kribhco

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AProject Report

On Summer Training at Krishak Bharti Co-Operative Ltd. HAZIRA

Submitted by: Exam Nos.

Deepak Sharma 85 Anish Nair 46

Zaid Patel 70 Kevin Varsani 101 Tandel Gracee 93

Submitted to:

Radha Vyas Jueela Mankar

Namrata Khilochiya Hiren Patel

Vivekanand College for BBA, SuratAcademic Year-2006-07

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ACKNOWLEGMENT

Sharing our experience is one of the biggest honors, which every one cannot

experience. To share our experience at KRIBHCO as management student is a

matter grate honor and pride.

We are grateful to KRIBHCO for letting us to do this project. We

express our gratitude to Mr. Sunil jain (P&A Manager) Mr.Sampat (store

department), Mr. Thomas T.S. (F & A Deptt), Mr. M.N Patel (H.R.D Deptt) .We are

really thankful to employees of KRIBHCO who have been guiding us in this path

Step by step and have made our path really simple to get through .we will use this

experience through out our career and will make our future bright. So once again we

thank all of them.

In regard to this programmed, we would like to acknowledge our

gratitude and Thanks to coordinator, Vivekanand College for B.B.A Veer Narmad

South Gujarat University for catering us the opportunity of training. We also forward

our special thanks to director sir Mr.vipul joshi and faculty member Mrs. Radha Vyas,

Mrs. Jueela mankar for guiding us in training Programme. The valuable suggestion

of our faculty member during the course our Project work and giving us inspiration to

achieve our goal. The shape that project has been taken is due to our faculty

member’s help, judicious guideline and encouragement.

And three most precious part of our life, our parents who have showered

their love and support which can be never repaid in any form but can be

commemorated without them this achievement could not have been achieved.

Nair Anish

SR. PARTICULAR PAGE

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No. No.

1 INTRODUCTION OF KRIBHCO 4

2 GROWTH OF FERTILIZER INDUSTRY 6

3 ORGANIZATIONAL STRUCTURE OF KRIBHCO 13

4 QUALITY POLICY 14

5 HUMAN RESOURCE DEPARTMENT 15

6 MARKETING DEPARTMENT 46

7 PRODUCTION DEPARTMENT 66

8 MATERIAL DEPARTMENT 83

9 PURCHASE DEPARTMENT 86

10 STORES DEPARTMENT 91

11 FINANCE DEPARTMENT 110

12 FUTURE PLANS 134

13 SWOT ANALYSIS 135

14 RECOMMENDATION 137

15 BIBLIOGRAPHY 138

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INTRODUCTION OF KRIBHCO

Krishak Bharti Co-operative Limited

“KRIBHCO” the world’s premier fertilizer producing co-operative has an

outstanding track record to its credit in all spheres of its act ivies. Since 17th April

1980 as a national level co-operative society promoted by Government of India

authorized to manufacturing and distribution of fertilizers. Chemical fertilizer and

allied farm imputes “KRIBHCO” imbibed the co-operative philosophy fulfilling its

commitment to strengthening and promoting the cause of agriculture development

and co-operative movements in the country.

Krishak Bharti co-operative limited popularly known as “KRIBHCO” has

been registered as national level co-operative society under the provision of the

multi-state co-operative societies act, 1984.

The”KRIBHCO” hazira unit is located around 15 kms, west of Surat

and lies on the north of river Tapti. An all weather road from Surat to hazira connects

the plant site with the city. The cannel belonging to irrigation department is running

on the plant site and is feeding water from ukai. A railway feeder line apporx. 55

kms. Long has connected the site with Bombay –Ahmedabad main line.

KRIBHCO multiunit co-operative societies were promoted jointly

by IFFCO and the agricultural co-operative all over the country.

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KRIBHCO PLANT AT HAZIRA Plant is based on Natural Gas from BOMBAY HIGH SOUTH BASSEIN. The society massive Ammonia, Urea complex is situated at HAZIRA near SURAT in GUJARAT.

KRIBHCO plant is one of the largest and most modern fertilizer compels in the co-operative sector in the world. It has two phases on UREA plants consisting of two streams of 1100 MTPP with an annual capacity to produce 14.52lakh.MT of urea equipment to 6.68 lakhs MT interns of nutrient nitrogen. KRIBHCO aims to fulfill the ever-growing fertilizer needs of the country. The HAZIRA project with project zero date of 31st March, 1985. The estimated project cost was Rs.957.71 crore However, the final project cost was Rs.885 crore resulting in hot saving at Rs. 72.71 crore.

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Growth of Fertilizer Industry

According to Fertilizer Association of India One of the most significant

achievement of the post Independence period of our Country has been the ability to

achieve self-sufficiency in food grain production. This achievement is due to the

rapid growth and improvement of Fertilizer industry. The Fertilizer industry is growing

at the rate of 4% for the last 10 years and has been contributing a significant part of

G.D.P.The growth and importance of Fertilizer industry in India can be divided

in to three distinct phases, these are given below.

1. Pro Green Revolution Period:

This period is described in 1952-1953 era where increased growth of

food grains took place however this increased production in food grains took place

due to increased irrigation methods. In this phase the land under agriculture was

made more, during this period about 80% of the country's population was involved in

Agriculture either directly or indirectly. During this period the fertilizer's which were

manufactured were Super Phosphate & Ammonium Sulphate.

2. Green Revolution Period:

During this phase Government stated the programme aimed at making

our country self sufficient in Food Products. This was the period between the years

1959-1960. This plan laid the emphasis on production of High Yielding Varieties. To

make this plan a success there was a high need to make soil fertile by providing it

with nutrients like Phosphorus, Nitrogen and Potassium.During this phase Fertilizer

industry tried to play a vital role, became one of the most important part of our

economy.

3. The Post Green Revolution Period:

The world's population along with Indian population has kept on growing at an

alarming rate; the fertilizer companies all over India are trying to expand their scale

of operations in order to increase the production rate. The current demand of

fertilizers in India is 18 million tones.

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1. Public Sector

The Fertilizer And Chemicals Travancore Ltd. (FACT)

Hindustan Fertilizer Corporation Ltd. (HFC)

Madras Fertilizer Ltd. (MFL)

Hindustan Copper Ltd. (HCL)

Naively Lignite Corporation Ltd. (NLC)

Pyrites, Phosphates And Chemicals Ltd. (PPCL)

Rashtriya Chemicals And Fertilizers Ltd. (RCFL)

2. Co-Operative Sector

There are only two fertilizer manufacturing societies in Co-operative sector.

Indian Farmers Fertilizers Co-Operative Ltd. (IFFCO)

Krishak Bharti Co-Operative Ltd. (KRIBHCO)

3. Private Sector

Fertilizer producing company in private sector.

Gujarat Narmada Valley Fertilizer Co. Ltd. (GNFC)

Hindustan Lever Ltd. (HLL)

Hari Fertilizer

ICI India Ltd.

Indo Gulf Fertilizers & Chemicals Corporation Ltd.

Mangalore Chemicals & Fertilizers Ltd. (MCFL)

Southern Petro Chemicals Industries Corporations Ltd.

Nagarjuna Fertilizer & Chemical Ltd. (NFCL)

Shri Ram Fertilizer & Chemicals Ltd.

Tuticorian Alkali Chemicals & Fertilizer Ltd.

Zuari Agro Chemicals Ltd.

Bindali Agro Chemicals Ltd.

Chambal Fertilizer & Petrochemical Corporations Ltd. (DEPCL)

Gujarat State Fertilizer Company (GSFC)

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MEMBERSHIP: -

A cooperative thrives on the trust of, its members. Membership of

“KRIBHCO” is open to government of India, national state and district and village

level cooperative society. At the initial stage, way back in June, 1981 the total

membership in ”KRIBHCO” was only 221 cooperative societies which rose

significantly to 6044 cooperative societies as on march 31,2005 as against 5790

as on march 31 2004. Phenomenal progress made by the society becomes a

testimony to the ever-increasing membership over the years.

The total paid up share capital as on March 31, 2005 was rs.39, 354.15

lakh as against rs.49, 170.72lakh in the previous year. During the current

financial year, the society has refunded share capital of rs.9700 lakh to “IFFCO”

and government of India respectively .the state –wise membership with share

capital contribution as on March 31, 2005 vis-à-vis march 31 2004.

5188

56245732 5790

6044

460048005000520054005600580060006200

2000-01 2001-02 2002-03 2003-04 2004-05

Years

Kribhco Membership

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OBJECTIVES: -

a) To undertake the activities for he rural upliftment and agriculture development.

b) To promote economic interest of its members by undertaking manufacturing

of chemical fertilizer & allied product.

In furtherance of these objectives “KRIBHCO” may undertake one or more of

the following activities: -

(I) To undertake production processing, manufacture, sale distribution,

marketing, import export and to otherwise deal in agriculture production

requisites.

(II) To set up storage units for storing fertilizer and other goods by itself or in

collaboration with other agency.

(III) To act as warehousing agency under the warehousing act and own go

downs or hire go downs for the storage of fertilizers and other goods.

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AWARDS: -

The excellence performance of the society has brought a number of laurels from

various organizations .The awards received during year were as follows: -

KRIBHCO receives gold star award of Excellence from Institute of Economic studies for its overall excellent performance.

KRIBHCO receives the Rajshabha Award from Honble Minister of Chemical and Fertilizers for 2002-03, 2003-04 and 2004-05.

KRIBHCO was awarded First Prize for Production, Promotion and marketing of Bio Fertilizers for the year 2004-05 on 1st December 05 by FAI.

MILE STONES: -

(I) Project zero Date : 31/03/1981

(II) Foundation stone laid by Smt. Indira Gandhi : 5/02/1982

(III) Project completion : 31/03/1985

(IV) Plan completion : 26/11/1985

(V) Commercial production : 1/3/1986

(VI)Percent capacity utilization : Urea 99%

Ammonia95%

(VII) Plant ready of production : January/September

1985

(VIII) Gas available by ONGC : PHASE 1 & PHASE 2

18-9-85 6-11-85

(IX) Trial production Ammonia : PHASE 1 & PHASE 2

14-11-85 30-11-85

Urea (stream 11/31) 26-11-85 13-12-85

Ammonia (stream 21/41) 31-12-85 01-12-85

(X) ISO certificate (I) KRIBHCO plant

ISO 9001-2000

(II) KRIBHCO plant

ISO 14001

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(III) KRIBHCO Mktg office

ISO 9001-2000

DEPARTMENT AND MANPOWERS AT “KRIBHCO”

Financing & Accounting 62

Personnel & administration 82

HRD 09

Security 101

Material 55

Medical 32

Mechanical 210

Transportation 29

Fire safety 45

Purchase & store 56

Instrument 90

Electrical & civil 101

Laboratory 54

Production (HEAP Plant) 440

Total 1379

Contract labor 1600

Total manpower 2979

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PERFORMANCE HIGHLIGHT:-

RECORDS 2006-07

Highest monthly urea dispatches from Plant Oct. 06 since inception

Earlier Record (Dec. 87)

1.98 Lacs MT1.94 Lacs MT

Highest monthly Urea Sales July 06 since inception

Earlier Records (June 87)

4.11 Lacs MT3.84 Lacs MT

Highest Total Annual Urea Sale 2006-07 since inception

Earlier Record (2005-06)

34.6 Lacs MT28.2 Lacs MT

Highest Daily Bio Fertilizer Production from Hazira Unit ( 01-14.11.2006)

Earlier Record

3000 Kg2660 Kg

Highest Total Monthly Bio Fertilizer Production Oct 06 Since Inception

Earlier Record (Oct 06)

97.5 MT94.4 MT

Highest Monthly Bio Fertilizer Production from Hazira Unit Nov 06 since Inception

Earlier Period

80.1 MT71.8 MT

Highest Annual Bio-Fertilizer Sales 2006-07Earlier Record (2005-06)

784.4 MT714.4 MT

Highest Annual Total Bio Fertilizers Dispatches 2006-07

Earlier Record (2005-06)

843.3 MT716.4 MT

Highest Annual Bio-Fertilizers dispatch from Hazira Unit 2006-07

Earlier Record (2003-04)

638.8 MT491.4 MT

Highest Sales ProductivityEarlier Record (2005-06)

5388 MT/ EMP4315 MT/ EMP

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ORGANIZATIONAL CHART OF KRIBHCO

Government of India

Ministry of Agriculture

Dept. of Fertilizer & Chemical

Chairman

Board of Directors

Managing Director

Operational Director

GM (P) GM (Materials) GM (F&A) GM (P&A) GM (Tech.) CM (MS) GM (Maintenance)

JGM (P) JGM(Materials) JGM(F&A) JGM (P&A) JGM(Tech.) JGM (Maintenance)

CM(P) CM (Materials) CM(F&A) CM(P&A) CM (Tech.) CM (Maintenance)

Purchase Store Process Project Laboratory F&S

Ammonia Urea Power Transportation Civil Mech. Instrument Elect

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QUALITY POLICY

Management of KRIBHCO, Hazira plant is committed to operate and maintain its

fertilizer manufacturing complex through quality assurance, environmental protection

and to the satisfaction of customers.

KRIBHCO, Hazira plant shall achieve this quality policy through following

objectives:

1. Continually upgrading technology to improve plant efficiency & reliability.

2. Maintaining & improving the safety & environmental performance.

3. Improving the skills & knowledge of personnel.

4. Continuously improving the quality Management system.

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HUMAN RESOURCE MANAGEMENT

Human Resource Management is that part of management which is

concerned with people at work & their relationship within the organization. The term

Human Resource Management refers to the management of personnel in the

organization of any company to achieve the predetermined goals. The duty of the

personnel manager is to look after the personnel department and various functions

of the personnel like recruitment, selection, promotion, transfer, etc.

In KRIBHCO, there is Personnel & Administration Department to

carryout the functions of Human Resource Management. Here, the term Personnel &

Administrations refers to the administration of personnel.

The objective of this department is as below:

(1) To ensure satisfaction to the workers so that they are freely ready to work.

(2) To attain maximum individual development.

(3) To improve efficiency of the human resources.

Realizing that employees are its greatest assets, KRIBHCO from its very

inception has been striving to build up a sound & transparent organizational culture

to inclusive to sense of belonging among its employees.

Personnel & Administration department mainly deal with:

Manpower Need – Why? Where? How? And When?

Recruitment & Establishment functions

Performance Appraisal

Welfare & other services

Loans & Claims

Industrial Relations and

Other miscellaneous functions.

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History of HRD:-

Efforts since the last 15 years can be divided 3 distinct phases:

1. Foundation (1980 – 1987)

2. consolidation (1987 – 1993)

3. Growth (1993 onwards)

This division has been on the basis of the various functions and role that the

department had to pay along the line starting right from the time of its introduction as

a training department to the present Human Resources Department.

Human Resource Department

‘KRIBHCO’ considers its human resources as a the greatest assets. It

invests time and money to develop its employees through various HRD mechanisms.

Regular in-house training programs sponsorship to outside training institution,

brainstorming, problem solving workshops etc. are conducted for employees at all

level.

