pakarab fertilizers limited (1)

8/10/2019 Pakarab Fertilizers Limited (1)

1/35


2/35


3/35

GROUP MEMBERS

LATIF UR REHMAN (BSME 01113008)

M.HASSAN TAHIR (BSME 01113078)

RAWAIL HASEEM (BSME 01113039)

NAUMAN RAZZAQ (BSME 01113086)


4/35

INTRODUCTION

It was 12th June, 1962 when a company named National Gas Fertilizers Factory was

Pakistan Industrial Development Corporation (PIDC) in Multan, with Ammonia and Nitr200 & l00 Metric Tons per day respectively.

Ammonium Nitrate & Urea are the final products having daily production of 330 and 18

respectively.

The plant was not able to achieve the rated capacity and it was supplemented with an

1988, with daily production of 60 Metric Tons of Ammonia. This unit was not also able

guarantee tests. In pursuance of the above mentioned decisions, a treaty was signed between Pakistan

Development Corporation (now NFC) and ADNOC (Abu Dhabi National Oil Company)

1973 and an agreement was made on 1st November 1973, to establish a new compan

PAKARAB FERTILIZERS (Pvt.) LTD. in the public sector, as a joint venture for the exp

modification of the old National Gas Fertilizers


5/35

Pakarab Fertilizers Limited was established as protocol concluded and signed on the 15

1972 by the Federal Government to further strengthen and develop internal ties betw

Republic of Pakistan and the State of Abu-Dhabi to cooperate in the fields of Petroleum i

National resources for the mutual benefits

The company was incorporated on 12 November 1973 with total authorized capital of Rs

Pakarab had equity share capital participation of Pakistan through NFC & Abu-Dhabi throug

the ratio of 52% and 48% respectively, with a paid up capital of Rs 743.061 Million.

The project was completed at a total cost of RS 2511.44 Million with a foreign exchange o

Million .It is the largest project of its type in the country. It is the project producing composuch as Nitro-phosphate, Calcium Ammonium Nitrate & Urea.

On July 14, 2005 Pakarab Fertilizer was privatized at a cost of Rs14.125 billion under priva

of Government of Pakistan, acquired by Reliance Exports (Private) Limited under the umbre

Group and Arif Habib Group.


6/35

GENERAL INFORMATION

Registered Name:

Pakarab Fertilizers (private) limited.

Status:

A private limited company having only two partners.

Factory Location:

Pakarab Fertilizer, Khanewal Road Multan.

Main Products:Calcium Ammonium Nitrate

Nitro phosphate

Urea

Area Factory: 172 Acres

Housing colony: 130 Acres


7/35

Plants Starting on

Power Plant June 24, 1978

Nitric Acid plant Sep11, 1978

Ammonia plant Sep 27, 1978

Urea plant Oct 01,1978CAN plant Nov 26,1978

NP pant Jan12, 1979

Capacities:

Ammonia Gas 313500 metric tons

Nitric Acid 441600 metric tons

CAN 450000 metric tons

Urea 2400 metric tons

Raw Material Requirements:

Natural Gas 52.5 M.cubic feet (per day)

Rock Phosphate 710 tons (per day)


8/35

No. Of employees:

Executives: 151

Office workers: 181

Daily Wages workers: 4140 (According to the requirements)

Auditors: Mr. Riaz Ahmed & Co.

Foreign Sources of Finance:

ADNOC

World Bank

Asian Development Bank

OPEC Special Fund

City Corporation International Bank


9/35

M.HASSAN TAHIR (BSME 01113078)


10/35

PLANTS IN OPERATION

The plants that are working efficiently are: -

Urea Plant Ammonia Plant

Nitro phosphate Plant

Nitric Acid Pant

Calcium Ammonium Nitrate Plant

Power House

Along with the fertilizers plants, Pakarab has itsown Powerhouse, which has the capacity toproduce 27 Mega Watts (Turbo Generators of 9MW each) of electricity.


