of plants

PRODUCTION PROCESS

START HERE

CHART NO:9

Annual production targets for the next year are prepared based on installed production

capacity of the plant and production data for the previous year. Necessary feedback is also

taken from marketing department while fixing the production targets. The production targets

thus fixed are presented to the corporate office for review and approval by CMD and the

plant managers are informed of the same. The production and consumption ratios for the

previous years are duly considered. All the data are compiled to form the production budget.

A copy of the production budget is sent to the finance department for preparing finance

budget. The production plan and budget are then presented to the govt. for approval. The

production budget then acts as the basis for further performance monitoring. Based on the

production plan, purchase department initiates action for procuring raw materials. In the

event of any change in the annual production plan becoming necessary, the corresponding

change in the raw material, requirements are intimated to the purchase department.

Production planning department receives data from all the plant and other interfacing

departments and compiles them. Various MIS reports consist of

daily production reports,

monthly reports and yearly reports they are sent to the management.

PLANT MAINTENANCE

CHECKING DEVIATIONSFROM PLAN

MONITORING PRODUCTION

PRODUCTION TARGETS

RAW MATERIAL AVAILABILITY(RM

DEPT)

APPROVAL OF PRODUCTION

PLAN


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FEATURES OF PRODUCTION PLAN

1.Production plan is based on the idea of producing the maximum withavailable raw material

and production capacity of plant.

2.Day- to-day production is planned according to raw materialavailability.

3.Daily production plan is prepared and likewise annual plan is alsoprepared.

4.Day wise production plan is monitored.

5.Production plan is always flexible.

PLANTS AT UDYOGAMANDAL DIVISION

1.Ammonia plant

2.Ammonium Sulphate plant

3.Ammonium Phosphate plant/ FACTAMFOS4.

Acid Plant

Ammonia plant

The capacity of the Ammonia plant is 900 TPD. The investment for the plant was about

Rs.618 Crores. The plant has economy scale size and employs state of Art technology for the

process engineering and control systems.

Acid Plants

Sulphuric acid plant

The Sulphuric acid plant is designed to produce 1000 TPD of monohydrate. The plant is

based on the double conversion, double absorption process and was designed by FEDO in

collaboration with Davypower gas Plant.

Phosphoric acid plant

The Phosphoric acid plant is designed to produce 360 TPD of P205

through the dehydrate route. The plant designed by FEDO in collaboration with

Messer society de prayon of Belgium

employs the prayon convertible process to give a product having strength of 30% P205


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. A separate concentration section is provided to concentrate this weak acid to strong acid

having strength of 45% P205

Ammonium phosphate Plant

The complex fertilizer plant was designed to produce quantities of N P Kfertilizers of

various grades. FACTAMFOS Consists of NPK and S in theratio 20:20:0:13.

PRODUCTS

1.Ammonium Phosphate/ FACTAMFOS

2.Ammonium Sulphate

3.FACT urea

4.Muriate of potash

PRODUCTS TPD (IN MT) TPA(IN MT)

NP:20:20(FACTOMFOS) 450 160000

AMMONIUM SULPHATE 667 210000

SULPHURIC ACID 1150 338570

PHOSPHORIC ACID 100 18000

TPD :-TONNES PER DAY TPA :-TONNES PER ANNUM TABLE NO:5

OPTIMIZATION OF PRODUCTION

The company is making all efforts to optimize production and reduce losses. Steps are being

taken to enhance the procurement of sulphuric acid as well as phosphoric acid. Steps are also

being taken to explore the possibility to import sulphuric acid.

ADHERENCE TO ISO IMPLEMENTATION

Do what you write or write what you do

1.FACT has a well defined procedure for production. So according to ISO implementation it

writes whatever it does.

2.Production standards are also kept as per ISO standards.


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CHALLENGES OF PRODUCTION DEPARTMENT

1.Raw material scarcity is upsetting the entire production plant.

