Iffco Final Project Pom

A

Project Report on

Production & Operation Management

of

IFFCO-KANDLA

Submitted To:

Prof. Hitendra Lachhwani

Submitted By:

Anjali Nair-12035

Kruti Rawal-12040

Khushma Thacker-12051

Grishma Parihar-12018

Pratik Parmar-12037

Debendra Manna-12031

Gujra Rahul-12019

Tolani Institute of Management StudiesPage 1

Acknowledgement

We are thankful to Mr. Dodiya (Employee Trainee) and our faculty Prof.

Hitendra Lachhwani. We are thankful to HR Manager of “IFFCO” who co-operate

with us and they gave proper guidance & necessary information regarding the unit.

We are also thankful to Tolani Institute of Management Studies for providing

us such valuable opportunity of getting the knowledge of real meaning of industry.


Sr. No.

Content Page No.

1 Introduction 4

2 Core Process 9

3 Corporate Strategy 11

4 Competitive Priorities 14

5 Production Process 16

6 Capital Intensive 21

7 Manufacturing Process 22

8 Production & Inventory Strategy 32

9 Quality & Lean 36

10 Resource Planning 41

11 Analysis 43

12 Conclusion 44

13 Bibliography 45

Introduction


IFFCO’s NPK plant is located adjacent to Kandla Port Trust Oil jetty. IFFCO was

built at a cost of 30 crores with two streams having a licensed capacity of 1,27,000

tons of P2O5. This plant was designed by MS. Dorr Oilver, to produce three grades of

NPK based on DAP, the plant was commissioned on 26th November 1974 and its

commercial production was started on 1st January 1975.

Due to increased demand for complex fertilizer, the capacity of NPK plant has

been doubled at a cost of Rs. 28.6 crores and thus two streams (i.e. train C and D)

were added with the licensed capacity increasing from 1,27,000 MT P2O5 per annum

to 2,60,000 MT P2O5 per annum.

IFFCO Kandla again went for expansion in 1996-97. Kandla Phase- II NPK/DAP

project conceptualized the setting up of two additional streams (train E and F) with

an annual production capacity of 2, 10,700 P2O5 MTPA of at a cost of 205.30 crores.

Dr. U.S. Awasthi is the Managing Director and Chief Executive Officer of IFFCO who has been vested with the overall responsibility of the affairs of IFFCO's day to day activities.

Mr. M.R. Patel is the Sr. Executive Director at IFFCO

Kandla Unit.

IFFCO Plants:


Kalol

Kalol unit - the oldest unit of IFFCO is located at 26 km from Ahmedabad on the Ahmedabad Mehasana highway.

Aonla

Aonla is about 28 KM south west of Bareilly on Bareilly-Aonla road.

Phulpur

Situated near Allahabad in Uttar Pradesh.

Kandla

IFFCO's KANDLA PLANT is located on the western bank of Kandla creek adjacent to Kandla Port Trust oil jetties.

Para deep (Orrisa)

Paradeep is located on village Mudsadia, Jagatsinghpur.


Vision

To augment the incremental incomes of farmers by helping them to increase their

crop productivity through balanced use of energy efficient fertilizers, maintain the

environmental health and to make cooperative societies economically &

democratically strong for professionalized services to the farming community to

ensure an empowered rural India.

Mission

IFFCO's mission is "to enable Indian farmers to prosper through timely supply of

reliable, high quality agricultural inputs and services in an environmentally

sustainable manner and to undertake other activities to improve their welfare"

To provide to farmers high quality fertilizers in right time and in adequate

quantities with an objective to increase crop productivity.

To make plants energy efficient and continually review various schemes to

conserve energy.

Commitment to health, safety, environment and forestry development to enrich

the quality of community life.


Products

Urea

IFFCO's Urea is not merely a source of 46% of nutrient nitrogen for crops, but

it is an integral part of millions of farmers in India. A bag of IFFCO's urea is a constant

source of confidence and is a trusted companion for Indian farmer.

DAP

Diammonium Phosphate It is the most popular phosphatic fertilizer because

of its high analysis and good physical properties. The composition of pure salt of DAP

is N-21.19% and P205 -53.76%. Fertilizer grade DAP is 18:46:0.

NPK

NPK complex fertilizers produced at Kandla are DAP based grades. At present

two grades Grade I - 10:26:26 and Grade II-12:32:16 are produced.

Granular NPK complexes are free flowing and do not pose any problem during

handling and storage. However, exposure of material for long period to very high

humidity may cause caking. Therefore, NPK complexes are bagged in quality tested

HDPE bags to prevent.


BIO – Fertilizers

Bio-fertilizers are capable of fixing atmospheric nitrogen when suitable crops

are inoculated with them. Bio-fertilizers are low cost, effective, environmental

friendly and renewable source of plant nutrients to supplement fertilizers.

Integration of chemical, organic and biological sources of plant nutrients and their

management is necessary for maintaining soil health for sustainable agriculture.

The bacterial organisms present in the Bio-fertilizer either fix atmospheric

nitrogen or solubilise insoluble forms of soil phosphate. The range of nitrogen

fixed per ha/year varies from crop to crop; it is 80 - 85 kg for cow pea, 50 - 60 kg

for groundnut, 60 - 80 kg for soybean and 50 - 55 kg for moongbean.

