Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
AT FACT, UDYOGAMANDAL
Submitted by
Co-ordinator
Manager (training)
JUNE 2010
1
DECLARATION
2
ACKNOWLEDGEMENT
This report has been made fruitful with the help and co-operation of various
people to whom I wish to express my gratitude.
I thank God Almighty for showering me with abundant grace for the successful
completion of the project
Last but not the least with great pleasure I hereby express my sincere thanks to
my most loving parents
3
HITHA MATHAI
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CONTENTS
SERIAL DESCRIPTION PAGE
NO: NO:
Chapter 1 INTRODUCTION
3. METHODOLOGY
1. FINANCE DEPARTMENT
3. MARKETING DEPARTMENT
4. MATERIALS DEPARTMENT
A. SWOT ANALYSIS
BIBLIOGRAPHY 5
APPENDIX
LIST OF TABLES
6
SERIAL TABLE DESCRIPTION PAGE
NO: NO: NO:
1. 1 Information about FACT
3. 3. List of Abbreviations
6. 6. Expenditure on R & D
8.
9.
10.
LIST OF CHARTS
7
SERIAL CHART DESCRIPTION PAGE
NO: NO: NO:
8
CHAPTER: 1
INTRODUCTION
9
INTRODUCTION
In India the main source of income comes from the field of agriculture. FACT has been
the backbone of national income for all these years.
World war ll caused acute food shortage in many parts of the country. The accelerated
population growth in the world needs remarkable expansion of food production from time to
time. Agriculture must rely upon a primary source for increase in food production. It was at
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this juncture that FACT was formed on the banks of river Periyar at Udyogamandal, Kerala
in 1949, the first large scale fertilizer factory in the country came into being. The immediate
objective was to grow monofood using chemical fertilizers. India is one of the major
producer and consumers of fertilizers in the world. The prosperity of industry is depended on
the prospects and growth of agriculture in India.
Indian agriculture has witnessed low rate of growth of around 1.5% recent years. Low and
unbalanced use of fertilizers could be the major cause for this. Adoption of new and
improved technology and development and utilization of alternative and cheaper source of
feed stock coupled with education and awareness creation among farmers on balanced use of
fertilizer are essential to correct the situation.
Fertilizer industry in India is almost dependent on imported raw materials like rock
phosphate and sulphur and intermediate products like phosphoric acid for production of
phosphoric and complex fertilizers. This over dependency and high volatility of price of stock
are the major issues confronting to this industry.
Agriculture has always been the mainstay of Indian people. But the land had been losing
its fertility through long years of cultivation. What people were putting back in the form of
organic manure was hardly adequate to replenish the soil or to correct the imbalance in the
fertility status of the land under cultivation. Advanced countries had answered to this problem
in chemical fertilizers.
The organization study is to familiarize ourselves with the working of various departments
for a particular period, so that one can have an exposure to the practical side.
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1. To understand the organizational structure of FACT
organization
6. To gain a clear picture about the challenges and activities faced by the
organization
FACT, Udyogamandal, has all those function areas such as production, finance,
personal, and marketing etc. The study is focused on the functioning of each department of
the organization giving emphasis to their working.
METHODOLOGY
To conduct the study, different methodologies have been adopted. The study was
undertaken by visiting the plant. Both Primary and Secondary data are used.
DATA COLLECTION
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1. Primary Sources
2. Secondary Sources
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CHAPTER: 2
INDUSTRY PROFILE
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INDUSTRY PROFILE
The fertilizer industry had a very humble beginning in 1906, when the first manufacturing
unit of Single Super Phosphate (SSP) was set up in Chennai with an annual capacity of 6000
MT. The Fertilizer And Chemicals Travancore Ltd (FACT) at Cochin in Kerala and
Fertilizers Corporation of India (FCI) ,Bihar were the first large sized fertilizer plants set up
in the 40’s and 50’s with a view to establish an industrial base to achieve self sufficiency in
food grains. Subsequently, green revolution in late 60’s gave an impetus growth of fertilizer
industry in India. The 70’s and 80’s then witnessed a significant addition to the fertilizer
production capacity.
INTERNATIONAL SCENARIO
World’s leading fertilizer producers are Russia and America. Other leading countries
include China, Canada, France and India. The fertilizer industry in US is organized into
separate segment for producing and Marketing Nitrogen, Phosphate or Potash intermediates
and products.
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PRESENT SCENARIO OF FERTILIZER INDUSTRY IN INDIA
The Indian fertilizer industry is capital intensive and presently the cost of production of
indigenous material is high and returns on investment are low. In the recent past, the fertilizer
industry has not attracted any significant investment. With the withdrawal of subsidy and
concessions the prices of fertilizers will increase. In this totally decontrolled scenario, the
stability and uniformity of fertilizer prices is not likely to be achieved. Indian farmers who
were getting fertilizers almost at the uniform price through the country may not continue to
avail this opportunity. They may also witness fluctuating market price of a fertilizer within a
short span of one crop season. Such price variation may affect farmers purchase decision as
well.
The ever increasing pressure of subsidy on fiscal deficit of the country has compelled
Government of India to take a decision to gradually withdraw the subsidy, heading towards
total decontrolled in a phased manner. A long term policy for fertilizer sector is under
consideration, covering the problems of feedstock, fertilizer pricing, total decontrol, WTO
related issues etc. The present policy environment in our country is not investment friendly
and viability of several existing units will also be adversely affected. A switch over in
feedback from naphtha to LNG for urea is contemplated, however, its availability and price is
still uncertain. High energy cost does not permit further expansions in urea capacity within
the country.
STATE SCENARIO
Kerala has a high degree of land and cropping industry. The state’s agricultural
productivity is decreasing year by year. The production and cultivation of rice is decreasing
and the farmers are attached to the cultivation of commercial crops like rubber etc. Kerala is
one of the low ranking states in the consumption of fertilizers. The main problems faced by
the fertilizer industries are: (1) seasonal demand for its products (2) large working capital
requirement (3) long credit period enjoyed by the buyers.