2.Working capital shortage is affecting the smooth functioning.

Around the globe, 2008 has witnessed acute shortage of raw materials and various natural

resources affecting various industries badly. Sulphur prices over the year have gone up 10

times and 5 times in case of naphtha. However, LNG can be substituted for naphtha which

again is witnessing an acute shortage. Some raw materials like Rock phosphate and Sulphur

are being imported, which again invites shipping problems for FACT being its demand for

raw materials is in low quantity. In addition Fertilizer industry is being looked upon as a sick

industry, even from the government side. The subsidy is not given by analyzing the real

situation.

MARKETING DEPARTMENT

GENERAL INFORMATION

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

sellers market

.However, its demand is seasonal and is very much dependent on the Monsoon. Market

penetration is very difficult, and once a company captures a market its brand is substituted for

the product. The brand image plays an important role. The whole market is also dependent on

farmers awareness about fertilizers. All of these call for a planned marketing effort and huge

requirement of funds to meet the seasonal demand of fertilizer.

OBJECTIVES

Monitoring of sales & distribution

Study & respond adequately to the information from market research department and from

field establishment .

Liaison with bulk buyers, central and state government officials and officials of fertilizersassociation of India


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DIR(MARKETING)

GM(MARKETING)

CM SALES C.Ag.AGRONOMY

CMDISTRIBUTION

AM (KL) AM(T.N)

AM(KAR) AM(AP)

ORGANISATIONAL CHART OF MARKETING DEPARTMENT

CHART NO 10

C.Ag-CHIED AGRONOMIST, AM-AREA MANAGER

FUNCTIONS OF MARKETING DEPARTMENT

1.Sales

2.Market Research

3.Agronomy

4.Preparation of sales report

5.Processing and sending replies to audit queries at the divisional level

6.Liaison with bulk buyers, central and state government officials and officials of fertilizers

association of India

7.Sales force motivation through internal and external training programmes The marketing

department consists of various sub departments organized on the basis of their function. They

are:

1.Sales Department

2.Distribution Department

3.Agronomy

SALES DEPARTMENT


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The sales department is headed by a Chief Manager who is responsible for sales coordination

of function across various depots, conduct an effective market research for analyzing market

and calculating the demand and finally promote the sales of FACT products. FACT today

holds major market share in Kerala, 11% in Karnataka and 6% in other states.

Main products

1.FACTAMFOS/Ammonium Phosphate

2.Ammonium Sulphate

3.FACT Urea

4.Muriate of potash

Sales Promotion Tools of FACT

FACT over the years have innovated various techniques of sales promotion. Many of them

are recognized as effective tools of promotion by national and international agencies. These

techniques are mainly grouped into two:

1.Mass Communication Techniques

2.Personal Contact Method

Mass Communication Techniques

This method involves catering to a large number of people in the

shortesttime possible. Advertisement are done through Films, Exhibition ,Radio jingles,

Hoardings, Posters, Farmers awareness programmes in AIR, Wall Painting, Advertisement ,

Direct mail service etc.

Personal Contact Methods

As the name implies, in this method, more personal and closer contact with farmers are

developed through promotional methods. The methods adopted by FACT are through

Demonstrations, Block demonstrations, Soil testing, Seminar, Study classes, Co-operative

training programmes, Dealer training, Squad programmes etc. Realizing the importance of

bringing the essential agricultural inputs and facilities for advisory service under single roof,

FACT has converted its major selling points into Agro Service Centres rendering service to

farmers. These centres advise the farmers on modern farm management techniques, credit

availability, marketing prospects etc. It also prepares detailed farm plans for each farmer

according to his agriculture pattern. FACT is the pioneer in fertilizer education and sales

promotion programs. These consist of fertilizer festivals, study classes, seminars, Krishi

VigyanKendras (KVKS), crop campaigns, crop demonstrations etc., with an ideal blend of


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information and entertainment to drive home the message of balanced fertilizer use for

increasing crop production. The creative and

novel education programs like village adoption of FACT have gained national recognition.

