noman ansari

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INTERNSHIP REPORT ON PAKARAB FERTILIZER LTD.

2013

Institute of Management

Sciences BZU Multan

Noman Akram Ansari

MBE-11-06

Khanewal Rd, Multan Pakarab Fertilizer Factory


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Institute of Management Sciences BZU Multan

Dedication

I dedicate this report to my parents who conveyed love and respect for education,

to my teachers who taught the skills and knowledge to accomplish all my

educational tasks with confidence and ease, and especially to people who believed

in me when I did not; and for always being a support and strength.


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Acknowledgement

I have taken efforts in this project. However, it would not have been

possible without the kind support and help of many individuals and the

organization. I would like to extend my sincere thanks to all of them.

I am highly indebted to Mr. Mohsin Raza H. Hashmi for their guidance

and constant supervision as well as for providing necessary information

regarding the project & also for their support in completing the project.

I would like to express my gratitude towards my parents & members of

Pakarab Fertilizers Ltd. (Fatima Group) for their kind co-operation and

encouragement which help me in completion of this project.

I would like to express my special gratitude and thanks to industry

persons for giving me such attention and time.

My thanks and appreciations also go to people who have willinglyhelped me out with their abilities.

Noman Akram Ansari


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Institute of Management Sciences BZU Multan4

Executive Summary

Pakistan is a developing country, economy dominated by agriculture. Pakistan's principal natural

resources are arable land and water. About 25% of Pakistan's total land area is under cultivation

and is watered by one of the largest irrigation systems in the world. The most agricultural

province is Punjab where wheat and cotton are the most grown. Some people also have mango

orchards but due to some problems like weather, they're not found in a big range. Fertilizers are

used to improve the quality of food, growth, production of the crop. It is an important factor that

is involved in the farming and cultivation. There are numbers of companies running in Pakistan

proving quality fertilizers for such purpose. Pakarab Fertilizer is one of these companies which

are currently owned by Fatima Group and Arif Habib Group.

The company was taken over by the current management through the process of privatization in

2005.

Pakarab is playing a vital role in providing farmers with quality fertilizer. Pakarab Fertilizer is

committed to playing a substantial role in the promotion of balanced application of fertilizers and

the sustainable development of Pakistan. The Directors of Fatima Fertilizer comprise of

energetic, highly qualified and experienced professionals. The Directors have past experience of

managing large industrial units and commercial businesses. The key management is directly

responsible for managing the day-to-day operations (and profitability) of Pakarab Fertilizers

Limited.

Pakarab Fertilizers Limited plans to revamp and expand its existing fertilizer manufacturing

capacity by making an investment of approximately PKR 22.000 billion. In this respect, Pakarab

Fertilizers plans to increase its Ammonia plant production capacity by 138,000 tons per year

from its current production of 316,800 metric tons per year.

This internship report covers all important aspects of Pakarab Fertilizers; product range,

production facilities, financial situation, PFLs contribution for minimizing the environmental

pollution, ethics followed by the company and values & behavior being practiced at PFL. But the

main focus of the report is on Marketing Department at Pakarab Fertilizer and its sub

departments; i.e. distribution department, sales department and warehouses.

Final compilation of the report is done by adding SWOT analysis of the company which

includes; Strengths of PFL that gives it an advantage over others, Weaknesses (or Limitations)

that place the company at a disadvantage relative to others, Opportunities which are the external

chances to improve performance (e.g. make greater profits) in the business environment and

Threats which are external elements in the environment that could cause trouble for the business.


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A brief critical analysis is also added to the report which includes a careful evaluation of what

company is lacking in its day-to-day business. Final addition to the report is the conclusion along

with few recommendations.


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Table of Contents

Introduction to Fatima Group ___________________________________________________09

Vision & Mission ____________________________________________________________10

Business Areas (Fatima Group) _________________________________________________11

Introduction to Pakarab Fertilizers Limited ________________________________________14

Vision & Mission_____________________________________________________________15

Board of directors and Management Team_________________________________________ 16

Products and Services _________________________________________________________17

Industrial Solutions ___________________________________________________________21

Production Facility ___________________________________________________________22

Competitors and Industry Status _________________________________________________26

Marketing Department at PFL and Its Functions ____________________________________29

Business Ethics ______________________________________________________________30

Product Quality ______________________________________________________________33

Marketing Areas _____________________________________________________________34

Business Associate (BA) / Customer _____________________________________________37

Sales Operations _____________________________________________________________39

Marketing Allowance _________________________________________________________45

Sales on Secured Credit _______________________________________________________48

Retirement of the Bank Guarantee _______________________________________________ 52

Warehouses _________________________________________________________________ 54

Sales (Warehouse) ____________________________________________________________62

Safety Standards for Warehouses ________________________________________________ 68

Safety Standards for All Employees ______________________________________________70


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Security Precautions __________________________________________________________74

Social Responsibility _________________________________________________________ 77

Policy Statement of Ethics and Business Practices __________________________________ 79

Values &Behaviors __________________________________________________________ 81

PEST Analysis ______________________________________________________________ 83

RATIO Analysis _____________________________________________________________84

SWOT Analysis..107

Critical Analysis ... ... 112

Conclusion & Recommendations ... . 11515

References ... . 118

Annexes ... ... 119


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Introduction to Fatima Group

Fatima Group was established in 1936 with trading of commodities and gradually entered into

the manufacturing of various products. The Group has a success story spread over seven decades,

expanding its horizon from trading to manufacturing. Today, the Group is engaged in trading of

commodities, manufacturing of fertilizers, textiles, sugar, mining and energy.

Remaining true to its founding principle of striving for excellence, the Group combined the

vision of an entrepreneur, the knowledge of experts, the commitment and business expertise of

three generations to develop its core strengths, vision and mission. With the commitment and

effort of its employees, professional management and vision of its sponsors, the Group has

achieved the standing of being the most progressive and fast growing conglomerate in Pakistan.

The Group has made exceptional progress in the last two decades and diversified into

manufacturing of sugar and fertilizers. The Group has a distinction of being the largest exporter

of molasses and importer of di-ammonium phosphate (DAP).

In its endeavor to reduce dependency on imports, the Group is engaged in the quarry of rock

phosphate which is used as production input in phosphate fertilizers.

The Group's future plans and growth matrix are strategically designed for further portfolio

diversification in the energy sector, focusing on green energy.

The commitment to corporate social responsibility at Fatima Group is evident in a wide variety

of areas including the quality and safety of products, environmental, health and safety initiatives,

ethical manufacturing programs, philanthropy initiatives, community relations, human resources,

corporate governance and the code of conduct. Fatima Group assures that all its businesses are

managed in compliance with business ethics as defined through its policies.

Realizing its responsibilities as a good corporate citizen, the Group contributes substantially to

the economic development of Pakistan through taxation, exports and by with over 10,000 people

associated with our business operations, in various capacities.


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Vision & Mission

Vision:

To be a dynamic business group, building robust businesses that excel at serving their customers

and stakeholders through exceptional products and services in industries and markets that

support progression and economic growth at community, society and country level.

Mission:

create continuous value for our customers and consumers, inspiring confidence and respectthrough the highest levels of product quality and service.

To provide employees a work environment that's enabling and inclusive and where innovation

and entrepreneurship are a way of life and where people work in an ethical and safe business,

based on the principle merits and equal opportunity.

To be a responsible corporate citizen, complying with all aspects of Corporate

Governance and the full spectrum of Corporate Social Responsibility.


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Business Areas (Fatima Group)

The diversified operations are carried out from the following Group companies:

Fatima Fertilizer Company Limited

The Fatima Fertilizer Company Limited was incorporated on December 24, 2003, as a joint

venture between two major business groups in Pakistan namely, Fatima Group and Arif Habib

Group.

The fertilizer complex is a fully integrated production facility, capable of producing two

intermediate products, i.e., Ammonia and Nitric Acid and four final products which are Urea,

Calcium Ammonium Nitrate (CAN),Nitro Phosphate(NP) and Nitrogen Phosphorous Potassium

(NPK) at Sadiqabad, Rahim Yar Khan.

The Complex has a 56MW captive power plant in addition to off-sites and utilities. The Complex

has been allocated 110 MMCFD of gas from the dedicated Mari Gas fields.

