os-fact
TRANSCRIPT
AN ORGANISATIONAL STUDY
AT FACT, UDYOGAMANDAL
A Project report submitted in partial fulfillment of the requirement for the award of degree of
Master of Business Administration of University of Kerala
Submitted by
HITHA MATHAI (Register No: 0905315)
Under the guidance of
Faculty guide Project guide
Mr. MANOJKRISHNAN C.G
Co-ordinator
IMK - ADOOR Mr. AMBRUCE
Manager (training)
INSTITUTE OF MANAGEMENT IN KERALA, ADOOR
Parakode P.O, Kerala – 69155
JUNE 2010
1
DECLARATION
I declare that the project report entitled “ORGANISATION STUDY AT FACT,
UDYIGAMANDAL” submitted by HITHA MATHAI for the award of the degree of
MASTER OF BUSINESS ADMINISTRATION of the UNIVERSITY OF KERALA is
my own work. The report has not been submitted for the award of any other degree of this
University or any other University.
Place: ADOOR HITHA MATHAI
Date: Register No: 0905315
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 sincerely acknowledge my deep gratitude to Mr.AMBRUSE, Manager
Training, FACT Ltd. for giving me an opportunity to do my project in the organization and
make use of the facilities available.
I also take this opportunity to express my sincere gratitude and indebtedness to
my project guide MR.Manojkrishnan C.G, Co-coordinator IMK Adoor, whose
encouragement and guidance helped me a lot in bringing out this project.
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
HITHA MATHAI
3
CONTENTS
SERIAL
NO:
DESCRIPTION PAGE
NO:
Chapter 1 INTRODUCTION
1. OBJECTIVES OF THE STUDY
2. SCOPE OF THE STUDY
3. METHODOLOGY
4.LIMITATIONS OF THE STUDY
Chapter 2 INDUSTRY PROFILE
Chapter 3 COMPANY PROFILE
Chapter 4 PRODUCT PROFILE
Chapter 5 DEPARTMENT PROFILE
1. FINANCE DEPARTMENT
2. HUMAN RESOURCE DEPARTMENT
3. MARKETING DEPARTMENT
4. MATERIALS DEPARTMENT
5. PRODUCTION PLANNING DEPARTMENT
6. QUALITY CONTROL DEPARTMENT
7. RESEARCH AND DEVELOPMENT DEPARTMENT
8. FIRE AND SAFETY DEPARTMENT
9. COMPUTER SERVICE DEPARTMENT
10. TRAINING DEPARTMENT
4
11. VIGILANCE DEPARTMENT
12. COMPANY SECRETARIAT
Chapter 6 COMPETITIVE ANALYSIS
A. SWOT ANALYSIS
B. PORTER’S FIVE FORCE MODEL
Chapter 7 FINDINGS,SUGGESTIOS AND CONCLUSION
BIBLIOGRAPHY
APPENDIX
LIST OF TABLES
5
SERIAL
NO:
TABLE
NO:
DESCRIPTION PAGE
NO:
1. 1 Information about FACT
2. 2. Share holding pattern of FACT
3. 3. List of Abbreviations
4. 4. Division wise staff strength
5. 5. Area offices of FACT
6. 6. Expenditure on R & D
7. 7. Performance –Production, Sales and Profitability
8.
9.
10.
LIST OF CHARTS
SERIAL CHART DESCRIPTION PAGE
6
NO: NO: NO:
1. 1. ORGANIZATION STRUCTURE OF FACT
2. 2. ORGANIZATION HIERARCHY AT FACT
3. 3. ORGANISATION STRUCTURE OF HUMAN
RESOURCE DEPARTMENT
4. 4. ORGANISATION STRUCTURE OF MARKETING
DEPARTMENT
5. 5. ORGANISATION STRUCTURE OF MATERIALS
DEPARTMENT
6. 6. PROCESS FLOW IN STORES DEPARTMENT
7. 7. PROCESS FLOW IN TRAFFIC DEPARTMENT
8. 8. ORGANISATION STRUCTURE OF PRODUCTION
DEPARTMENT
9. 9. ORGANISATION STRUCTURE OF QUALITY
CONTROL DEPARTMENT
10. 10. ORGANISATION STRUCTURE OF R&D
DEPARTMENT
11. 11. ORGANISATION STRUCTURE OF FIRE AND
SAFTEY DEPARTMENT
12. 12. ORGANISATION STRUCTURE COMPUTER
SERVICE DEPARTMENT
13. 13. ORGANISATION STRUCTURE OF TRAINING
DEPARTMENT
14. 14. ORGANISATION STRUCTURE OFVIGILANCE
DEPARTMENT
7
15. 15. ORGANISATION STRUCTURE OF COMPANY
SECRETARIAT
CHAPTER: 18
INTRODUCTION
INTRODUCTION
9
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
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.
OBJECTIVES OF THE STUDY
10
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.
The objectives include:
1. To understand the organizational structure of FACT
2. To understand the various key functional areas of the company
3. To get an idea about existing business operations at FACT.
4. To interact with managers at various levels of the organization hierarchy
5. To analyze the practical aspect in relation to the theoretical aspect of the
organization
6. To gain a clear picture about the challenges and activities faced by the
organization
7. To observe the work culture existing in the organization
8. To identify the strength and weakness of the organization
9. To analyse competition within the industry.
SCOPE OF THE STUDY
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
11
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
1. Primary Sources
Direct interview with the department heads
Discussion with the divisional heads
Interaction with workers in the company
Data collected by observing the function of the organization
2. Secondary Sources
Annual reports of the company
Department manuals
Periodicals, books, etc. published materials by the company
Internet websites
LIMITATIONS OF THE STUDY
The time period available for the study was limited
The study was conducted only during the day shift and hence the
working conditions of those employees working during the evening
and night shifts could not be examined
12
CHAPTER: 2
INDUSTRY PROFILE
13
INDUSTRY PROFILE
GROWTH OF FERTILIZER INDUSTRY
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.