DISTRIBUTION DEPARTMENT

Physical distribution of products is a major function of the marketing division. Chief

Distribution Manager is entrusted with planning, monitoring and implementing of product

distribution and co-coordinating the movement from production units and ports. Marketing

operations of FACT in respect of fertilizers follow a completely centralized pattern. The

marketing network of FACT is spread over the southern states of Kerala, Tamil Nadu,

Pondichery, Karnataka and Andhra Pradesh. In each state there are 4 area office and 16

regional offices. The distribution network consists of 100 Agro Service Centres, 50 field

storage points and over 7900retail selling points in these states, and serves the farmers by the

supply of fertilizers and agronomy advice. Through innovative farmer education and fertilizer

promotion programmes, FACT has created awareness about scientific cultivation

and fertilizer use. The states offices are called area and their sub- divisions are called regions.

AREAS REGIONS

KERALA ALLEPY PALAKKAD KOTTAYAM KANNUR

TAMIL NADU COIMBATORE TRICHY MADURAI VELLORE

KARNATAKA MANGLORE BANGLORE BELGAUM HOSPET

ANDHRA PRADESH HYDERABAD VIJAYAWADA KAKINADA VELLORE

TABLE NO :6

MARKETING OPERATIONS

AGRO SERVICE CENTRES 100

SWC/CWC POINTS 43

SOIL TESTING LABORATARIES 3

AREA & REGIONAL OFFICES 20

FIELD SALES OFFICES 100

DEALER POINTS 7759

TABLE NO :7


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AGRONOMY DEPARTMENT

Fertilizer sales are highly dependent on farmers awareness on modern techniques of farming

by using fertilizer for high productivity. Awareness creation involves an elaborate and well-

planned farmer education and fertilizer promotion program, which in turn calls for a

multiplicity of activities. Chief Agronomist has overall charge of the agronomy department,

which renders technical guidance, and supervision of all agronomy services.

PROCESS OF MARKETING DEPARTMENT

START HERE

CHART NO 11

Market Research department takes care of collection, analysis and interpretation of data

pertaining to fertilizer market and preparation of product wise, month wise and annual sales

plan for each area. Agronomy prepares the farmers to buy fertilizers. The sales department

monitors and reports competitor's sales and collects, scrutinizes, analyzes and compiles

region wise and area wise sales of performance and purchased

productsfor providing information to management on achievement against thetarget. The

distribution department finds out the various depots as per the information given by sales andsells the products and subsequently sales report is prepared.

Marketing research

Marketing Research Department is essential for the success of marketing function. The main

function of marketing research is the collection, analysis and interpretation of data pertaining

to fertilizer market.

Functions

SALES REPORT

SELLING PRODUCT

DISTRIBUTIONCALCULATINGFINDING THE DEPOTS

AGRONOMY

MARKET RESEARCH


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1.Preparation of product wise, month wise annual sales plan for each area.

2.Publication of annual report of division

3.Monitoring and reporting of competitor's sales as per perform a prescribed

4.Collection, scrutiny, analysis and compilation of region wise, area wise sales performance

of own and purchased products for providing information to management on achievement

against the target on a daily basis.

5.Submission of monthly performance report of the division to the CMD

6.Ensuring product availability, dispatch monitoring and inventory control

7.Submission of various statements to FAI for publication in their fertilizer statistics

yearbook.

Performance of the Marketing Division during the financial year2012-2013 as compared

to the financial year 2011-2012.

During the financial year 2012-2013 the fertiliser sales was 7.40lakh MT as against 8.40 lakh

MT during the previous year. Sale of Factomfos during the year was 541966 MT as

compared to 582471 MT during the year 2011-2012 .The sale of Ammonium sulphate during

the year was 134720MT as compared 175524 MT during the previous year.