Our Product - Water Soluble Fertilizer:

Water soluble fertilisers are now set to be produced in the country

with the Indian Farmers Fertiliser Cooperative Limited setting up a manufacturing plant

at its Kandla unit in Kutch district.

At present, 100 per cent water soluble fertiliser is imported. The 50-million-tonne

plant is expected to facilitate easy availability of this fertiliser of urea phosphate, which

is highly in demand for drip irrigation of cash crops. The product has significant impact

on quality and yield of cash crops, horticulture crops, vegetables and grains.


1. CORE PROCESS:

Supplier Relationship Process:

Over the years IFFCO has developed expertise in its manufacturing

processes as well as developed good supplier relationships. Working

effectively with suppliers has added significant value to the products

of the firm. With the help of procurement of better raw-materials

which is in turn result of efficient supplier relationship, IFFCO has

been able to improve the quality of its products. The demand

forecasting for IFFCO KANDLA unit is done by its head office. The head

office has a vendor list from which it sends raw material requisition to

the vendors. These in turn send tenders to the company and the

company selects those vendors who quote the lowest prices, with

quality material and with a quick delivery time.

New Product Development Process:

With the increasing needs in agriculture and improved technology,

the need for better fertilizers evolved. Thus IFFCO through its sincere

efforts developed new products with the help of its Research and

Development Department. New products like bio fertilizers and water

soluble fertilizers were developed and production for the same

started at IFFCO Kandla unit.

Order Fulfillment Process:

With improved technology and transport facilities, IFFCO has been

able to satisfy its customers by producing top quality products and

delivering them to its customers on time.


Customer Relationship Process:

With sincere efforts in marketing IFFCO has been able to identify its

potential customers, build relationship with external customers and

facilitate the placement of orders by customers. The distribution of

IFFCO’s fertilizer is undertaken through over 37,000 co-operative societies.

The entire activities of Distribution, Sales and Promotion are coordinated by

Marketing Central Office (MKCO) at New Delhi assisted by the Marketing

offices in the field. IFFCO has its own retail outlets called Farmers

Service Centers. There are 158 Farmers Service Centers available. In

these retail outlets agriculture inputs like fertilizers, seeds, pesticides

and agriculture implements are made available to the farmers. These

centers also provide technical guidance to the farmers. IFFCO has

promoted several institutions and organizations to work for the

welfare of farmers, strengthening cooperative movement, improve

Indian agriculture. Indian Farm Forestry Development Cooperative Ltd

(IFFDC), Cooperative Rural Development Trust (CORDET), IFFCO

Foundation, Kisan Sewa Trust belongs to this category. Thus IFFCO

has maintained efficient Customer Relationships.


2. CORPORATE STRATEGY:

IFFCO is a CO- OPERATIVE SOCIETY

Corporate strategy provides an overall direction that serves the framework

for carrying out an organization’s functions. It specifies the business or businesses

the company will pursue and opportunity and threats in the related environment

and identifies growth objectives.

Form of any big organization is very important. According to Co-operative Society

Act, IFFCO follow all the rules and regulations of the co-operative society

What is Cooperative Society?

The strength of co-operative movement emanates from its ability to empower people

who are individually weak and often helpless. The spirit of co-operations encourages people

to come together on the basis of equality to achieve their economic interests. Voluntary

association of individuals is the important aspect of any co-operative endeavor. Equality is

assured to all the individuals involved in an unselfish atmosphere. The goal is to achieve the

common economic interests of the group of individuals who have come together for the

purpose.

To decide the corporate strategy and form an organization there has to be some

market survey done. The organization needs to develop core competencies to become

successful.

ENVIROMENTAL SCANNING :

In order to set up of fertilizer plant at Kandla, IFFCO had to do environmental scanning

to understand the availability of resources and facilities. For this purpose IFFCO had to carry

out a market survey regarding the existence of Fertilizer Manufacturing plants, their


suppliers, customers, prices of raw- materials and end products, Government Policies etc.

Besides these arrangements for efficient transport facilities and storage facilities needed to

be acquired. A detailed study of the atmospheric changes and weather conditions were

conducted to ensure the safety of manufacturing processes and storage facilities as the raw-

materials required were all of hazardous nature. The investments in infrastructure of the

plant, finding efficient sources of energy consumption, efficient production, optimum

utilization of resources and minimum level of pollution were the major concerns for IFFCO.

DEVELOPING CORE COMPETENCIES:

Core competencies are unique resources and strength that an organization

possesses.

Workforce:

IFFCO has a well-trained diverse and flexible workforce. All the workers are

provided with training and development programs. The production process

is carried out continuously and therefore skilled workers are required to

work in shifts. In cases when there is shortage of employees, other workers

are made to work overtime. Incentives and benefits given to employees

motivate them to work more and develop better skills which are the key

success of well trained workforce at IFFCO.

Facilities:

IFCCO has well located facility in regard to offices, stores and plants. Efficient

storage facilities for raw materials like NPK/ DAP, POTASH, AMONIA, etc.