Pakarab Fertilizers Limited

For the last 38 years, Pakarab Fertilizers Limited has been the only fertilizer company in

Pakistan producing compound fertilizers, Calcium Ammonium Nitrate (CAN) and Nitro

Phosphate (NP). The Plant also produces Urea. Pakarab Fertilizers was acquired through a

privatization process of the Government of Pakistan in 2005.

Reliance Weaving Mills Limited

Reliance Weaving Mills Ltd (the Company) was founded by late Mr. Mukhtaar Ahmed Sheikh

more than two decades ago and is headquartered in Multan (Pakistan). The Company obtained

certificate of Commencement of Business on 14 May, 1990. Initially it has started its production

as weaving unit but later it also involved in manufacturing of yarn. At present the Company is a

high profile set-up in the textile export industry of Pakistan having two weaving units consisting

of 295 looms with fully equipped state-of-the-art computerized back process comprising of

warping and sizing machines and two spinning units comprising 35,520 spindles to cater the

international market and to achieve the highest point of quality control. The Company has carveda niche for itself in the textile industry. Having diversified into various types of yarn and fabrics,

the Company has been setting in standards, quality and caters to diverse markets across the

globe.

Major activities of the Company include manufacturing and export of cotton and synthetic yarn,

manufacture and export of woven and processed fabrics. The Company supplies its products to

the residential and contract customers in the Pakistan, United States of America, Europe, Middle


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East, Far East, China and other Asian Countries to gratify the bulk requirements with an

assurance of unblemished goods and timely delivery of the ordered goods to its customers. The

Company is in the best position to cater the bulk requirements with an assurance of flawless

finish and timely delivery of the ordered goods to its customers.

Fatima Sugar Mills Limited

The company was incorporated as a Public United Company In 1988 and certificate of

commencement of business was granted in 1989. The project was financed by ICP-Led

consortium consisting of NBF ABL, MCB, UBL and HBL. Initially the sponsors of the company

injected a capital of Rs. 128.459 million and subsequently it was enhanced to Rs. 720.478

million at different intervals.

The company is recognized in the local and international market as a fine quality producer of

white refined sugar & molasses and also holds a substantial share in the local market. Thecompany is also engaged in the export of white refined sugar and molasses and is contributing to

the national economy in the form of foreign exchange.

Reliance Commodities (Private) Limited

A Fatima Group Company, Reliance Commodities (Pvt) Ltd. was incorporated in Pakistan in

1996. The company is a leading commercial exporter/importer of different commodities (i.e.

export of molasses and import of sugar & fertilizers). The company is the winner of 27th, 28th,

29th, 30th, 32nd & 33rd FPCCI Best Export Performance Trophy for Molasses.

The company belongs to a conglomerate group, which is operating fertilizer plants under the

name of Pakarab Fertilizers Limited & Fatima Fertilizers Company Limited as well as sugar &

textile industries. The directors of the company have good market reputation and sound financial

worth.

Fatima Energy Limited

Due to the energy crisis in the country, the government is looking towards the private sector to

overcome these acute shortages. In views of this crisis, Fatima Energy has been incorporated and

plans are underway to install a 100 MW power generation plant. During crushing season,

electricity will be generated processing byproduct (bagasse) from its sugar manufacturing

activities at Fatima Sugar Mills Limited. Bagasse, a biomass, is a source of renewable energy.

During off-season, coal will be used for power generation.


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Introduction to Pakarab Fertilizers Limited

Pakarab Fertilizers Limited was established as a result of protocol concluded and signed on

November 15, 1972 by the Government of Pakistan to further strengthen and develop fraternal

ties between Islamic Republic of Pakistan and State of Abu Dhabi.

A Memorandum of Understanding was concluded between Pakistan Industrial Development

Corporation (PIDC) and Abu Dhabi National Oil Company Limited (ADNOC) on March 7,

1973. A participation agreement emerged on November 1, 1973 to establish a joint venture for

the expansion and modernization of the old Natural Gas Fertilizer Factory (NGFF) at Multan.

The Company was incorporated on November 12, 1973. Subsequently, PIDC assigned 52% of its

shares to National Fertilizer Corporation (NFC) of Pakistan and ADNOC assigned 48% of its

shares to International Petroleum Investment Company, with a paid-up capital of

PKR743.061 million.

Under the privatization policy of Government of Pakistan, Pakarab Fertilizers Limited was

privatized on July 14, 2005 at a cost of Rs.14.125 billion. It was acquired by a consortium of

Fatima Group and Arif Habib Group.

Under the new management, Pakarab Fertilizers Limited has undergone extensive modernization

and new improved processes have been introduced to maximize the output while minimizing the

negative impacts on the environment. For this a Clean Development Mechanism (CDM) plant

was installed, which is the first project of this kind in Pakistan. Basic aim of this project is the

abatement of N2O and NOX emissions from the stack gases of Nitric Acid plant. The reductionof green house effect of these gases shows the new management's commitment towards a

cleaner environment.

Pakarab Fertilizers Limited is located at Khanewal Road, Multan. The site area comprises 302

acres, which includes area for the factory and the housing colony with all amenities including

medical centre, school, management and staff clubs for recreation of employees and their

families, etc.


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Vision & Mission

Vision:

To be a world class manufacturer of fertilizer and ancillary products, with a focus on safety,

quality and positive contribution to national economic growth and development. We will care for

the environment and the communities we work in while continuing to create shareholders' value.

Mission:

To be the preferred fertilizer company for farmers, business associates and suppliers by

providing quality products and services.

To provide employees with an exciting, enabling and supportive environment to excel in, be

innovative, entrepreneurial in an ethical and safe working place based on meritocracy and equal

opportunity.

To be a responsible corporate citizen with a concern for the environment and the communities

we deal with.


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Board of Directors

Arif Habib Chairman

Fawad Ahmed Mukhtaar Chief Executive OfficerFazal Ahmed Sheikh DirectorAbdus Samad DirectorNasim Beg DirectorMuhammad Kashif DirectorRehman Naseem Director

Management Team of Pakarab Fertilizers

Muhammad Abad Khan Advisor to CEOMuhammad Zahir Director Marketing

Ahsen-ud-Din Director Technology Division

Mr. Farrukh Iqbal Qureshi General Manager Manufacturing, PFL

Arif Hamid Dar Chief Financial Officer, PFL

Ausaf A. Qureshi Company Secretary

Iftikhar Mahmood Baig Head of Business Development

Javed Akbar Head of Procurement

Shahid Saeed Head of Information Technology

Haroon Waheed Head of Human ResourceBrig (R) Muhammad Ali Asif Sirhindi General Manager Administrative ServicesMuhammad Saleem Zafar General Manager Projects


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Products and Services

Fertilizers:

Fertilizers restore soil fertility by supplying nutrients to the soil. These nutrients are utilized by

crops for their growth and development. Without the addition of fertilizers, crop yield would be

significantly reduced as our soils are deficient in major nutrients, like, N, P & K. Mineral

fertilizers are used to increase the nutrient concentration of the soil and these minerals can be

quickly absorbed and used by the crops.

Crops require sixteen (16) different types of mineral nutrients during their growth and these

nutrients are supplied by the soil and mineral fertilizers. Plant nutrients are classified into three

categories.

1. The three primary macronutrients: nitrogen (N), phosphorus (P), and potassium (K).

2. The three secondary macronutrients: calcium (Ca), sulphur (S), magnesium (Mg).

3. The micronutrients or trace minerals: boron (B), chlorine (Cl), manganese (Mn), iron (Fe),

zinc (Zn), copper (Cu), molybdenum (Mo) and selenium

Pakarab Fertilizers Limited produces Calcium Ammonium Nitrate (CAN), Nitro Phosphate (NP)

and Urea and has a monopoly in the production of CAN and NP.

1. Nitrophos (NP)

For farmers, choosing the right fertilizer for their soil is very important. In Pakistan, the soils are

calcareous, have high pH and are alkaline in nature. Nitrophos (NP) being highly acidic is the

most suitable fertilizer for these soil types.

Products

Nitrophos (NP)

22% Nitrogen - 20% Phosphorus (P2O5)

Also contains 9~10% Calcium


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Properties

Nitrophos (NP) is a granulated fertilizer in which each grain has equal amounts of

Phosphorus (P) 20% & Nitrogen (N) 22%. In addition to this, NP being a highly acidic product

with a pH of 3.5, is the most suitable fertilizer for soils that have a high pH and are alkaline innature.