Structure:-

Chief Manager (N.Bhatta)

Senior Manager (D.K Mandal)

Manager (H.D Desai)

Deputy Manager (P.T Solanki)

Sr. Assistant Manager (S.N Purabia)

Assistant Manager (M.N Patel)

Junior Manager (K.S Mohanan)

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Average Employee Turnover rate--- NIL

Average Employee Absenteeism rate---NIL

HRD Activities:-

In our endeavor to facilities KRIBHCO employees towards their growth

and development the activities have been continuing at reasonable fair pace.

An exclusive in-house training program has been designed to upgrade the

technical knowledge of our operators.

“Self-awareness and inter personnel relationship” play a vital role in brining

about a sea change in the functioning of any system comprising human and

hence they have been organizing these programs on a continues basis to give

exposure to all employees in a planned and phased manner.

Technical and non-technical programs.

Orientation training programs for new employees.

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HR planning:-

HR planning includes estimation of how many qualified people are

necessary to carry out the assigned activities, how many people will be available and

what if anything, must be done to ensure that personnel supply equals personnel

demand at appropriate point in future. It is the foundation for all personnel functions.

In KRIBHCO, forecast of manpower is based on expected promotion

and retirement. In KRIBHCO, “bottom-up” approach is used i.e. manager or

department head submit their departmental proposal to Establishment Section,

which is forwarded to corporate office.

Training and DevelopmentFeedback and counselingEducational opportunitiesRewards and encouragement

Induction training on the job training refresher courses

Process simulator informationGallery conference room audio – visual aids

Orientation programIn house training

Evaluation and feedback

Technical libraryLecture hallauditorium

Facilities

Mechanism

Methodology

HRD

Performance appraisal

Proper communication

In house journals

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Objectives of HRD at KRIBHCO:-

Maximize department contribution to KRIBHCO.

To increase KRIBHCO` s foundation through increasing in employees

contribution.

Provide an opening of self- expression and self-development in congruence

with organization.

Provide need-based training to all employees of the organization.

Plan the right working condition for employee’s progress.

Plan and design appropriate training strategies to build competencies of

employees

Ensure growth and development for all.

Training and Development: -

Organizations become dynamic and grow through zeal, caliber and

vision of their Human Recourses. “KRIBHCO” has always considered development

of Human Resources as its most important responsibility because this alone ensures

the well being and growth of the origination. Training and development activities of

society from a part of continuous process in integrating the organizational needs and

the needs of individuals, “willingness to change” for betterment is the pre-requisite

for moving towards excellence.

Training forms the most important function in the development of the

human resources training is giving at there different phases:

1) Individual Phase

2) Management Development Phase

3) Organization Development Phase

The adjectives of training program at “KRIBHCO” have a very wide scope, which is

as follows:

To minimize the time gap in learning new development.

To equip the participants with requisition ability so that they can work with

minimum supervision.

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To enable employees to update their knowledge and increase the level of

performance on their present job assignment as well as canalize their

inherent potential, in order to make him Holistic Person.

To foster initiative, self confidence and to overcome manpower

obsolescence occurring due to age, temperament, lack of motivation or

inability of person to adapt to changes.

To impart training to new entrants to enable them to take up their

assignment effectively.

To create an environment of “We feeling” and enhance accountability of

people.

Identification of Training Needs:-

A committee has been constituted at Head Office for identification and

assessment of training needs of each employee posted at HO/ CMO/ SMOs. On the

basis of specific recommendation of Head of departments, employees the committee

would nominate employees for various seminar / Training Programs / Conferences

etc, either in India or abroad to meet the development needs.

Training Program:-

HRD Department at “KRIBHCO” is conducting various programs for

two categories of persons.

1) Non-Employees

2) Employees of KRIBHCO

1. Non-Employees:-

HRD Department of KRIBHCO is dealing with training apprentices

under Apprentice Act, 1926 for the categories such as ITI and Diploma, Graduate

Engineers and Science Graduate in the following Trades:

i. Fitter

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ii. Turner

iii. Machinist

iv. Wireman

v. Electrician

vi. Tool and Dye

vii. mechanic

viii. Draughtsman

ix. Electronics

x. Computer Applications

Vocational Training Programs:-

This is also another training program conducted by HRD Department.

This is normally organized for students coming for practical training in industrial

organization that is a part of their academic curriculum.

Training is provided to student of different course like MLW, MHRD,

BBA, MBA, DCA, M.SC and Engineering Graduate during their vacation. During

this training they are exposed to the activities of various departments and the

practical work. They also called apprentices for 1 year from (BOAT). They pay

stipend of Rs. 3600/- to every apprentices per month

Employee:-

To sustain the healthy work culture and maximize the utilization of

human potential in achieving organizational objectives, KRIBHCO management

has been giving continuous thrust on the following HRD sub-system.

In-house training:-

After the identification of the training needs of employee and keeping

in view the requirement of the society, the in-house training program are

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organized. In such training programs, faculties are drawn from within the

organization and from outside also.

The infrastructure facilities for in-house training at Hazira plant include:

I. An qualification with a capacity for 500 persons.

II. Two air-condition lecture hales to accommodate 50 persons each.

III. Full fledged library.

Induction training:-

New appointees are imparted Induction training covering KRIBHCO`

s aim objective and achievement, work culture, office. Normally internal faculty is

drawn for such training. New appointees are put on the job only after necessary

induction training.

Similarly, special programs are being designed and the employees who have

been provided to officer category from the workmen category in the recent past.

Training scheme:-

S1.No.

Discipline Qualification Training limit

Max. age limit

Design. On absorption

01. Engg. ManagementServices-I

Engg. Graduate 1 yr 25 yrs. Asst. Engr.

02. Engg. SubordinateService-II

Engg. Dip. Holders 2 yrs. 23 yrs. Opts/ Tech

03. Mgt. Services MBAs from IIMs Ahmedabad, Bangalore, Calcutta,Lucknow

To be inducted as J.M in Gr. G2

04. Pers. & IR PG Dip. Business Mgr with specialization in Pers/ IR from XLRI,Jamshedpur

1 yr. 24 yrs. J.M in Gr. H

05. Agri. Graduate trainee

B.Sc. Agri. With 1st class 1 yr. 25 yrs. Field Rep.

06. Commercial Subordinate Service

MBA with 55 marks other than IIMs/ XLRI

2 yrs. 25 yrs. Asstt. Gr-1

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07. Admn. Subordinate Service

Master Degree in Social work with Min 55 marks/ PG Dip. In PM/ IR/ Social Welfare/ DSW/ LSW/ DLL from recognized Institution

2 yrs. 25 yrs. Asstt. Gr-1

08. Jr. Commercial Service

Graduate 1 yr. 25 yrs. Clerk

Personnel & Administration:-

Personnel Department is that part of management, which is

concerned with people at work 7 their relationship within the organization. The

term personnel management refers to the management of personnel in the

organization of any company to achieve the predetermined goals. The duty of the

personnel manager is to look after the personnel department and various

functions of the personnel like recruitment, selection, promotion, transfer, etc.

As there is so much important of the heart in the human being so

much as there is also importance of person in any organization. Person working

in the organization are considered as the blood and heart of the organization. The

success of unit mainly depends upon the personnel function in any organization.

As in the organization there must be maintain good relation between personnel of

different department. Personnel manager plays very important role between

employers and employees.

The objective of this department is as below:

1) To ensure satisfaction to the workers so that they are freely ready to work.

2) To attain maximum individual development.

3) To improve efficiency of the human resources.

Personnel & Administration department is divided into two major departments.

1) Personnel Department

2) Administration Department

The personnel department is further sub divided into four sub-division:

a) Recruitment and Establishment cell

b) Tine office and Wage & Salary Administration cell

c) Industrial Relations cell

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d) Contract cell

The Administration Department look after the following matters:

a) Canteen

b) Transportation

c) Township

d) Horticulture

e) Guest house/ temple/ garden maintenance etc

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Structure of P&A department:-

General Manager/Joint general manager

Manager(P &A Deptt.)Estate

Manager(P &A Deptt.)

Personnel

Executive director

Manager(P & Legal)

Sr.Manager(P & Legal)

HAEP

Estate, legal recruitment, time office

Industrial relation, welfare Administration

Operational director

Sr.Manager(P & A Deptt.)

Sr.Manager(P &A Deptt.)Administration

Sr.Manager(P &A deptt.

Manager(P &A Deptt.)Time office

Manager(P &A Deptt.)

Welfare

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Grade system in KRIBHCO plant site HAZIRA

A Managing Director

B Director [Operations/ Marketing/ finance]

B1 Executive Director

C senior general manager/ General Manager

D Joint general manager / Chief Manager

E senior manager/ CMO

F Manager

F1 Deputy Manager/ senior M.O.

G Sr. Assistant manager/ Sr. area manager/ Sr. engineer/ foreman

G1 Assistant manager/ Engineer/ Assistant foreman

G2 Assistant Engineer/ Assistant manager

H Joint manager/ P.S.

Function of Personnel & Administration DepartmentTIME OFFICE : Time office Management, Attendance & Leave,

Wage Administration, Leaves travel Concession, Marketing Bus Coupons.

LOANS & CLAMS : HBL, Conveyance Loan, Salary Advance, Medical Bills, Accident Insurance Claims.

ESTABLISHMENT : Recruitment, Placement, Confirmation, Appraisal Report, DPC, Personnel Records, Employment Returns, Data Bank.

TRAINING & DEVELOPMENT

: Nominating In-House/Outside raining, Learning Group, Vocational Trainees.

PLANTHORTICULTURE

: Horticulture work in KRIBHCO & HAEP Plants

FURNITURE BUDGETINTERNAL AUDIT

: Procurement & Maintenance of office furniture & Equipment, Physical Verification of Furniture.

BUDGET & INTERNAL AUDIT, VIGILANCE MATTERS

: Preparation of Budget and matters related to it, Internal Audit coordination & replies, Vigilance matters.

RURAL DVELOPMENT PUBLIC RELATIPON

: RURAL Development, Release of Advertisement & Processing of Bills, Publishing of KRIBHCO DARPAN/ Kribhco Today Publicity/ Liaison with Press, Photography & Videography, Periodicals & Newspapers.

HOUSE KEEPING & DESPATCH

: House keeping and upkeep of Administrative Block, Dispatch Section, Courier Service,Attendant Service to various Sections.

INDUSTRIAL RELATIONS : Industrial Relation, Union & Association matters,

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Collective Bargaining, Management of Industrial canteen, Review of Personnel policies, Wage Revision matters, Incentive payment, Sport & Games, Cooperative Stores, Unit Level Class, Management of Class, Management of Schools, Welfare matters.

IMPLEMENTATION OF HINDI

: Office Language Implementation

GUEST HOUSE LIVERIES LOCAL PURCHSE LAN PRINTING OF STATIONERY

: Management of Guest House-I & GH-II, training Hostel, Procurement of liveries, Gift & complimentary, local Purchase, Department Imp rest, Printing of Stationary & Visiting Cards etc.

TRANSPORTATION : Hiring of Cars/ uses, staff Cars/ Buses, excursion trips, Rail/Air Booking, Duplication Section.

ESTABLISHMENT : Township Horticulture, Maintenance of Public Building, House-keeping of Township House, Community Hall, Ladies Club, Celebration of Festivals, Township House & Shop Allotment, Hospital & security Administration, Fish culture, Horticulture of township

CONTRACT CELLLEGAL CELL

: Compliance of labour laws & contract Labour [R&A] Act, Verification & Witnessing Disbursement of Wages to Contract Labour, Matters related to HAIA, SUDA& Payment Legal Cases, Disciplinary matters.

PF & TERMINAL BENEFITS JMC

: DBF & terminal Benefits, Joint Management Council, Post Retirement Medical Assistance, Pf trust, Suggestion Scheme.

COMPUTERIZATION – NODAL OFFOCER

: LAN Implementation in P&A Department, computerization & other matters related to Computer.

HAEP ADMINISTRATION : Day to Day Administration matters of HAEPHOSPITAL ADMINISTRATION

: Day to Day Administration matters of Hospital

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RECRUITMENT & ESTABHLISHMENT

Organizations are dynamic, organic ongoing systems consisting of

many individual. A successful management focuses on the individual and then

attempts to relate the individual to the group and different groups to the organization.

Individuals join organization to fulfill their goal and aspirations within the framework

of the organization. It is one of the major functions of management to convert the

goals and aspirations of the individuals into the goals of the organization.

KRIBHCO in the formative stages inherited miles and practices from

IFFCO. Subsequently, need was felt to streamline and standardized the existing

practices and to evolve R&P guidelines for KRIBHCO.

In line with the above, R&P guideline were formed and revised from time

to time. There are only guideline for the management and do not contain the detailed

procedure to implement the same.

Salient feature of the guidelines are given below:

General:-

Vacant position in organization chart shall not automatically be treated

as operative to be filled by recruitment or promotion. The positions shown in the

chart are estimated, keeping in view current and future requirement and are to be

operated only when it becomes necessary to operate them with the approval of

competent authority.

Recruitment from outside agencies shall be made when , in the opinion

of the management suitable persons are not available within the organization.

Recruitment from outside may also be done in case of addition requirements of

manpower, due to expansion of the organization.

Recruitment:-

All existing employees of KRIBHCO shall be considered for ‘promotion’

or ‘direct recruitment’. Only for the next higher grade, departmental candidates may

apply against open advertisement provided they have completed one years of

service in the immediate lower grade and the applicant otherwise meets the

specification prescribed for the posts except age limitation.

- 30 -

Sources of Recruitment:-

Vacant positions are filled up through internal or external sources of

recruitment.

Internal Sources of Recruitment:

1. Promotion

2. Lateral Transfers

3. Amongst Trainees/ Apprentices

External Sources of Recruitment

1. Open Advertisement

2. Employment Exchange

3. Campus Interview

4. On deputation from Government/ Other organization

5. On contract for specific period

All recruitment to ‘H1’ grade and below is done on local unit basis. For

‘G2’ grade and above, it is done at all India basis. For grade ‘D’ and above, as per

the selection post and management specification.

Recruitment Procedure:-

The stage wise details of Recruitment are as under:

1. Recruitment from the concerned Department.

2. Availability of Vacancy as per Organization Chart.

3. Approval of Competent Authority to fill the post.

4. Advertisement in the Newspapers/ local Employment Exchanges such as

Surat.

(Mandvi and Songadh if required) as per the specification (copy enclosed)

5. Recruitment regarding ‘H’ grade and below grades on local unit basis.

6. Recruitment regarding ‘G2’ grade and above grades shall be made on All

India basis.

7. Recruitment & promotion for posts in grade ‘ D’ and above are concerned

these will be treated as Selection Posts and Management shall follow such

specifications as may be required form time to time.

- 31 -

8. Scrutiny of applications received and preparation of lists of eligible

candidates. A list of rejected candidates with reasons also to be prepared. A

separate list of Gen/ OBC/ SC/ ST.

9. Taking approval for engaging outside agency to conduct the written test if

required.