Market and Financial Know-How :

At the time of incorporation installation of plant, procurement of raw

materials, efficient production process (less wastage) etc. was costly. As time

passed, with changes in technology IFFCO improved its working by gaining


knowledge of market and financial know-how. This helped IFFCO to give

tough competition to the existing fertilizer manufacturer.

System and technologies :

With improving technology IFFCO had adopted better technological systems,

efficient machineries and better information systems that helped IFFCO to

improve its manufactured process and reduce its cost.

3. COMPETITIVE PRIORITIES:


Competitive Priorities are the critical operational dimensions a process or

supply chain must possess to satisfy internal as well as external customers,

both now and in future.

COST:

Despite steep rise in prices of raw materials and unprecedented rupee depreciation

in the year 2011, IFFCO had not passed on the increasing cost of fertilizers to farmers. It

always considers benefit of farmers and accordingly sets prices of its products. IFFCO gets

subsidy from Indian Government so that it can continuously provide top quality Fertilizers to

the farmers at the least possible rates.

QUALITY:

Fertilizers manufactured by IFFCO are of top quality. The sole aim of

IFFCO is to enrich the lives of farmers by providing them best quality

fertilizers at the least possible rate. IFFCO tops when compared to its

competitors like Hindalco Corporation, Gujarat State Fertilizers and Chemicals

(GFSC), TATA chemicals etc. IFFCO has won several awards in the year 2011 and also

before that for its performance in manufacturing top quality products.

TIME:

IFFCO follows continuous manufacturing process and therefore it is

always able to produce its products as per the demand in the market. IFFCO

has its own retail outlets known as Farmers Service Centers and therefore it is

able to track the increasing requirements for fertilizers in the market. IFFCO

due to its continuous production process and efficient transport facility

(which includes rail, road and sea) is able to provide On-time Delivery of its

products to its customers.


Other competitive priorities are the operational capacity of IFFCO

itself. IFFCO Kandla unit has the biggest Zinc Sulphate Monohydrate Plant of

capacity 100(Metric Ton Per Day) MTPD as on date with annual capacity of

30,000 MT. it is a cooperative society and therefore the subsidies received

from Government is a very important factor that helps IFFCO to produce top

quality fertilizers at less costs.

4. PRODUCTION PROCESS :


PRODUCT

GRANULATOR

DRYER

NH3

SCRUBBER LIQUOR

PHOS.ACID

PRENEUTRALIZER

SLURRYPUMP

CONVENTIONAL

Process Description of Kandla Phase -I (Streams A, B, C & D):

The manufacturing process uses the well known conventional slurry

granulation process. The plant consists of four identical streams with a common

product handling, storage, reclaiming and bagging facilities. .Phosphoric acid

containing 52 to 54 % P2O5 and scrubber liquor containing 20 to 25 % P2O5 at

NH3/H3PO4 mole ratio of 1.2 to 1.3 are fed to a vertical cylindrical reactor called

preneutraliser where it is reacted with anhydrous liquid ammonia to a mole ratio of

1.4 or a pH of 5.6 to produce an ammonium phosphate slurry containing 18 to 20 %

water. About 70 % of the total phosphoric acid requirements are fed to the

preneutraliser. The rest is fed to the scrubber system from where it goes to the

preneutraliser in the form of scrubber liquor at a pH of 8 to 5.2.


The ammonium phosphate slurry from the preneutraliser is pumped to a

rotary drum granulator where it is sprayed over the rolling bed of recycles fines and

solid raw materials feeds like potash, urea and filler to form granules. Further,

ammoniation upto a mole ratio of 1.8 to 1.85 is carried out inside the granulator by

means of ammonia spargers located below the bed of materials. The granulated

product containing 2.5 % water is then dried in a co-current rotary drum dryer with

hot air produced by combustion of fuel oil/LSHS. The dried product is elevated by

means of continuous discharge type bucket elevators and distributed over double

deck vibrating screen by means of a drag flight conveyor.

Product of the required size (between 1 mm and 4 mm) is separated in the

screen from the oversize and undersize. The on-size product collects in a

compartment in the product bin and is withdrawn at the required rate by a vibrating

pan feeder. Excess product size materials and oversize materials pulverized in a chain

mills are discharged into the recycle flights conveyor.

The undersize material collect in a fines bin and discharge into the recycle

conveyor, where it mixes with the crushed oversize and fresh solid raw material

feeds to form the recycle feed to the granulator. The recycle conveyor, which is a

drag flight conveyor, discharge the material into a continuous discharge bucket

elevator which in turn discharge into the granulator.

The product discharge from the vibrating pan is conveyed to a rotary drum

cooler where the product is cooled from 70 deg. to about 40 deg. The product

discharged from the cooler is elevated by a product elevator in each train which

discharges into the product conveyor common for all four trains.