The installed capacity as on 30.01.2003 has reached a level of 121.10 lakh MT of
nitrogen and 53.60 lakh MT of phosphatic nutrient, making India the 3rd largest fertilizer
producer in the world. The rapid building up of fertilizer production capacity in the country
has been achieved as a result of a favorable policy environment facilitating large investment
in the public, co-operative and private sectors. Presently there are 57 large sized fertilizer
plants in the country manufacturing a wide range of nitrogenous phosphatic and complex
fertilizers besides; there are about 64 medium and small scale units in operation producing
SSP.
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.
Industry in the European Union is governed by wide number of manufacturing
regulations. Regulations pertaining to the fertilizer industry cover the health and safety of
employees and the general public, conditions for safe storage and transportation of
manufactured fertilizers material and intermediates, limits on emission to the atmosphere and
water, limits on noise level and the treatment and disposal of waste products, resulting from
the production of fertilizer intermediates.
14
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.
15
1.
CHAPTER: 3
COMPANY PROFILE
16
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.
The company’s main business is manufacture and marketing of:
1. Fertilizers
2. Caprolactum and Engineering Consultancy
3. Fabrication of equipments
17
ABOUT FACT
MISSION OF FACT
To function as a dependable and globally competitive producer of fretilizer and other
allied products and to develop self reliance in the field of engineering and technology,
especially in the field of fertilizer chemicals , petrochemicals, oil and gas industries.
VISION OF FACT
To emerge as a leading company in the business of providing quality agriculture and
industrial inputs and providing engineering services for industrial and infrastrucural facilities.
FACT IN A NUTSHELL
NAME FERTLIZERS AND CHEMICALS
TRAVANCORE LTD (FACT)
SLOGAN PIONEERS IN PROGERSS
ESTABLISHED IN THE YEAR 1944
LOCATION UDYOGAMANDAL, COCHIN
PROMOTERS GOVERNMENT OF INDIA
PRODUCTION UNITS OF FERTILIZERS UDYOGAMANDAL AND
AMBALAMEDU
FABRICATION DIVISION FEW
PALLURUTHY, COCHIN
CONSULTANCY DIVISION FEDO UDYOGAMANDAL
MARKETING DIVISION
HEAD OFFICE
UDYOGAMANDAL
LIAISON OFFICES TRIVANDRUM, CHENNAI, MUMBAI,
NEW DELHI
AREA OFFICES TRIVANDRUM, CHENNAI,
BANGALORE, HYDERABAD
MARKETING TERRITORY KERALA, TAMIL NADU, KARNATAKA,
ANDRA PRADESH
Table no: 1 INFORMATION ABOUT FACT
18
ORGANISATION STRUCTURE OF FACT
The following flow chart gives the organization structure of FACT
Chart no: 1 organization structure of FACT
19
FACT
CORPORATE HEAD OFFICE
UD
COMPUTER
SERVICE CENTRE
FERTILIZERS
MANAGEMENT
DEVELOPMENT CENTRE
PETROCHEMICALS
R & D CENTRE
PD CD MARKETING
DIVISION
FEDO FEW
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.
20
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.
RESEARCH AND DEVELOPMENT
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.
COMPUTER SERVICE 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.
21
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.
22
CHAPTER 4:
PRODUCT PROFILE
23
PRODUCT PROFILE
FINISHED PRODUTS
Ammonium Sulphate – Udyogamandal
Factamfos - Udyogamandal division and Cochin division
Caprolactum – Petrochemical Division
Biofertilizer – Research & Development
EXPORTED PRODUCTS
Caprolactum – Petrochemical Division
Ammonium Sulphate – Udyogamandal Division
BYPRODUCTS
Nitric Acid and soda ash – Petrochemical Division
Gypsum – Udyogamandal
Carbon dioxide gas – Udyogamandal
INTERMEDIARY PRODUCTS
Ammonia - Udyogamandal division and Cochin division
Synthesis gas – Udyogamandal Division
Sulphuric Acid - Udyogamandal division and Cochin division
Oleum - Udyogamandal Division
So2 Gas - Udyogamandal Division
Phosphoric Acid – Udyogamandal & Cochin division
PRODUCT MIX
STRAIGHT FERTILIZERS
Ammonium Sulphate
Ultraphos
COMPLEX FERTILIZERS
24
Factamfos 20:20:0:15 – NPK Complex Fertilizer
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.
Rose Mixture - A fertilizer tonic for roses
Vegetable Mixture
Garden Mixture
Imported/Traded products – Direct import of MOP and Ammonium Sulphate trading
of imported urea
Biofertilizer – FACT produces and markets ‘N’ fixing biofertilizers - Rhizobium,
Azospirillium
CHEMICALS
Anhydrous Ammonia
Sulphuric Acid
Caprolactum
Nitric Acid and Soda Ash
ORGANIZATION DESIGN AND STRUCTURE
OWNERSHIP PATTERN
25
The Fertilizers And Chemicals Travancore Ltd (FACT) is a schedule A category
Government of India enterprise under the administration control of department of fertilizers
in the Ministry of chemicals and Fertilizers. In 1960’s the Government became the major
share holder of FACT.