SELECTION

Selection Procedure

The stages wise details of selection are as under:

1. Screening of applications of eligible candidates.

2. issue of Call Letters for the written test to the eligible candidates copy

enclosed)

3. Arranging payment of TA to SC/ST candidates through Accounts Department

sending therewith a list such candidates. TA from enclosed)

4. Supervision at the Centre of test. Valuation of test papers and preparation of

merit list.

5. Final lists of candidates for personal interview to be prepared. Concession for

SC/S candidates in the written test.

6. Constitution of Selection Committee – Approval from the Competent Authority.

Communication to the Chairman of the Committee for fixing dates for

Personal Interview.

7. Issue of call letters for Personal Interview along with Bio-data from.

Preparation of Bio-data of the selected candidates for submission to the

Committee Members.

8. Verification of Original Certificates along with one set of photocopy of the

certificates of the candidates attending the personal interview and preparation

of their attendance list.

9. Making physical arrangements for the interview. Preparation of interview

proceedings on the sane day. Obtaining approval from the Competent

Authority for the selection.

- 32 -

10. Issue of Offer of Appointment to the selected candidates along with Medical

Examination Form and Character Verification form giving 15 days time for

joining. Receipt of Acceptance copy from the selected.

11.On joining – verification of the original certificates, medical examination form,

No objection certificate form the previous Employer.

12.Preparation of Joining Report. Copy enclose)

13.Allotment of Personal Number. Nomination forms such as Kribhco Group

Personal Accident cum Death Assurance scheme, PF form etc. to be filled by

the candidates.

14. Information regarding candidates joining to be Accounts Department, Time

Office, Security Department, Administration Department, Hospital, Estate

Department, HPRD etc.

15.Probation period : Six months

16.Before confirmation Performance Appraisal Form to be sent tom the

concerned department about the candidates performance. Preparation and

issue of confirmation letters separately for workmen categories and officer

categories.

17.Release of Annual Increment – 1st January and 1st July.

18.3 months for newly appointed employee up to H1

6 months for newly appointed employee H to D

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INCREMENT

Employees shall be entitled to annual increment in accordance with

the increment rates specified in various pay scales.

The first increment shall be awarded to KRIBHCO employees on

initial appointment subject to satisfactory completion of probation period in the

following manner:

FOR EMPLOYEES JOINING BETWEEN DATE OF INCREMENT

a) 1st January to 30th June 1st January

b) 1st July to 31st December 1st July

In case of promotion to the next higher grade, the date of increment

of an employee arrived at on his initial appointment in KRIBHCO shall remain

unaltered throughout his service career in KRIBHCO unless otherwise specifically

ordered by the Management to take care of the anomaly in pay fixation and Leave

Without Pay/ Absence from Duty.

If an employee remain absent from duty on account of leave Without

Pay, Unauthorized Absence, the date of award of next annual increment shall be

postponed by the corresponding period for which he remained on LWP/

unauthorized absence.

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PROMOTION

Promotion means an improvement in pay, prestige, position and

responsibilities of an employee within organization.

In KRIBHCO, promotion is based on seniority cum merit basis. The

Establishment Section prepares the Eligibility List of employees for promotion twice

in a year on May 0 and November o1 of each year. Up to H/ H1 grade, promotion are

done at plant level by constituting committee which conducts personal interview to

assess the suitability of the candidate.

1. Preparation of list of eligible employees for promotion as per R&B Guidelines.

2. Annual Appraisal report of eligible employees to be got filled by the concerned

officers.

3. Competent Authority’s approval for constitution of the Department Promotion.

4. Bio-data of the eligible for constitution of the Department promotion

Committee.

5. Bio-data of the eligible employees to be prepared for the DPC.

6. Communication to the Chairman of the committee for fixing the date of DPC.

Communication to the employees for attending the DPC.

7. Making physical arrangements to the interview.

8. Preparation of selection proceedings.

9. Approval of the competent authority to be obtained for the selection

proceedings.

10.Vigilance clearance to be obtained giving the promotion order.

11.Promotion ordered.

For promotion of G grade and above, Establishment Section put

before the Committee the Bio-data of eligible employee, annual appraisal report with

rating and signature of each member of the committee and forwards it to Managing

Directors’ approval.

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PERFORMANCE APPRAISAL SYSTEM

Performance Appraisal is the process through which an individual

employee’s behavior and performance over a fixed time period is measured and

evaluated. It is systematic and objective way of finding the relative worth or ability of

an employee in performing the task. It helps to identify those who are performing

their tasks well form those who are not and also indicates the reasons for such

performance.

Use of Appraisal System

It provides information of paramount importance/ assistance in

making decisions such as promotion, additional charge etc. As such, through the

system, ability of an individual can be recognized.

Every employee wants to know how he is performing on the job and

what his superiors feel about his performance. Performance appraisal plays a very

important role to meet this requirement of the employee through feed-back system.

The system helps considering employees suitability for different types

of assignments, transfer and placement. Appraisals Report written objectively can

reduce grievances and develop better relationship.

Keeping in view its various uses in relation to the development needs

of the employees, the Appraisal System of KRIBHCO is being revised and

developed from time to time. The main features of the existing system are as under:

General Instruction for filling up Appraisal Forms

1. To be filled up with a high sense of responsibility.

2. Objective is not fault finding but of identifying the strengths, weaknesses and

potential of the employee.

3. Not to fill up hurriedly but with due dare and attention.

4. Although performance appraisal is an annual exercise, the Appraising Authorities

are to review the performance periodically and take corrective steps.

5. To depict true picture of the appraiser.

6. Assessment to be confined to the period of report only.

- 36 -

7. Some posts of the same rank may be more exacting than others. The degree of

stress and strains are to be borne in mind while appraising.

8. After completion of appraisal report, Appraising officer may discuss the same with

appraiser highlighting his strengths and weaknesses. This may be done in the

presence or Reviewing Officer, if he is in station at the same location.

9. Report to be filled up annually April to March).

10.Appraisal is to be made only if the employee has worked for more than three

months during the appraisal period. In case, where an employee has worked

under two Appraising Offices during one has worked for more period during the

year.

Performance Appraisal Procedure:

a. The instructions provided in the appraisal form have to be carefully gone

through by the rating of the employee should be done annually at any

time. The first page of the appraisal format is to be filled by the Personnel

Department and passed on to the Appraisal officer by 1st week of April who

will give his rating by 10th April and send it to the Reviewing officer and

from him to the Accepting officer. The Accepting officer after recording his

observation on the appraisal of the employee will send the report to

personnel Department latest by the end of April.

b. Individual appraiser bearing unmanned that the rater will be rated

eventually.

c. In case of disagreement among the Appraising and Reviewing Officer, the

Accepting Officer should hold discussion with all of them and finalize

rating.

d. In case performance of employee is “Below Average”, same shall be

communicating by personnel department after appraisal is accepted by

competent authority.

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WAGE & SALARY ADMINISTRATION

Wage & Salary Administration refers to the establishment and

implementation of sound policies and practices of employee compensation.

Generally, the remuneration paid to the workers known as wage while the payment

made to office staff known as salary.

Wage is the remuneration paid for service of labour in production,

skilled and unskilled person or employer, worker technicians. Salary refers to the

monthly paid to clerical administrative and professional employees.

A sound wage & salary administration tries to achieve these objectives:

a) For employees:

Employees are paid according to requirement of their job. This

eliminates inequalities.

The changes of favoritism are greatly minimized.

Employee’s morale & motivation are increased because wage program

can be explained & based upon facts.

b) To Employer:

A wage & salary Administration reduces the likelihood of friction &

grievance over wage inequities.

It enhances an employee’s morale & motivation because adequate and

fairly administered wage are basic to his wants and needs.

It attracts qualified employees ensuring an adequate payment for all

the jobs.

The information about employees, presentation and absence provided

by the tine keeping system is directly linked with computer section. Then after pay

slip is preferred with the Master-Date. Finally after all additions and deductions, pay

is paid to the employees. The productivity linked bonus and incentive schemes also

introduced by the KRIBHCO. The employees of KRIBHCO have been paid bonus

linked with productivity i.e. annual capacity utilization of the plant and materials.

In KRIBHCO calculation of wage and salary is done by establishment

section in Finance & Account Department. In this section, wage and salary is

calculated on computers. It is the responsibility of personnel department which has

to handle wages and salary distribution together with account department.

- 38 -

Salary are payable on the last but on working day of every month. In

this organization for the wage and salary administration, first prepared the Master-

Date under the personnel department. In this Master-Date there are various column

like grade, employee number, pay scale, code, P.P. Account, number, name, basic-

pay, living-pay, house rent, over-time pay, medical allowance and other facilities rate

etc.

Demotion:-

Demotion in any organization is very rare. The same is the case in

KRIBHCO. Demotion in the company occurs only in case of major indiscipline. This

action is taken after much inspection of the fault made. A special committee is

formed for the inspection of the whole matter and then finally a report in generated

whether the employee is found guilty or innocent. It even involves legal and police

formalities many times. Provisions of this indiscipline are available under certified

standing order. Some of the ‘Major Indiscipline’ is as follows:

1. Breach or habitual breach of the provisions provided in the service rules

framed or instructions or orders issued by the management from time to time

and in force.

2. Insubordination or refusal to obey.

3. Violation of any condition or term contract or employment.

4. Any big loss suffered by the company due to any employee’s disregard of

operation or carelessness in operation or maintenance.

5. Acting in a manner prejudicial to the interest or reputation of the organization.

6. International non-submission/ late submission of immovable property return in

the manner prescribe rules of complete account of movable or immovable

properties acquired by the employee or concealment of any material fact

relating to acquisition of such properties.

- 39 -

JOB DISCRIPTION:-

It is an important document. Job analyst prepares a statement of fact in

a prescribed blank called, Job Description, which is basically descriptive in nature.

Job Description is very important for a new employee to know under

whom he has to work, what is his designation etc.

In KRIBHCO Job Description contains following:

1. Proper Job Title

2. Job Summary.

3. Job Location.

4. Duties & Responsibilities on the job.

5. Nature of supervision.

6. Machine tools and materials.

7. Relation to other jobs.

8. Working conditions to the job etc.

JOB SPECIFICATION:-

All employees posted at Plant, Corporate Office, Central Marketing

Office and Field Marketing Offices are governed by the Rules and Procedures laid

down under the service Rules for employees of KRIBHCO.

Discipline & conduct:-

1. An employee shall, at all times, conduct himself soberly and temperately and

show proper respect and civility to his superior and persons having any official

dealings with KROBHCO.

2. An employee shall serve honestly and faithfully and shall use his utmost

endeavors to promote the interest of the organization.

- 40 -

3. All employees shall be full time employees of KRIBHCO and will devote

themselves exclusively to the duties assigned to them from time to time when

required to do.

4. During the period of employment with Kribhco, no employee shall hold any

office of profit outside the organization or engage himself in any other service,

business and trade.

5. No employee shall take with him for his own personal use, any photograph,

sketches, etc. regarding any business or activity of the organization, building,

plant process, work etc.

6. No employee shall use organization’s name or properties etc. for his personal

use or benefits.

7. An employee shall keep himself up to date with the knowledge, skill,

information, ability etc.

WELFARE MEASURES IN KRIBHCO:-

Considering to the Statutory Provisions KRIBHCO provides following welfare

measures:-

The Factories Act, 1984, is one of the Act, which enumerates a good

number of welfare measures to be provided by and employer of the factory.

KRIBHCO provides following welfare measures under Factories Act:-

1. Cleanliness: KRIBHCO keeps clean both outside and inside factory areas.

Housekeeping both in Plant and Townships is given due importance and

proper attention. Even KRIBHCO won Prizes under good housekeeping many

times. Plant premises and Houses in Township are painted or co lour washed

periodically.

2. Disposal of Wasted& effluents effective arrangements are being made in

KRIBHCO for proper disposal of wastes & effluents both in plant & Township.

3. Ventilation and Temperature: Proper actions are being taken for adequate

ventilation in work place and temperature is maintained for comfort and

prevents injury to health.

- 41 -

4. Dust & Fume: Proper attention is given to prevent harmfulness of dust &

fumes, which is injurious or offensive to the workers employed in factory

premises.

5. As regard to artificial humidification, overcrowding, lighting, drinking water,

latrines and urinals, spittoons, proper actions are taken to provide the

aforesaid facilities for proper working of employees inside the Plant.

6. Safety measures are strictly adhered to provide the safety and security while

working tin the plant.

7. Washing facilities, sitting facilities are provided wherever required.

8. First Aid Counter is maintained so as to be readily accessible during all

working hours with First Aid Boxes which contains prescribed items and

sufficient numbers of Boxes are provided in different locations. First Aid

Counter is also providing inside the Factory premises round the clock in order

to meet any eventuality while working in case of any employee.

9. Industrial Canteen is provided with subsidized eatables with an objective to

provide balanced and clean food. The industrial Canteen also used by

workers as a Lunch Room during working hours.

10.KRIBHCO has employed Welfare Office who is in charge of Welfare Services

provided by KRIBHCO. He is supervising for proper implementation of welfare

activities of KRIBHCO.

11.Working Hours, Compensatory Off, Interval for Rest, Spread over, Night Shift

and Prohibition of Overlapping Shift, Extra Wage for Overtime as provided

under the Factories Act, 1948 are implemented in true spirit in KRIBHCO.

12.As regard to annual leave with wages, wages during leave period, payment of

wages in advance is also implemented in KRIBHCO as per the provision of

Factories Act.

13.Safety and Occupational Health Surveys are done annually to provide proper

safety inside the factory premises and to diagnose any occupational disease

and providing treatment for its cure. Surveys are also conducted to prevent

occupational health hazards.

- 42 -

WELFARE FACILITIES IN KRIBHCO:-

(I) Housing:-

Townships facility to the extend of 99% of requirement of

employees is provided by KRIBHCO. KRIBHCO provided semi furnished

accommodation with proper housekeeping, security arrangements, repair and

maintenance of houses in Township, cable connection, electrical maintenance in the

township for its employees. Park facilities with equipments for playing of children,

sitting arrangement in the garden, lawn maintenance, plantation and maintenance of

trees, maintenance of flower plants for beautification are also being provided.

Shopping canters in the township are provided to cater to the need and requirement

of residents of the township. Post Office, Bank and PCO facility are provided in the

township. Township of KRIBHCO, in overall provides facilities for modern life.

(II) Educational Facilities:-

KRIBHCO has provided two schools namely Sunflower School in

Gujarati Medium and Central School in Hindi / English medium. Theses two school

are situated inside the township and are having facilities up to 12 th standard. Both

pre-primary and pre-nursery educational facilities are also provided in township.

Apart from this, KRIBHCO provides transport facilities and arrangement for the

children of township to avail educational facilities available outside township i.e. in

Surat city or in other nearby areas. Coaching classes and Entrance examination

preparatory classes are also run by KRIBHCO provides grants to Officers Club and

Staff Club to maintain Library and Reading Room in the township. Officers Club and

Staff Club arrange Computer-learning classes.

(III) Medical Facilities:-

KRIBHCO provides free medical facilities to its employees, their

spouses, dependent members of his family, be eligible for reimbursement of:

1. Fees paid by him to an authorized medical attendant for consultation whether

at is cleaning or at he employee’s residence.