Effect

The balanced combination of Nitrogen & Phosphorus is ideal for plant growth and development.

It contains dual Nitrogen (Nitrate: readily available to the plants and Ammonical: available after

its conversion to nitrate through the process of nitrification). Consistent and longer use of NP

also improves soil health.

Application

Nitrophos (NP) can be applied universally on all types of soils, but is more effective where the

soils have high pH and are alkaline in nature. In many crops it could be effectively applied at

planting and at early growth stages of the crops. Each grain has equal amounts of N &P, hence

the nutrients are equally distributed throughout the field.

2. Calcium Ammonium Nitrate (CAN)

In farming, the efficient supply of nutrients to the plants, with a low level of losses, is of greatimportance. This applies primarily to nitrogen, which has a direct influence on crop growth and

development. Due to its special properties, the supplies of nutrients are quick and for a longer

time.

Products

Calcium Ammonium Nitrate (CAN)

26% N (Dual Nitrogen) - 13% Nitrate and 13% Ammonical

Other than Nitrogen, it supplies additional 5 elements required for plan growth:

Potassium - 0.9%

Calcium - 10%

Magnesium - 0.05%

Sulphur - 0.4%


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Copper - 0.001%

Properties

Calcium ammonium nitrate (CAN) is a granulated nitrogenous fertilizer that supplies nitrogen to

plants in a balanced and secure manner. The combination of ammonium nitrogen and nitrate

nitrogen makes CAN a special product with neutral chemistry (pH). The excellent granulation

and specific surface coating has very good spreading properties.

Effect

The composition of readily available nitrate nitrogen and reserved N (nitrate available after its

conversion from ammonium nitrogen) is optimal for providing all crops with targeted nutrition.

The nitrate nitrogen that is available immediately after the application and absorbed in water is

taken up directly by the plant and nutrient losses are almost eliminated. CAN is a hygroscopic

product and needs very low moisture to be absorbed by the plants. It is equally effective in water

stressed areas where soil has low moisture. Furthermore Calcium and Sulfur available in CAN is

also helpful in soil reclamation.

Application

Calcium Ammonium Nitrate (CAN) can be applied universally and is suitable for all crops, all

seasons, soils and locations. The main components nitrate and ammonium are present in an ideal

ratio and make CAN an affordable fertilizer for healthy plant growth in agriculture and

horticulture. It is suitable for multiple methods of application; by drill, broadcast or through

fertigation.

3. Urea

Urea is widely used in the agriculture sector both as a fertilizer and animal feed additive,

which makes the production of urea considerably high in comparison to other fertilizers in the

country.

Products

Urea - 46% Nitrogen

Properties

Urea releases nitrogen into soil which is thereafter taken up in by the plants. Once applied to the

soil, urea undergoes vital transformations and breaks up into ammonium form and this total

process is dependent on soil moisture. As soon as urea dissolves in the soil, it forms around it a

zoning layer of high pH and ammonia concentration turning the soil to be acidic and toxic at the


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same level. Urea is available as prills that are crystalline white and highly resistant to moisture

and thus facilitate long time storage as well.

Effect

Urea has the highest nitrogen content, equal to 46 percent. This percentage is much higher than

other nitrogenous fertilizers available in the market. The nutrient composition rendered by urea

enhances the productivity of the soil and enriches its nutrient constituency. Providing each

plant with relevant element needed, urea sustains plant life.

Application

Urea can be applied in various form, it can be spread in bulk alone or can also be mixed with

other fertilizers before application. When urea is applied on acidic soils of higher pH i.e above

7.5, it should be incorporated into the soil as soon as possible. Urea is high moisture absorbent

therefore it should be stored in sealed and well enclosed bags.

4. Crop Seasons of Pakistan


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Industrial Solutions

As a leading fertilizer manufacturer, Pakarab Fertilizers Limited has a strong production base for

Carbon Dioxide.

Carbon Dioxide

Carbon Dioxide is a colorless, odorless, incombustible gas, formed during respiration,

combustion, and organic decomposition. CO2 is used in food refrigeration, carbonated

beverages, fire extinguishers, and aerosols.

The CO2 plant at Pakarab Fertilizers Limited is equipped with the state of art technology on-

line analyzing system, having Total Hydrocarbon, Total Sulfur, Total Moisture & Total Oxygen

analyzers with latest infrastructure installation of vacuum insulated tanks & ambient

vaporizers at customer sites to meet their needs to satisfaction.

There are various applications of CO2 which range from the use in Beverages, Manufacturing of

Urea, Fire Extinguishers, and Dry Ice and as Food Perseveres. PEPSI COLA and COCA COLA

are also the customers of Pakarab Fertilizers for CO2.


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Production Facility

Pakarab is one of Pakistan's foremost chemical companies that process natural minerals and

nitrogen into vital products for farmers and industrial customers. The main product is fertilizers,

while industrial uses are also an important segment.

1. Ammonia PlantBased on Kellogg process, steam reforming of the natural gas, the plant commenced production

in November 1978. The plant had capacity of 910 MTPD, which was enhanced by 50 MTPD

through addition of Purge Gas Recovery Unit in April, 1986.

The plant is designed to operate 330-days per annum (initially 320-days/annum prior to capacity

increase). Present energy consumption at the plant is 9.6 G.Cal /MT of Ammonia (excluding

non-productive gas), which was 9.464 G.Cal /MT of Ammonia during guarantee period.

2. Nitric Acid Plant

There are two units (three lines) of Nitric Acid production. The old line has a capacity of 180

MTPD of 60% Nitric Acid strength. This line commenced production in 1963. Other two lines

have a capacity of 600 MTPD of 60% Nitric Acid. These two lines commenced production in

December, 1978.

The old line was modified in 1986 when an additional Absorption Tower was added, which

resulted in increase of Nitric Acid concentration to 60% strength and reduced pollution level i.e.NOx Emission from 4000-6000 mg/cubic meter to 800 mg/cubic meter. The plant is operated as

and when required.

The two new lines have on stream factor of 330 days (originally 320 days). The old line

consumes 0.310 MT Ammonia/ton Nitric Acid (100% basis) while the new lines consume 0.290

MT Ammonia/ton of Nitric Acid (100% basis). Thus old unit of Nitric Acid consumes higher

energy. Approximately 40% of total Ammonia produced is used to produce Nitric Acid.

3. Urea Plant

A new Urea unit of 280 MTPD capacity commenced production in April, 1986 based on

Snam Progetti design. Old Urea unit, Evaporation unit and Prilling Tower were retained.

The new plant has 330 operating days/annum. Urea unit is a trouble free unit. It has the highest

production efficiency. The highest production achieved was 387 MTPD against design of 280

MTPD (38.2% higher). Last year a production capacity of 101,754 MT of Urea as compared to

design of 92,420 MT/annum and was 10.12% higher despite gas supply disruption due to load

shedding (+ 13,619 M. Tons).


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4. Nitro Phosphate Plant

The process was based on license from Stem carbon, Holland, while detailed Engineering was

made by Uhde, Germany. The plant was designed to produce 229.4 MTPD of P2O5 or 1,015

MTPD of Nitro Phosphate (NP) having 22.6% P2O5 with 300 on stream days/annum. The plantcould not produce NP product at its rated capacity both in terms of designed quality as well as

quantity at the time of guarantees; Uhde was made to undertake modifications on the plant,

which they performed through addition of 2-lines of Crystallizers making total six lines.

Similarly 2 centrifuges were added to 4 existing ones and additional refrigeration capacity was

provided. However, even after the modifications desired product quality could not be achieved.

The plant consumes much higher energy level as compared with design.

In view of the fact that plant could not produce 22.6% P2O5, the specs were revised to 20%

P2O5 and 22% Nitrogen (originally 22.6% each of Nitrogen and P2O5).