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.
SHARES AND SHAREHOLDING PATTERN
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
CATEGORY NUMBEROF SHARES PERCENTAGE OF
SHREHOLDINGS
Govt. holdings
345465200 97.38Govt. of India
State Govt. 2585000 0.72
Sub total 348050200 98.10
Non- promoter Holdings
4026854 1.14Insurance Companies
Sub total 4026854 1.14
Others
473597 0.14
Pvt. Corporate bodies
Indian public 2187434 0.62
NRI’s or OCB’s 14316 -
Clearing member 19573 -
26
Sub total 2694926 0.76
Total 3554771974 100.00
Table no: 2 Share holding pattern of FACT
LIST OF ABBREVIATIONS OF ORGANIZATION HIERARCHY AT FACT
CMD Chairman & Managing Director UC Udyogamandal Complex
SECTRY Secretary F&F FEDO & FEW
TECH Technical MGR Manager
CVO Chief Vigilance Officer PD Petrochemical Division
DIR Director UD Udyogamandal Division
GM General Manager PRDN Production
CM Chief Manager MTCE Maintenance
EXEC. DIR Executive Director CSP Chief Superintendent Production
CP Corporate Planning CME Chief Mechanical Engineer
PC Production Co-ordination JGM Junior General Manager
HR Human Resource DIST Distribution
CD Cochin Division R & D Research and Development
Table no: 3 Abbreviations
ORGANIZATION HIERARCHY AT FACT
Chart no: 2
27
CMD
CM
saaa
DIR FINANCEJGM (UD) DIR TECHGM Marketing
Company SECTRY
CM FEDOCM DISTDIR Marketing
CM FEWCM TRADING
GM (UC)CVO
GM (CD)GM MaterialsJGM(PD)GM (CP & PC)
GM(F&F)CM PRDN CM MTCE
MGR QUALITY
MGR SAFETY
MGR
R & DCMECSP GM HR
EXEC.DIR (FINANCE) GM FINANCE CM Purchase
MGR STORESMGR TRAFFIC
CHAPTER 5:
DEPARTMENT PROFILE
28
1. FINANCE DEPARTMENT
29
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.
Report the financial performance of the company to Management, stakeholders and to
comply with the Government rules and regulations.
1.2 ORGANIZATIONAL CHART OF FINANCEDEPARTMENT
chart no:2
30
DIRECTOR FINANCE
EXECUTIVE DIRECTOR
MANAGER (IA)
GM (FINANACE)
DGM (FINANCE) DGM(IA)
9
Manager (Taxes, Duties)
Manager (Cash, Bank, Payroll)
CM (Costing,MIS,Budget)
CM (General Accounting
CM (SALES)CM (BILLS)
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.
1.4 PROCESS OF FINANCE DEPARTMENT
Finance department is divided into five sections for carrying out its process. They are:
Bills and materials
Sales
Costing, MIS, Budget
Cash, bank and payroll
Tax and duties
1.4.1 BILLS AND MATERIALS
The main functions are stores accounting and receiving, dispatch and holding of bills
1.4.1.1 BILLS SECTION
Bills section deals with the contract accounts for execution of civil works and other
construction /erection, maintenance and services. It includes:
Sale of tender form
Remittance of security of deposit
Remittance of EMD
Issue of materials to the extractors
Reception to certified bill in the specified format
Security on running account bills and final bill.
Statutory procedures and formalities in works contract.
31
1.4.1.2 STORES ACCOUNTING
Main functions of stores accounting are
Receipts of stores
Issues of stores
Returns of stores
Value adjustments
Reconciliation with control accounts
Unconsumed materials lying at site at the close of financial year
1.4.2 SALES ACCOUNTING
Some functions are
Accountability for selling and distributing of products and byproducts.
Recording the transaction
Transfer of information from depots to HO
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.
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.
32
1.4.3.2 MIS (Management Information System)
To provide the management with vital facts which affects the efficient running of the
business for decision making on planning, organizing and controlling the major activities of
the organization and initiating suitable action.
MIS briefly consists of:
Division Reports
P&L account – statement and its analysis
Production performance of the division
Inventory position
Cost of production – actual and budget for the month
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.
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.
1.4.3.3.2 CAPITAL EXPENDITURE shows all items of capital expenditure to be
undertaken during the budget period like expenditure on acquisition of new assets like
machinery, furniture and office equipments which have reasonable life, expansion of
existing facilities and modification and improvements to plant and machinery resulting in
i. Increase in capacity
ii. Increase in useful life
iii. Improvement in quality of output
iv. Reduction in cost of output is treated as capital expenditure
33
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.
1.4.4.1 CASH AND BANK ACCOUNTS SECTION:
Various functions include:
Receipt of cash, cheques, bank drafts and postal money orders.
Payment of cash, cheques, bank drafts and letters of authority.
Handling of bank deposits\withdrawals.
Maintenance of petty cash books and cash books.
Reconciliation of bank accounts.
Security arrangement of cash handling
Safe custody of valuable documents.
1.4.4.2 PAYROLL SECTION: Functions of the section are:
Preparation and disbursement of salaries and wages to managerial and non-managerial
employees.