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1.
CHAPTER: 3
COMPANY PROFILE
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COMPANY PROFILE
FACT, India’s first large scale fertilizer unit was set up in 1944. In 1947 FACT started
production of Ammonium Sulphate. FACT became Kerala State Public Sector ENTERPRISE
ON 15TH Augustb1960 and on 21st November 1962, the Government of India became the
major share holder.
The second stage of expansion of FACT was completed in 1962. The third stage of
expansion of FACT was completed in 1965 with setting up of a new Ammonium Sulphate
Plant.
FACT Engineering and Design Organization (FEDO) was set up on 24th July 1965 to
meet the emerging need for indigenous capabilities in vital area of Engineering Design and
consultancy for establishing large and modern fertilizer plants. FEDO has since then
diversified into chemicals, petrochemicals, hydrometallurgy, pharmaceutical and other areas.
FEDO offers services from project identification and evaluation stage to plant design,
procurement, project management, site supervision and commissioning of plants as well as
revamping and modernization of old plants.
FACT Engineering Works (FEW) was established on 13th April 1986 as a unit to fabricate
and install equipments for fertilizer plants. Over the years FEW developed capabilities in the
fabrication of pressure vessels and heat exchangers. FEW have also undertaken laying of
cross country piping and fabrication installation of large penstocks of hydro projects. The
Cochin Division of FACT, the second production unit was set up at Ambalamedu and was
commissioned in 1976.Caprolactum plant was commissioned in 1990 and the Ammonia plant
was commissioned in 1998.
1. Fertilizers
3. Fabrication of equipments
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ABOUT FACT
MISSION OF FACT
VISION OF FACT
FACT IN A NUTSHELL
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ORGANISATION STRUCTURE OF FACT
FACT
FERTILIZERS
PETROCHEMIC
ALS
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DIVSIONS OF FACT
UDYOGAMANDAL DIVISION
The udyogamandal division of FACT can be the mother unit of the entire fertilizer
industry in India. FACT commenced at Udyogamandal with the commissioning of a 50000
tonnes per annum Ammonium Sulphate plant in 1947. In the decades that followed
multistage expansion programmes were undertaken bringing in the latest technology of the
day, which were quickly mastered and successfully implemented. Today the division is a
mostly mix of 35 years of old small capacity plants and two years old state- of- the- art
technology plants. The latest addition to this unit is a 900 TPD Ammonium complex with an
investment of 642 crores. FACT Udyogamandal division is ISO: 14001 certified.
COCHIN DIVISION
FACT Cochin division was setup in the 1970’s at Ambalamedu, 30kms from
Udyogamandal adjacent to the Cochin Refineries. Phase 1 of the division saw the setting up
of integrated Ammonia, Urea complex utilizing Indian Engineering skills. A large –scale
complex plant of 485000TPA was setup on phase ll of Cochin division and Sulphuric Acid
and Phosphoric Acid of marketing plant capacity.
PETROCHEMICAL DIVISION
FACT diversified into petrochemicals in 1990 with the production of Caprolactum. The
versatile petrochemical is the raw material in the manufacture of Nylon-6, which finds
extensive application in textiles and engineering products. To its high quality the production
have been acknowledge as among the best in the world. The division is located adjacent to
the Udyogamandal division. Co-product Ammonium Sulphate is transferred for processing to
the fertilizer plant to Udyogamandal.
FEDO
FACT Engineering & Design Organization (FEDO) was established in 1965 for utilizing
the considerable indigenous plant building expertise accumulated by FACT in its process of
nurturing the nascent chemical fertilizer industry. FEDO is today, one of the India’s pyemier
project engineering organizations, catering to a wide spectrum of industries like petroleum
storage, environmental engineer, offside facilities etc.
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The division undertakes project execution on consultancy and turnkey basis, handling the
intricacies of the technologies sourcing, design and engineering, hardware procurement and
construction with practiced case. FEDO is ISO: 9001 certified.
FEW
Established in 1966, FEW were originally conceived as a unit to fabricate and erect
equipment for fertilizer plants. Over the years, it developed capabilities in the manufacture of
class pressure vessels, heat exchangers, columns, towers etc. required for the fertilizer
Petrochemical and Petroleum industries. FEW received ISO 9002 certification in 1998.
FACT has been a pacesetter in fertilizer marketing. The marketing network of FACT is
spread over the Southern states of Kerala, Tamilnadu, Pondicherry, Karnataka, and Andra
Pradesh. The distribution network consists of 100Agro Service Centres,50 field storage
points and over 7900 retail selling points in these states, and serves the farmers by the supply
of fertilizers.
FACT’s well-equipped R&D section has advanced facilities with pilot plants, modern
equipment and accessories. A team of high motivated research scientists backs the division.
Various processes have been developed and patented by FACT R&D division of which
several have been commercialized successfully. A 159 TPA Biofertilizer plant is setup at the
R&D centre.
FACT computerized its activities since 1965 to meet the growing need for management
information, Engineering and commercial applications. The centre is equipped with servers in
all its divisions connecting by FACT NET and Intranet network.
Today, Computer Service Centre is equipped with divisional database servers at each of
the three production divisions, a corporate server and around 700 PC nodes. The computing
nodes are connected via WAN at interdivisional level through 64kpbs BSNL leased lines/
fiber optic link and ETHERNET LAN at department level.
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A corporate INTRANET provides e-mail access to senior level officers, besides hasting
WebPages containing daily update, of key production and financial figures. Major database
applications are on INGRESS platform and are being migrated to oracle.
Major software systems in the organizations are developed and maintained in-house by
the skilled workforce at Computer Service Centre. This include production MIS , payroll
system , financial accounting system, materials and maintenance system, Human resource
management , process optimization system , attendance recording system, CID and
estimation system and management system among others.