5. Calcium Ammonium Nitrate (CAN) Plant

Designed capacity of this plant is 1,500 MT per day of Calcium Ammonium Nitrate having 26%

Nitrogen contents and 1-2 % Potassium Sulphate as additional nutrient to stabilize the prills &

fulfill the soil requirement. It is manufactured by mixing 75% molten Ammonium Nitrate and

25 % Calcium Carbonate in the mixing tank at 170 Celsius. Around 550 to 700 MT of

Ammonium Nitrate is produced per day directly by reacting Ammonia gas and 60% Nitric acid

in the Neutralization Reactor. 1,050 MT of Ammonium Nitrate is produced per day in the CN

Section by reacting Calcium Nitrate solution with Ammonia and Carbon dioxide gases in the CN

Reactors. 600 MT of Calcium Carbonate is also produced per day in the same CN Reactors.

Calcium Ammonium Nitrate is hygroscopic by nature and absorbs moisture from the atmosphere

therefore it can be used in the soil without sufficient water. It contains 13% Nitrate Nitrogen

which supplies nutrients immediately to the plants and rest 13% Ammonium Nitrogen gives food

slowly till ripe up of the crop.

Process of the plant is designed by Hoescht whereas detail engineering is done by UHDE

Germany. This plant is in production since 1979.

6. CO2 PlantThe CO2 Recovery Plant is designed to recover the impure, low pressure CO2 gas emitting from

the Ammonia Plant as a by-product gas and to produce purified, high pressure liquid CO2.

The capacity of this plant is 192 MT per day at a pressure of 21 bars. The temperature of the

Liquid CO2 is -20 C. The liquefaction of gases is a complicated process that uses various

compressions and expansions to achieve high pressures and very low temperature liquids.


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There are various applications of CO2 which range from the use in Beverages, Manufacturing of

Urea, Fire Extinguishers, and Dry Ice and as Food Perseveres.

7. Co-Generation

Pakarab Fertilizer Limited is a major fertilizer complex producing both Nitrogenous and

Phosphatic fertilizers. Ever since its inception, the complex is not connected to the national

electricity grid. Power and steam for the fertilizer processes as well as for common consumers

within the Pakarab Fertilizers area was supplied by the captive power plant on-site, without any

co-generation.

On 20th July, 2007 Pakarab Fertilizers Limited submitted a plan for Co-generation Power Project.

The objective of the project was:

To generate power & steam by Gas Turbines with upstream Heat Recovery Steam

Generators (HRSG) for supply to fertilizer complex using clean, renewable and sustainable

cogeneration technology.

Application of the energy efficient process of cogeneration of heat and power in natural gas

fired cogeneration plant.

To help achieving the objectives of combating climate change under UN-FCCC by reducing

significant amount of greenhouse has (Carbon dioxide) emissions.

Pakarab Fertilizers Limited hired the services of Fichtner GmbH & Co. KG; Germany as the

"Project Development Consultants" and with a total project cost of $ 35 million, the projectstarted on 1st January 2008 and was completed in one year.

The cogeneration plant has an operational life of 25 years and the new gas turbine cogeneration

plants estimated emission reduction capacity is 107,746 Tons of CO2 eq/year.


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Competitors and Industry Status

1. Engro Chemical Company Ltd.

2. Fauji Fertilizer Company Ltd.

3. Dawood Hercules

4. Fatima Fertilizer Company Ltd.

5. National Fertilizer Corporation

6. Pak American Fertilizers Limited

7. Tara Urea (Agritech Pakistan)

1. Fertilizers by Engro Chemical Pakistan

Nitrogenous Fertilizers:

Engro Urea

Phosphatic Fertilizer

Engro DAP

Engro Zorawar

Engro Phosphate

Blended Fertilizers

Engro Zarkhez

Engro NP

Micro Nutrients

Zingro

2. Fauji Fertilizer Company Ltd.

Sona Urea

Sona DAP

Sona SOP

3. Dawood Hercules Chemical Ltd.


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Bubber Sher

4. Fatima Fertilizer Company Ltd.

Nitro Phosphate Nitrogen Phosphorous Potassium

Calcium Ammonium nitrate

Urea

5. National Fertilizer Corporation

Imported UREA

6. Pak-American Fertilizer Limited

Pak American Fertilizers Limited is the largest Single Super Phosphate (SSP)

manufacturing plant in the country. Previously it was Hazara Phosphate Fertilizers (Pvt.)

Limited and was taken over by Azgard9 Group through privatization process from the Govt. of

Pakistan in 2006. The Company's vital and important strategic goal is to become a diversified

manufacturer producing both nitrogenous and phosphatic fertilizers. Since Acquisition of the

plant by Azgard 9, PAFL has managed to acquire 8 % of market share within 9 months. This

successful penetration of the market resulted in a collection of Rs. 3.0 billion as revenue.

7. Tara Urea (Agritech Pakistan)

Tara Urea is one of the best-selling brands, owned by Agritech Pakistan (formally PAFL) and it

is expected to earn a lot of market share in future. Its high quality fertilizer gives new life to

crops. Agritech Pakistans mission is to make its "Tara brand" the 1st choice of each and every

farmer of Pakistan. This plant has a capacity to produce 1050MT of UREA per day.


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Marketing Department at PFL

&

Its Functions

Like Marketing Departments of most organizations, Marketing Department of Pakarab

Fertilizers has to study the market and the target customers and their buying behaviors from time

to time. It is also one of the duties of the marketing departments to decide and formulate best

ways and road-maps to reach the valuable customers.

Being a student of MBA (Marketing) I was appointed as an intern at Pakarab Fertilizers

Marketing Department. I completed my internship duration working at Regional office (Trust

Plant) and Plant Distribution section (PFL), I also got chance to spend a couple of days at Multan

Warehouse which is located at Bahawalpur Road, Multan.

Marketing Department of Pakarab Fertilizers is further classified into sections

Sales Department

Sales Department at Pakarab Fertilizers has been divided into 10 regions including a recently

added region Peshawar. I will explain the regions and coverage of the Marketing Department in

detail on next pages. Warehouse network of Pakarab Fertilizers is operated with the help of

private contractors as well as Pakarab has its own warehouses throughout the country.

Distribution Department

Distribution Department at Pakarab Fertilizers comprises of Plant Distribution and field

distribution, which is handled from different localities and hence Pakarab has 56 distribution

channels throughout the country.


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Business Ethics

Ethical way of doing business always brings success, repute and positive feedback to the

company in the long-run. Hence, Pakarab has rigid ethical rules to follow and they have a clearly

defined policy for doing Business in the market. They never compromise on the quality co-

ordination with the valuable customers, hence they have clearly defined the areas of concern and

preference for personal dealing, business dealings and all field personnel attached to the

organization directly or indirectly.

Policy Statement on Business Ethics

The policy of Pakarab Fertilizers Limited, as stated over the years by the Board of Directors, is

one of the strict observances of all laws applicable to its business.

Our policy does not stop here. Even when the law is permissive, PFL chooses the course of thehighest integrity. Local customs, traditions and modes differ from place to place, and this must

be recognized. But honesty is never subject to criticism in any culture. Shades of dishonesty

simply invite demoralizing and reprehensible judgments. A well-founded reputation for

scrupulous dealings is itself a priceless company asset.

An overly ambitious employee might have the mistaken idea that we do not care how results are

obtained, as long as he gets the results. He might think it best not to tell higher management all

that he is doing, not to record all transactions accurately in his books and records, and to deceive

the Companys internal and external auditors.

He would be wrong on all accounts.

We do care how we get results. We expect compliances with our standards of integrity

throughout the organization. We will not tolerate any employee who achieves results at the cost

of violation of laws or unscrupulous dealing. By the same token, we will support and we expect

you to support an employee who passes up an opportunity or advantage which can only be

secured at the sacrifice of principle.

Equally important, we expect candor from managers at all levels and compliance with

accounting rules and controls. We do not want liars for managers, whether they are lying in a

mistaken effort to protect us or make themselves look good. One of the kinds of harm which

results when a manager conceals information from higher management and the auditors is

that subordinates within his organization think that they are being given a signal that company

policies and rules, including accounting and control rules, can be ignored whenever

inconvenient. This can result in construction and demoralization of an organization. Our system

of management will not work without honest book keeping, honest budge proposals, and honest

economic evaluation of projects.


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It has been, and continued to be Pakarab Fertilizers Limited policy that all transactions

shall be accurately reflected in its books and records, and any off-the- record bank accounts are

strictly prohibited.

This policy is in accord with the previously stated policies of Pakarab Fertilizers Limited.