Effect various recoveries through payroll and remit the same to concerned agencies.
Processing of various personal payments advances.
Keep book of account for above transaction.
1.4.5 TAX AND DUTIES SECTION is concerned with calculation and payment of various
taxes and duties to the government.
34
1.5 CHALLENGES OF FINANCE DEPARTMENT
1.5.1 Working capital crunch due to which
Up gradation of plants and machinery is not possible.
High quality equipment cannot be purchased. For the same reason , FACT goes for
the lowest quoting bid.
Cannot maintain adequate stock of fertilizers for combating shortage .
Lack of flexibility in production.
1.5.2 Low availability of credit due to non-payment of loans and security to keep for loans.
Due to which the organization
Cannot grow and therefore stagnates
Cannot compete with other fertilizer companies due to lack of fund.
35
2. HUMAN RESOURCE
DEPARTMENT
36
2. HUMAN RESOURSE DEPARTMENT
2.1 GENERAL INFORMATION:
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.
2.2 ORGANIZATION STRUCTURE OF HUMAN RESOURCE DEPARTMENT
Chart no:3
37
CMD
DIRECTOR
GM (HR)
DGM (ADMINISTRATION)
CM
(IR)
CM
(EST)
CM
(TRAINING)
CM
(IE)
CM
(WELFARE)
2.3 FUNCTIONS OF HR DEPARTMENT
Organizational planning and development
Recruitment and selection
Training and Development
Wage and Salary administration
Employee records maintaining
Performance Appraisal
Welfare programs
Job evaluation and so on.
2.4 PROCESS OF HR DEPARTMENT: The Human Resource Department of FACT
consists of three sections
1. Establishment
2. Training and Industrial Engineering
3. Industrial Relations
2.4.1 ESTABLISHMENT SECTION
The Establishment section deals with:
Recruitment, selection, placement and severance of employees
Transfer and rotation of employees in consultation with divisional heads
Redressal of employee grievances
Fixation of salary
Performance Appraisal
2.4.1.1 RECRUITMENT POLICY
The Recruitment policy is done as per prescribed recruitment specification with proper
authority appointed by BOD. The following are the sources of recruitment:
1) Confirmed employees within the division or company
2) Employment exchange as per provisions of Employment Exchange Act
3) Employees on deputation from Govt
38
4) Casual labours who were initially taken after employment exchange
5) By transfer from public sector undertakings
6) Apprentices who completed training in FACT
7) Dependents of deceased employees who died while in service.
2.4.1.2 PERFORMANCE APPRAISAL
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
1. Self Appraisal for all management employees
2. Reporting and receiving officers specified for each level of appraisal
3. Assessment by the Assessment Committee
4. Grading on the basis of assessment
5. Communication of final rating to employees formally
6. Provision for appeal by employees formally
2.4.2 TRAINING AND INDUSTRIAL ENGINEERING
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:
1) Utilizing all resources better and more productively
2) Identifying training needs of all employees based on a uniform approach and imparting
required training.
39
AIMS AND OBJECTIVES OF 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.
4. To maintain a good database of training details. Training and Development Activities
Company has a scheme of selecting Management trainees based on All India
Selection Test and Interview. Once selected, training centre facilitates orientation training
and other Training programmesTraining Centre is involved in three broad activities:
1. Training officers and workers of the company as a whole in identified areas.
2. Meeting the obligation of Apprentice Act 1961/1973
3. Facilitating post qualification training, in plant training and project work to
Students.
EXTERNAL TRAINING PROGRAMS
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.
MANAGEMENT TRAINEES: Periodical review of the progress of the management trainees
is assessed by the training Centre and status reported to management from time to time.
2.4.3 INDUSTRIAL RELATIONS
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.
40
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.
Healthy industrial relations help the organizations in the following ways;
1) Lead to mental revolution
2) Conducive environment for new programs
3) High employee morale
4) Reduces industrial disputes
5) Reduce wastage
2.5 TRADE UNION AND LONG TERM WAGE SETTLEMENT
There are a total of ten recognized trade unions functioning in various divisions of FACT.
Udyogamandal Division
1) FACT Employees Association
2) FACT Workers Union
3) FACT Employees Congress (INTUC)
4) FACT Employees Organization.
Cochin Division
1) FACT Employees Union
2) FACT Employees Association
3) FACT Employees Sangh
4) FACT Workers Congress.
41
Petrochemical Division
1) FACT Employees Association
2) FACT Workers Organization
FEDO
1) FEDO Employees Association
2) FACT Employees Congress
FEW
1) FACT Employees Association
2) FACT Employees Congress.
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.
2.6 WORKERS PARTICIPATION IN MANAGEMENT
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.