2. Fees paid for injection, dressing or minor surgery,

3. Fees paid for X-ray and pathological test etc.

- 43 -

4. Expenses of treatment for chronic or any specialized treatment or incase of

hospitalization, at actual.

5. Reimbursement of medical expenses for routine treatment Rs. 4500/- per

annum (2250/- for Township Residents)

In addition to above KRIBHCO is having its own hospital having both

in-patient and outpatient facility. Specialists from Reputed hospitals / practitioner visit

KRIBHCO visit KRIBHCO Hospital for Township Residents. In case of specialized

and chronic diseases cases are referred from KRIBHCO hospital to Empanelled

Doctor/Hospital in Surat or outside Surat.

(IV) Recreational Facilities: -

KRIBHCO provides following recreational facilities:-

(a) Outdoor game facilities are provided like Cricket, Football, Volleyball, Lawn

tennis and swimming. Coaching camps are conducted for these games during

summer vacations and sports and games meet are organized in regular

intervals. Even State level and National level facilities are organized for such

games.

(b) Annual Athletic meets are organized for employees and their dependant

family members.

(c) KRIBHCO contributes grant for KRIBHCO Officers’ Club and KRIBHCO Staff

Club situated in township.

(d) Badminton courts are provided in both the above clubs. Club organizes

various cultural and sports & games activities for their members.

(e) Cable TV connections are provided in each house of the township free of

cost.

(f) Marketing Bus facilities for employees and their dependant family member are

provided at subsidized cost.

(g) Celebration of Republic Day, Independence Day, May Day, Holi, Gujarati New

Year is being celebrated with much fanfare and cultural programmes.

(V) Other welfare Facilities:-

- 44 -

a. Employees Cooperative Society is there which is managing distribution

of Milk, LPG Gas, dealership, Provision Stores and credit facilities.

b. “Ashirvad” – Old age home for Township residents.

c. Workers Education Scheme is prevalent in KRIBHCO.

Employees Relations

The Employee relations in KRIBHCO have been very cordial. The work

culture in KRIBHCO is of ‘belongingness’ wherein there is a sense of caring, security

and participation by all. This has been possible only because of better understanding

amongst. Management and Employees Representatives.

The well trained and motivated strength of 2600 employees are

organized and represented through single Union and Association having 100%

internal leadership and maintaining independent character, not affiliated with any

Central Trade Union Organizations. It had always preferred to resolve all employees’

relations since inception. Annual elections are conducted in a democratic manner

and intra union group has ever emerged.

Management has also given a thrust on employees welfare schemes

which include a self contained township having facilities like Health Care Center.,

two Schools, Clubs, Bank, Post Office, Shopping Center, Cable TC Network, Games

and Sports activities, Cultural activities etc. On the job working conditions and off

jobs welfare facilities have raised the moral and belongingness of KRIBCO

employees, which is reflected by the statistics of less then 1% employees turnover in

past 16 years.

It is however unfortunate that KRIBHCO, in spite of its consistently

good performance, professional management, experienced manpower and

harmonious industrial relations has not been able to diversify for the last several

years. KRIBHCO would therefore be looking forward to receiving valuable assistance

from the Government of India and other agencies for clearing the KRIBHCO’ s

project proposals on fast track basis.

- 45 -

Time office

Time is considered as money. so we have to the value of money is

equal to value of time. Time keeping in big organization is very essential function.

Therefore it is necessary to adopt sound system in order to save & avoid dispute

regarding attendance. KRIBHCO is enough sensitive towards optimum use of time. It

has as separate time office concerned with security department. Ti is situated at the

main gate of company. The office runs for 24 hours and dealing with pub services.

The chief time keeper (Jr. Mgr-P&A) supervises the work of time office,

under him there are the four assistant to carry out the daily system maintenance of

Attendance Register for staff category, overtime, Leave Management, etc.

Main function of Time Office:

Control Daily Attendance

Leave Management

Issue of punching card/ Attendance card to employee

Maintain all types of record of employees as per requirement of Gujarat

Factory Rules/ standing order Act.

Maintenance of over time

Administration of shift and claim of shift allowance

Maintain the record of absent ,Leave without pay, CL, EL and Leave

encashment

Distribution of canteen coupons

- 46 -

- 47 -

Marketing department

Introduction: -

Marketing is the process of planning & executing the conception,

pricing, promotion and distribution of ideas, goods and services to create exchanges

that satisfy individual and organization goals.

In simple sense marketing is concerned with selling. But now a days

the concept has enlarged its meaning. We know that a product is provided with the

aim of sale. Marketing management covers marketing research, new product

development and so many other important functions.

The important responsibilities of the marketing departments are: -

Volume sales: - total production to be sold in each season.

Price realization: - selling price at level to the consumer (farmer)

at MRP.

Cost of marketing: - discounts, credit, distribution expenses,

traveling and communication &warehousing expenses,

advertising& sales promotion expenses, etc should be minimal.

In KRIBHCO marketing management has the task of regulation of

level, liming and character of demand in a way that will help the organization to

achieve its objectives. The aims of producer totally depend on marketing, without

marketing not a single unit can run.

“KRIBHCO” marketing philosophy aims not to sell fertilizer but to help

farmers by education them the modern farming technology and the use of fertilizer

for optimum crop out. KRIBHCO sold urea mainly through co-operative societies.

KRIBHCO has been making celebrate arrangements for dispatch of urea from plant

site to various destinations as per requirement by optimum use of rail & road.

In KRIBHCO marketing is done by head office at Delhi. KRIBHCO has

nationwide marketing network and has covered all major stated in the countries.

Presently it is operating in the Uttar Pradesh, Himachal Pradesh, Delhi, Madhya

Pradesh, Maharastra, Karnataka, Tamilnadu, Punjab, Haryana, Gujarat, Rajasthan,

Andhra Pradesh, West Bengal and Bihar. (Chart) &marketing act ivies.

- 48 -

KRIBHCO Head offices

Central marketing offices co-operatives offices

State mkting offices state mkting offices state mkting offices

Area mkting offices Area mkting offices Area mkting offices

Field representative field representative field representative

Marketing Activities: -

1. Farmers Benefits programmes.

2. Sanket Haran bima yojana.

3. Marketing of BVFCL urea,

4. ISO 90001-2000

5. Seed multiplication programme

6. Gramin vikas trust. (Rural Development Trust)

- 49 -

Product mix: -

KRIBHCO, manufacturing nitrogenous fertilizer and allied product viz.

urea, Ammonia, Bio-fertilizer, 30 mega watt power plant operation & maintained of

heavy water plant of department of atomic energy, But KRIBHCO is having urea as

its main product.

They use Ammonia as raw material &main input of urea& sale the excess production

to other non-fertilizer industries.

Product mix of KRIBHCO

Urea Bio-fertilizer Seeds

-Wheat

I Azotobacter -Paddy

II Azospirillum -Pulses

III Rhizobium 1. gram

IV phosphorus solubilising 2. pea

Miro-organism (P S M) 3. arthan

4. Urd

5. lentils

6. moog

- oil- seeds

1. mustand

2. soyabean

3. castors

- 50 -

Features of products: -

Urea: -

1 Urea is colorless odorless white crystalline chemical substance.

Generally in the form of crystals. Urea is soluble in water, alcohols and

liquid ammonia when heated under vacuum. It sublimes at around 120

Deg.c- 130 Deg.c temperatures. At 160 Deg.c it decomposes to

ammonia and carbon dioxide. Urea in the fact is the diamide of

carbonic acid with a chemical representation: NH2CONH2.

2 The principle field of application of urea is for agriculture purpose as a

nitrogenous fertilizer. Fertilizer grade urea is generally marketed in the

form of prills due of its free flowing characteristics. A certain quantity of

urea is also used for mixed fertilizer like NP or NPK of different grades.

A part from its use as a nitrogenous fertilizer urea is a also used for

purpose of animal feed as a protein supplement in some of the

advance countries.

3 Another important application of urea is for the manufacture of

thermosetting etc. further urea is also used for manufacture of several

other chemicals and pharmaceuticals etc.

Kribhco urea production and sales

Year Production (Lack MT) Sales (Lack MT)

2000-01 16.31 15.72

2001-02 16.94 17.21

2002-03 16.03 16.38

2003-04 17.73 18.37

2004-05 18.06 17.37

- 51 -

1414.5

1515.5

1616.5

1717.5

1818.5

Lack MT

2000-01 2001-02 2002-03 2003-04 2004-05

Years

Kribhco Urea Production and Sales

Production (Lack MT) Sales (Lack MT)

Bio-fertilizer: -

1. Azotobacter: - Azotobacter Bio-fertilizer contains billions of Azotobacter Chrococcum

species of bacteria and is very useful microbial inoculants for nitrogen mobilization.

Te microorganisms of Azotobacter live in the rhino share of root system of the plant.

They consume organic carbon present in the soil and fix atmospheric nitrogen.

Azotobacters are free-living microorganisms, which are active nitrogen fixers. They

contain an enzyme known as nitrogenous which converts/fixes atmospheric nitrogen

in to ammonia. This ammonia is excreted by the microorganisms in to the soil, which

is consumed by the plant for protein synthesis. Azotobacter chrococcum has a

potential of fixing 50kg of nitrogen per hectare.

2. Azospirillum:-

Azospirillum Bio-fertilizer contains billions of Azosirillum Brasilense

species of bacteria and is very useful microbial inoculants for nitrogen mobilization.

The microorganisms of Azospirillum are associative in nature i.e. the are present I

the rhizophere and rizoplane of the plants they use nutrients and source of energy

from the root exudation and fix atmospheric nitrogen. Azospirillum are associative

microorganisms, which are active nitrogen fixers. They contain an enzyme known as

nitrogenous which converts/fixes atmospheric nitrogen in the ammonia and the

- 52 -

plants use this ammonia. Azospirillum brasilense has a potential of fixing 20-40kg of

nitrogen per hector.

3. Rhizobium: -

Rhizobium variety of Bio-fertilizer contains billions of Rhizobium

species of bacteria. These bacteria form nodules on the roots of leguminous crops.

Rhizobium is symbiotic in the nature, while other verities such as Azotobacter, P.S.M

and Azospirillum are free living. Rhizobium is crop specific unlike Azotobacter,

P.S.M, and Azospirillum, which can be used for all crops. The leguminous seeds

when treated with Rhizobium, the roots hairs are attacked by Rhizobium during

germination and give rise to the formation of nodules. This nodule contains billions of

bacteria and seats of nitrogen fixation. Grater the number of nodules formed on the

roots, grater is the quality of nitrogen fixed. Rhizobium has potential of fixing nitrogen

varying from 50kgs to 200kgs nitrogen per hectare depending upon the variety of

leguminous crops.

4. Phosphorus solubilising micro-organism (P.S.M):-

P.S.M variety of Bio-fertilizer contains billions of phosphate solubilsing

microorganisms, which are capable of solubilising insoluble phosphate already

available in the soil. Of the total phosphatic fertilizers applied to the crops, only a

meager quantity of 25% is available to the plants in soluble forms, while rest of the

phosphates get fixed in the soil in the form of insoluble phosphates, such as

aluminum phosphate, iron phosphate, tri calcium phosphate etc. these phosphates

get accumulated in soil and remain unused under normal soil conditions .the

phosphate solubilising micro-organisms are free living and present in the rhizophere

of the root system of the plant. Phosphate solublising microorganisms haves

potential of solubilising about 40kg phosphorus p205 per hectare.

- 53 -

Kribhco bio-fertilizer production and sales

0100200300400500600700

2000-01 2001-02 2002-03 2003-04 2004-05

Years

Kribhco Bio-fertilizer Production and sales

Production (MT) sales(MT)

Kribhco ammonia production

YearProduction (MT) sales(MT)

2000-01 384 3542001-02 389 3732002-03 296 3512003-04 603 5162004-05 560 611

2000-01 9.632001-02 9.92002-03 9.922003-04 11.172004-05 10.92

- 54 -

8.5

9

9.5

10

10.5

11

11.5

2000-01 2001-02 2002-03 2003-04 2004-05

Years

Kribhco Ammonia Production

Kribhco seeds production and salesYear Production (Lack Qtls) Sales (Lack Qtls)2000-01 1.04 0.762001-02 0.84 1.12002-03 1.08 1.062003-04 1.21 1.112004-05 1.54 1.49

0

0.5

1

1.5

2

2000-01 2001-02 2002-03 2003-04 2004-05

Years

Kribhco Seeds Production and Sales

Production (Lack Qtls) Sales (Lack Qtls)

- 55 -

Product planning: -

Product planning is the process to plan for marketing a particular

product or product line of the company in a particular industrial or geographical

market.

General Manager of production is consulting with G.M of marketing considering

following factors: -

1. Capacity of plant

2. Availability of raw material

3. Demand in the marketing

4. Environmental factors

5. Activities of competitors

6. Availability of stock in a country

7. Availability of storage and warehouses

8. E.S.C allocation given by Agri-minister like rain prigation, cropping pattern etc.

Depending up on the above factors first yearly target is desired &month wise target is also decided.

Market segmentation: -

Kribhco’s market is all over the India &segmented according to:

I. Geographical area

II. Proportion of shares held by co-operatives society

(I) Geographical area: -

In case of geographical market segmentation, the market is

segmented zone wise, district wise, and village wise. KRIBHCO has 7 state wise

offices. Each state is headed by state marketing manager comes area offices

consisting of area officer and area agronomist. Under each area office there are

officer who area assigned one village co-operative society. The order are first place

- 56 -

by farmers at village level which are in turn forward to district level and to state level

officers, who convey information to marketing general manager at the office.

(II) Proportion of shares held by co-operative society: -

Here the market is segmented in terms of the number of share

membership. It implies there are more numbers of share membership in that region,

large consumers are found. This type of segmentation is done by KRIBHCO to reach

their market-oriented goal.

Distribution channel: -

KRIBHCO handles its distribution of fertilizer by making division situated at

Delhi. “KRIBHCO” channel its product through co-operative distribution network.

According to the essential commodities Act, the government regulates the

distributions of fertilizer. The department of fertilizer guides the management of

KRIBHCO for the distribution of urea. Products, which are produced at Hazira, are

not dispatched directly to the customers. It involves distribution channel, KRIBHCO

has develop for distribution of urea.

Channel of Distribution

Through IFFCO State level co-operative

District level co-operative Taluka level co-operative

Block level co-operative

Village level co-operative

Farmers

- 57 -

Being in the co-operative sectors, the society has been marketing its

product only through co-operative and institutional agencies. Besides providing its

products to Apex level co-operative federation/ institutions in most of states, it has

also been supplying its product grass-roof-level societies in the states of Uttar

Pradesh, Andhra Pradesh, Rajasthan, and the focal points in Punjab, apart from

Krishak Bharti sewa kendras (KBSKS). The direct supplies to primary Agriculture co-

operative societies (PACs)/ focal points not any only helps in timely availability, and

increase in fertilizer consumption, but also provides maximum benefits to the

societies for making the financially strong.