Business Ethic - DOs and DONTs

There will be quite a few situations in our daily work related to business ethics which may

require a company employee in the field to exercise his best judgment to act strictly in line with

the business ethics policy. Although it is difficult to enumerate each one of these situations,

some of the most common and related to our personal and business dealings/operations

are given below with required action guidelines.

1. Personal Dealings

o Giving or taking gifts should be avoided to the maximum. However, it confronted an

unavoidable gift-giving or gift taking-situation; please make sure that gifts exchanged are

of nominal value not exceeding US $15 as defined in PFLs gift policy.

o It is preferred that all such receipt of gifts be reported to the immediate supervisor

seeking his guidance on whether the gift can be retained by the employees or will need to

be surrendered to PFL audit department for future course of action.

o Entertainment should only be related to business and the cost should be small in relation

to salary of the person being retained.

o Accept in entertainment only what are you able to return.

2. Business Dealings

All employees are expected to be honest in business dealings. For example:

o Never do a job or get a job done through payoffs/bribes.

o Always do accurate reporting of all facts.

o Never let anyone else act unethically on your behalf.

o Do not provide misleading, incomplete and inaccurate information

documentation. For example:

Show all discounts on the invoice Provide correct data on customer documentation

Provide clear, accurate description of transactions on all

documents

Follow company policy and get the changing policy in written for

record.


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3. How to Evaluate a Questionable Practice

When confronted with a questionable practice, the following questions help in evaluating

it in relation to business ethics.

Do we know all the facts?

Is it lawful?

Why is it being done this way?

Why it would appear to be an outsider?

Are we trying to get an advantage not available to others? How would it look, if it

appears in a newspaper?

4. Some Areas to watch for Field Sales Personnel

Diversion of product to be properly reflected in all records. Invoice the actual customer who gets the product form the warehouse.

Sell to Company BA and farmers, meeting the specified criteria.

Clearly advice BA approved terms of sale.

Supply properly weighted (full weight) bags to BA.

In case of sales from a warehouse, ensure that invoicing is done at the time of sale and

not before or after the sale, i.e. strictly according to the Warehouse Operations manual.

Ensure that warehouse operations are in accordance with law and policy.

Give equal opportunity/preference to all customers.

Avoid committing sales when not sure of supplying the product.


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Product Quality

Pakarab Fertilizers Limited follows a Product Quality Management Program. For the pursuance

of a regular Product Quality Management Program, field officers monitor the product quality of

PFL and Competitors Urea on monthly basis in the field.

Every month one field officer form each region sends 01 sample of PFL Urea and 01 sample of

each Competitors Urea (drawn simultaneously on the same day) to laboratory incharge, Pakarab

Fertilizers Limited. Details of the sample are documented on the sample data sheet. Copies of his

data sheet are sent to the regional office (for record).

The samples received at laboratory, Pakarab Fertilizers Limited are analyzed physically

and chemically for prill size, prill strength, fines, caking, nitrogen percentage, biurate contents,

and moisture contents etc. The results are then conveyed by laboratory incharge, Pakarab

Fertilizers Limited to Marketing Manager, who tabulates them for management

information/action.

Product/Package Quality Complaint Procedure

Field staff is confronted from time to time with complaints regarding our product quality and/or

package. In the interest of striving for higher customer satisfaction, it is imperative to take

cognizance of these complaints. It may be noted that complaints are to be recorded by all

individuals who have a regular interface with the customers.

A product quality complaint (PQC) can trigger from various sources-farmer, BA, warehouse,port, plant, field, regions etc. The process to lodge a complaint is as follows:

i. PQC input Form is filled by the originator as a hard copy.

ii. The department concerned investigates the complaint and provide feedback to the RMM.

iii. The RMM then issues a letter to the originator of the complaint in light of the feedback.


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Marketing Areas

Marketing Regions and Marketing Districts

At present, the marketing area of Pakarab Fertilizers Limited comprises of ten (10)

Marketing regions, each region segmented into a number of sales districts. These are as follows:

Zones Regions Districts

South Zone Hyderabad Hyderabad

Thattha

Mirpur Khas

Digri

Tando Allah YarBadin

Sanghar

Nawab Shah

Rahim Yar Khan Rahim Yar Khan

Sadiqabad

Khanpur

Daharki

Sukkur Sukkur

Shikarpur

Noshero Feroz

Dadu

Jacobabad

Khairpur Mirs

Quetta

Larkana

Center Zone Bahawalpur Bahawalpur

Ahmed Pur East

Bahawalnagar

Haroonabad/Chishtian

Hasilpur

Lodhran


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The locations appearing in the first column are the defined Marketing Regions (MR) of PFL.

Each region is looked after by Regional Marketing Manager (RMM). The RMMs-Supervisors of

all the ten regions report to the Director Marketing in the Head Office.

Each marketing region is further divided Marketing Districts (MD). A marketing district islooked after by a DMM. The MDs have been worked out keeping in view the geography of the

area and the functional convenience in operations. One MD may cover one or more political

districts wholly or partially. These MRs and MDs are modified from time to time based on the

environment, geographical alignments and business needs.


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Business Associate (BA) / Customer

(Channel Management)

PFL has appointed a number of Business Associates (BA) throughout the country to carry out

their daily sales transaction easily and conveniently. Business Associates are the people who act

as private distributors to the company and are running their transport business in collaboration

with the organization. BAs are playing a role of middle-men between the organization and the

final customers/consumers, who book orders from the farmers and small agencies and deliver the

orders to the customers after collecting orders from the production facility/plant distribution

channel/warehouse. Final customers can also enjoy a business deal with the organization without

depending on the Business Associates, but here I will talk about the Business associates

selection and contribution to the business only.

Statement of Policy regarding Customer Relations

Pakarab Fertilizers Limited believes that customer satisfaction is of primary importance for its

success. Mindful of this responsibility, the company strives to understand customer requirements

and concerns and to merit their business by responding energetically and effectively.

Specifically, it is the companys policy to:

1. Provide high quality products that meet or exceed specifications and needs under all

reasonable circumstances.

2. Furnish services which reliably meet responsible standards of performance, efficiencyand courtesy.

3. Price the products and services competitively, explain terms of sale and send accurate

understandable bills promptly.

4. Assure that products and services are compatible with safety, health and

environmental standards of the community and beyond that continuously evaluate

safety and health aspects and give appropriate warning of know potential hazards.

5. Furnish accurate and sufficient information about its products and services so that a

customer can make an informed purchasing decisions, and scrupulously truthful in

advertising and all other communications.

6. Respond promptly and constructively to suggestions, requests for information and

complaints.

7. Recognize the importance of meeting community standards of appearance in

designing and maintaining company facilities.

8. Participate constructively in the debate of public issues affecting customers and

consumers, encourage governmental policies conductive to adequate supplies.

9. Comply rigorously with applicable laws and regulations.


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Marketing Excellence Commitment Statement

Pakarab Fertilizers Limited believes that marketing is the responsibility of all employees and is

vital for the success of the company.

As a Pakarab Marketing Personnel said, we always will:

i. Value our customers and make their satisfaction our first priority.

ii. Ensure the effectiveness of all customer interfaces.

iii. Perform as a well-motivated, superior marketing team.

iv. Encouraging and recognize innovation in marketing.

BA Selection Criteria

A BA should be;

Financially sound party. (Should be able to invest according to the business requirement)

Having good reputation in the area.

Having established contacts with the farming community.

Has experience of fertilizer and/or associated business (e.g. seed, pesticides, agricultural

implements, commission agent, ginning factory/rice mill owner).

Owns a shop/go down which can accommodate a minimum of 1000 bags of fertilizer.

Business set-up is located at a prominent site easily accessible to farmers.

Go down/shop must be accessible to 10, 20 ton trucks/30 tons trailers.

The prospective party should have potential to adequately represent PFL in the market in

terms of annual volume up liftment and should have a positive impact on sales andmarket share.

Willing to keep adequate quantity of all products.

Willing to participate in Company-sponsored activities, e.g. farmer meetings, group

discussions, demonstration plots, etc.

Should provide reliable competitive market intelligence and maintain confidentiality

when needed.