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
42
2.7.1 WELFARE MEASURES
• Canteen providing food at a subsidized rate
• Medical treatment & Dispensary
• Employee welfare fund
• Transport facilities
• Consumer cooperative society
• Education allowance to employees children
• Personal accidents insurance scheme
• FACT Lalith kala Kendra
• Scholarship for employee children
• Sports & Recreation facilities
2.8 MANPOWER OF FACT
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
43
Division wise Staff Strength - october -2009
Division
Non managerial Managerial Total
Strength Avg.
age
Strength Avg.age Strength Avg.age
HO82 48 272 48 354 48
UD 1238 47 574 48 1812 48
CD 690 50 373 52 1063 51
FEDO 18 50 84 49 102 50
FEW 20 50 22 52 42 51
Marketing 117 50 116 49 233 50
Total 2165 48 1441 49 3606 49
Table no:4
44
3. MARKETING DEPARTMENT
3.1 GENERAL INFORMATION
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
Monitoring of sales and distribution
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
Distribution Department
Marketing Research Department
45
3.3 STRUCTURE OF MARKETING DEPARTMENT
Chart no:4
46
EXECUTIVE DIRECTOR (MARKETING)
GM(MARKETING)
CSM(SALES) CM(TRADING)
AM
KERALA
AM
TN
AM
KARNATAKA
AM
AP
CM(DIST)
RM RM RM RM
SALES OFFICER
SALES OFFICER
SALES OFFICER
SALES OFFICER
DEPOT OFFICER
DEPOT OFFICER
DEPOT OFFICER
DEPOT OFFICER
3.4 SALES DEPARTMENT
Functions of this department are :
1. Monitoring of sales in the areas
2. Monitoring of price in terms of FACT products
3. Processing credit proposal for dealers and institution
4. Monitoring the flow of MIS from market research department and from field
establishment
5. Processing and sending replies to audit queries at the divisional level.
6. Liaison with bulk buyers, central and state Government officials and officials of
fertilizers association of India
7. Sales force motivation through internal and external training programmes.
8. Preparation of sales report
3.4.1 SALES PROMOTION TOOLS OF FACT
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
1) Mass Communication Techniques
2) Personal Contact Method
1. Mass Communication Techniques
This method involves catering in a large number of people in the shortest time possible.
Various techniques involved in this category are
a) Films d) Exhibition g) Radio jingles
b) Hoardings e) Posters h) Farmers programmes in AIR
47
c) Wall Painting f) Advertisement i) Direct mail
2. Personal Contact Methods
As the name implies, in this method more personal and closer contact with farmers are
developed through promotional methods. The methods adopted by FACT are;
a) Demonstrations
b) Block demonstrations
c) Soil testing
d) Seminar
e) Study classes
f) Co-operative training programmes
g) Dealer training
h) Squad programmes
3.5 DISTRIBUTION DEPARTMENT
Physical distribution of products is a major function of the marketing division. Chief
Distribution Manager is entrusted with planning, monitoring and implementing of product
distribution and co-coordinating the movement from production units and ports.
FACT marketing operations in respect of fertilizers follow a completely centralized pattern. FACT
distributes its fertilizer to four states of south India viz; TamilNadu, Kerala, Andrapradesh, and
Karnataka. In each state they have an area office, which is located at the following places
AREAS REGIONS
Kerala Allepy Pallakkad Kottayam Kannur
Tamilnadu Coimbatore Trichy Madurai Vellore
Karanataka Mangalore Bangalore Belgaum Hospet
Andrapradesh Hyderabad Vijayanada Kakinada Nellore
Table no:5
48
These offices keep a close liaison with the Directorate of agriculture and other
developmental agencies. These are sub divided into 17 regions.
3.6 MARKETING RESEARCH DEPARTMENT
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.
b) Publication of annual report of division
c) Monitoring and reporting competitor's sales as per Performa prescribed
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.
e) Submission of monthly performance report of the division to the CMD
f) Ensuring product availability, dispatch monitoring and inventory control
g) Submission of various statements to FAI for Publication in their fertilizer statistics
yearbook.
3.7 CHALLENGES OF MARKETING DEPARTMENT
Improper subsidy policy-Government susidy policy does not take into account the
technology used for production and cost of raw materials and comes to the
organisation after a long gap after actual sales, which leads to acute shortage of
working capital.
Lack of fund for research activities
Narrow product range
Unnecessary intervention of state and central governments in distribution and sales
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.
49
4. MATERIALS DEPARTMENT
4.1 OBJECTIVES
To control and account for the materials in the organisation
To ensure the availability of materials and its quality
4.2 ORGANIZATION STRUCTURE OF MATERIALS DEPARTMENT
Chart no:5
4.3 FUNCTIONS OF MATERIALS DEPARTMENT
Importing raw materials under the approval of safe purchase committee constituted by
the Board of Directors
Maintaining adequate raw materials needed for production
Procurement of machineries, intermediaries, equipments and spares
Inspection of materials
Transportation of RM , products and byproducts
Accountability of materials
Purchase of stationary and other eqiupment needed by individual department.
Vendor development.
50
GM Materials
CM Purchase RM
Manager E.S.S
Manager Stores Manager Traffic
Dy.CM RM Manager F. F.T.S
The department is divided into three sub departments. They are:
A. PURCHASE
B. STORES
C. TRAFFIC (Logistics)
4.4 PURCHASE:
The department is sub divided into:
Raw Materials (RM)
Stores and Transportation Services (STS)
Equipment spares and supplies (ESS)
4.4.1.1 RAW MATERIALS (RM)
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.
4.4.1.2 STORES AND TRANSPORT SERVICES (STS)
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.
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.
4.4.2 PURCHASE PROCEDURE
The purchase procedure covers the following areas of procurement of goods and services
for the company.
1. Capital items (For project and other purposes)
51
2. Raw material, intermediates, stores and spares etc
3. Services
4. Package items involving design, supply, erection and commissioning.
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.
4.4.3 TYPES OF PURCHASE
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
In the case of emergencies which affect production or completion schedule of projects/
turn around jobs etc
4.4.4 VENDOR PRE-QUALIFICATION
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.