11/35

CHOICE OF LOCATION

The reason for its particular location selection were

:

Near the grid station

Abundant supply of natural gas (which is the

raw material for the fertilizer)

Close to main highway (transportation access)

Out of city due to pollution hazards

Easy safety and drainage


12/35

ORGANIZATIONAL STRUCTURE

The board of directors has appointed a full time chairman and a managing director, whoadequate powers to manage the day to day affairs of the company on sound commercia

Managing Director as Chief Executive is assisted by divisional heads i.e. General Mana

General Manager (Finance), and General Manager corporate & commercial (Company

General Manager (Engineering). The Managing Director administers and is responsible

management and working of Plants

There are four major Divisions Manufacturing Division

Internal Audit Division

Finance Division

Corporate Affairs & Commercial Division


13/35

MANUFACTURING DIVISION

Safe Operation & Environment Department

Production (Plant and their relative storage areas)

Materials Department

Inspection Cell

Technical & Planning Department

Personnel & Industrial Relation Department

Security Department

General Administration Department

Procurement / commercial Department


14/35

FINANCE DIVISION

Management system Department

Education Department

Finance Department

Accounts Department

Internal Audit and commercial divisions are not further divided into sections

or departments


15/35

OPERATION STRATEGY

Operation strategy in PAKARAB is product focused. It is producing standardized producequipment and work force are organized around the product.

This strategy fits high volume production of products.

Product focus manufacturing firms follow make to stock' strategy in which firms hold ite

immediate delivery.

This strategy is feasible because most product focus firms produce high volumes of prod

Operation strategy for PAKARAB is product focused so based on this strategy make to sadopted.

There is mass production in this organization so 'make to stock' is feasible.


16/35

PRODUCT / ORGANIZATION LIFE CYC

In 1937 PFL was in introduction stage, it grew by the time and in 1986, when they

expanded Urea plant they were at growth stage. Now they are at maturity stage.Both in terms of organization and products (CAN, NP, UREA)


17/35

OPERATIONS COMPETITIVE CYCLE


18/35

RAWAIL HASEEM

ROLL #

BSME (01113039)


19/35

INVENTORY MANAGEMENT SYSTEM

Inventory management system of Pakarab Fertilizer limited issystem- The system is meant to update the inventory of the o

and maintain records properly that help management to take

about the availability of items to keep the operations running

It has the following functions:-

Making file inquires

Entering item movement or corrections

Managing stocks

Maintaining files


20/35

FORECASTING SYSTEM

This system is also employed in Pakarab and used to classify the items on the

inventory list on the consumption and current stock basis into A, B and Ccategories. Also the system forecast the new order point and order quantity

after reviewing the order points of all the items on inventory list: based on the

lead time and purchase period.

CLASSIFCATION OF ITEMS ON CONSUMPTION BASIS

Slow Moving Items

Normal-Moving Items

Fast-moving Items


21/35

CAPACITIES FOR PRODUCTION

Nitric Acid (old plant) = 180 MTPD (max. tolerable period of disruption)

Nitric Acid (new plant) = 1200 MTPD

Ammonia = 960 1000 MTPD

Ammonia Nitrate Crystals= on demand


22/35

MATERIAL/INVENTORY MANAGEME

STORE SECTION

Procurement of material from foreign countries is a time consuming andexpensive job. So Pakarab has maintained a stock of essential spares of different

machines; which are stored in the warehouses or stores. For the Inventory

handling there is separate store section that regulate inventory to provide smooth

running operation. The main stores are:

Spare parts store

General stores And zero area is allocated to the old plants such as Nitric Acid and NH3 filling etc.

Catalyst like rhodium, platinum etc. which are of very high value are kept near to

the concerned plant and are issued.


23/35

BUFFER STOCK

IT AIMS TO:

stabilize prices

Ensure supply

Prevents producers from going out of business because of drop in prices

In Pakarab buffer stock for intermediate product is also maintained for smooth

running of operations.

Buffer stock of NH3 is maintained-

To avoid any disturbance in the production of Urea.

Sometimes Ammonia produced is not entirely utilized

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

Min buffer level for foreign item is 40 weeks

Min buffer level for a local item is 12 weeks.


24/35

ITEM COST RANGE

(In rupee)

A: 100,000 and above

B: 25,000 to 100,000

C: below 25000

A and B items represent 20% of inventory but 80% of total stock value- while

C items represents 80% of inventory and 20% at total stock -value A and B arevery costly items These items include insurable. items which are very costly

and so important that without them the whole operation can be disturbed


25/35

MANAGEMENT POLICY OF PAKARAB

Management policy means how the managers have established theatmosphere in the organization.