During the year under review, the society was given an allocation

under ECA in almost al the major states in the country. The society marketed its

product in t5he states of Uttar Pradesh, Uttranchal, Punjab, Himachal Pradesh

Karnataka, Tamil nadu, Bihar and west Bengal. The society sold 98% of its ECA

allocation against the national average of 92%.

Mode of Distribution: -

Proper planning and close monitoring enabled the society to dispatch it

urea as per ECA allocation from plant site to various destinations by optimal use of

rail and road mix.

1. Railway: - major part of fertilizer almost 79% is transported through railway

line to the states like Maharastra, Madhya Pradesh, Punjab, Haryana and

Uttar Pradesh.

- 58 -

2. Roadways: - the dispatch of fertilizer through roadway is limited to the

state like Gujarat, Rajasthan, Madhya Pradesh, and many other states

is round around 21%.

Pricing policies: -

Profit of company mainly depends upon cost of production and price of

the products manufactured. KRIBHCO as a manufacturer of fertilizer has very limited

role to play in declaring the prices of fertilizer as the price of fertilizer is decided by

the government under the Essential Commodities Act (ECA).

When pricing of the fertilizer is regulated by government following points are taken

into consideration: -

1. Cost of production

2. Transportation cost

3. Profit margin

4. Taxation rate

Although the fertilizer manufacturing cost is high, the prices are fixed by Govt. in the

form of subsidy to the manufacturer.

Details of competitors

KRIBHCO generally dose not face any stiff competition as the

government decides the major parts of its marketing activities. Chemicals and

fertilizer ministry of India decides the ratio of sales of fertilizer and chemical in the

industry. Generally competition exists in free trade. Some of the competitors of

KRIBHCO are:

- 59 -

Sr. no Name1 GNFC Gujarat Narmada

Fertilizer Corporation 2 GSFC Gujarat State Fertilizer

Corporation 3 IFFCO Indian farmer Fertilizer

Corporation4 RCF Rashtriya Chemical

Fertilizer5 NFL National fertilizer Ltd6 HFC Hindustan Fertilizer

Corporation7 FCL Fertilizer Corporation of

India 8 Nagarjuna -9 Chambal -

Generic Level of Competitors: -

Agricultural minister of India supplies fertilizers, farming equipment,

loans and many other facilities to Indian farmer at discounted prices in order to

benefit and develop farmer. Thus it also provides rebate to the fertilizer producing

companies. Generic level competition exists in terms rebates given to different

companies in the industry. These rebates are given specially to make the product

affordable for the farmers. Competition even exists in terms of benefits that the

fertilizer companies provide farmers in order to sell their product. It acts as a sales

promotion activity.

Competition exists in the mode of supply i.e. through road or rail, those

supplying through roads are faster in their transportation and hence deliver the

product in shorter period as compared to railway. Finally and most importantly the

competition exists in terms of quality of product. KRIBHCO maintains the best quality

and hence is a leader in fertilizer industry.

Sales promotions: -

In modern world there is very strict competition so for stand in the

market, strongly sales promotion program is very important. The main aim of sales

promotion is to increase the sales and increase the number of customer. KRIBHCO’

- 60 -

s promotional Programs are carried to farmers field through technically qualified and

trained field force under the highly qualified agronomists and managers the major

promotional activities consists of the following.

1. Block Demonstration

2. Co-operative conference

3. Krishak Bharti Seva Kendra

4. Crop seminars

5. RGB Members visits

6. Farmer benefits programs.

1. Block Demonstration:-

In these demonstrations, latest agricultural production technology was

demonstrated visa-a visa local practice. The review demonstration were

organized on different crops on approximately 100 hectares of land and a large

number of farmers visited this plots various other field Programme like farmers

meetings etc were organized at the site of these demonstration. Block

demonstration was conducted in the state of U.P, M.P, Haryana, Punjab &

Gujarat.

2. Co-operative Conference:-

All the product of KRIBHCO marketed by the co-operative societies, so

their mangers and salesmen are trained on better business, fertilizer and other

agro- input storage, soil testing etc. A group of 100 participants is trained in each

co-operative conference sufficient quality of crop folders and other technical

material, provided to each participant for further distribution to farmers through

co-operative societies.

3. Krishak Bharti Seva Kendra

The society has established 10 Kendra in the state Haryana and

Punjab. These are successfully in operation and through these centers a

package of inputs and services is being provided to farmer’s right at their

doorsteps. The society is already in process of establishing 27 more seva

Kendra’s in state of U.P, M.P, Rajasthan, Punjab, and Maharastra.

4. Crops seminars

- 61 -

The society organized one crop seminar with collaboration of IIFCO

in state of Maharastra. In the seminar, experts I the field of agriculture were

invited for expressing their view points.

5. RGB members visit

Representative General Body (RGB) delegates are the

representatives of Kribhco member society. They act as KRIBHCO spokesperson

art various platforms throughout the country. It is in the interest of KRIBHCO to

provide maximum information about its programmes to its members. Short study

visit of 1-3 days duration in each term are arranged for these RGB members at

Hazira plant or other project site.

Advertisement

Consumer is the king in the modern market. Without consumer the

task of business is incomplete. So consumer must know about the product of

company. Now a day, advertisement is the best way to introduce the product to

consumer.

KRIBHCO’s advertising mainly depends upon its customer & their

customers are farmers and they are mostly illiterate. So, media gives

advertisement in regional language, but in present time farmers are also develop

so advertising strategy also taken into consideration. Company gives its

advertisement in local newspapers also like Gujarat samachar, loksata, and

jansatta, sandesh etc T.V; Radio magazines are also taken as a media for these

purpose.

Different language like Hindi, Punjabi, Marathi and Gujarati over

various stations of all over India radio. For the popularity of KRIBHCO large no.

Of holdings & roadside boards are installed on highway, bus pan ness, wall

paintings and glow sing at airports have also been installed for above purposes.

Advertisements have been realized from time to time in the dealing newspapers,

and other periodical, special supplements were brought in English, Hindi and

regional languages.

- 62 -

Market research

Marketing research is the problem analysis. It learning more about

consumers, dealers about marketing mix, preference, quality, and packaging etc

are important in marketing research.

Marketing research is a continuous process for survived the market

or competition it includes product analysis, market analysis, distribution analysis,

and competition analysis.

Marketing research includes a manufacturer or producer to know

what the consumer want, in how much quantity they want, how many of them

want particular commodity, how it could be made available and how other

customers can be attracted by the producer or dealer. Thus it is an precious tool

in decision making based on scientific investigation and analysis of marketing

problem.

KRIBHCO has separate marketing research department whose

basic function is to keep all the primary and secondary data of agriculture and

fertilizers. This department keeps all information about the units, production,

storage, stocks and sales of the producers and given to the ministry of

agriculture. This department keeps in touch with all the state offices and feeds

the top management about the position of the company.

This department also keeps information about the demanding various

regions, helps the distribution department to sent the material where they are

prospect of selling it. It also record stock in warehouses and realization of money

for materials.

Taxes applicable on sales activity:-

Taxes payable by KRIBHCO being a cooperative Ltd. Is very few and

in a small amount. As it provided the farmers with the urea at discounted prices, it

is tax-free. A company buying any of KRIBHCO’ s products for the preparation of

fertilizers gets it tax-free and if for some other purpose like chemicals or catalysts

then it is taxable. Some of the taxes applicable as per conditions are a follows.

1. state sales tax: - this differs and varies from one state to another

- 63 -

2. Central sales tax: - CST is applicable centrally and equally to all the

states.

3. Octroi: - this tax is decided by the panchayats of different villages and

talukas. Hence is varies from village to village.

4. Freight: - freight is paid according to ECA.

5. Excise: - there is no excise duty applicable on KRIBHCO selling its

product directly or indirectly to farmers. But if the same is sold to

company for the preparation of some chemical or other than fertilizer

then excise duty is applicable.

Forecasting sales plan

Forecasting sales plan is very important activity for marketing a

product. And most important part of forecasting the sales plan is to forecast the

demand of the product. Before forecasting demand KRIBHCO finds it necessary for

the field officer to gain knowledge about: -

1. what is the basic product: he should acquire perfect knowledge about the

product that includes all its parts, spares, raw material utilized, an over view

about the processing of the product and all necessary details. The basic

product is urea.

2. Who is the basic customer: field officer should also try to collect information

about the basic customer of the product, potentiality of the customer, market

from where the customer generally buys his product, etc. the basic customer

is farmer

Now after knowing the product and customer, officer proceeds with forecasting the

demand.

1. He now tries to know the agriculture land: it is most important to know the land

on which the farmer is going to use the urea. This would help in promoting

sales by understanding the customer well.

- 64 -

2. He tries to know the cropping pattern of that land and the one that the farmer

would adopt. Moreover he also studies the better opportunities or patterns

that are more profitable to the farmer. Even know as which drop needs what

amount of urea. This would again help in increasing the volume of sales.

3. At this stage he should try knowing the agriculture situations of the village,

here he should take care of both the agricultural facilities like the tube wells,

canals, farming equipment, tractors, equipments for harvesting, etc. and

geographical conditions like the amount of rain and heat, moisture content

and fertility of soil, type of land i.e. a plateau or a flat one, etc.

4. Officer should try to gather information about the previous consumptions

made by the farmers of the same village, he tries to educate the farmers and

there by teaching them about the various benefits of using urea and hence

ultimately increase the sales volume.

5. He should try to study competitor’s performance in the last few years and thus

by making a comparison can remove the drawbacks in their promotional

activities and even if required then even in quality.

Through all the above steps the required information for forecasting

the sales can be achieved. Hence company leads to an approximate figure of sales

that helps in calculating various other expenses and incomes of the company for the

coming accounting year.

Sales procedures:

The sales procedure of the company is followed by its sales promotion

activities. Generally they conduct the promotional activities and then the actual sales

procedure starts.

1. Educating farmers, generally a farmer’s meeting is conducted in any village

with approximately 400 to 500 farmers. Generally the meeting is conducted

through a mediator who may be mukhiya, secretary of a cooperative, or

someone who can convince farmers to attend the meeting. Preliminary stage

includes giving general knowledge about the general farming process and

harvesting. They are educated about how fertilizers can really help in

producing good and high quality yield of crops. in the secondary stage, the

- 65 -

farmers are asked about their process of farming and thus are suggested with

corrective measures. They are even given tips for more productive farming.

This would help them to get good and more fertile crop.

2. Demonstrations are made for the acknowledging the farmers about the

productive use of urea and other fertilizers. They also show the new and

productive ways of farming. This would help in creating new buyers. And thus,

it would promote the product.

3. Field day is also conducted and all the farmers and villagers are invited to

participate in this field day. It gives them opportunity to learn practically by

participating in the field. Highest participation is expected to be taken.

4. District cooperative conference is held. All secretaries, presidents, chairmen,

are called upon to attend this meeting. During the meeting an expert called

from the ministry of agriculture explains them all details about the product i.e.

urea. They are given details about the distribution, selling, prices, rebates,

taxes, and all necessary information related the product.

Report generated by marketing department: -

Demand forecast.

Supply forecast

Sales plan.

Weekly, fortnightly, monthly, quarterly, half yearly and annually

generated marketing reports.

Sales promotion reports generated in different time periods.

- 66 -

- 67 -

Production Department

Production is the process by which, raw materials and other inputs are

converted into finished products. It involves many functions such as manufacturing

process, product and process design, plant layout, inventory control, plant

maintenance, etc. KRIBHCO has the Production Department in the Plant Premises

and it works in harmony with the Marketing Department and Transportation

Department as well as all other departments. It also includes Stores and Purchase

Department which take care of all the materials used in the production process.

Introduction to Plant

The KIBHCO Hazira Plant in two phases produces a total of 1.45 million tones

of Urea per annum. The main plants consists of two Ammonia plants, each of 1350

MTD capacity and four Urea streams of 1100 MTD capacity.

Another necessary supporting facility include Raw material storage, water

pretreatment plant, D.M water plant, Steam & power generation plant, plant-air &

inert gas plant, ETP, urea storage & product handling plant.

The Hazira plant consists of Urea Complex, Ammonia Complex and Offsite

Plants which includes supporting facilities.

Production Performance

Ammonia Urea

Year Qty

(in lac MT)

Year Qty

(in lac MT)

1995-1996 10.50 1995-1996 17.22

1996-1997 9.86 1996-1997 15.40

1997-1998 10.80 1997-1998 17.72

1998-1999 9.39 1998-1999 15.17

1999-2000 9.47 1999-2000 15.57

2000-2001 9.63 2000-2001 16.31

2001-2002 9.90 2001-2002 16.94

2002-2003 9.92 2002-2003 16.03

2003-2004 11.17 2003-2004 17.73

2004-2005 10.92 2004-2005 18.06

- 68 -

Under the overall national planning for utilization of natural

Gas/associated gas located in Bombay high and south bassein in the west coast of

Bombay and gigantic program for new generation of fertilizer units was envisaged for

implementation. The Hazira fertilizer complex was conceived in early 1978 and

Krishak Bharti cooperative Ltd. (KRIBHCO) was formed jointly by IFFCO and

government of India and about 490 cooperative societies to own and operate the

projects with an investment of about Rs.950 corers. KRIBHCO started functioning as

another largest cooperative society from November’1980. it was planned to install

two ammonia plants of capacity 1350 tone per day each (Reassessed to 1520 MTPD

each from 1.4.2000) and four urea plants of capacity 1100 tone per day each

(Reassessed to 1310 MTPD each from 1.4.2000).

The consultants for the Ammonia plants are M/s. Kellogg supported

by M/s. fact engineering and design organization (FEDO) as subcontractor. The

consultants for the urea plants are M/s. snamprogetti, Italy and M/s. project &

development Ltd. (PDIL) as co-consultant. The consultants for steam generation

plant, power plant and other offsite facilities are M/s. Development consultants Pvt.

Ltd. (DCPL).

The zero date for the project was 31st march, 1981. Trail production of

Ammonia and urea plants started in November ‘85. Date of commercial production

was 1.3.1986.

Forecast production plan: -

Based on their availability of raw material, based on their yearly shut

down & based on their any unfortunate shut down, they generally fixed or forecast

their target f production department.

Major modification:-

1. Purge gas recovery plant was commissioned in July ’89 (date of stabilized

commercial production) resulting in additional Ammonia production of 115

MT/day and savings in specific energy consumption by 0.1333 MMKcal /MT

Ammonia.

- 69 -

2. Ammonia plant optimizer was commissioned in November’92 and March’93 in

unit-I and unit-II respectively resulting in energy saving of 0.616% (avg. of

plants).

3. Ammonia converter retrofit was completed in Ammonia unit-II and Ammonia

unit-I in Dec ‘93 and March’95 respectively. The GTR of unit-I was done in

April’95. This modification resulted in increase in Ammonia concentration of

converter output from 14.5% to 19.5%. As a result the average energy saving

of about 0.258 MMKcal/MT of ammonia has been obtained.

4. Urea-21 CO2 compressor revamped in may’2000 by changing the rotors,

impellers and diaphragms for all 3 casings. Intercoolers and separators of the

2nd and 3rd stages also replaced for higher load operations. This has reduced

power consumption in CO2 compressor by 1478 KW.