52
There should be three types of PR as follows
a) For projects and major capital equipment
b) For stores, including stationary and office supplies, spares.
c) For services.
4.4.5 INVITATION TO BID
The Purchase Manager shall invite bid. Normally 30 days from the date of enquiry shall
be given for submission of bids in limited tenders. For open tenders 30 days from the date of
appearance of advertisement shall be prescribed.
4.4.6 RECEIPT AND OPENING OF BIDS
Reading of bids- the following information may be read out to the Bidders
representatives.
a) Prices, taxes and duties
b) Payment terms
c) Delivery period
d) Performance guarantee
e) Brief description, where relevant
4.4.7 BID EVALUATION AND FINANCIAL CONCURRENCE.
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;
a) Technical evaluation by indenter in consultation with other technical experts where
necessary.
b) Commercial evaluation by the purchase department in consultation with other
concerned departments.
c) Review and approval of technical and commercial evaluation by the competent
authority to determine the bids, which are technically and commercially suitable.
53
d) Comparison of prices and financial evaluation by purchase department in consultation
with other concerned departments.
4.4.8 FINANCIAL CONCURRENCE
For purchase above Rs.25000, the purchase recommendation shall be forwarded to
finance department. Sanctioning authority shall be as per the delegation of powers. After
financial concurrence, the proposal for sanction shall be forwarded to the sanctioning
authority through purchase order.
4.4.9 PURCHASE ORDER
Detailed purchase order shall be issued soon after the letter of intent and normally within
30 days of issue of letter of intent.
4.4.10 EXPEDITING AND INSPECTION
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
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.
54
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.
4.5 STORES DEPARTMENT
4.5.1 OBJECTIVES
Collection and receiving of materials purchased
Inventory management and control
Issuing materials to user departments
Disposal of surplus and obsolete materials
4.5.2 PROCESS FLOW IN STORES DEPARTMENT
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.
55
Receiving Inspecting
Issue
Holding
Disposal
Inventory control
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 TRAFFIC DEPARTMENT
4.6.1 OBJECTIVES
To ensure loading and dispatch of products
To ensure right quantity and right product to right vehicle and to the right
destination.
4.6.2 PROCESS FLOW IN TRAFFIC DEPARTMENT
Chart no:7
56
Marketing division
Dispatch information
Traffic department
Vendor (transport)
Depot
Weighing
Vehicle in slip issue Loading
Transportation
Signed MDA
MDA issue
Payment
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.
57
5. PRODUCTION PLANNING DEPARTMENT
5.1 GENERAL INFORMATION
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
Co-ordination of production function
Co-ordination with maintenance and production department
5.3 ORGANIZATION CHART OF PRODUCTION DEPARTMENT
Chart no:8
58
DIR (TECHNICAL)
PRDN MTCE PRDN MTCE
JGM (UD)
GM (UD) GM (CD)
GM (CP&PC)
Caprolactum
CSP CME
Traffic
CSP CME
AmmoniaAmmonium
Sulphate
Sulphuric
Acid
Factamfos
Cyclo hexane
HYAM ANONE RAP
JGM (PD)
5.4 FUNCTIONS OF PRODUCTION DEPARTMENT
Planning daily production according to annual target
Submitting plan to government and getting approval
Monitoring actual production and checking any deviation
Making revision plans according to actual production
Maintenance of plants
5.5 PLANTS AT UDYOGAMANDAL DIVISION
AMMOMIA PLANT
AMMONIUM SULPHATE PLANT
AMMONIUM PHOSPHATE PLANT / FACTAMFOS
ACID PLANT
5.5.1 AMMONIA PLANT
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.
5.5.2 AMMONIUM PHOSPHATE PLANT
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 ACID PLANTS
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.
59
5.6 PETROCHEMICAL DIVISION
FACT Petrochemical Division is one of the only manufacturers of caprolactum in India.
They have strictly adhered to documented quality systems. The plant can produce 50000 TPA
of caprolactum and 225000 TPA of Ammonium Sulphate as co-product. FACT Caprolactum
is currently being exported to USA, China, Korea, Taiwan, Australia, Philippines, Slovenia
and Srilanka. Domestic buyers are mainly Sino Fibers, Gwalior, Century Enka Ltd., Chennai
etc.
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.
5.7 CHALLENGES OF PRODUCTION DEPARTMENT
Raw material scarcity is upsetting the entire production plant
Working capital shortage is affecting the smooth functioning of the plant
Shortage of workers
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6. QUALITY CONTROL DEPARTMENT
6.1 GENERAL INFORMATION
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
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
Chart no:9
61
MANAGER QUALITY
CONTROL
SHIFT IN CHARGE
CHEMIST
LAB ASSISTANT
6.4 FUNCTIONS OF QUALITY CONTROL DEPARTMENT
Quality checking
Process control assurance
Pollution control
6.4.1 QUALITY CHECKING:
a) Raw materials – Pre and post dispatch check. It is usually done by FACT Quality
Control Cell or external agency if expertise is required.
b) Product quality check
c) By product quality check- only in case of byproducts sold
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).
6.5 POLLUTION CONTROL MEASURES
Hydrocarbon detectors are placed in vulnerable areas in the plant for transmission to
control room
Computerized automatic ambient air monitoring system is placed at stations, inside
the plant and two in township to monitor ammonia, carbon monoxide, non-methane,
sulphur dioxide and oxides of nitrogen on a continous basis.