CHALLENGES OF MARKETING DEPARTMENT

8.1.

Improper Subsidy poli cyGovt. Subsidy policy does not take into account the technology used

for production & cost of raw materials, and comes to the organization after a long gap after

actual sales, which leads to acute shortage of working capital.

Lack of fund for research activities

Narrow product range

Unnecessary intervention of state and central governments in distribution & sales

Recurring losses have put the organization on the back foot looking for survival in the present

than long term plans & resulting research, leading

to low level of research activities and narrow product range.


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MGR(Q.C)

SHIFT INCHARGE

CHEMIST

LABASSISTANT

FINANCIAL

IN LAKHS

PRODUCTION

YEAR 2012-13 2011-12

Factamfos 20 : 20 537081 622256

Ammonium Sulphate 126286

163468

Caprolactam 15544 37854IN TONNES

SALESTABLE NO 8

YEAR 2012-13 2011-12

Fertilisers 740111 834580

Caprolactam 17695 40963IN TONNES

QUALITY CONTROL DEPARTMENT

OBJECTIVES OF QUALITY CONTROL

Customer satisfaction through excellence in quality of production andservices

Adherence to documented quality system

Promoting quality culture among employees

Continuous improvement in the quality Management System

ORGANISATIONAL CHART OF THE DEPARTMENT

CHART 12

YEAR 2012-13 2011-12

Turnover 239380.00 293657.00


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FUNCTIONS OF QUALITY CONTROL

1.Quality checking

2.Process control assurance

3.Pollution control

QUALITY CONTROL PROCESS

Quality checking

Raw material-Pre and post despatch check. It is usually done by FACT Quality control cell or

external agency if expertise is required.

Product Quality check By-product Quality check-only in case of by-products sold[R &

D counter checks quality]

Process control assurance

The samples are tested in the Lab. There is one Main Lab for UD division and Sub Labs for

each plant.

Pollution control

By taking air and water samples. If samples contain more than required level of effluent, then

the matter is reported to the plant manager, Quality department and GM (UC)

POLLUTION CONTROL MEASURES

Hydrocarbon-detectors are placed in vulnerable areas in the plant for transmission to

control room..

Computerized automatic ambient air monitoring system is placed at stations, inside

the plant and two in the township to monitor ammonia, carbon monoxide, non-methane

hydrocarbon, sulphur dioxide and oxides of nitrogen on a continuous basis.

The company continues to give top priority to pollution control activities. It has

already invested lot of money especially for setting up pollution control plants at

Udyogamandal, Cochin and petrochemical divisions. FACT Udyogamandal, Cochin Division

are ISO 14000 certified units. As commitment to humanity, the company has taken all

necessary safeguards to prevent water and atmosphere pollution caused by effluent gases and


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liquids thrown out from the factory. The company could maintain all effluent parameters

within limits as prescribed by the statutory authority. Treated liquid effluent and gas emission

from plants conform to the Kerala State Pollution Control Board norms. The guidelines

specified by Kerala State pollution control board are followed in the disposal of all hazardous

wastes generated. The ambient air quality monitoring stations continuously monitor the level

of pollutants like sulphur dioxide, Oxides of Nitrogen, Ammonia, Carbon Monoxide,

Hydrocarbons and Suspended Particulate matters.

ACTIVITIES CARRIED OUT

1.Reduction of air pollution from amorphous plant and phosphoric acid plants

2.Improving the quality of effluents on a continual basis

3.Minimize dust problem in sulphur handling and prevention of sulphur spillage to river

4.Reduction of contamination of raw effluents with vapour condensation from Hyam plant