5. The scheme for modernization of urea plants was implemented after survey

and audit by M/s snamprogetti to improve the energy efficiency and urea

product quality. The scheme involved installation of MP pre-decomposer and

vacuum pre-concentrator with dedicated vacuum system. The scheme was

implemented in Jun ‘2001. This has resulted decrease in steam consumption

of 132 of urea.

- 70 -

Organizational chart of production department

Operations Directors

G.M G.M G.M G.M G.M Production Maintenance P&A F&A Technical

Chief Manager Chief Manager Chief ManagerAmmonia Urea Power / Offsite / HAEP

Sr. Manager Sr. ManagerAmmonia – I Ammonia – II

Manager Manager

Dy. Mgr. / Sr.Engr./Engr. Dy. Mgr. / Sr.Engr./Engr.

Ch. Optr. / Sr. Optr. / Ch. Optr. / Sr. Optr. / Optr. Optr.

- 71 -

Information regarding process route for each plant / product

Name of plants/product Ammonia urea

1. Name &sources of natural gas from Bombay Ammonia & CO2

Raw material high/south bassein after Sweetening, LPG extraction

And c2-c3 extraction (at IPCL Gandhar from Jun ‘2002) Through M/S GAIL.

2. Name & sources of Utilities:

Steam (*) Internal generation with Backup from SGP

Electricity power from captive power

Backup from Plant with backup from G.E.B

Water Through canal from kakrapar weir (**)

I) name of process steam reforming of N.G Ammonia stripping

II) Plant designer MW Kellogg Co. USA snamprogetti Italy.

(*) Steam generation boilers were converted on dual fuel (Natural gas & natural gas liquid)

(**) in view of Gujarat irrigation department’s notice for stopping the supply of water through canal from April’92, an alternate source of water supply i.e. supply through pipeline from kakrapar weir is also installed.

- 72 -

Plant-1 Plant-2 Ammonia 1520 MTPD 3040 MTPDUrea 1310 MTPD 5240 MTPDBio-fertilizer - - 250 MTPA (Per annum)

PLANT DETAIL:-

- 73 -

Plant Layout

Ammonia Plant Layout:-

Natural Gas

Steam (N2)

MethanationSyn Gas Compressor

Ammonia Synthesis

Ammonia Chilling

Ammonia Separation

Unconverted Syn gas

Excess NH3 to Storage

Ammonia CO2

De-Sulphurisation

Primary Reformer

HT&LT Shift Conversion

CO2

absorption

CO2

Stripping

Secondary Reformer

UREA PLANT

- 74 -

Urea Plant layout:-

M.P Decomposer

L.P Decomposer

Vaccum Section

Carbomate Condenser

M.P Condenser

L.P Condenser

Waste Water Recovery Section

M.P Absorber

Prilling Tower

Waste Water

Urea to Silos Bagging

Urea Reactor

Stripper

Liquid Ammonia

Ammonia pump

Ejector

CO2

CompressorCO2

- 75 -

Process description – Ammonia plant

1. Main section The steam reforming Ammonia process involves the following basic steps:

I. DesulphurizationII. Steam reforming

III. Shift conversionIV. Carbon Dioxide removalV. MethanationVI. Ammonia synthesis

VII. Refrigeration system

I. Desulphurization

a) The purpose of desulphurization is to remove sulphur from the natural gas.

Sulphur is poisonous for the catalyst used in Ammonia plant and hence its

removal is essential.

b) Desulphurization is accomplished in reactor by sending natural gas mixed

with a small quantity of hydrogen (from make up gas) at a temp. Of 395 c

over bed of comox (cobalt and molybdenum) catalyst and two beds of zinc

oxide catalyst.

c) The chemical reactions involved are:

RSH+H2 = H2S + RH (COMOX bed)

H2S + ZnO= ZnS + H20 (zinc oxide bed)

d) Thus over a period of time the entire amount of zinc oxide catalyst will get

converted to zinc sulphide and a new catalyst has to be charged.

e) The sulphur content of natural gas is thus reduced from 10 ppm to less

than 0.25 ppm.

II. Steam reforming

a) The steam reforming of hydrocarbon feedback to syn gas production is

carried out in two catalyst reactions stages. The first stage, called primary

- 76 -

reforming, produces a partially reformed gas containing approximately 10

% by vol. Of methane (dry basis) and in the secondary reformer this gas is

further processed to achieve to methane content desirable for syn gas

production approximately 0.3% by vol. (dry basis).

b) Desulphurised natural gas is mixed with steam in the ratio of 3.45: 1 and

the mixed gas is then heated in the convection section of primary reformer

to a temperature of 460c before entering the catalyst tubes (containing

Nickel catalyst) in the radiant section of the primary reformer.

c) Hydrocarbons in the natural gas (methane above 90% ethane, propane,

butane etc.) react with steam to give hydrogen, carbon monoxide, carbon

dioxide according to the following reactions:

CH4+H2O =CO+3H2 Endothermic (heat require)

CH4+2H2O =CO+4H2

d) Since these reactions are endothermic, the heat required is supplied by

burning a mixture of natural gas and purge gas from the synthesis loop in

a series of burners installed at the roof and walls of the radiant section.

e) The outlet gases from the primary reformer with a methane content of

about 10% in enter the secondary reformer at a temperature of 800 c.

f) In the secondary reformer these gases are mixed with the stochiometric

quantity of air (sources of nitrogen), which supplies oxygen for the

combustion of partially reformed gas.

g) The combustion heat utilized to complete the reforming reaction over the

nickel catalyst bed in the secondary reformer. Thus the methane content

of the gases is reduced to 0.3 % and the temperature increased to about

985 c.

III. Shift Conversion

a) Carbon Monoxide is converted into carbon dioxide in two-section i.e. HT

shift conversion and LT shift conversion.

b) The gases coming out of the secondary reformer at a temperature of about

985 c are cooled in Waste Heat Boiler (which produce most of the steam

require for the Ammonia plant) and enter high temperature shift converter

- 77 -

at a temperature of 350c. In the presence of iron chromia catalyst carbon

monoxide reacts with the steam to form carbon dioxide and the hydrogen

according to the following reaction.

CO+H2O = CO2+H2 Exothermic (Heat liberated).

c) The reaction being exothermic, the temperature of the gases increases to

405c. The gases are cooled to 203c to generate high-pressure steam in a

waste heat boiler, to heat the methanator feed and preheat boiler fed

water in separate heat exchanger. The gases are then introduced in low

temperature shift converter containing and copper zinc catalyst. The same

reaction as about takes place and about 99.7%of carbon monoxide is

converted to carbon dioxide.

d) Two different reactors and temperature levels are used to take maximum

advantage of higher reaction rate at higher temperature and higher

conversion at lower temperature.

IV. Carbon Dioxide Removal

a) Carbon Dioxide, the raw materials for urea is removed in this section and

sends to the urea plant.

b) The gases leaving L.T. shift converter at around 221c are cooled to 94c

and the unreacted steam is condensed and removed.

c) The process use for removal of carbon dioxide is low heat Ben field

process with the following features:

Absorption is accomplished in two stages with lean, semi lean Ben field

solutions consisting of potassium carbonate and diethanolamine as the

main absorbent and vanadium pent oxide as a corrosion inhibitor. The

gases leaving absorber at the temperature of about 70c contain a

maximum of 0.1%carbon dioxide on dry basis.

Rich Benfield solution from the bottom of the absorber at a pressure of

about 28kg/cm2 is sent to the top of CO2 striper through hydraulic

turbines which are coupled to semi lean solution pumps their by

reducing the power consumption for semi lean solution pump drivers.

Rich Ben field solution is flashed of at stripper top thus yielding a pure

CO2 product.

- 78 -

As in the case of absorber, the stripper design is also based on

operation in two stages. In the upper section, rich Ben field solution is

partially stripped of the dissolved CO2 by up flowing vapor and a major

portion of semi lean solution is withdrawn from the middle point of the

stripper and is pumped to the middle of absorber.

The balance of semi lean solution comes down to the bottom of

stripper and the further stripped by the up flowing vapors processed in

solution regenerator. The lean solution withdrawn from the bottom of

stripper is cooled and pumped back to the top of absorber.

IV. Methanation

a) The gases leaving CO2 absorber contains traces of carbon monoxide and

carbon dioxide which are highly poisonous to synthesis catalyst in amm

converter and hence these are converted to methane in methanator in the

presence of Nickel catalyst at a temperature 285 to 305c.

b) The reaction that occurs is :

CO + 3H2 = CH4 + H2O Exothermic

CO2 + 4H2 = CH4 + 2H2O Exothermic

At exit of methanator pure synthesis gas containing N2 and H2 in the ratio of 1:3 has

a CO+CO2 contain of less than 1 PPM

VI. Ammonia Synthesis

The synthesis gas containing nitrogen and hydrogen in the volumetric

ratio of 1:3 is compressed in a turbine driven centrifugal compressor from 28.5

kg/cm2 to 185kg/cm2.

The compressed gas is preheated by heat exchange with converter effluent and is

passed over iron oxide catalyst where about 17% ammonia is formed. The

unconverted gases are mixed with make up synthesis gas and after removal of

ammonia product are recycled over the ammonia converter containing the iron oxide

catalyst. The ammonia formed in this section is chilled and separated.

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VIII. Refrigeration System

a) A four-stage ammonia refrigeration system provides refrigeration for

ammonia condensation in the synthesis loop and the ammonia vapors

generated in the ammonia storage tank due to normal heat leak.

b) The refrigeration compressor consist of two cases centrifugal

compressor with inter coolers, a refrigerant condenser, a refrigerant

receiver and four flash drums.

c) The refrigeration system is designed to deliver the ammonia product as

liquid at –33c. This temperature is chosen because it permits the storage

of liquid ammonia at atmospheric pressure.

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PROCESS DESCRIPTION

1. Main Sections

i. The production of urea by ammonia stripping process involved the

following steps.

Synthesis

Purification and Recirculation

Concentration and Prilling

ii. The stripping process for production of urea is based on Henry’s laws.

According to this law the concentration of component in the solution

while in equilibrium with the vapor phase is directly proportional to the

partial pressure of that component in the vapor phase. The increase in

partial pressure of ammonia over the ammonium carbonate solution

reduces the partial pressure of carbon dioxide and hence ammonium

carbonate solution decomposes to increase the partial pressure of

carbon dioxide in vapor phase to approach equilibrium concentration.

2. Synthesis Urea is produced by synthesis of liquid ammonia and gaseous carbon

dioxide at a temperature of about 190deg. C and pressure of 160kg/cm2.

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2NH4 + CO2 = NH2 COO NH4 Exothermic (Heat Liberated)

Ammonium Carbamate

NH2 COO NH4 = NH2 CO NH2 +H2O (Slightly Endothermic)

Urea

iii. Liquid Ammonia from ammonia plant is pressurized to 240 kg/cm2 and is

used as a driving fluid in the Carbamate ejector for recycling the

unconverted ammonium Carbamate into the synthesis reactor. Carbon

dioxide is also compressed to synthesis pressure in a centrifugal

compressor and fed to synthesis reactor.

iv. In the synthesis reactor ammonia and carbon dioxide react to form

ammonium Carbamate, urea and water as shown above. Although the

first reaction is spontaneous and complete, the conversion of ammonia

carbonate to urea is only partial (about60%) thus leaving unconverted

ammonium Carbamate, urea and water at the reactor outlet.

v. The effluents from the reactors enter the stripper, which operates at the

same pressure as the reactors. Here the ammonia stripping process

achieves the decomposition of ammonium Carbamate into ammonia and

carbon dioxide and the heat of decomposition is supplied by steam.

vi. The overhead gases (ammonia, carbon dioxide and water vapor) from

stripper are condensed in the weak Carbamate solution in the

Carbamate condenser at synthesis pressure. The heat of condensation

is utilized to produce low-pressure steam in the sell side of the

condenser. The Carbamate solution so formed is recycled to the

synthesis reactor through Carbamate ejector.

3. Purification and Recirculation

vii. The purification of urea and further circulation of unconverted

ammonium Carbamate take place in two stages operating at 16kg/cm2

and 4.5kg/cm2 respectively.

viii. Each stage consists of a decomposer where further decomposition

take place on account of pressure reduction, a separator where the

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gases and urea solution are separated and condenser where gases

are dissolved in the weaker Carbamate solution from the subsequent

stage.

ix. The society has also installed pre-concentrator and pre-decomposer to

reduce the energy consumption and to reduce the vacuum load.

x. The concentration of urea is thus increased to about 80% and almost

the entire quantity of converted ammonia and carbon dioxide is

recycled back.

4. Concentration and Prilling

xi. The urea solution is further concentrated to 99.75% in two vacuum

concentrators operating at 0.3kg/cm2 abs and 0.03kg/cm2 abs

pressure.

The concentrated urea solution is pumped to the top of Prilling tower

from where it is sprayed in to the Prilling tower through a Prilling bucket. The drops

of urea encounter by cold airflow and get solidified in to prills. The urea prills are sent

to the bagging plant or at urea silo by belt conveyors.

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MATERIAL DEPARTMENT

PURCHASE STORES

RECE IPT SECTION CUSTODY SECTION DISPOSAL

SECTION

Spare Section Scrap Section

Material Handling

Transportation

Thus, customers are the aim of any business. The most important

task of any business unit or organization is to fulfil customers’ needs by providing

them product or service on right time, price and place. Customer satisfaction is the

success of any organization. For that material should be, reach on it is desired Place

on right time and this is possible only by any Transportation facility. Transportation is

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link between customer & organization. Transportation is a most important function of

any organization.

In KRIBHCO, Transportation alone accounts approximately 80% of

the total marketing cost. Hence, it requires utmost attention, careful planning and

judicious approach in finalization of transport contracts. In order to bring down the

marketing expanses, KRIBHCO is transporting its products (urea) by rail and road.

Rail dispatches on an average contributes 75% while road dispatches are 25% of the

total urea produced and dispatched from plant.

The Road Transportation from plant is presently undertaken for the

states of Gujarat, Maharastra, and M.P & Rajasthan. These states fall in economy

zone where road transportation is cheaper as compared to rail. Dispatch instructions

(DI’s) are given only to such destinations where transportation by road is

comparatively cheaper than rail. Hence, annual contracts for road transportation for

above states are performed.

The cheapest transportation mode is selected for dispatching the

material to the respective places. The production of the plant is more than 100%. For

commercial sale the price is Rs.7200 per metric ton, and for agricultural purposes its

Rs.4800 which is subsidized and sales tax free rate. There are 2 Silo’s where the

materials can be stocked for 1 month. In Gujarat on average, an everyday 80-ton is

dispatched. The economic zones are Maharastra, MP, and Rajasthan, which touch

the boundary of Gujarat. The documentation should reach the consignee before the

consignment reaches the consignee. The document which is of prior importance is

RR (railway receipt-railway), BL (bill of lading-Ship), AB (Airway bill-Air), and LR

(Lorry receipt-Road).

The product is sold at fixes rate throughout India. There are two

types of transportation subsidy and the other one is gives by FICC. Government

fixes the retention price, which is cost of production given by the government. The

production is controlled according to FCO standards that are fertilizer control order.