6.6 CHALLENGES TO QUALITY DEPARTMENT
Lack of expertise to handle raw materials quality checking
Aged machinery
High noise pollution
62
7. RESEARCH AND DEVELOPMENT DEPARTMENT
7.1 GENERAL INFORMATION
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.
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.
7.3 ORGANIZATION CHART OF R&D DEPARTMENT
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
63
MANAGER R&D
STAFFS
OFFICER
ASSISTANT MANAGER
b) Pilot plant studies for process collaboration with IIT Madras for development of fibre
reinforced caprolactum for use in plastic.
7.5 EXPENDITURE ON R&D
Detials of expenditure on R&D is given below:
YEAR CAPITAL REVENUE TOTAL Rs. in lakhs(as %of total
turnover)
1. 2007-2008
2. 2008-2009
1.13
0.00
26.83
36.24
27.96
36.024
0.032
0.017
Source: annual report 2008-2009
Table no:6
64
8. FIRE AND SAFETY DEPARTMENT
8.1 GENERAL INFORMATION
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
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
Train the employees for ensuring safety and to prevent accidents
8.3 ORGANIZATION CHART OF FIRE AND SAFTEY DEPARTMENT
Chart no:11
65
JGM (UD)
INSPECTORS FIREMAN
ASSISTANTS INSPECTORS
MANAGER (SAFTEY) MANAGER (FIRE)
8.4 FUNCTIONS OF SAFTEY DEPARTMENT
1. Function of safety department is not limited to reporting accidents and arranging
compensation, it also involves making a detailed investigation regarding the cause of the
accident, communicate the suggestions to the concerned authority and take necessary steps to
improve the condition and to avoid further occurrence of similar accidents.
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
5. Safe production by prompt attention on built-in- safety or integrated safety
6. There is effective effluent treatment system in operation to render it harmless before letting
it out of the factory
7. In addition to the safety department, safety committee is set up to promote active
participation at all levels. Safety committee meets once in two months
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.
11. Safety cartoon/ caution boards are displayed at important locations
12. Prepares valuable information of safety and distribute among employees
13. Organize and conduct mock drills based on onsite emergency plan to further improve upon the
emergency plan
66
8.5 CHALLENGES OF FIRE AND SAFTEY DEPARTMENT
Aged plant and machinery
Prone to fire
Modern control precaution and control of fire through installation of
sensors is not possible.
Maintenance of safety equipments
Safety equipment brought with lowest coating bid
Constant need to renew safety equipments
.
67
9. COMPUTER SERVICE CENTRE
9.1 GENERAL INFORMATION
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.
68
9.2 ORGANIZATION CHART OF COMPUTER SERVICE DEPARTMENT
Chart no:12
9.3 FUNCTIONS
Planning and procurement of computer systems in all divisions
Software development and system support to all divisions
User training on computer awareness and applications
Maintenance of FACTNET connecting all divisions
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
Access control of data between and within department.
69
CHIEF MANAGER
SYSTEM ADMINISTRATOR
MANAGER
DEPUTY CHIEF MANAGER
STAFFS
10. TRAINING DEPARTMENT
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.
Centralization was effected with a view to
Utilize all recourses efficiently and to ensure more productivity
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.
10.2 OBJECTIVES OF TRAINING
To identify training needs of the employees as a whole on the basis of uniform
criteria.
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
To maintain a database of training details and development activities.
70
10.3 ORGANIZATION CHART OF TRAINING DEPARTMENT
Chart no:13
10.4 FUNCTIONS OF TRAINING DEPARTMENT
Training centre is involved in four broad functions:
Training officers and workers of the company as a whole in identified areas
Meeting the obligation of Apprentice Act 1961/1973
Facilitating post qualification training , in-plant training and project work to
students
Facility for employees to attend external training programmes
10.5 CHALLENGES TO TRAINING
Improper feedback
Improper selection of employees from the various departments
Limited time available due to the pressure of production targets
71
CHIEF MANAGER TRAINING
MANAGER TRAINING
OFFICER TRAINING
INSRUCTOR
STAFFS
11. VIGILANCE DEPARTMENT
11.1 GENERAL INFORMATION:
Vigilance department of FACT is headed by a chief vigilance officer (C.V.O).The
incumbent CVO is an IPS or IAS officer. He or she possesses the status rank and perquisites
of a functional Director. Under him, there are two Deputy Chief Managers (vigilance) posted
at FACT head office at Udyogamandal.
Vigilance is an integral part of the management function. The stress is in transparency
and accountability of the working of the company to the society. Vigilance Notice boards
have been installed in all the offices all over the country displaying the address and telephone
numbers of the CMD, CVO, and CVC. These authorities can be approached on complaints of
corruption. They can be accessed by e-mail also. Anonymous and pseudonymous complaints
are not taken. Cognizance of employees suspected of indulging in corruption on getting
reliable information, their names are included in the agreed list for keeping a close vigil on
their activities. The names of employees who are charge sheeted in the court in a corruption
case or have been punished or likely to be punished in departmental proceedings on charges
of corruption and irregularities are included in the list of officers of doubtful integrity, both
the lists are sent to the CBI also for keeping a watch on the activities of listed employees.
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.
72
11.2 ORGANIZATION CHART OF VIGILANCE DEPARTMENT
Chart no:14
11.3 FUNCTION OF VIGILANCE DEPARTMENT
Acting on complaints
Inspecting high value files
Maintaining transparency and accountability of jobs
Department wise monitoring of frauds and malpractices
73
CHIEF VIGILANCE OFFICER
CHIEF MANAGER
DEPUTY CHIEF MANAGER
INSPECTOR
12. COMPANY SECRETARIAT
12.1 GENERAL INFORMATION
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.