An On-line Integrated Information system (OIIS) linking all functional areas of the
enterprise are under implementation by M/S Tata Consultancy service. The integrated
system, which is based on the Oracle -8 [platform would optimize the business proceeds of
the enterprise and provide information support for speedy decision making.
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CHAPTER 4:
PRODUCT PROFILE
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PRODUCT PROFILE
FINISHED PRODUTS
EXPORTED PRODUCTS
BYPRODUCTS
• Gypsum – Udyogamandal
INTERMEDIARY PRODUCTS
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PRODUCT MIX
STRAIGHT FERTILIZERS
• Ammonium Sulphate
• Ultraphos
COMPLEX FERTILIZERS
NPK MIXTURES
• NPK mixtures – FACT prepares crop specific standard mixtures for all crops in
Kerala and also special NPK mixtures for plantation crops like Tea, Coffee,
Cardamom, Rubber etc.
• Vegetable Mixture
• Garden Mixture
CHEMICALS
• Anhydrous Ammonia
• Sulphuric Acid
• Caprolactum
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ORGANIZATION DESIGN AND STRUCTURE
OWNERSHIP PATTERN
A Board of Directors manages the organization. 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. FACT is a public limited company registered under the Companies
Act 1956. As a major industrial Organization, FACT complies with all laws and statutes
which govern industries in general, for example, Factories Act 1948, Industrial Dispute Act
1947, and Employee Staff Welfare Act 1948, Trade Union 1926 etc.
The shares of the company are listed in the National Stock Exchange (NSE) of India Ltd,
Mumbai. The stock code of the company at NSE is FACT.
DISTRIBUTION OF SHAREHOLDING
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State Govt. 2585000 0.72
Sub total 348050200 98.10
Non- promoter Holdings
Insurance Companies
4026854 1.14
Sub total 4026854 1.14
Others
Pvt. Corporate bodies
473597 0.14
Indian public 2187434 0.62
NRI’s or OCB’s 14316 -
Clearing member 19573 -
Sub total 2694926 0.76
Total 3554771974 100.00
Table no: 2 Share holding pattern of FACT
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Table no: 3 Abbreviations
Chart no: 2
CMD
Company
SECTRY
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MGR MGR MGR
CM CM MTCE QUALITY
CSP CME SAFETY
PRDN R&D
CHAPTER 5:
DEPARTMENT PROFILE
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1. FINANCE DEPARTMENT
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1. FINANCE DEPARTMENT
1.1 OBJECTIVES
• To maintain and account for the financial resource of the organisation, to forecast its
requirment in the future and plan accordingly and to check for deviation.
chart no:2
DIRECTOR
FINANCE
EXECUTIVE
DIRECTOR
GM (FINANACE)
MANAGER (IA)
CM (BILLS) CM CM (General CM
(SALES) Accounting (Costing,MI
S,Budget)
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1.3 FUNCTIONS OF FINANCE DEPARTMENT
Some of the main functions are payroll, billing, preparation of journal, ledger and trail
balance, banking, financial resources and materials accounting ,budget preparation, cost
accounting, auditing, preparation of financial statements and reports, cooperating planning
etc.
Finance department is divided into five sections for carrying out its process. They are:
• Sales
The main functions are stores accounting and receiving, dispatch and holding of bills
Bills section deals with the contract accounts for execution of civil works and other
construction /erection, maintenance and services. It includes:
• Remittance of EMD
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• Security on running account bills and final bill.
• Receipts of stores
• Issues of stores
• Returns of stores
• Value adjustments
• Compilation of reports
1.4.3 THE COSTING, MIS, AND BUDGET SECTION is cocerned with ascertaining the
cost of production, providing information, helping to prepare a budget, forecasting the
performance and finally making a plan.
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1.4.3.1 COST ACCOUNTING
Identification of the cost centre –Direct expenses is recorded to the respective cost centre.
Indirect expenses are separately booked and allocated at the end of the year. Cost sheet is
prepared in two ways. The item in the cost sheet is compiled on the basis of process of the
products or on the basis of elements of the product.
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.
• Division Reports
• Inventory position
• Specific information important for the management major projects, man hour
utilization etc.
1.4.3.3 BUDGETING
Two types of budget: Revenue and Capital Budget and two types of estimates – Budget
estimate and revised estimate.
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1.4.3.3.1 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 heads of the divisions.
i. Increase in capacity
1.4.3.3.3 BUDGET REVISION: while preparing the next year’s revenue budget for the
current year is revised, based on the actual from April to September and the anticipated
trend for the remaining period.
1.4.3.3.4 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 &
CMD.
1.4.4 THE CASH, BANK AND PAYROLL SECTION is concerned more with the day to
day activities and less of future forecasting and planning.
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• Reconciliation of bank accounts.
• Effect various recoveries through payroll and remit the same to concerned agencies.
1.4.5 TAX AND DUTIES SECTION is concerned with calculation and payment of various
taxes and duties to the government.
• High quality equipment cannot be purchased. For the same reason , FACT goes for
the lowest quoting bid.
1.5.2 Low availability of credit due to non-payment of loans and security to keep for loans.
Due to which the organization
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• Cannot compete with other fertilizer companies due to lack of fund.
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2. HUMAN RESOURCE
DEPARTMENT
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2. HUMAN RESOURSE DEPARTMENT
Human resource management is one of the most complex and challenging fields of
endeavour. It is considered to be the most expensive and important resource of every
organization. In FACT the scope of Human Resource Department is very vast. From
selection to retirement, HR department of FACT is there to do all things, which are necessary
for the betterment of employees and also for the organisation.
CMD
DIRECTOR
GM (HR)
DGM
(ADMINISTRATIO
N)
CM CM CM CM CM
Chart no:3
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2.3 FUNCTIONS OF HR DEPARTMENT
• Performance Appraisal
• Welfare programs
1. Establishment
3. Industrial Relations
The Recruitment policy is done as per prescribed recruitment specification with proper
authority appointed by BOD. The following are the sources of recruitment:
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1) Confirmed employees within the division or company
FACT's Performance Appraisal started in 1962. In 1984 the system was further revised to
include potential assessment, assessment of training needs and performance counselling.