ZUAVARI AGROCHEMICAL (BIRLA GROUP)

At KRIBHCO, distribution of the material is performed by Transportation

Department. 70% of total transportation is done by Rail & 30% are by Road.

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KRIBHCO have their own jetty but mostly their market is domestic so sea

transportation is not so useful for them. No materials are dispatched from ship.

So, we can say that the transportation at KRIBHCO;

Transportation at KRIBHCO

70% 30%

Rail Road

Thus, transportation Department does many functions but the

main functions of this department are following

Preliminary Transportation

Linked between Production, Marketing & Finance

Direct Selling of excisable product.

Maintenance of Track, Station, Wagons etc.

Purchase Department

Purchasing is one of the basic functions of Inventory Management and

forms a major part of it. What to buy, when to buy, where it buy, how much to buy, how much

to pay and how much to stock are the fundamental of the Inventory control. It also involves

creative functions such as development of new resources, introducing new materials and

sources in the undertaking etc. It needs considerable expertise not only negotiating but also

in the techniques of competition and studying of economic trends in respect of materials to

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be purchased in large quantity. Every rupee saved by the good purchasing goes directly in

to the profit for the simple reason is that it is not spent at all.

Objectives of Purchasing:

The objective of Inventory purchasing can be enumerated as follows:

o To Maintain Continuity of production,

o To contribute to the competitiveness of the end product,

o To contribute towards higher productivity,

o To buy for the best ultimate value not necessarily at the lowest initial price,

o To contribute towards standardization, variety reduction and value analysis programs,

o To increase profits through effectiveness in purchase contract.

The scope of purchase in KRIBHCO includes the following ,

o Capital items, like plant and machinery, office equipment, furniture and fixtures

etc.

o Raw materials and semi finished goods.

o Consumable items like tools, oils and lubricants, office stationery etc.

o Spare parts.

o Items for repairing and maintaining the capital items.

o Contract / agreement for clearing, handling, loading and transportation of

incoming / outgoing materials.

o Rate contractors for procurement of casual lab ours and for maintenance of plant

and township buildings.

o Contract for construction of civil, structural, mechanical, electrical,

instrumentation, insulation and painting etc.

o Contracts for hiring of vehicles.

o Contract for running of canteen / guesthouse.

o Rate contracts for procurement of laboratory, glass wares/chemicals etc.

Existing Purchase Procedure in KRIBHCO

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To study the existing purchase system, the purchase procedure followed by the

purchase department have been analyzed and evaluated on the basis of observation and

discussions with concerned personnel of KRIBHCO is as follows:

1. Responsibilities of the purchase functions are,

The purchase department issues the material manager purchase orders/ contract

after the approval of the competent authority. The purchase function in other offices (like

head office at NEW DELHI and its various branch offices) is headed by the single officer

designated for that purpose. The indenters from various departments are issuing inquiries,

inviting bids, entering into correspondence or negotiation with vendors / contractors. All

requisition for purpose is duly processed in accordance with procedure laid down, which is

forwarded to purchase department for necessary action.

2. Registration / Selection of Suitable Vender:

Purchase department is responsible for developing a list of approved vendors for

various types of materials and service as per procedure. An advertisement is issued in all

the leading news papers inviting applications in the prescribed Performa for registration of

suppliers and contractors for listing out of various types of purchase and service that are

likely to be made during the next three to five years. The application received are scrutinized

by a committee consisting of a representative from technical, finance and purchase

department nominated by General Manager and ascertained the resources, capacity and

quality of workmanship of the vendor. The committee also calls the vendors and contractors

for personnel discussion and clarifies the applications and obtains such other information as

may be considered necessary by the committee.

The list of approved vendors and contractors as to be up dated at least every five

years by issuing a press advertisement.

3. Requisition to Purchase:

The indenters from various departments are raising a requisition called the Material

Purchase Requisition (MPR) for purchase in the prescribed Performa. It should be ensured

that the requisition for purchase is completed in all respect with regard to.

(a) Description of the material / equipment / scope of work.

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(b) Material of construction / specification.

(c) Temperature / pressure / standard if anywhere applicable.

(d) Quality and chit of measurement.

(e) Date when delivery of material / service is required.

(f) Estimated value and budget head.

(g) Whether item is a stock item / non - stock item and fast moving / slow moving.

The requisition for purchase of stock items is raised by the stores department after

the quality in stock-.has reached the re-order level as determined for the respective items.

Such requisition amongst other-particular also indicates the minimum, maximum and reorder

level, the date on which last supply was received and average consumption per month since

last purchase.

The requisition for purchase of non-stock items is invariably routed through the

stores department which indorses on the requisition the availability / non-availability.

In case item is available the quantity thereof is indicated on the purchase requisition

and the quality to be purchased is adjusted by the materials manager in consultation with

the indenter.

All requisitions for purchase of materials or for award of work is raised by respective

departments. The department manager ensures the following particulars in the purchase

requisitions.

(a) The budget provisions.

(b) The amount utilized up to the previous requisition.

(c) The estimated value of the present requisition and

(d) The balance available under the budged head after booking the present requisition.

The requisition is submitted to the competent authority for approval of purchase after

filling the above information. After the approval of requisition, the same is passed on to the

purchase department for inviting bids.

4. Purchase Function after Receipt of MPR:

To enter requisition in indent register, the requisitions are checked for specification,

quality, code numbers, budget heads etc. This number is entered on all the four copies of

indent, one copy is for action by purchase department, second copy is sent to Finance

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department, third copy is returned to indenter, and fourth copy is retained in the purchase

department's master file.

5. Floating Inquiries:

Purchase department issue inquires to approved vendor or press advertisement

depending upon value of purchase which is followed as per the following guideline.

Estimated value of purchase order / work order/contract

Minimum of vendors to whom inquiry to be issued

Minimum No. of bids to be obtained.

UptoRs.20,00,000/- 5 3

Exceeding Rs 20 ,00,000/` All suppliers on the approved list

3

This has been prescribed by the KRIBHCO so that a healthy competition amongst

bidder to procure materials at the most economical price.

Quotation Comparison Statement:

At this stage a statement called Quotation Comparison Statement (QCS) is prepared

by the purchase department.

Then after the bids lowest in value is rated in the QCS as lowest (L1), second lowest

(L2), Third lowest (L3), etc.

The purchase department sends the QCS to the indenters and tender committee for

review and recommendations.

6. Purchase Order / Work Order:

The recommendation of the tender committee is routed though the finance

department to enable them to record the value of commitment in the budget records

confirms availability of funds under the approved budget and also record financial

concurrence.

As soon as the recommendation of tender committee is approved by competent

authority, the purchase department issues purchase/work order to the recommended

successful bidder.

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The purchase department is responsible for following up of the purchase

order/contracts with vendors and transporters until the material is reached and accepted at

the plant/stores.

On receipt of materials at plant site/stores, the stores department will fill up the store

receipt voucher and arrange the inspection from the inspection department or indenters, as

the case may be necessary.

7. Terms & Conditions:

The existing purchase procedure gives fair chances of competition to all the vendors.

It leaves no room for malpractice of favoritism of employee. In time of urgency of

requirement, necessary deviations are approved by competent authority so as to avoid

stoppage of work. The procedure is based on democratic way of working. Good suggestions

to improve efficiency are always considered. Various annual rate contract, running contracts

are entered for regular consumable items, like oil and lubricants, stationary, chemicals,

medicines, printing job etc. This is reducing the repetitive job times and money of company.

STORE DEPARTMENT

OBJECTIVE:

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To render materials service to the organization by receiving, issuing

the materials, preserving the materials which in custody, disposing the scrap/surplus

materials.

FUNCTION:

To receive all types (i.e. stock & non stock) materials, to arrange

inspection of materials.

To keep materials safe custody, issue of the materials to user department.

To initiate action for procurement of stock items, custody & issue to user

departments.

Disposal of non-moving items/surplus items & scraps.

Raising indent for hiring services of contractor for material handling,

transportation, grass cutting etc.

STORE DEPARTMENT IS ALSO DIVIDED INTO THREE SECTIONS:

RECEIPT SECTION

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CUSTODY SECTION

DISPOSALSECTION

The stores have about 64663 Nos. of items out of which about 1800

items are stock items. Stores initiate the procurement action of stock items. The

store is spread over in 02 lakhs sq. Mtr. Of space out of which 12000 sq. Mtr. Is

covered area. Normal working hours of stores is general shift hours. However, in

case of shut down, emergency service of stores is made available as by the user

departments.

RECEIPT SECTION

Main Function of section;

To arrange copies of purchase order/work order and amendments thereof

for ready reference.

Receiving of materials – checking and arranging for inspection.

Documentation – SRV (Store Receipt Voucher)

Handling over of accepted materials to custody section

Accounting / segregation of rejected material.

Follow up with handling contractor and transporter.

Processing bills for services availed.

Assisting for dispatch of equipment and machinery.

Maintaining of Imp rest and cash purchase activity.

Declaring consignment to the under writer for insurance cover.

Reply of various work related queries / to provide required information to

other department.

TIPS FOR PROPER FUNCTIONING OF RECEIPT SECTION;

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While receiving the material goods are being received

Door delivery basis directly from the supplier

Through registered post parcel / V.P.P.

Through courier

Through transporter directly

Through bank

A. CHALLAN / INVOICE -

NAME OF SUPPLIER (ABC & CO.)

CHALLAN NO. DATE

NAME OF BUYER (KRIBHCO) ORDER NO. & DATE

S. NO. ITEM CODE

/DESCRIPTION

QTY./UNIT UNIT PRICE VALUE

Other details – like T.C. / G.C. / W.C. / payment terms & other conditions

SIGNATURE OF RECEIVER SIGNATURE OF SUPPLIER

POINTS TO BE TAKEN CARE –

PO NO.

Description

Quantity – weight / nos. /measurement

TC/WC/GC & other documents as per PO.

Sign. Of supplier

Condition of goods

A. CLEARING OF CONSIGNMENT FROM TRANSPORTERS / COURIER

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RR /LR /PWB /GR

NAME OF TRANSPORTER R.R. NO. DATE

CONSIGNEE COPY / DESTINATION COPY / CONSIGNOR COPY / EXTRA DELIVERY CONDITIONS:

NAME OF CONSIGNOR (SUPPLIER) & ADDRESS

NAME OF CONSIGNEE (BUYER) & ADDRESS

BOOKING PLACE DELIVERY PLACEPACKAGES DESCRIPTION WEIGHT MR

DETAILSPAYMENT

INSTRUCTIONTO PAY/PAID/ TO BE BILLED

INSURANCE DETAILS:

RECEIVED BY SIGN. OF CONSIGNOR SIGN. OF BOOKING PERSON

OTHER CONDITION ON OVERLEAF

POINTS TO BE TAKEN INTO CARE –

Invoice / challan

PO NO.

Description of material

Quantity – weight /nos. / measurement

TC /WC/GC & other documents as per PO.

Sign. Of supplier

Condition of goods

CUSTODY SECTION

Main function of section;

1. Codifying all the items with 9+1 digit code structure.

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2. Receiving & posting of “accepted materials” against SRV and storing at proper

location

3. Preservation of material during storage period.

4. ‘Stock Verification’ reconciliation of stock with management approval.

5. Issue of material to the User dep’t. / Contractor as and when required.

6. Maintenance of records and accounting for each transaction.

7. Verification of “Material statement” for the material issued against various ‘work

orders’

8. Reservation of stock for various schemes

9. Accounting of ‘Loaned material’.

10. Preparation of MPRs for ‘stock controlled’ items.

11. Review and fixing of ‘stock level’ for “stock control items”.

12. Direct receipt of bulk materials like steel/ oil/ cement and stock items gases to

avoid double handling.

13. House keeping of the entire covered area under stores

14. Receipt of materials through ISRV from dep’t /contractors

RECEIVING MATERIAL FROM VENDORS & OTHER UNITS. PROV. INSURANCE CLAIMS, OCTROI FORMALITIES

RETURN OF REJECTED MATERIALS TO VENDORS & DESPATCH OF MATERIALS FOR REPAIR

“J” FORM FOR CONTRACT OF MATERIALS HANDLING & TRANSPORTATION TO PURCHASE DEPARTMENT

STORES

FLOW DIAGRAM

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PROCEDURE FOR RECEIVING THE ACCEPTED MATERIAL IN CUSTODY SECTION

A) The materials are received in custody section through two sources mainly.

CUSTODY SECTION

RECEIPTSECTION

DISPOSAL SECTION

DEL. OF MATERIALS SOLD TO SUCCESSFUL BIDDERS (THROUGH MSTC)

SCRAP FROM PLANT

HANDLING OVER SURPLUS MATERIALS FOR DISPOSAL TO

ISSUE OF MATLS.TO USER DEPTT.

RETURN OF MATERIAL THROUGH SRV

INSPECTION OF MATERIALS

SRV ACCEPTED MATERIALS

MPR FOR STOCK ITEM TO PURCHASE

PRESERVATION OF MATERIALS

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From receipt section through SRV and;

From user dep’t through ISRV (Material once drawn from stores and

not consumed can be returned to custody till it is further required for

consumption).

1) If the material is received through SRV,

i) SRV for receipt of accepted material will be checked for special remarks

for storage condition (if any) & taken into custody.

ii) The appropriate location for the material will be selected/arranged.

iii) The material will be shifted to the selected place of its storage.

iv) The material will be “stock charged” i.e. taken into account by posting in

compute

2) If material is received through ISRV,

i) SIV reference no. & date (when this material was drawn).

ii) Reasons of return.

iii) % Value of material indicated by user or not.

iv) If it is repaired & returned to stores.

v) Condition of material.

B) Quantity mentioned in ISRV is checked with quantity received by stores.

PROCEDURE FOR RECONCILIATION OF INVENTORY STATUS

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It is a system for identifying the unwanted inventory and the deviation in physical

stocks for reconciliation of the stock and maintaining the accuracy in “management

reporting system” for inventory status.

All items in stocks are to be physically verified once in a year so that

necessary adjustments can be made in stocks after obtaining necessary approvals

from competent authority.

PROCEDURE

Every item will be verified under perpetual type of “inventory verification

system” once in a year.

The finance or their representative of nominated hired agency will prepare the

group wise list of the items.

On hand quantity against the individual item will be noted with their respective

location.

The physical stock is then verified with the representative of stores dep’t.

The deviation will be checked, scrutinized and sorted out.

The final list of unsettled item with deviation in quantity will be prepared.

Management approval for write-off / write on the stock is obtained.

Stock is adjusted through a voucher- SAV

PROCEDURE FOR MATERIAL ISSUE

Issue of material to user dep’t for its end use / consumption in plant

/outside plant like township against authorized issue vouchers. Issue of

material to contractors against work orders / contracts against authorized

issue voucher.

Materials are issued within the specified time period i.e. 9.00 AM to 12.00

noon. In case of emergency, materials can be issued depending upon the

merit of the case.

Materials are issued against SIV format signed by authorized persons.

SIV will be checked.