PRODUCT

GRANULATOR

DRYER

COOLER

NH3

SCRUBBER LIQUOR

PHOS.ACID

DUAL PIPE REACTOR

GPR

DPR

The scrubbing system consists of a fumes scrubber, Dust scrubber, Dryer

scrubber & Cooler scrubber. The first three are venturi cyclonic type. Scrubber liquor

supplemented by fresh phosphoric acid feed is circulated by pumps in all the

scrubbers except the cooler scrubber where only water is circulated. Dust laden air

from the dryer, cooler and other equipments pass through cyclones where a major

portion of the dust is separated before being scrubbed in the respective scrubbers.

Fumes from the preneutraliser and granulator are scrubbed in the fumes scrubber.

Each scrubber is provided with a fan for creating the required draft. The scrubbed

gasses are let out into the atmosphere through a common stack.

Process Description of Kandla Phase-II (Streams E & F ):

Merchant grade Phosphoric acid containing 54% P2O5 is reacted with liquid

Ammonia in dryer pipe reactor (DPR) installed inside the rotary dryer upto a mole

ratio of 1:1.05 (moles of Ammonia to moles of H3PO4 ) and in the granulator pipe

reactor (GPR) installed inside the rotary drum granulator upto a mole ratio of 1:1.4.


The reaction is highly exothermic resulting in the evaporation of water

content of the phosphoric acid and recycled scrubber liquor. While discharging from

the granuator pipe reactor the pressure is 4 to 5 Kg/cm2 and temperature between

120 to 130 deg C. While discharging from dryer pipe reactor the pressure is between

3 to 4 Kg/cm2 and temperature is between 1200 to 1300 C. The discharge from the

GPR & DPR fall on the rotating bed of recycle fertiliser material in the corresponding

equipments i.e. Granulator & Dryer. Dry raw materials like Urea, Filler & Muriate of

Potash are added into the granulator through independent feeders which discharge

into a common recycle conveyor along with recycle material like crushed oversize,

fines and excess product. The fertiliser material in the granulator is further

ammoniated to a mole ratio of 1:1.8 by sparging ammonia through the bed in the

granulator. The granulated fertiliser containing about 2.5% moisture is then

discharged into the rotary dryer where it is dried with hot air from the fuel oil fired

combustion chamber in a co-current flow. The moisture of the fertiliser material gets

reduced to less than 1%.

The fertilizer material is then screened in double deck vibrating screens. The

separated oversize material (above 4mm) is crushed in roll crushers and forms part

of the recycle sent to the granulator, the product size material (-4mm to 1mm) goes

to a rotary cooler and is the final product, the fines material (less than 1mm) is also

recycled back to the granulator.

The off gases from dryer and cooler are passed through respective dryer and

cooler cyclones and then sent for wet scrubbing. The off gases from the granulator

are first scrubbed in an inclined venturi scrubber followed by a wet venturi type

fumes scrubber. The exit gas from the dryer and granulator scrubbers are once again

passed through a tail gas scrubber for maximum recovery of nutrient from these

gases, before being discharged to the stack. Dusts from various dust generation

points at different locations are sucked by the dust fan through a network of ducting

lines. The dust is then deducted in cyclones and later sent for wet scrubbing. The


scrubbing medium is weak phosphoric acid solution. The scrubber liquor is

consumed in the granulator pipe reactor and the dryer pipe reactor.

Phosphoric acid & ammonia are reacted in a preneutraliser vessel / pipe reactor

forming ammonium phosphate slurry.

Potash, Urea, Filler & recycled material are fed into the granulator by a system of

elevators & belt conveyors.

Ammonium phosphate slurry is sprayed over the bed of solid materials in the

rotary granulator.

Granulated product is dried in rotary dryers.

Double deck screens separate product material from the oversize & undersize

which is recycled to granulator.

Product material is cooled in rotary cooler & sent to storage or for bagging.

Kandla Phase II plant uses pipe reactors inside the granulator & dryer for

reaction instead of preneutraliser

5. CAPITAL INTENSIVE:

Setting up a manufacturing plant is not an easy task. It involves huge

investment in terms of human resource and financial investment. IFFCO


started its operations by setting up a plant to produce three grades of NPK

based on DAP. This plant was worth 30 crores with two streams having a

licensed capacity of 1,27,000 tons of P2O5. Further the capacity of NPK plant

was doubled at a cost of Rs. 28.6 crores and thus two more streams were

added with the licensed capacity increasing from 1,27,000 MT P2O5 per

annum to 2,60,000 MT P2O5 per annum. IFFCO Kandla again went for

expansion in 1996-97 this time the plant was of worth 205.30 crores.

Fixed Automation:

IFFCO opted for fixed automation process because of the very nature of the

products to be produced. All the products produced at IFFCO are such that

each product requires specific raw-materials and different production

process. This is the reason as to why the resources used here are not flexible.

6. MANUFACTURING PROCESS:

In a manufacturing process, all the resources including man, material, money,

plant and machinery needs to be brought together for production. All the

resources are equally important for manufacturing process. Taking into


consideration the type of product to be produced, availability of raw-

materials, investment in plant and machinery, the set up time of machinery,

shut down time of machinery etc. the manufacturing firm needs to decide

the type of manufacturing process. There are four types of manufacturing

processes:

1. Job Process

2. Batch Process

3. Line Process

4. Continuous-flow Process

IFFCO follows the Continuous-flow Process for production of NPK/DAP. For this

purpose IFFCO has efficient skilled employees and workers who work in shifts of 8

hours. When at times there are shortage of certain employees in particular shifts,

other employees are made to work overtime.