FEATURES
The Training and development activities of the company have been centralized with
effect from April 2004. With this arrangement the Management Development Centre (MDC),
the training Centre of Cochin Division, Udyogamandal Division and the Petrochemical
Division have been combined into one department called "FACT Training Centre".
Centralization was effected with a view to:
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2) Identifying training needs of all employees based on a uniform approach and imparting
required training.
1. To identify training needs of the employees as a whole on the basis of uniform criteria.
2. To impart required training, which equip the employees (officers and workers) of the
company with knowledge and skill required for improved performance in their respective
areas.
3. To meet training needs with specific reference to ISO 9001:2000 and ISO 14001:2004
standard requirements.
In addition to the in house programs conducted with internal as well as external faculties,
employees are nominated to attend specific programs out side the state as well as within the
state. Such programs are chosen on the basis of their usefulness and relevance to the company
and to the employees.
44
Industrial relation describes relationship between management and individual employee
and in that light it is some times called employers employee relations or personnel relations.
It embraces the relationship between management and trade unions. In fact the term industrial
relations is used to all types of relationships between all parties concerned with industrial
enterprises.
The concept of industrial relations has been extended to denote the relations of the state
with employers, workers and their organizations. This includes individual relations and joint
consultation between employers and workers at their places of work; collective relations
between employers and their organizations and trade unions and the part played by state in
regulating these relations.
5) Reduce wastage
There are a total of ten recognized trade unions functioning in various divisions of FACT.
Udyogamandal Division
Cochin Division
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2) FACT Employees Association
Petrochemical Division
FEDO
FEW
The company provides the recognized unions with certain facilities. The unions in
Udyogamandal area are provided with office accommodation at subsidized rates. FACT (CD)
Employees union, the company has hired office accommodation. Reimbursement of rent is
also given to the trade unions of FEW.
FACT, as in many other areas is one of the pioneer Industrial undertakings, which
initiated action to promote workers participation in management. Even as early as 1959,
when FACT had only one division, the idea of having the active association of employees in
various aspects of productive operations in true participative spirit, creation of acclimate of
involvement and commitment in order to motivate the work force. So that the work force
would contribute its best to the sustained growth and prosperity of the organization was in the
mind of management. It was with this idea a Joint Council, Shop Council and Joint Labour
Management Action Groups were formed.
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2.7 WELFARE
Welfare schemes can be divided into statutory , agreement, voluntary and incentives. The
main objective of welfare measures is to maintain healthy working envcironment and raise
the standards of living of employees which create harmony to the society and finally to the
organization
• Transport facilities
As part of cost reduction measures, from 1998 onwards FACT reduced its employee
strength. FACT had more than 9000 employees earlier, but it is now reduced to less than
4000 employees by the successful implementation of VRS. The FACT has several divisions,
which all together consist of 3606 employees now. The following table shows the division
wise employee strength of FACT during 0ctober - 2009
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Division wise Staff Strength - october -2009
82 48 272 48 354 48
HO
UD 1238 47 574 48 1812 48
FEDO 18 50 84 49 102 50
FEW 20 50 22 52 42 51
Table no:4
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3. MARKETING DEPARTMENT
FACT is maintaining a multi channel system in distribution and marketing. In Kerala they
have a series of central depot and authorized retailers. The central depot functions, as storage
cum selling points and the majority of authorized retailers are cooperative societies. The main
market of FACT consists of South Indian states such as Kerala, TamilNadu, Karnataka, and
Andrapradesh. Because of the vast area and demand Andrapradesh is considered to be the
main market for FACT fertilizers. FACT also exports its other products to different countries.
The marketing division is headed by a General Manager who reports to the Director
(Marketing). FACT has two marketing Departments : Petrochemical marketing Department
and Fertilizers marketing Department.
3.2 OBJECTIVES
• Study and respond adequately to the information from market research department
and from field establishment
• Liaison with bulk buyers, central and state governmemt officials of fertilizers
assosiation of India.
The marketing department consists of various sections organized on the basis of their
function. They are:
Sales Department
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Distribution Department
Marketing Research Department
EXECUTIVE DIRECTOR
(MARKETING)
GM(MARKETING)
AM AM AM AM
KERALA TN KARNATAKA AP
RM RM RM RM
4. Monitoring the flow of MIS from market research department and from field
establishment
6. Liaison with bulk buyers, central and state Government officials and officials of
fertilizers association of India
FACT over 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
This method involves catering in a large number of people in the shortest time possible.
Various techniques involved in this category are
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a) Films d) Exhibition g) Radio jingles
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;
a) Demonstrations
b) Block demonstrations
c) Soil testing
d) Seminar
e) Study classes
g) Dealer training
h) Squad programmes
AREAS REGIONS
Kerala Allepy Pallakkad Kottayam Kannur
Tamilnadu Coimbatore Trichy Madurai Vellore
Karanataka Mangalore Bangalore Belgaum Hospet
Andrapradesh Hyderabad Vijayanada Kakinada Nellore
52
Table no:5
These offices keep a close liaison with the Directorate of agriculture and other
developmental agencies. These are sub divided into 17 regions.
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.
3.6.1 FUNCTIONS
a) Preparation of product wise, month wise and annual sales plan for each area.
d) 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.
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•Recurring losses have put the organisation on the back foot looking for survival in the
present than long term plans and resulting research , leading to low level of research
activities and narrow product range.
4. MATERIALS DEPARTMENT
4.1 OBJECTIVES
GM Materials
Chart no:5
• Importing raw materials under the approval of safe purchase committee constituted by
the Board of Directors
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• Inspection of materials
• Accountability of materials
• Vendor development.
A. PURCHASE
B. STORES
C. TRAFFIC (Logistics)
4.4 PURCHASE:
Raw materials section is headed by Deputy CM (Materials) RM. The main function of
Material section is procurement of raw materials like Sulphur, Rock phosphate, Furnace oil,
Naphtha, Ammonia, Benzene, Sulphuric acid and LPG. Shipping office at Wellington Island
also comes under this section.