How the subordinates are working in the office.

In Pakarab Fertilizers, the management style is the mixture of differentstyles. On one side we can see the Management by Objectives that the allwork is done with the consent of workers.

All the targets and achievements during the year are set with the

collaboration of the staff members and workers, while on the other handswe see that the system is centralized.

All the decisions are made at the top levels.

If we look towards the relationships between the management andworkers we find them informal up to some extent both the managers andworkers work with very close to each other.


26/35

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

with each other and the other realizes them. The disputes are settled with the mutual

dealings.

The policies are made at the top level of the management. Higher management also makes all future decisions.

The policies are imposed in the organization but the resistance against the policies is

The reason is that when the policies are framed at the top level, the all paper work is

All those who will be effected by the policy are contacted and their opinion is received

made on the basis of these opinions.

That's why, the resistance is very Low The workers and staff members honor all the p


27/35

NAUMAN RAZZAQ (BSME 01113086)


28/35

OUTCOMES OF MANAGEMENT POL

Following are the outcomes of management policy prevailing in Pakarab Fertilizers. Thes

signs of its success. It also shows the trend of the managers towards effective managem

The outflow of workers is very low .The person, who joins the organization once almo

leaves it.

The low degree of resistance is found against the policies of the management.

The working efficiency is also very high due to frankness and free relationship betwee

management and workers.

The high production is also a yardstick showing the success of management policy be

the poor management the workers are not satisfied and when the workers are not sat

production is also decreased.

There is a low rate of labor union and management clashes.


29/35

ANALYSIS

STRENGTHS: Broad range of main and mid products

Central location of plant

Broad production range

Monopoly in Calcium Ammonium Nitrate & Nitro Phosphate production Support from

Ministry

Experience in production and marketing of product

ANA YSIS


30/35

ANALYSIS

WEAKNESSES: Urea made by Pakarab is of more powdered form as compared to the urea made by

FFC

Obsolete plant with high operating cost

Govt. compellations especially for the pricing policy

Monetary sensitiveness to foreign exchange exposure

Dependence on imported feed stock suppliers and special repair/maintenance

facilities Environmental problem & proximity to urban area

Limitation in achieving CAN plant design capacity

Limitation in achieving NITROPHOSPHATE product quality, design specifications


31/35

Unsatisfactory Product quality of urea

No proper sales promotion

Placement and number of warehouses

Lack of long term planning, decisions are made keeping in view the short-

term benefits.

Lack of financial budgets for implementation at decisions.

Too much cost consciousness that affects the long run impact and profits.

Too much centralization effects timely decision making

ANALYSIS


32/35

ANALYSIS

OPPORTUNITIES: Improvement in product quality

Expansion of plants to meet the demand more efficiently

Proper sales promotion

Proper placement or warehouses

Delegation of authority so that decisions can be made at the spot without any delay

Long term profits or benefits should be preferred over short-term profits. Qualityshould be improved gradually with the results and trends in market

ANALYSIS


33/35

ANALYSIS

THREATS: Low product quality of competitive product (urea) is a major threat Major competitors are FFC, ENGRO CHEMICALS. The sales figures and market shares for urea o

ENGRO and DHC are as follows

Market share threat for Urea

NFC FFC ENGRO

25-26% 48% 24-25%

In market the 50-kg bag of Pakarab is sold at RS.330 while ENGRO and DHC at RS.360 sell that bmore effective

PFL is giving almost negligible incentives to the customers while FFC and ENGRO are running effschemes to attract the customer.


34/35

PFL is also lagging behind in providing the product at the right time and place Customer has

days to load be second truck while at the warehouses of FFC and ENGRO-CHEMICAL cust

immediately get the product.

So the placement of warehouses is a threat. NEML has 6 warehouses in Multan region while

warehouses in that region

The packaging of FFC is also better than Pakarab.

Imported fertilizers are also a threat to Local Industry selling at RS.310 in the market for a 5


35/35

pakarab fertilizers limited (1)

Documents