Layout of K-I Unit at IFFCO Kandla


Ground Floor – preneutraliser tank

Combustion Chamber

Primary Product Elevator

Secondary Product Elevator

First Floor – Fine Conveyors

Quench Air Fan

Second Floor – Pulveriser

Oversized Pulveriser

Raw material bins (Urea, Potash, Filler, MAP)

Third Floor – Product Cooler

Dryer

Granulator

Cooler Feed Conveyor

Fourth Floor – Vibrating Screens

Cooler Fans


Fifth Floor – SDF (Screen Drag Feeder)

Dust Fans

Cyclones

Raw Materials, Work in Progress and Finish Goods

RAW MATERIALS

Raw materials required for the production of phosphoric fertilizers:


Inventory

Raw Material

WIPFinished Goods

Stores and Spares

NPK 1 (10:26:26) & NPK 2 (12:32:16)

Phosphoric Acid (P2O5)

Ammonia (NH3)

Urea (NH2CHNH2)

Potash

Filler

Sulphuric Acid

DAP (18:46:00) & MAP (11:56:00)

Phosphoric Acid (P2O5)

Ammonia (NH3)

Urea

Filler

Sulphuric Acid


Raw Material Imports:

Name of Raw Material Supplier Country

Ammonia 99% Saudi Arabia, Qatar, OMIFCO (Gulf), Kalol (IFFCO), R.C.F.,

G.N.C.F., KRIBCO.

Potash (MOP) Germany, Canada, Russia, Israel, Jordan, (through Gov.

agencies)

Phosphoric Acid (P2O5) Morocco, U.S.A., Mexico, Senegal, Tunisia, Egypt,

Urea Kalol (IFFCO)

Sulphuric Acid Indian Supplier

De-foamer (Olic Acid, H-601, Nopco-8-5 and

SPAK-81-M)

Locally

Fillers (Silica Sand) Locally

Tendering and placement of orders for above imported raw materials is done at Head Office

(Delhi). Production targets and projected consumption requirement of raw materials, the

commercial section of TS department at Head Office takes the procurement action. Potash

and Urea are procured from M/s. Indian Potash Limited and commercial department at

Head Office from time to time depending on the materials requirements places purchase

orders.


Raw Material Storage:

For phosphoric acid storage there are 8 tanks and each having capacity of 10000MT and

there are 3 atmospheric ammonia tank, capacity of 15000MT, 10000MT and 5000MT

respectively. There are 2 Horton sphere for the storage of ammonia having capacity of

15000MT each. Potash storage Capacity is 84000MT, for urea and filler storage capacity is

8500MT. for water there are 2 tanks each having capacity of 6000MT.

Sr.no. Raw Material Capacity (MT)

1 phosphoric acid 80000

2 Ammonia 33000

3 Potash 84000

4 Urea & filler 8500

5 Water 12000

Investment in Raw Material :

All manufacturing firm have to carry inventory of raw materials. The level of raw materials

inventory is influenced by the following consideration:

1. Volume of safety stock to have an uninterrupted production.

2. Determining the reorder point.

3. Balancing of cost and risk.

Safety Stocks:

They serve the cost reducing function by minimizing the risk of the production due to the

‘out-of-stocks’. Procurement lead time and condition of supply determine the level of the

safety stocks.


Transit Time for different Raw Material:

Raw material Average transit time

Phos acid 17 days

Ammonia 5 days

Potash 13 days

Urea 5 days

Filler 1 day

Here lead time cannot be calculated as all raw material purchases are done by Head Office

and here they use transit time instead of lead time. Transit time means time required for

shipment of raw material to reach Kandla while lead time is the time when the need for

more inventories is recognized until the time it becomes available.

The cost of being out of stock may be the cost of closing the production line. The production

loss due to the raw material shortage at IFFCO Kandla unit for the year 2010-11 is given

below.

P205 Urea Potash Ammonia filler

Average per

day

consumption

2747.58 41.44 2300.97 1289.25 131.65

Transit time 17 5 13 5 1

Reorder point

(MT)

46708.86 207.2 29912.61 6466.25 131.65

Therefore safety stocks are needed to be maintained. To determine the reorder point under

certainty, we should know lead time and average usage.


For the above calculation of reorder point, transit time is used instead of lead time. The

reorder point under certainty is calculated by the formula

Reorder point = Transit time*average per day consumption + safety stock

Storage and Handling of Raw-Materials:

Urea and Filler is stored in 6 numbers long asbestos covered storages.

Phosphoric Acid is imported from Foreign Countries in bulk tankers.

Atmospheric ammonia storage facility consists of three double wall double integrity

design storage tanks having capacities of 5000 MT, 10,000 MT and 15,000 MT at a

temperature of -33 degree centigrade and atmospheric pressure.