Stores and Transportation Services are responsible for all activities in Divisional stores for
ensuring inventory control, commissioning of codes and disposal of scrap. STS also arranges
for transport services and also the procurement of FEDO and FEW.
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4.4.1.3 EQUIPMENT SPARES AND SUPPLIES (ESS)
ESS deals with the procurement of operating supplies, spares and equipment, steel and
cement for R&D, welfare, service etc.
The purchase procedure covers the following areas of procurement of goods and services
for the company.
3. Services
This procedure does not apply to civil works and contracts for
construction/erection/maintenance/engineering works for which a tendering procedure is
being issued separately. For procurements on behalf of clients for consultancy contracts
where clients themselves do the placement of orders and payment to suppliers, the procedure
laid down in the contracts with the clients shall be applicable. However, where clients do not
insist on any special procedure, this purchase procedure shall be applicable, to extend these
do not come into conflict with contracts.
1. CASH PURCHASE
This can be resorted to only for non-routine petty purchase and for emergency purchase
of small value. The financial limit for this type of procurement shall be Rs 6000 per indent.
2. LOCAL PURCHASE
Items, which are urgently required and available in the local market, may be procured by
local purchase.
3. EMERGENCY PURCHASE
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In the case of emergencies which affect production or completion schedule of projects/
turn around jobs etc
Pre qualified vendor list shall be maintained by materials department. The vendor list
shall comprise 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 shall be made on a continuous basis on the
criteria already stated. All divisions shall follow the approved vendor list strictly.
c) For services.
Reading of bids- the following information may be read out to the Bidders
representatives.
b) Payment terms
c) Delivery period
d) Performance guarantee
57
The technical part of bid shall be 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 shall be;
Detailed purchase order shall be issued soon after the letter of intent and normally within
30 days of issue of letter of intent.
The materials department shall perform expediting of orders or other agencies appointed
for the purpose. Materials department shall continuously monitor vendor's performance to
ensure timely delivery and periodic status reports shall be made available to all concerned
departments. In case of extension of delivery is necessary, the same shall be gained only after
detailed scrutiny by all concerned departments and obtain approval from concerned authority.
Inspection may be carried out by FACT or by third party inspection agencies, depending on
the nature of items and facilities available. When an item is subject to inspection/test in shop,
vendor shall dispatch it only after such inspection tests are carried out. Successfully waived
with approval from the competent authority, when the inspection agency issues final release
58
certificate .Department, authorized for the purpose shall receive the dispatch document. The
department responsible for the clearance shall maintain a register for dispatch documents and
update entries on day-to-day basis. Payment of freight/certification of freight bills shall be the
responsibility of the department head entrusted with clearance of goods. All goods cleared
from the carrier shall be forwarded to the receiving section of the stores department or
department authorized for this purpose. In case of bulk, the consuming department may
directly receive raw materials/intermediates the goods. Materials received against turnkey
jobs awarded to agencies responsible for supply, transport, storage and erection shall not be
taken into stock by stores department.
Rejected consignment shall be kept separate and the stores/receiving department shall
send a first information report to the supplier with the copy to finance and purchase
department. In all case of rejection/shortage/damage other than for reasons attributable to
supplier, the stores department shall take up the matter with the insurers under advice to
finance department. Follow up of the claims and finance department shall do settlement with
insurer.
Disposal Issue
59
Chart no:6
4.5.3 CODIFICATION AND CLASSIFICATION: All stocks items bears a 9 digit code
prepared on a significant numbering system. First digit is allocation of 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 compartment-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.
4.5.4 PROCEDURE FOLLOWED: When a material is received, the stores officer inspects
the items and is approved by the store manager 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 MIS. And for issue of materials ,the requirements
forwarded by the departments is verified and approved by the manager for dispatch. The
issue is and recorded in the MIS. However, for disposal the list of items to be disposed is
forwarded to the management by the stores. Approved items are disposed or sold for scrap
value and recorded in the MIS. Store is responsible for all activities for ensuring inventory
control, commissioning of codes and disposal of scrap. Materials move into store only after
inspection conducted by store employees. Technical department help is sort wherever
required. Obsolete items are disposed.
4.6.1 OBJECTIVES
•To ensure right quantity and right product to right vehicle and to the right destination.
Chart no:7
60
Dispatch MDA issue
information
Weighing
Traffic Signed
department MDA
Paymen
t Vendor Vehicle in slip Loading
(transport) issue
The marketing division selects the depots where fertilizer has to be transported and
gives the dispatch information to the traffic department .the traffic department selects the
vendor for transport .Depots is allotted to vendor by the department. The vendors are issued a
vehicle in slip which is a slip for the vehicle to go into the loading site in which the
destination, vehicle no, product or byproduct to be loaded are recorded. Before loading the
empty weight of the vehicle is taken and after the loading the weight with the load is taken by
the C.I.S.F security men. If deviation more than the specified limit is noticed, the goods are
either unloaded or reloaded. A copy of MDA (Material Dispatch Advice) is given to the lorry
driver for dispatching to the concerned depot. When the goods arrive at the depot, message is
passed to the department and the signed copy of MDA is returned to the department by the
vendors so as to enable him to collect payment. If the load dispatch is found damaged , loss in
quantity noticed, penalty is charged from the vendor.
61
5. PRODUCTION PLANNING DEPARTMENT
FACT has mainly two divisions for production, namely Udyogamandal Complex and
Cochin Division. The Udyogamandal Complex is again divided into Udyogamandal Division
and Petrochemical Division.
5.2 OBJECTIVES
• Production planning
GM (CP&PC)
GM GM
(CD) (UD)
JGM JGM (PD)
(UD)
62
MTCE PRDN MTCE PRD
N
Sulphate
• Maintenance of plants
AMMOMIA PLANT
ACID PLANT
63
The capacity of the Ammonia plant is 900TPD. The investment for the plant was about
Rs.618 crores. The plant has economy scale size and employs start-of-art technology for the
process engineering and control systems.