12.3 ORGANIZATION CHART
Chart no:15
12.4 FUNCTIONS OF COMPANT SECRETARIAT
To act as the principal officer of the company
Carries out Board Director’s instructions
Public information officer complying with Right To Information Act (RTI Act)
Compliance or adherence to the legal requirement of the organization
Supervision of share transfer/depository agents
74
CMD (FACT)
COMPANY SECRETARY
ASSISTANT SECRETARY
OFFICER
STAFFS
CHAPTER 6:
COMPETITIVE ANALYSIS
75
A. SWOT ANALYSIS
76
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.
77
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
1. Unfavorable Government of India policy
2. Diminishing market for Caprolactum.
3. Incidence of greater competition to mainstay product Factamfos.
4. Infiltration of more fertilizer products to the southern markets from other
producers.
5. Inherent bottlenecks in infrastructure facilities.
6. Lack of product differentiation.
7. High incidence of raw material pricing.
8. Severe liquidity crunch leading to non-operation plant at higher capacity.
9. High cost of captive ammonia due to alarming increase in price of petrol products.
10. Scarcity of raw materials in the international market.
78
B.PORTER’S FIVE FORCE
MODEL
79
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
Contents80
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)
o 1.5 The bargaining power of suppliers
THE FIVE FORCES
1.1 The threat of the entry of new competitors
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:
The existence of barriers to entry (patents, rights, etc.)
Brand equity : FACT has got good brand equity among the fertilizer industries. Factamfos, a
fertilizer used commonly by the farmers has strong brand identity in the market.
High Capital requirements: For a new company to venture into this field should need
high capital investment around 1200 crores. Also the raw materials used for the
manufacture of fertilizers like Naftha, Natural gas etc are too costly.
Customer loyalty to established brands: FACT already a leading company in this field
has got strong customer loyalty to its established brand like Factamfos. So it will be
difficult for a new company to compete with FACT.
Absolute cost advantages: FACT products are cheaper i.e. FACT sells much cheaper
than other companies.
81
Government policies
Industry profitability; the more profitable the industry the more attractive it will be to
enter.
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.
Sustainable competitive advantage through innovation
Level of advertising expense
Powerful competitive strategy
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.
1.3 The threat of substitute products or services
The existence of products outside of the realm of the common product boundaries
increases the propensity of customers to switch to alternatives:
Relative price performance of substitute: Organic farming which is a substitute for
fertilizers need the high technological support and cost of operation is high.
Buyer switching costs: Buyer switching is relatively high in this field.
82
Number of substitute products available in the market: In Indian fertilizer industry,
no substitutes are available. Organic farming can be substitute but in India this has not
yet started.
Ease of substitution: No substitutes are available.
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.
1.5 The bargaining power of suppliers
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.
83
CHAPTER 7:
FINDINGS, SUGGESTIONS AND
CONCLUSION
84
A. FINDINGS
The authority and responsibility is clearly defined in this organization.
Employees are well qualified, skill and dedicated to the organization.
FACT conducts training programs for employees for the purpose of increasing their
efficiency.
The organization always keeps a good communication system.
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.
FACT gives much importance to all its stake holders.
85
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.
86
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.
With commercialization of its production at Udyogamandal , it began its expansion stage
to Cochin Division and finally to petrochemical division. But the reigning period of FACT
came to an end with the scarcity and sky rocketing prices of raw materials. It could hardly do
anything to save its declining trend as the product pricing is done by the Government of
India. The show case example has been the drift of the company to loss even after making a
record production in 1999-2000.
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.
87
BIBLIOGRAPHY
88
BIBLIOGRAPHY
www.fact.co.in
www.urvarak.co.in
www.fact.co.in/fedo
www.google .com
FACT 65th Annual Report (2008-2009)
FACT Diary 2009
FACT News
Department Manuals
89
APPENDIX
90
ANNUAL REPORT 2008-2009
HIGHLIGHTS (2008-2009)
Net profit –Rs. 42.95 crore.
All time high Annual Turnover of Rs. 2147 crore.
All time high Imported Urea Sales.
All time high Bio-Fertilizer production.
38% increase in total fertilizer sale over the previous year.
Introduction of New product –FACT Gypsum.
Launching of Zincated Factamfos.
Joint venture operations-Incorporation of new JV Company –FRBL.
Joint venture with department of Factories & Boilers- KIWR
Production of Ammonium Sulphate using direct neutralization process.
Supply of waste steam to a nearby State PSU.
PERFORMANCE – PRODUCTION, SALES AND PROFITABILITY
2008-2009 2007-2008
1 Production /In Tonnes
Factamfos 20:20
Ammonium Sulphate
Caprolactum
605047
128845
13548
425530
30478
6759
2 Sales /In lakh Tonnes
Fertilizers
caprolactum
8.33
0.12
6.03
0.14
3 Financial/Rs.lakh
91
Turnover
Profit/Loss (-) before tax
Provision for fringe benefit tax
Profit/Loss after tax
Profit/Loss b/f from previous year
Net deficit carried to balance sheet
214748
4311.44
16.00
4295.44
(-)39517.29
(-)35221.85
88487
917.61
20.80
896.81
(-)39535.03
(-)39517.29
92
93