Imported potash in the form of crystalline potassium chloride is received in trucks

and stored in a covered storage area which has a capacity to store 80,000 MT

A new concentrate Sulphuric Acid unloading, storage and handling facility has been

constructed at IFFCO Kandla. Storage tank is of Mild steel and vertical cylindrical type

and having a storage capacity of 5000 MT.

Bagging (Packaging) at IFFCO:

Bagging is an important section of product storage. It is process by which finished

good is packed in various sizes. The bagging plant has a total of fourteen slat conveyors,

thirteen of which are fitted each with two Nos. of microprocessor based semi-automatic

weighing machines and stitching machine and each salt is capable of weighing and stitching

at a rate of 900-950 bags per hour. One fully automatic weighing and bagging machine is

also installed along with bag placer which has capacity of weighing at a rate of 1200 bags

per hour.


There are different signs of colors shown on bag for differentiating the grades of

fertilizer like:

Sr. No. Fertilizer Colors Of Strip On Bag

1 NPK 10:26:26 Red color Strip

2 NPK 12:32:16 Green Color Strip

3 DAP 18:46:00 Red & Green Color Strip

4 MAP 11:56:00 Brown Color Strip

Sr. No. Bags size

1 50 Kg.

2 40 Kg.

3 25 kg.

These different color strips are there on the bags to make identification of the stock

in the warehouse. Information about the type of product, the maximum retail price, and the

information about the offer of the insurance on the each bag purchased by farmer is also

provided on the bag.

The machines do automatic stitching of bags. The bags are reprocessed so no

wastage of bags is seen in the department. The workers working in this department are

having a piece wage system. Space has been provided for storing more that 3 million empty

bags in the bagging plant and the covered platform area can be used for stacking more than


5000 MT of bagged product. Bagged product is transported by road within the state of

Gujarat and Rajasthan and by railway wagons to places all over the country.


7. Inventory Management and Control:

For the purpose of production, Budgeted Sales and Production estimates are

prepared by the Head Office at Delhi. IFFCO plant at Kandla prepares list of raw

materials required and sends it to a head office for approval. Once the list is

approved procedure for procurement of raw material is carried out. The head office

at New Delhi finances procurement of all the raw materials. All long term decisions

are taken at Head Office, New Delhi and only operational decisions are undertaken

at this unit. Supplier of raw material are generally fixed and main criteria for their

selection are cost and quality and some other factors also such as payment terms,

services etc.

INVENTORY MANAGEMENT:

Inventory management is the planning and controlling of inventories in order to

meet the competitive priorities of the organization. It is an important concern for

managers in all types of businesses to manage inventory. Inventory management

helps organizations to utilize their capacity and potential to full extent. This type of

efficiency can only happen if the right amount of inventory is flowing through the

supply chain. In order to achieve this efficiency the organizations need to calculate

economy order quantity levels taking into consideration the demand for product,

quantity already available in stock, lead time of suppliers, etc.

The basic objective of inventory control is to reduce investment in inventory and

utilise the saving in more productive processes of the organization. Calculation of

economic order quantity helps the organization to determine what quantity of raw

material needs to be procured and in what time. The organization also needs to

determine the sale forecast, study the production capacity and plan for production

schedules.


A company needs to maintain adequate stock of materials for a continuous supply to

the factory for an uninterrupted production. The firm may purchase large quantities

of raw materials than needed for the production to obtain quantity discounts of the

bulk purchasing. In IFFCO Kandla they follow Contract method for procurement of

raw materials which is handled by head office.

Economic Order Quantity:

Objective: total cost of inventory is minimized..

The EOQ is used as a part of a continuous review system, in which the level of inventory is

monitored at all times, and a fixed quantity is ordered each time the inventory level reaches

a specific reorder point. The EOQ provides a model for calculating the appropriate reorder

point and the optimal reorder quantity to ensure the instantaneous replenishment of

inventory with no shortage.

Total cost is the sum of 2 costs.

1) Ordering cost

2) Carrying cost

Ordering cost: This is incurred making purchases. This covers cost involved in planning of

requirement, calling tenders, deciding suppliers, issuing purchase orders, follow up. Clerical

cost incurred from various departments is included in ordering cost.

Carrying cost: This is incurred in maintaining the stock. This includes interest on money

locked upon the material stocks, taxes and duties, insurance on goods, obsolescence

(Unusable parts), some materials deteriorate or get spoilt and are unfit for use, Shrinkage or

reduction in volume, evaporation (losses), rentals for space occupied by the stores, labor

cost, and maintenance cost. Carrying cost is worked out in percentage and can be as high as

30% to 35%.


EOQ is a point where ordering cost & carrying cost are equal (which is seldom

possible) or the point where these two costs meet favorably. If ordering cost is increasing,

the carrying cost will be decreasing and vice versa. At IFFCO the EOQ is decided by the Head

Office and the orders for procurement of raw-material is also done by the Head Office.

Kandla unit plant provides information about the stock levels in the plant and accordingly

the Head Office makes arrangement for procurement of raw material.

INVENTORY CONTROLS:

One of the primary task in inventory control is determination of stock levels. There

are various levels of stocks at IFFCO plant (kandla unit)

1. Deficiency Level : here stock is inadequate to meet needs.

2. Exhaust bin Level : this is the point known as stock out.

3. Buffer or minimum stock level: it is the insurance stock carried to meet exception

conditions.