The complex fertilizer plant was designed to produce quantities of NPK fertilizers of
various grades. FACTAMFOS consists of NPK and S in the ratio 20:20:0:13
5.5.3.1 Sulphuric Acid Plant is designed to produce 1000 TDP of monohydrate. The plant is
based on the double conversion, double absorption process and was designed by FEDO in
collaboration with Davy Power gas plant.
5.5.3.2 Phosphoric Acid Plant is designed to produce 360 TPD of P2O5 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%
P2O5. A separate concentration section is provided to concentrate this weak acid to strong
acid having strength of 45% P2O5.
The other plants present in the PD are Anone Plant, Hyam Plant(Hydroxylamine) ,
cyclohexane plant, captive power plant and RAP (Replacement Ammonia Plant). Products
from these plants are essential for the production of caprolactum and Ammonium Sulphate.
64
• Working capital shortage is affecting the smooth functioning of the plant
• Shortage of workers
At FACT, quality has always been an article of faith and strictest international standards
are adhered to in producing the various products. The sophisticated micro processors based
digital distribution control system, brings about efficiency in information management and
process optimization. The process control based on online analysis assures consistency in
quality throughout the manufacturing process and also in the finished products.
A well equipped and modern lab provides reliable analytical support. Extensive
troubleshooting facilities aid the rigorous quality assurance programmes .Exceptionally
qualified and experienced trained professionals provide expertise at all levels of quality
control department.
6.2 OBJECTIVES
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Ensure that the product quality matches with standard quality.
Achieve high levels of safety
Minimize delay in procurement of raw materials.
Maximize capacity utilization.
6.3 ORGANIZATION CHART OF QUALITY CONTROL DEPARTMENT
MANAGER
QUALITY
SHIFT IN CHARGE
CHEMIST
LAB ASSISTANT
Chart no:9
• Quality checking
• Pollution control
a) Raw materials – Pre and post dispatch check. It is usually done by FACT Quality
Control Cell or external agency if expertise is required.
66
6.4.2 PROCESS CONTROL ASSURANCE: The samples are tested in the lab. There is one
main lab for UD division and sub labs for each plant.
6.4.3 POLLUTION CONTROL: By taking air and water samples pollution is checked. If
samples contain more than required level of effluent, then the matter is reported to the plant
manager, Quality department and GM (UC).
• Hydrocarbon detectors are placed in vulnerable areas in the plant for transmission to
control room
• Aged machinery
FACT’s well- eqiupped R&D section has advanced facilities with pilot plants modern
equipment and accessories: a team highly motivated research scientists backs the division.
Various processes have been developed and patents by facts, R&D division of which a
several have been commercialized successful. A 150 ton per annum bio fertilizer plant is
setup at P&D centre.
67
7.2 OBJECTIVES
To carry out in-depth research , to provide specialized services to other divisions of the
organization , and is involved in the production of environment friendly bio fertilizers.
MANAGER R&D
ASSISTANT
MANAGER
OFFICER
STAFFS
Chart no:10
7.4 Specified areas on which research and developments are carried out by the company on:
• Controlled release of fertilizers: The product developed by the FACT, have been
tested in the field of Kerala and Tamilnadu agricultural universities.
a) Process development and anti-skimming agent used in paint industry. This has been
completed
b) Pilot plant studies for process collaboration with IIT Madras for development of fibre
reinforced caprolactum for use in plastic.
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turnover)
1. 2007-2008 1.13 26.83 27.96 0.032
2. 2008-2009
0.00 36.24 36.024 0.017
Table no:6
FACT has well established safety departments to look after the needs of respective
divisions. It is the firm opinion of the company that no operation is so important and no job is
so urgent that one cannot find time to perform it safely. Further it aims to see that an
69
employee remain as healthy as he entered the plant, by providing safe environment and safe
working conditions, safe tools and procedures to carry out all operations.
8.2 OBJECTIVES
• To ensure safety of the organization and of its employees and to act under emergency
JGM (UD)
INSPECTORS ASSISTANTS
FIREMAN INSPECTORS
Chart no:11
70
2. Prevention at source by correction of un safe acts, un safe situations or both, good
preventive maintenance programmes, ensuring material quality etc..
3. By sticking the factory to the Factory's Acts and regulations and following laid down
safety procedures
4. Bringing up all levels of working to a correct safety attitude through training and
interaction
6. There is effective effluent treatment system in operation to render it harmless before letting
it out of the factory
8. Housekeeping inspection committee is set up to inspect the whole factory area at least
thrice in a year and decides inter departmental housekeeping awards
9. A safety manual highlighting safety practices/ instruction had been prepared and distribute
among employees as guideline
10. Routine plant inspection by safety fire staff and other staff in the line function notices
unsafe condition and corrective measures are taken.
13. Organize and conduct mock drills based on onsite emergency plan to further
improve upon the emergency plan
71
• Maintenance of safety equipments
Safety equipment brought with lowest coating bid
Constant need to renew safety equipments
72
FACT computerized its activities since 1965 to meet the growing need for management
information, Engineering and commercial applications. The centre is equipped with servers in
all its divisions connecting by FACT NET and Intranet network.
Today, Computer Service Centre is equipped with divisional database servers at each of
the three production divisions , a corporate server and around 700 PC nodes. The computing
nodes are connected via WAN at interdivisional level through 64kpbs BSNL leased lines/
fiber optic link and ETHERNET LAN at department level.
A corporate INTRANET provides e-mail access to senior level officers , besides hasting
WebPages containing daily update , of key production and financial figures. Major database
applications are on INGRESS platform and are being migrated to oracle.
Major software systems in the organizations are developed and maintained in-house by
the skilled workforce at Computer Service Centre. This include production MIS , payroll
system , financial accounting system, materials and maintenance system, Human resource
management , process optimization system , attendance recording system, CID and
estimation system and management system among others.