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Sales Operations

As per literature and technical definition Sales operations are a set of business activities and

processes that help a sales organization run effectively, efficiently and in support of business

strategies and objectives. Sales operations activities; help sales leaders make sound and timely

business decisions to drive short term and long term performance, help sales leaders align selling

resources with the greatest opportunities in the most cost effective ways, help ensure all sales

personnel are treated fairly and are paid accurately, help improve sales performance through

better processes, technology and methodologies, help to improve employee morale.

Pakarab has managed to set its sales operations in a very effective way. Sales operations at PFL

include components like customer order (CO) generation, Bank Guarantee (BG) approvals for

the customers who want to have a deal on credit, cross-checks of Demand Drafts (DD),

collaboration with the warehouses, co-ordination with BAs etc. I will talk about Customer Order

generation and supplies at first place in this section and later on I will also write about the order

handling, allowances and bank guarantees (BG).

Customer Order Generation and Supplies

Pakarab use three sources to supply their products:

i. Plant Distribution (Multan)

ii. Field Warehouses

iii. Port Karachi/Karachi Warehouses

The procedure for order generation and its processing through SALES SYSTEM for supply of

product from each source of supply is followed in the sequence given below:

Customer Order Generation

PFL representative identifies all the customer requirements and after mutual agreement receives

the payment in the form of demand draft, pay order and regular cheque (in case of sugar mills,

industries, registered companies and registered institutions) drawn on Multan Branch, made in

favor of Pakarab Fertilizers Limited from the BA for further processing of the order. In some

instances, however the demand draft or other payment instruments are received from the BA by

hand or through mail at the DMMs base or Regional Office or field warehouses.

The PFL representative checks the payment instruments for correctness of the amount,

wording of the companys name and make sure that the instrument is drawn on Multan.

The DMM then prepares Manual Customer Order by inserting all relevant details of

payment instrument, order and BAs preferences. This customer order has four copies as

follows:


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i. DMM/Warehouse Copy

ii. Customer Acknowledge Copy

iii. Sales Accounting Copy

iv. Regional Office Copy

DMM/Warehouse Copy is for record purpose of MM/TMM/TMM TECH/Warehouse.Customer acknowledgement copy is handed over to the BA for its own record. The other

two (sales accounting and regional offices) copies along with payment instruments are

sent to concerned Regional office/Head office.

Upon receipt of customer order Sales Assistant inserts the data on payment instrument

and other relevant details in SALES SYSTEM. Once the payment is entered the amount

will be credited into the BAs account. Sales Assistance then logs the customer order.

This entry is considered as evidence for the review of customer accounts.

Sales system retrieves customer order detail from Payment information screen and updates theBA Account balance appearing in customer order screen. Hence forth, the BAs account balance

will be updated on entry of every new payment and becomes the basis of payment for product

ordered form all supply sources, by the representative BA. Both the manual customer orders as

well as the SALES SYSTEM can accommodate multiple products provided the shipment mode

for all products in same (i.e. OC or CC).

Supplies ex-Plants and Redistribution Hubs

1. The respective distribution officer retrieves Customer Order Log Sheet in SALES

SYSTEM. This sheet is generated on daily basis. Customer order log sheet carries theupdate on all orders logged by Sales Assistance.

2. The distribution officer then gets the order detailed through Detailing Screen in product

handling system of SALES SYSTEM. On the basis of detailed order, Truckers Backlog

Report generated through PHS. This report contains the list of all orders detailed for

shipment. The distribution officer then hands over the Truckers Backlog Report to the

trucking contractor at plants and the PH&S Section and Shipment section at

Redistribution Hubs generate invoice/PSA through PHS in SALES SYSTEM against the

order for which the truck is provided and loaded for shipment. PM&S Officer and

Distribution Officer at Redistribution Hubs get the print out of the Invoice/PSA in

triplicate for:i. BAs Acknowledgement

ii. BSs own record

iii. Gate pass

3. After delivering product at the BAs outlet, the trucker takes the acknowledgement of the

BA on the acknowledgement copy of the invoice and also gets it stamped. This copy of


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invoice is the evidence of the delivery of product to the BA. This copy is later attached by

the trucking contractor to his freight bill as the supporting document.

Supplies ex-Port

The Distribution Officer, Port, retrieves Customer Order Log Sheet through the ProductHandling System in SALES SYSTEM. This sheet is generated on daily basis.

The Distribution Office then gets the order detailed through Detailing Screen in ProductHandling System of SALES SYSTEM. On the basis of detailed order, Truckers Backlog

Report is generated through PH&S. This report contains the list of all the orders detailed

for shipment. The Distribution Officer then hands over the Truckers Backlog Report to

the Tally Contractor and Trucking Contractors at Port. The trucking contractors arrange

transport for shipment of detailed customer orders. Whereas, the tally contractor monitors

truck loading operation at port according to the Truckers Backlog Report.

The tally contractor then generates invoice/PSA manually against the order for which the

truck is provided or loaded for shipment. Invoice/PSA is issued in 04 copies for:

i. BAs acknowledgement

ii. BAs own record

iii. Gate pass for Port Authorities

iv. Distribution officer Port

Sales Assistance at pant, logs the data in SALES SYSTEM form the manual copy of

invoice to generate the same through the system.

After delivering product at the BAs outlet, the trucker takes the acknowledgement of the

BA on the acknowledgement copy of the invoice and also gets it stamped. This copy ofthe invoice is the evidence of the delivery of product to the BA. This copy is later

attached by the trucking contractor to his freight bill as the supporting document.

Order Generation and Supplies ex-Warehouse

The basic operational difference between a Plant/Redistribution Hub/Port order and a warehouse

order is that the product of former is shipping through company arranged transportation; it is the

companys responsibility to ensure that the product is finally delivered at the BAs outlet. In case

of warehouse supplies, the companys responsibility ceases as soon as the truck is loaded and the

BA or his authorized representative acknowledges the product receipt on the invoice. The stepsfrom order generation till supplies ex-warehouse are as follows:

The BA or his authorized representative brings the payment instrument for the requisite

amount covering the payment for quantity to be shipped.

The warehouse assistance raises an order for the required quantity and then prepares

Manual Invoice/Sales Tax Invoice against the quantity ordered. He inserts relevant details

(truck #, quantity, pricing) on the Invoice/Sales Tax Invoice.


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The BA or his authorized representative arranges transport and brings a truck to the

warehouse.

The warehouse in-charge arranges loading of the product in the presence of the BA orhis

authorized representative.

The BA or his authorized representative then acknowledges receipt of the product on the

Invoice/Sales Tax Invoice.

The warehouse in-charge then matches the signatures of the BA and his authorized

representative/ contact man with the specimen signature card of the representative BA.

This step is followed in order to ensure that the shipment is made to the Companys

authorized BA or his authorized representative.

The BAs copy of the invoice is handed over to him. The companys responsibility now

ceases and the product is transported to the destination at the BAs own responsibility.

8. The payment instruments are recorded on the DD listing by the warehouse in-charge

and both are mailed to the regional office on daily basis. Production and shipment are recorded in daily shipment status report on daily basis.

Handling of Consignment Shipments

Scope:

The procedure is basically developed to entertain the needs of customers, who at times fall to

service the end consumers due to unavailability of the product at their outlets. It is sort of an

arrangement between the customers and company by which the Company may ship the product

as consignments on prevailing price to facilitate them to address the need of end consumers.

However, at any date given by the company, if the customer does fail to sell the product then he

has the option either to return the product to the company or get his invoiced at prevailing price.

The procedure of consignment is envisaged both warehouses and plant shipments and is

applicable to all products on need basis as and when approved by Marketing Manager.

Transaction is allowed against a bank DD.

Procedure:

Ex-warehouse Consignments

Consignment shipment is made against DDs as covered in agreement. Bank Guaranteesare however not entertained in consignment shipments.

This agreement is executed on stamp paper of Rs. 100/- or special adhesive stamps of

same amount may also be used. The cost of special adhesive stamps is born by the

company as we normally do in the Seller Buyer Agreement.


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Agreement is signed by both customer and the companys authorized representative

(DMM/Warehouse In-charge. Office assistants and RM, those who normally cab sign the

invoices) in the presence of two witnesses.

To entertain such customers, warehouse in-charges record consignments transactions at

warehouses in separate STRs and this is done shifting the stocks form regular STRs toconsignment STRs.

The record of all consignment agreements although with details of DDs is maintained at

warehouse and DDs are kept as security deposit till products get invoiced.