4. Reorder level: this is the level at which order has to be placed. This may not be

equal to EOQ, it should be regularly surveyed.

5. Maximum Level: this is the level above which stock should not permit to rise.

Levels of all inventory items except “filler” (low value silica sand ) are not

seasonal.

TWO BIN SYSTEM:


Physical stock is split into two boxes/bins

1. One bin is called the ‘first bin’ (main bin) which holds the balance stock.

2. Other bin is called ‘second bin’ (Reserve bin or Reorder Point)

Issues are done from the ‘first bin’. When stock of first bin is exhausted issues are

done from the ‘second bin’.

On receipt of stock, ‘second bin’ is filled to minimum stock and the balance stock

is placed in the ‘first bin’. Actual physical separation is not possible or required if

one is careful to take timely replenishment action as soon as the stock drops to

minimum.

Reserve bin should have sufficient stock to last lead period and to take care of

variations in both lead time and consumption. IFFCO Kandla unit follows Two Bin

system and informs the Head Office about the raw-material levels when the

stock reaches minimum level.

STORES AND SPARES:

Stores and Spares again have 5 sub categories.

1. General Stores

2. Spares

3. Loose tools

4. Construction materials-steels

5. Construction materials-cement

8. QUALITY AND LEAN:


TOTAL QUALITY MANAGEMENT:

Laboratory is another important section where the raw material as well as

the final product is brought to check whether it is up to the mark or not. Laboratory

is divided into six different sections which are as follows:

Hot room: In this section all the work related to heat to creating heat are

being done. Usually the work done here is like checking the moisture content

of the raw materials so that the material becomes useable.

Sampling room: After the product is produced, it is brought to this section

from the production unit. Here the product which is brought after each and

every hour is the granulated product. The sample brought is approximately of

1 kg weight. Then the sample is divided in two equal parts and is ground into

a mixture. The powder is then diluted with acid to a make a solution. This

solution is taken to the auto sampling room.

Auto sampling room: This section is fully automatic and computerized in this

section the solution made in the sampling room is brought every hour for

analysis and is passed through the analyzing machine, where the solution of

the product NPK is automatically divided into 3 parts i.e. N (nitrogen), P

(phosphoric acid), K (potash). As the machine is connected to computer, the

graph can be seen on the computer monitor and accordingly the percentage

of the sample is matched to the standard percentage that is :

Grade 1: 10:26:26

Grade 2: 12:32:16

Dap: 18:46:00


The graph is also monitored on the computer installed in the production unit

and if any difference is seen in the percentage of the materials used, then

accordingly the changes are made in those materials.

Process control room: Here the process done is of in between material i.e,

the material between the raw material and the production. After removal of

moisture from it, the material is brought here for testing and a report of its

suitability is prepared.

Water testing room: In this section. The water is brought for testing after its

demineralization (the water is dematerialized in the off sit section). If the

water contains any chloride in it, it is sent for mineralization as chlorine water

may not be useful in the boilers.

Bag testing room: Here the NPK as well as other bags are brought for

checking its quality before going to the bagging department.

The checking is done in terms of:

1) No. of stitches in 1 Sq inch

2) length and width according to the weight

3) end stitches

4) thickness

5) breaking strength etc.


QUALITY CONTROL

Quality control during storage:

The products conveyed from the complex plant are scientifically stored in bulk storage and

never bagged directly. These are reclaimed with scrapper loaders moving continuously

along the length of the bins to get homogenous, blended and composite material for final

dispatch. The blending operation helps in removing non-uniformity in the composition of

the product received at different manufacturing periods from the plant.

The bagged product is analyzed for all the nutrients before dispatch. The process further

improves the nutrient control of the product for compliance of FCO tolerance limit in plant

nutrients.

Field level quality control:

Rigid surveillance measures are exercised by the IFFCO marketing field staff to

ensure that the quality of the product does not deteriorate during transportation, storage

and handling at field level. Samples of the IFFCO product are drawn on random basis by the

field officials and sent back to plant laboratory for nutrient check. These samples are

collected evenly spread over the entire area of marketing operations all over the country.

Thus excellent feedback is available to the plants about the quality of their product in the

field, and appropriate actions are being taken to maintain desired level of nutrients in

product at field level also.

The above Quality Control Measures thus taken at IFFCO - Kandla, have ensured

quality product to the farmers. The cost inherent in the quality control measures adopted, is

being amply compensated by the benefit accruing to the manufacturer and the consumer.


Kandla-ISO 14001:

Kandla unit initiated the process of obtaining ISO 14001 certification.

National Productivity Council was the consultants for the same and M/S BVQI is the auditors. The

final audit for assessment of issue of certificate was carried out.

IFFCO Kandla has been certified as Environmental Standards ISO 14001:1996 company by

M/S BVQI for the operational scope of "Manufacture of DAP and NPK Fertilizers" with effect from

27th Nov'2000.