An On-line Integrated Information system (OIIS) linking all functional areas of the
enterprise are under implementation by M/S Tata Consultancy service. The integrated
system, which is based on the Oracle -8 platform would optimize the business proceeds of the
enterprise and provide information support for speedy decision making.
CHIEF MANAGER
73
DEPUTY CHIEF
MANAGER
MANAGER
SYSTEM
ADMINISTRATOR
STAFFS
Chart no:12
9.3 FUNCTIONS
Process data and prepare relevant information for various levels of management for
appropriate and speedy decision making
Prompt and efficient services for meeting information requirements of the employer,
payment of wages and settlement of claims
74
10.1 GENERAL INFORMATION
The training and development activities of the company have been centralized with effect
from April 2004. With this arrangement, the management development centre (MDC) ,the
training centers of Cochin Division, Udyogamandal Division and Petrochemical Division
have been centralized into one department called FACT Training Centre.
•Identify the training needs of all employees based on a uniform approach and
imparting required training.
Training centre of FACT has started job-oriented courses in Fire and Safety Engineering.
New courses in Heavy Equipment Operation and maintenance, welding technology and
Process Plant Operation are being organized. These courses are planned to be offered in
association with Governmental agencies and statutory bodies. The objective is to convert the
training centre into a “skill development academy” with a view to provide facilities for skills
development and making educated youth employable.
• To impart required training which equip the employees consisting of officers and
workers of the company with knowledge and skill required for improved
performance.
• To meet training needs with specific reference to ISO 9001:2000 and ISO 14001:2004
standard requirements
CHIEF MANAGER
75
Chart no:13
MANAGER TRAINING
OFFICER TRAINING
INSRUCTOR
STAFFS
• Improper feedback
76
11.1 GENERAL INFORMATION:
Vigilance officers are deputed from time to time to speak on vigilance matters during the
service training programmes of the company to sensitize the employees and the public about
evil of corruption. Vigilance awareness week is celebrated every year in which seminars and
workshops are organized by the company. Circulars and instructions of the central vigilance
commission are followed and their implementation is ensured.
77
CHIEF VIGILANCE
OFFICER
CHIEF MANAGER
DEPUTY CHIEF
MANAGER
INSPECTOR
Chart no:14
• Acting on complaints
78
12. COMPANY SECRETARIAT
Company secretariat is a statutory requirement for all companies having more than 2
crores worth assets.
12.2 OBJECTIVES
• To carry out the company affairs as directed by the Board of Directors and to act as a
link between B.O.D and the company.
CMD (FACT)
COMPANY
SECRETARY
ASSISTANT
SECRETARY
OFFICER
STAFFS
Chart no:15
• Public information officer complying with Right To Information Act (RTI Act)
79
CHAPTER 6:
COMPETITIVE ANALYSIS
80
A. SWOT ANALYSIS
81
A. SWOT ANALYSIS
STRENGTHS
1. High capacity utilization.
2. High quality products.
3. Sustain operating parameters of the plant at good level and productivity of plant at
good level.
4. Well-qualified and technically skilled manpower.
5. Very large asset base.
6. Good support with farmers and user segment.
7. FACT is one of the producers of Caprolactum in India which is of world-class
quality.
8. ISO Certification of most of the divisions.
9. Strong dealer network in South India.
10. Good engineering and consultancy design, perhaps one among the best in Indian
Fertilizer segment.
11. FEDO has own process know-how for hydrogen, Sulphuric Acid, Ammonium
Sulphate, DAP and complex fertilizers
12. FEDO has worked in association with many international process licenses, and has
acquired the capacity of customizing and designing projects to the requirements of the
Indian consumers.
13. Competent Engineers and different design perhaps one among the best in India
14. FEDO is an approved center of surveyors and audit for portliness, installation, non-
destructive listing energy audits, ISO audits and so no.
WEAKNESS
1. The government controls the prices of finished goods, but the prices of raw materials
are uncontrolled. So it is forced to operate in an uneconomic situation.
2. The average age of employee is very high. Due to freeze on recruitment the number
of younger professionals is decreasing.
3. The company doesn’t have any significant market research outside Kerala state
compared to competitors
4. Lack of product line diversification
5. Lack of working capital resources.
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6. Market share of some products are shrinking due to increase in competition from
other manufacturers
7. Some managerial personals were handling more than one position
8. Several unskilled jobs, which could be sub contracted are undertaken by the
permanent employees at high cost.
OPPORTUNITIES
1. Alternatives less expensive sources of energy and other inputs.
2. Acquiring technology to utilize possible input resources.
3. Outsourcing administrative and welfare functions
4. Value added products from the existing functions.
5. Value added products from the existing product base.
6. Utilize the existing infrastructure available to establish more economic means for
storage and transport of inputs and products.
7. Expanding production capacity to drive benefits of scale.
8. FACT ammonium Sulphate has greater demand in foreign countries, which increase
its opportunities.
9. Opportunities for product diversification.
10. 2170 acres of land and infrastructure facilities.
THREATS
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B.PORTER’S FIVE FORCE
MODEL
84
B. PORTER FIVE FORCES ANALYSIS
Porter's five forces is a framework for the industry analysis and business strategy
development developed by Michael E. Porter of Harvard Business School in 1979. It draws
upon Industrial Organization (IO) economics to derive five forces that determine the
competitive intensity and therefore attractiveness of a market. Attractiveness in this context
refers to the overall industry profitability. An "unattractive" industry is one in which the
combination of these five forces acts to drive down overall profitability. A very unattractive
industry would be one approaching "pure competition", in which available profits for all
firms are driven down to zero.
Three of Porter's five forces refer to competition from external sources. The remainder
are internal threats. It is useful to use Porter's five forces in conjunction with SWOT analysis
(Strengths, Weaknesses, Opportunities, and Threats).