Acknowledge of consignment shipments from customers is taken.

All such consignment shipments are reported as sales; however, these shipments are

reported separately by warehouse to Regional office to head office for record purpose.

Bin cards are not updated against consignment shipments.

Once price is given, all consignment shipments are invoiced and bin cards are updated.

Ex-Plant/Ex-Port Consignment

Procedure at Regional Office

Consignment agreement is prepared as per procedure explained above.

Regional Office Assistance generate/makes a physical order through system or manually.

In the case of manual order sales assistance lock the manual order information in the

system.

In case of system updation at RO, RMM separately distribute information on details of

DDs received against each consignment through e-mails (consignment order #, quantity

of product, amount and DD #) and region keeps the hard copy of such e-mail for record.In case of e-mail failure this information is faxed to the distribution department.

Regions are responsible to keep the record of consignment agreements along with DDs as

security deposit (in fire proof cabinet under lock and key), and log these DDs in system

once pricing is issued and match the payments against the PSAs on which consignment

orders were serviced.

It is sole responsibility of region to have matched all the PSAs served against

consignment orders.

This is done by generating the PSAs report of consignment order and recalling the

individual PSA in system to have details of shipment through query and finally matching

the payments (already entered once price is issue) by pressing the button as given on

SALES SYSTEM screen.

This ends up the operation and system will automatically pick the price in both above

referred customer order (consignment order or invoice).


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Steps at Plant and Karachi Port Distribution

Upon receiving the consignment orders (DDs details separately through e-mail/fax from

regions), Plant and Karachi Distribution enters the data in SALES SYSTEM for detailing as they

normally do in system. The rest process is followed as normal for shipment of product andgeneration of PSAs as normally done to entertain the warehouses orders.

Steps at PH&S Plant and Karachi Port Distribution

The PH&S section at plant and Karachi port distribution generate PSAs against the consignment

orders for which the truck is provided and loaded for shipment. PH&S plants and Karachi Port

Distribution gets the print out of such PSAs.

i. BAs acknowledgement

ii. BAs own record

iii. Gate pass

iv. Trucker Copy (in case of Multan only)

v. Head Office Copy (in case of Multan only)

Steps at Truckers end

After delivering product at the BAs outlet, the trucker takes the acknowledgment from the BA on

PSAs and also gets it stamped as he normally does in case of normal delivery and submit this to

Plant and Karachi Port distribution for billing purpose.

Steps at PH&S Plant and Karachi Port Distribution (once price is issued)

Both plants and Karachi PH&S generate the PSAs report of consignment orders for their record.

As soon as regions confirm the data entry on log of payments and updating the PSAs for pricing,

both Plant and Karachi PH&S once again generate the PSAs report to flag out if any PSAs

pricing is not made. This will serve as double check in system and help to reconcile the data on

shipment as well. If there seems any PSA/invoice without pricing then concerned region is

informed and invoice get updated.


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Marketing Allowance

Marketing Allowance (MA) is paid to BA/direct customer to assist them to promote the usage of

fertilizer. The amount of MA is the function of the sales volume promoted by the BA. MA

payable to BAs/direct customer is usually defined in three forms as follows:

i. Base Marketing Allowance (MA) allowed and adjusted up front in each invoice (in

abeyance)

ii. Special Marketing Allowance (SMA) allowed and adjusted up front in each advice (in

abeyance)

iii. Deferred Marketing Allowance (DMA) allowed and adjusted separately at end of a

defined period (month) on the basis of volume lifted.

Handling of Marketing Allowance

The need for marketing allowance is identified by the DMM to work out the net price based on

the assistance needed by BAs to;

Actively promote fertilizer usage by the farmers

Sell on credit to farmers to encourage greater usage Match the pricing of the

competitors.

These considerations are reviewed by the RMM who examines the situation from the regional

perspective. He then develops a proposal for consideration of the General Marketing manager.

The General Marketing Manager accords approval through a serially controlled letter of pricing.

After this approval pricing with new MA allowed then becomes applicable to all the orders

generated OR shipments made during the period in which the MA is allowed. This MA can be

allowed on orders generated or shipments made, depending on the approval accorded by the

General Marketing Manager/Marketing Manager.

Deferred Marketing Allowance

If the MA is allowed in the form of Deferred Marketing Allowance, the MarketingManager accords his formal approval through a serially controlled letter of pricing. The

Admin assistant then logs into DMA Definition module in pricing screen for SALESSYSTEM. He then defines the different volume slabs against which the various DMA

slabs are allowed per ton, as a part of pricing approved by the General Manager. DMAs

allowed from separate sources of supply are to be entered in separate pricing in SALES

SYSTEM.

On completion of this transaction in SALES SYSTEM, the system generates another

serial number known as SALES SYSTEM DMA number assigned to the pricing allowed.


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At the end of DMA period, Admin Assistance selects the names of the BAs (qualifies for

various DMA slabs against defined volumes lifted) through the system. This is done on

the basis of the DMA applicable to BA/sales point/sales district/region, defined for the

specific supply source in step 2. Completion of this transaction in SALES SYSTEM in

turn concludes the definition and claim of DMA. The last and final step is the final calculation of DMA and issuance of DMA through

system. On the completion of the DMA period, the Sales Accounting runs the DMA

Calculation process through DMA Calculation module in pricing screen of SALES

SYSTEM. The system automatically completes the DMA process by retrieving the

required data from DMA definition and selection modules and generates the DMA note

for the concerned BA.

DMA note thus generated is sent to the concerned DMM The amount against this DMA

note becomes available in BA TAR balance in SALES SYSTEM. The BA can either

request for refund of his DMA or get this amount adjusted in his next order.

All deferred MA adjustments through DMA calculation process is SALES SYSTEM

should be completed within 15 days from the date of expiry of the contracted period.

Amendments in Order

An order once it is logged in SALES SYSTEM can be amended or cancelled as per the request

of the customer subject to its status in SALES SYSTEM.

If the status is pending then it can be cancelled and money refunded. Or the balance thus

available may be used for ordering any other product.

If the status is partially shipped then the pending quantity may be cancelled.

Suspension of Order

An order once it is logged in SALES SYSTEM can be suspended up to 75% of total order

amount, upon written request of the customer subject to its status in SALES SYSTEM.

If the status is pending then it can be suspended and order for any other product can be

raised.

Original order will remain as suspended in the SALES SYSTEM for 15 days and

afterward in case of no payment it will be cancelled automatically.

In case of price change new price will be effective on original order activation. No BG

orders can be suspended.


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Product Allocation Procedure

In peak consumption seasons, scenarios could emerge at times when the availability of the

product becomes lower than demand i.e. short supply situations. In such situations all regions are

put on allocation. Orders are then generated in accordance with the following procedure:

The allocation of the regions are worked out by the respective Marketing Managers on

the basis of the feedback from the regions in light of the Market Share trend, industry

forecast and various other factors contributing towards fertilizer consumption in the

area.

The RMM divides his allocation into his marketing districts on the basis of the above

criteria.

The DMM further breaks down his allocation for his BA network, based on the same

parameters as used by HO/RO. Month allocation will be communicated in writing to BA

in the co-ordination book. Each DMM is communicated his allocation for that month.

The RMM monitors/controls the order generation of his Marketing districts to keep the

order flow of his region in line with the sales allocation worked out for each Marketing

district.


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Sales on Secured Credit

Bank Guarantee

Objective

The company has made available the use of secured credit facility within a certain

allocation/quota to BAs/buyers. This facility is extended to the BA/buyers in order to stimulate

and promote sales volume. The main instruments of this credit are the Bank Guarantee (BG) and

Letter of credit (LC).

Policy

Marketing Division authorizes the Marketing Division to manage credit within a maximum limit

during a specified time period. Marketing Division further allocates the credit limit (amountoutstanding against quantity ordered at any point in time) to the regions.

The regions ensure that the amount outstanding for quantity uplifted against BG/LC should not

exceed their allocation at any point in time.

Bank guarantees can be issued from any of the scheduled banks, which include HBL, UBL,

ABL, MCB, BOP, BAF, ACB and NBP. Additionally, BA may also issues BGs from any of

PFL relationship banks, which include ABN AMRO, ANZ Grind lays, SCB, Citibank, Faisal

Bank, and Bank of America. Letter of Credit (LC) can be advised only through UBL corporate

Branch, Multan.