5.Reduction of noise level in SO2/Acid plant main air blower

6.Reduction of SO2emission during start up of sulphuric acid plant

7.Minimize and recycle waste water from phosphate plant and sulphuric acid plan

t8.Improving housekeeping in phosphate and sulphuric acid plant

CHALLENGES TO QUALITY CONTROL

Lack of expertise to handle raw materials quality checking7

Aged machinery Effluent discharge likely to exceed the permissible limit High noise

pollution

RESEARCH AND DEVELOPMENT

GENERAL INFORMATION

FACT began research in a modest scale in 1962 with just four scientists. Over the years this

nucleus has grown in to a full-fledged but compact integrated division with a team of about

12 personnel. The division is recognized by the ministry of science and technology for in

house research and by the ministry of environment and forests, Govt. of India. R&D plays a

vital role in giving the company and its products the cutting edge in a competitive

environment. FACTswell-equipped R&D section has advanced facilities equipped withpilot plants, modern equipment and accessories. It is backed by a team of highly motivated


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MGR(R.D)

ASSTMANAGER

OFFICER

STAFFS

research scientists. Various processes have been developed and patented by FACT R&D

division of which several have been commercialized successfully. Field trials on slow release

fertilizers developed by the division have been successful. Production of bio-fertilizers has

commenced with an installed capacity of 150tonnes per annum. FACT R&D division has got

modern and sophisticated laboratory and the facilities are continuously expanded and

updated. A wide variety of tests conforming to Indian and international standards are carried

out. FACT R&D division has a unique mobile laboratory equipped with state of the

art instruments for monitoring, assessing, computing and recording air data. FACT has won

Indian Chemical Manufacturers Association award twice for outstanding performance in

Development of technology & Export of technology.

OBJECTIVES

To carry out in-depth research, to provide specialized services to other divisions of the

organization, and is involved in the production of environment friendly bio fertilizers.

ORGANISATIONAL CHART OF R&D DEPARTMENT

CHART NO 13

FUNCTIONS OF R & D DEPARTMENT

Quality assurance /Quality control cell

As per the directive from Ministry of Agriculture, Government of India, a Quality control cell

has been set up in R & D centre, for efficient monitoring of quality of fertilizer products at

the dispatch and selling points.


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Bio-fertilizer research and development

FACT has set up a 150 TPA bio-fertilizer plant at R&D premises. The plant was

commissioned during the end of 1999, to take up the production of N-fixing Bio fertilizers

like Rhizobium, Azospirillum and P-solubilising bio-fertilizer like Phosphobactor. The

carrier material employed is exfoliated vermiculite

The Biofertilizers plant at R & D centre is capable of producing three kinds of Biofertilizers

namely Rhizobium, Azospirillum and Bacillus Megatherium under the trade name BIO-

FACT. Owing to the short shelf life, production of these Biofertilizers is based on specific

demands of marketing Division. Efforts are underway to changeover to a new carrier material

called Lignite that conforms to the recently laid down FCO regulation.

Quality maintenance of product at various depots across the states

Corporate Quality Survey

FACT is committed to provide quality products to consumers. As a part of this strategy,

FACT R&D Centre has been entrusted with checking the quality of fertilizer samples from

production divisions. The Quality check is usually period wise; sometimes surprise visits

are also conducted.

Consultancy work especially for clients such as Govt. of India

Nyrip Process

FACT & IIT Chennai have signed an MOU for setting up of pilot plant to produce fiber

reinforced polymer matrix composites from caprolactum and carrying out scale up studies.

Pilot plant studies at IIT Chennai are continuing. This project has been funded by planning

commission, Govt. of India under Technology mission programme.

ACTIVITIES CARRIED OUT

1.Development and filed testing of slow release fertilizer

Slow fertilizer release

R&D Centre of FACT has formulated slow release fertilizers in order to increase the efficient

use of plant nutrients. The slow release fertilizer project has been selected for partial funding


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under PATSER scheme by DSIR, New Delhi, for, Agronomical evaluation by Tamil Nadu

Agricultural University, Coimbatore and

Organisational Study in FACT, Ernakulam

Documents

Transcript of Organisational Study in FACT, Ernakulam