LEAN MANAGEMENT

REUSE OR DISPOSE WASTES AND EFFLUENTS:

The waste materials produced from the manufacturing process is effectively disposed at

a safer place. In IFFCO, bio waste (hospital waste) and canteen waste is disposed by burning

or burying them in the pit. Industrial waste (scrap) is sold to Companies or NGO. Plastics are

either sold or disposed of by proper procedure. Waste water is recycled and reused. Dust

fumes arising from the manufacturing process is processed and made harmless then

allowed to pass from the chimney into the atmosphere.

OPTIMUM UTILIZATION OF RESOURCES:

The potash and other raw-materials in powder or granule form are stored in big storage

areas under huge sheds. These raw-materials are in the form of bulk storage therefore they

are spread across the entire storage area. Yet these raw-materials are not allowed to go

waste as the workers are made to accumulate these and reuse them in the production

process.


Five S Methodology:

Proper arrangement for every process and storage facilities is a part of lean. “Everything

should have a place and everything should be in its place.”

1. Sort (separate, scrap, sift) – Separate the necessary from the unnecessary and

get rid of unnecessary.

2. Set in order (straighten, store, simplify) – Organize the work area and put

everything in its place.

3. Shine (scrub, sweep) – Sweep, wash, clean, and shine everything around working

area.

4. Standardize – Use standard methods to maintain the work area at a high level so

that it is easy to keep everything clean for a constant state of readiness.

5. Sustain (systematize, self-discipline) – Ensure that all 5S policies are followed

through the entire organization by means of empowerment, commitment, and

accountability.

Thus on the basis of above mentioned factors and the observations we found that

IFFCO follows the Lean Management though most of the employees are following it

without knowing this Management term.


9. RESOURCE PLANNING:

BILL OF MATERIALS:

The entire business process depends on planning and scheduling. From

demand forecasting to final dispatch of product to the customers require a

detailed planning procedure. IFFCO follows a very systematic process when it


Forecast demand

Bill Of Materials

Check Inventory

Capacity Plan

Material Plan

Purchase Requisition

Production order

Calculati on of Schedule

Issue of Tender

Production Process

Bagging StorageDispatch

comes to resource planning. This includes preparing material budgets,

production budgets, sales budgets, financial budgets and above all the master

budget. When the business firm forecasts demand for its product, it prepares a

purchase requisition and issues tender. The firm needs to prepare a Bill of

Materials (BOM) to verify the available stock quantity and the stock quantity

needed to be procured. Bill of Materials contains detailed information regarding

the raw-materials required and the specific quantity of raw-materials needed.

Then after considering the production capacity and materials availability

scheduling is done for every activity to be conducted. Production order is given

to the manufacturing unit. Production process is carried out and the raw-

materials are converted into Work-in-progress goods (WIP) and then into

finished goods. The finished goods are sent to storage warehouses where they

are stored in bulk and then sent to the bagging department where the fertilizers

are bagged in different sized and coloured bags according to the variety of

fertilizers. Finally the fertilizers are dispatched to various parts of the country to

its customers through road, rail and sea transport.

ANALYSIS

IFFCO follows the best possible methods to reduce wastage and to make optimum

utilization of its scarce resources. This is because the raw-materials are very costly and also

the investment in such huge plants is also huge. There is no scope to waste the financial or

other resources as this will affect the functioning of the firm. It undertakes an efficient


production process. IFFCO is not an entirely profit making firm. It operates with a noble

objective of serving the farmers with best possible products and thus enriching their lives.

The procurement and storage of such hazardous raw-materials is very difficult task yet IFFCO

has succeeded in its operations with minimum reported accidents till date. It also takes care

of its employees and their benefits. Various training and development programs are held for

its employees and other welfare activities are carried out by IFFCO in the interest of its

employees. Thus the success of a business firm is not profits alone, but an efficient and

willing flexible workforce working day and night not only for their own benefits but also for

the benefit of the society.

CONCLUSION

In the overall success of a manufacturing firm, the application of best practices of

production as well as best Human Resource practices is essential. With the adoption of


latest technologies and optimum utilization of resources any business firm can reap benefits

not only for the firm but also for the entire society. As it is said that business earns from the

society and therefore it is the responsibility of business firm to provide the society with

benefits in return. IFFCO evidently proves to be the best example of this.

BIBILOGRAPHY

http://www.iffco.coop/


http://www.iffco.coop/

http://www.clamshellbeachpress.com/html/book1_sample.pdf

http://www.iffco.nic.in/applications/brihaspat.nsf/

0/0215e21f284706aae525677800325184/$FILE/doc_7.pdf

Some information’s taken from the material provided by the organization official.


http://www.iffco.nic.in/applications/brihaspat.nsf/0/0215e21f284706aae525677800325184/$FILE/doc_7.pdf

http://www.iffco.nic.in/applications/brihaspat.nsf/0/0215e21f284706aae525677800325184/$FILE/doc_7.pdf

http://www.clamshellbeachpress.com/html/book1_sample.pdf

Iffco Final Project Pom

Documents

drag flight conveyor

ammonium phosphate slurry

auto sampling room

dryer pipe reactor

granulator pipe reactor

efficient production process

licensed capacity increasing

iffco kandla unit