Porter referred to these forces as the micro environment, to contrast it with the more
general term macro environment. They consist of those forces close to a company that affect
its ability to serve its customers and make a profit. A change in any of the forces normally,
requires a business unit to re-assess the marketplace given the overall change in industry
information. The overall industry attractiveness does not imply that every firm in the industry
will return the same profitability. Firms are able to apply their core competencies, business
model or network to achieve a profit above the industry average. A clear example of this is
the airline industry. As an industry, profitability is low and yet individual companies, by
applying unique business models, have been able to make a return in excess of the industry
average.
Porter's five forces include - three forces from 'horizontal' competition: threat of substitute
products, the threat of established rivals, and the threat of new entrants; and two forces from
'vertical' competition: the bargaining power of suppliers and the bargaining power of
customers.
This five forces analysis is just one part of the complete Porter strategic models. The
other elements are the value chain and the generic strategies
Contents
85
• 1 The Five Forces
o 1.1 The threat of the entry of new competitors
o 1.2 The intensity of competitive rivalry
o 1.3 The threat of substitute products or services
o 1.4 The bargaining power of customers (buyers)
Profitable markets that yield high returns will attract new firms. This results in many new
entrants, which eventually will decrease profitability for all firms in the industry. Unless the
entry of new firms can be blocked by incumbents, the profit rate will fall towards zero
(perfect competition).In the fertilizer industry, the chances for new entrants are feasible
mainly because of:
86
1.2 The intensity of competitive rivalry
For most industries, the intensity of competitive rivalry is the major determinant of
the competitiveness of the industry.
The visibility of proprietary items on the Web used by a company which can
intensify competitive pressures on their rivals. Competitive rivalry is likely to be
based on dimensions such as price, quality, and innovation. Technological advances
protect companies from competition. This applies to products and services. The
Company is successful in introducing new technology and are charging low prices
and achieve higher profits, until competitors imitate them. The main competitors of
FACT are Southern Petrochemical Industries Corporation Limited(spic), Madras
Fertilizer Limited(MFL), Nagarjuna Fertilizer Limited(NFL) etc.
The existence of products outside of the realm of the common product boundaries
increases the propensity of customers to switch to alternatives:
87
1.4 The bargaining power of customers (buyers)
The bargaining power of customers is also described as the market of outputs: the ability
of customers to put the firm under pressure, which also affects the customer's sensitivity to
price changes.
• Buyer volume: The main customers of fertilizer are the farmers. Since the customer
volume is high, they have strong bargaining power.
• Non-availability of existing substitute products will decrease the bargaining power.
• Buyer price sensitivity: The buyers are price sensitive. They will switch from one
company to another according to the price tagging of the products.
• Differential advantage (uniqueness) of industry products: The Company’s products
are not unique, but pricing is highly acceptable.
The bargaining power of suppliers is also described as the market of inputs. Suppliers of
raw materials, components, labor, and services (such as expertise) to the firm can be a source
of power over the firm, when there are few substitutes. Suppliers may refuse to work with the
firm, or, e.g., charge excessively high prices for unique resources.
• FACT has only overseas suppliers(raw materials) and the bargaining power of
suppliers is comparatively low.
• Supplier competition – supplier competition is low for labor and services.
88
CHAPTER 7:
89
A. FINDINGS
• FACT conducts training programs for employees for the purpose of increasing their
efficiency.
• There are strict rules and procedures followed by FACT for issuing quotations.
• FACT produces high quality products and accepted by the world at large.
• FACT gives more importance to their employee’s safety and safety measures.
90
B. SUGGESTIONS
FACT’S product s has already captured south Indian market but there is a need to
expand operations to north India.
Cost of production can be reduced by using modern methods and modify the plant to
become more efficient.
The cost of NAPHTA is very high and its use for the production of ammonia, leads
to high cost of production.
The FACT division at Ambalamedu is one of the most geographically favourable
locations with access to all the three main modes of transport. With the airport,
seaport road adjacent to it and also the exclusive rail access. Efforts should be made
to utilize these means of transport in favour and profit of the company.
Young and innovative workers should be given opportunities as there is lack of fresh
and young blood in the organisation.
Mechanization should be greatly enhanced by making use of modern and innovative
equipments to increase production.
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C. CONCLUSION
FACT is the pioneer in fertilizer production which paved way for increased productivity
in agricultural sector. It started with a vision to become a dependent global player in
agriculture and provide self reliance in engineering and technology especially in fertilizers.
With this vision it navigated through all difficulties which came on its way in the initial
stages of growth. Setting up of R & D centre was an envisaged activity to keep abreast with
the latest development, especially for biofertilizers manufacture.
Today, the organization runs at loss and is short of working capital. The working capital
crunch has stopped most of its envisaged activities. The organization as of now is stagnating
and is in a difficult stage of production. The immediate impact is seen in its low funding to
R&D department reluctance in adopting new technologies, revising the corporate to the bare
minimum targets and reduction in welfare measures of the company. The trend has badly
affected its market share and has stepped behind in company with its contemporary
organizations.
However, even in this tragic situation, the company is operating above 90% capacity
utilization. the management and its staff are putting their best to sustain the company .trade
unions are cooperating with the management by understanding the company’s situation and
responding to its needs.
The future however looks bright when the opportunities and strengths of the organization
are considered. FACT’s real strength is its experienced employees who have tasted the
different stages of its growth . further , it tries to acquire new technology for cutting the cost
of production . Government’s new policy on subsidy may rewrite the history of FACT.
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BIBLIOGRAPHY
93
BIBLIOGRAPHY
• www.fact.co.in
• www.urvarak.co.in
• www.fact.co.in/fedo
• www.google .com
• FACT News
• Department Manuals
94
APPENDIX
95
ANNUAL REPORT 2008-2009
HIGHLIGHTS (2008-2009)
2008-2009 2007-2008
3 Financial/Rs.lakh
96
Turnover 214748 88487
16.00 20.80
Provision for fringe benefit tax
4295.44 896.81
Profit/Loss after tax
97
98