The credit facility is applicable for all PFLs product viz. Urea, NP and CAN.

Essentially, this credit is extended through the bank guarantee by way of two modes:

i. Single Credit Sales for BA/buyer

ii. Multiple Credit Sales for BA

BA Bank Guarantee Procedure

The BA submits the BG, prepared by the issuing bank on a verified stamp paper

according to the text as per the PFL specified BG format. The DMM should ensure

payment of appropriate stamp duty.

The DMM makes sure that the text/wording of the Company name, BG no., name of

issuing bank, P.A number of signing officers, terms, amount, credit period, etc are not

correct.


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The DMM also checks for the credit due date of the BG which should not be less than six

working days ahead of the bank guarantee period allowed to the BA.

Additionally, the BG is signed by:

a) Two attorneys from the issuing bank, who are executing officers duly authorized by the

bank to sign on the document. The DMM should ensure that their respective powerattorney numbers are explicitly mentioned with the signatures. In case of a single attorney

branch, the document still needs to be signed by two officers of the branch.

b) Two male witnesses with a note o their respective NIC numbers (NADRA issued) and

addresses. One of the witnesses is preferred to be PFL employee.

The DMM ensures that any corrections/modifications/cancelations in the text of the bank

guarantee must be accompanied by the by the bank stamp and the initials of the bank

executing officer.

The DMM may send the BG along with a written request for verification to the

Zonal/Regional Office of the issuing bank or to the Regional Office for arranging

verification.

Upon receipt of the original BG document from the DMM, PFL regional office seeks

independent verification of the issuance of this BG document form the Zonal/regional

office of the issuing bank branch through fax or letter.

Upon receipt of authentication through verification letter from the Zonal/Regional Office

of the issuing bank. Sales Accounting, will calculate the last shipment date falling within

the BG expiry period. This will also be automatically calculated by SALES SYSTEM on

entry of the BG data in the system. In case, credit period is for 90 days then the expiry

date of the BG must be 31 days ahead of the last shipment date; In case the credit period

is for 120 days then the expiry date of the BG must be 130 days ahead of the lastshipment date, else SALES SYSTEM will not accept the data in BG detail field.

All other particulars of BG are then logged into BA BG detail screen of SALES

SYSTEM by Sales Accounting.

The DMM , while filling out the customer order form manually, ensures that the sales

quantity does not exceed the amount allowed in the BG as calculated on the basis of the

applicable price of the product, enhanced by the applicable amount on account of BG

charges.

The DMM/Warehouse In-charge makes a note of the BG no., SALES SYSTEM no., and

date of issue, amount, and issuing bank name on the customer order form. In case of plant

shipment DMM send the Customer Order to the regional office.

12. Extra care should be taken while punching the data of Customer Order and invoices

into SALES SYSTEM by Regional Assistance, so that the quantity of order, invoices and

other particulars may not get wrongly punched. Verification should be made with the

amount of product and the amount available for BG.


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13. The customer order form is sent to the DO, who will generate the Product Shipment

Advice (PSA) and the invoice through the system on the basis customer order logged

against the particular BG is SALES SYSTEM.

14. In case the BA lifts product from a warehouse, customer order is raised at warehouse

and invoice is prepared once product is delivered to the BA.

Buyer Bank Guarantee Procedure

This type of BG is generally allowed for single sales for a credit period ranging from

210-240 days (depending upon Management approval).

The person desirous of obtaining Buyer Bank Guarantee approaches the concerned

DMM. Checking the availability of credit facility DMM allow buyer to initiate the

process preparing BG in the bank.

DMM submits following documents to RO for approval from RMM:

i. Buyer Agreement is affixed with special adhesive stamps of Rs.100/= dulysigned by buyer and two witnesses. The cost of stamps is born by the

company.

ii. Specimen Signature Card duly signed by buyer and contact men and verified

by concerned DMM.

iii. Copy of Computerized National ID Card issued by NADRA.

Upon receipt of these documents RMM approves buyer by signing the buyer agreement.

After approval from RM regional stall is advised to enter the relevant details into the

SALES SYSTEM as done in BA Appointment.

No BA certificate will be issued in this case.

The buyer submits the bank guarantee, prepared by the issuing bank on a verified stamp

paper according to the text as per the PFL-specified Buyer Bank Guarantee format.

The DMM should ensure payment of appropriate stamp duty.

Letter of Credit Procedure

1. Making Division to provide Performa invoice to the customer to establish Letter of

Credit (LC). The Performa to be issued will be signed by the Marketing Staff Officer/or any

person authorized by the Marketing Manager, evidencing the fact that following has been

approved by Marketing Division.

i. Customer

ii. Product

iii. Quantity

iv. Price

v. Credit Period

vi. Shipment Dates


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a. Performa invoice to clearly state that drafts to be required - with cost of stamp

duty on applicants account.

b. Letter of Credit to be advised through UBL Corporate Branch Abdali Road

Multan.

c. Performa invoice to bear unique number for identification purpose.2. Once LC is received by the Marketing Division it is routed to Finance Department

for approval of credit. Finance Department checks the following before authorization:

i. Authenticity of LC message (Fax/Original)

ii. LC amount to be consistent with Performa invoice

iii. LC to allow at least 30 days negotiation period

iv. LC validity to be at least up to the negotiation period

v. Within documents are also required , following standard clause to be present:

a. Commercial invoice to be presented in original

b. Bill of exchange to be drawn on Applicant/Applicant Bank Delivery

c. Credit Period as per the Performa Invoice.

3. Marketing Division provides the following documents (before shipment) to the Finance

Department:

i. Commercial invoice marked original

ii. Original Letter of Credit received from customer

4. Finance Department to submit the documents received to the Advising Bank along with

the bill of exchange as per the LC.


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Retirement of the Bank Guarantee

The procedure for collection of Bank Guarantees is as follows:

Policy

This procedure is followed for collecting payments of all Bank Guarantees issued by any

bank (Single sales as well as multiple sales).

Credit period will be calculated on first shipment against a particular BG.

The responsibility of monitoring the expiry dates and credit period is with Sales

Accounting.

If due date falls after expiry date, expiry date is constructed as the due date. Collection

of BGs through bank is monitored by Bank Manager.

Payment through Bank

Sales accounting hands over the original BG (for single sales BG and final payment against

multiple sales) and the call notice 06 days before the due date of Finance Department.

On behalf of Finance Manager Banking, acknowledges receipt of BG after ensuring that

the instrument has been received in the manner stated above.

BG shall be accompanied by a covering note addressed to contact person in the collecting

bank. This note is signed by the Banking Supervisor.

When BG is received before 12:00 p.m., Finance Department ensures that BG sent and

received by bank the same day. When BG is received after 12:00 p.m., Finance Department ensures that BG is sent and

received by the bank latest by the next working day.

Upon receipt of realized funds, Finance Department informs SA of payments and issues

cash receipt immediately.

Payment through Region

For Interim Payments: In case of payment is not received 10 days after the due date, BG

is routed through bank and procedure set out above is followed. The 10 days period is

grace period to the customer available only in the case of interim payments. For Final Payment (single sales and multiple sales BG): In case payment is not received

06 days before the due date, payment is routed through finance. The only exception is in

case there is a cushion period of at least 06 days between due date and expiry date, in

which case collection through bank will not be triggered until the due date.

As per market practice, due dates and expiry dates fall on the same day, thereby if the

customer defaults, PFL will not have any recourse on the customer. However, if customer


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desires to pay through DMM, he must pay five days in advance so PFL has adequate time

to en-cash the BG.


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Warehouses

The huge portion and percentage of total sale of the products is operated and done at field

warehouses and hence dependent on the warehousing network of Pakarab Fertilizers. Pakarab

bound all warehouses a defined policy and set of rules. Even the warehouses owned by Business

Associates are checked on regular basis and also before signing an agreement with any Business

Associate. An applicant cannot be considered valid for being a BA unless he has a warehouse

which meets the selection policy and requirements of Pakarab. In this section I will talk about the

classifications of the warehouses, how these warehouses are selected, what safety measurements

are followed at the warehouses, and few documents used in the warehouses and the sales

process.

Classifications of Warehouses:

1. Permanent W

noman ansari

Documents