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Indication for type of transaction will be checked on SIV

Quantity on hand and location of the item will be noted on the SIV for

respective item.

Quantity to be issued is decided based on type of material required.

If required materials is “stock item”, then quantity issued is depending

on stock available & may be even less than demand quantity to

maintain service level for various other user dep’t

If required material is “non-stock” item, it can be issued full (i.e. equal

to demanded quantity).

If required material is material is from “reserved material category”,

then it can be issued to maximum quantity kept reserved for that

particular dep’t.

Material will be issued for the decided quantity-obtaining signature & name of

the drawer for its physical receipt.

Quantity issued for the item will be posted to update the stock position.

DISPOSAL SECTION

The various function of disposal section;

To receive surplus material, scrap, unserviceable stores.

It is ensured that scrap materials are properly located / stored for fetching

good price.

Coordinating activities of declaring items as surplus / obsolete, fixing of

reserve price for their disposal and obtaining management approval for their

final disposal.

Initiating appropriate ‘disposal action’ through press tender /limited tender,

public auction or through a “Govt.agency” (MSTC) hired for disposal on

Kribhco behalf.

Arrangement with Govt.Agency for their services in disposing off materials.

PURPOSE

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To describe the steps involving in handling, storage & disposing

off these type of items to only such customers who are authorized by pollution

control boards so that money blocked in such types of items can be realized as

soon as possible & at the same time to protect the environment.

PROCEDURE:

1) Disposable material will be received from following sources;

a) Used / spent catalyst from plants.

b) Used / spent oil from plants.

2) Hazardous waste will be made to ‘stock charge’ in “disposable category”.

3) This type of waste is stored in a designated area for this purpose. This is hard

paved area separated from area where other disposable materials are stored.

4) All the three items of hazardous waste are stored at separate location in the

hazardous waste area & board are displayed indicating the name of hazardous

waste

5) All the other steps for disposal as defined in the same except that before issuing

the sale order permission from pollution control board is sought through Lab.

Dep’t, to dispose off to a particular customer who is having valid certificate from

pollution control board for receiving, storing, handling & disposing of hazardous

waste.

6) In case of disposal of hazardous waste through MSTC, the procedure will be

followed as given. Also pollution control board’s permission will be sought as

mentioned above-5

PROCEDURE FOR DISPOSAL OF SURPLUS ITEMS AND SCRAP

(NON – HAZARDOUS)

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PURPOSE;

To describe the steps involved in disposing off the items so that money blocked

in such types of items can be realized as soon as possible.

PROCEDURE;

1) Disposable material will be received from following sources;

a) Surplus inventory from custody section.

b) Obsolete / scrap / waste from various user deptts. In the format.

2) A committee is constituted for the review either of its alternate use or suggesting

the disposal action with appropriate reserve price.

3) Approval will be obtained for the competent authority for disposal.

4) Consolidated list of disposable items shall be prepared & forwarded to METAL

SCRAP TRADE CORPORATION, vadodara.(agency appointed for disposal of

Kribhco materials)

5) M/s.MSTC will invite the tenders on Kribhco behalf as per their laid down

procedure. Our representative shall attend the tender opening at M/S. MSTC.

M/S. MSTC will prepare the QCS and recommend the vendor to whom disposal

to be made for Kribhco’s approval we shall study the proposal and if in order will

get necessary approval from competent authority for disposal of item. It shall be

communicated to M/S.MSTC who will issued sale order / delivery order as per

their procedures.

6) M/S. MSTC will forward a copy of sale order / delivery order in the format

7) Remittance of sale proceeds will be done by M/S MSTC only after receipt of such

remittance, physical delivery of material would be made.

8) On execution / or completion of “sale order” statement of accounts will be

forwarded by stores to accounts for final settlement of vendor’s account

9) Closure of sale order

10)In certain cases disposal may be done by Kribhco itself. All the steps mentioned

above will be followed except the M/S MSTC will not involve in such transaction.

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Inventory Management

The dictionary meaning of the word “Inventory” means stock of goods. In the

financial terms, Inventory means the value of raw materials, consumables spares,

work in process, finished goods, and scrap in which company funds have been

invested.

It can also be identified that Inventory are those goods which are placed,

stored and used for day to day functioning of the organization. Thus Inventory can be

defined as an “ideal resource of any kind having an economic value”.

TYPES OF INVENTORIES

Inventories can be classified in terms of its different uses, which will enable

one to appreciate the peculiarities and problems in its uses. Secondly the

differentiation based on uses of inventories will enable one to adopt control

techniques to suit the needs.

Inventories are classified according to uses and point of entry in the alteration

is as follows:

o Raw Material

o Stores, Spares and Consumables

o Work in Process Goods and

o Finished Goods

Raw Materials:

Raw materials are those basic input materials that are converted into finished

product through manufacturing process. The importance of raw materials can be

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easily visualized when any break in its supply will keep the production lines idle.

There are two important factors, which determine the size of raw materials Inventory.

o Consumption rate;

o Importance of item.

Under the head of the raw material maintained in KRIBHCO is Carbon

Dioxide and Ammonia which are obtained from the Natural Gas.

Stores and Consumables:

o Consumables: There are the materials which act as catalysis in the production

process and are not directly found in the output. This enables the production

process to function smoothly. In KRIBHCO, various chemicals like HCL, NaOH,

K2CO3, DEA, V2O5, H2SO4, Alum, Ferrous Sulphate, etc., fall under this category.

It requires different treatment of Inventory control than raw material.

o Spares: Spares form an importance class of inventories by themselves. Their

consumption pattern defers from that of raw materials, consumables and finished

goods, consequently the stocking polices are different necessitating special

methods for solving their peculiar Inventory problems. KRIBHCO is having a

huge store of specialty spare parts which can not be usually available in short

time. To avoid break down in plant due to fault in spare parts, the KRIBHCO is

maintaining huge stock of spare parts, from a small circuit board and bearing to a

large engines, since the time of its commence.

o Work-in-Process Goods: They represent products that need more work before

they become finished products for sale. Work-in-process goods acts as a buffers

within the manufacturing sub-system, which may consist of group of machines

and assembly lines, i.e. work centers. The raw material passes through the work

center for final production. Since KRIBHCO producing using continues process

plant, it having very less work-in-process inventory.

o Finished Goods: Finished Goods is the final or stable products which act as a

buffer between the production department and marketing department. The level

of inventory depends on the production and behavior of the market. Normally

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these inventories are controlled by the Marketing Department. Urea is the final

product of KRIBHCO. KRIBHCO have two silos each capacity of 45,000 MT for

storing Urea.

The Inventory Control includes controlling while purchasing through

implement proper purchasing policy and a good system of warehousing. This

includes controlling through controlling inventory ordering costs, carrying costs,

capital costs, storage space costs, risk costs, etc. Let us understand purchase

procedure of KRIBHCO.

CLASSIFICATION OF INVENTORY:

The universal problem can be solved taking in to consideration its important aspects.

Similarly, in Inventory Management classification is meant for solving the Inventory

control problem from its important angle. The inventories having huge amount of use

in the organization has to be controlled very strictly and low amount of use should be

kept low control. The importance can be due to the cost; its criticality, its availability

and its consumption.

EXISTING CLASSIFICATION SYSTEM:

The existing classification system is based on its use, i.e. inventories

classified as stock items and non-stock items.

The list and amounts of stock and non stock items is described in

Annexure-

The existing system keeps strict control on the item that are of

recurring nature. It takes in to consideration only the amount use of quantity

not in value. While for non-stock item low control is being kept. This system

has following shortcomings.

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The classification gives importance to only those items, which are of recurring

natures. It excludes from the control point of view the items that are high value

in stock.

It considers the quantity used not the money value of the material used.

Control kept on stock items a give equal weight age to all items, which

neglects the benefit of selective control technique.

Considering the practical use of classification techniques, two important

methods are suggested as follow.

(1) ABC classification and

(2) VED classification

ABC CLASSIFICATION:

ABC classification is a basic analytical Management tools which enables top

Management to direct their effort where the result will be maximum. This technique

properly knocks as “ALWAYS BETTER CONTROL” has universal application in

many areas of human endeavor. The technique tries to analyze the distribution of

any characteristic by money value of importance in orders to determine its priority. In

materials Management, this technique has been applied in areas needing selective

control. Such as Inventory critically of items, obsolesce. Stock purchases order,

receipt of materials, inspection, storekeeper and billing verification.

ADVANTAGES OF ABC CLASSIFICATION:

This approach helps the material manager to exercise selective

control and focus his attention only on a few items. When he is dealing with lakhs of

store items. ABC analysis has to be reported to equal extension to A, B and C items

will not worth while and would be very expensive. Concentrating on all items it is

likely to have diffused effect irrespective of the priorities.

It provides a sound basis on which to allocate funds and time of

personnel with respect to their importance of the individual items.

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TECHNIQUES OF ABC CLASSIFICATION:

The techniques of classifying the items into A, B and C categories as described

in the following steps:

(1) Classify the items of inventories, determining the expected use in units and the

price per unit for each item.

(2) Determining the total value of each item by multiplying the expected units by its

unit’s price.

(3) Rank the items in accordance with the total value, giving first rank to the item

with highest total value and so on.

(4) Compute the ratios (percentage) of number of units of each item to total units of

all items and the ratio to total of each item to total value of all items.

(5) Combine items on the basis of their relative value to form three categories A, B

and C.

PURPOSE OF ABC CLASSIFICATION

The object of carrying out ABC classification is to develop policy guidelines for

selective control.

Normally, once A, B, C classification has been done the following broad policy

guidelines can be established in respect of each category.

EXHIBIT 1.1

Sr.No. A-ITEMS B-ITEMS C-ITEMS

1. Very strict control Moderate control Low control

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2. No safety stock Low safety stock High safety stock

3. Frequent ordering or

weekly deliveries

Once in four months Bulk ordering once in six

months

4. Weekly control

statements

Monthly reports Quarterly control reports

5. Maximum follow up and

expediting

Periodic follow up Follow up and expediting

exceptional cases

6. Strict value analysis Moderate value

analysis

Minimum value analysis

7. As many sources as

possible for each item

Two or more reliable

sources

Two reliable sources for

each items

8. Accounts forecast in

material planning

Estimate based on

past data on present

plan

Rough estimate for

planning

9. Minimization of waste

obsolete and

surplus(review every 15

days)

Quarterly control over

surplus and obsolete

items

Annual reviews over

surplus and obsolete

items

10. Individual posting Small group posting Group posting

11. Central purchasing and

storage

Combination

purchasing

Decentralized purchasing

12. Maximum efforts to

reduce lead time

Moderate Minimum clerical efforts

13. Must be handled by

senior officers

Can be handled by

middle Management

Can be fully delegated

GRAPHICAL REPRESENTATION OF ABC ANALYSIS

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VED CLASSIFICATION

The VED classification is applicable largely to spare parts. Stocking

of spare parts will be based on strategies different from those for raw materials,

because their consumption pattern is different, while the consumption of raw

materials depends directly on the market demand on production the demand for

spare parts depends on the performance of the plant and machinery. Therefore, the

method of classification designed for one type of Inventory will not be compatible for

selective control of another type of Inventory to over come this draw back the VED

classification is used.

Spares are classified as vital, essential desirable. This implies

that V classes of spares have to be stocked adequately to ensure the operation of

the pant, because by definition the non-availability of vital spares can cause havoc

and stop the wheels of the organization. Some risk can be taken in the case of ‘E’

class of spares. Stocking of desirable spares can be even done if the lead-time for

their procurement is law. It is essential that this classification be done by technical

department or by those in charge of the maintenance of the plant. This classification

will be very useful to KRIBHCO if it is implemented.

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Moreover, ABC and VED classification can be a combined advantage, in order to

control the stocking of spare parts. The control action for the class AV, BE, CD, etc

are given in exhibit No. 2.1

EXHIBIT NO 2.1

CLASSE

S

V ITEM E ITEM D ITEM

A Items Constant control &

regular follow up

Moderate stock Nil stock

B Items Moderate stock Moderate stock Very low stock

C Items High Stocks Moderate stock Low stock

- 110 -

- 111 -

Introduction of Finance Department

Finance is the blood of the business. “Finance Management is that

managerial activity which is concerned with the planning and controlling of the firms

financial resources.” Finance management is the most important activity of the firm

and it means that the firm secures capital, if needs and employees it.

Finance management is mainly concerned with raising fund in the

suitable manner using the funds as profitably as possible, planning future operations

and controlling current performances and future developments through financial

accounting, cost accounting, budgeting and other functions.

The Finance and Accounts Department of KRIBHCO plant is located in

the Administration Building, which is situated outside the Plant factory gate. The

Finance & Accounts (F & A) Department is a service department and its name

function is to co-ordinate the financial activities at Plant Site. The F & A department

maintain the records as required under various statute and get the same audited by

Statutory Auditors under the functional supervision and guidance of KRIBHCO CO-

OPERATE OFFICE at NOIDA.

Various Sections

The F & A department have various Sections as detailed

below.

SEC. CODE

SEC. NAME DESCRIPTION

1701 INSURANCE & EXCISE To review the insurance policies of the societies in terms of adequacy of insurance cover and premium paid, renewals of policies in time, loading of claims and following-up for their settlement with underwriter.

To maintain constant liaison with the excise authorities and with societies consultant regarding day to day matters related to the central excise and hearing of ammonia tank wagons to outsides parties.

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1702 L/C SECTION To maintain all letters of credit open by the society for importing of materials and services, realizing payments as per the terms of the L/C, Liaison with banks and parties regarding matters relating to L/C and maintaining proper accounting records.

1703 PRODUCT HANDLING DEPARTMENT

Payments to bill of urea bagging and handling contractor and other small value contractor pertaining to urea and bio-fertilizer transportation after certification by production department and maintenance of necessary accounting records.

1704 EMPTY UREA BAGS SUPPLIES

Payment for supplier of the empty bags and to maintain all related accounting transactions.

1705 BUDGET Preparation of annual capital and revenue budgets and monitoring of commitments and expenditure and generation of periodical reports.

1706 CONTRACT PAYMENT SECTION

Payments to contractor for various work orders issued other then product handling and transportation contractors and to keep all accounting records.

1707 MISC. PAYMENTS Payments towards misc. Works of petty nature

1708 TOWNSHIP LICENCE FEE RECEIPTS

Recovery of license fee, electricity charges, water charges etc.

1709 PURCHASE BILL SECTION

Payments towards various PO issued by materials department and to keep all relevant accounting records

1710 TRANSPORTATION Payments towards transportation of urea by road and, matters related with railway for railway siding, to maintain all related records and transfer of all the transportation charges including.

1711 SALE OF AMMONIAINDUSTRIAL UREA & NITROGEN

Accounting for sale of ammonia, industrial urea, nitrogen to keep relevant accounting reports.

1712 SALES TAX Submission of returns as prescribed by GST act, 1969 and CST act, payment to wards sales tax on transfer of sales/stock of urea sales, ammonia, scrap sales, follow-up of pending matters and assessment etc.

1713 ESTABLISHMENT Release payment towards all employees related matters like salary/wages, loans and advances etc., payments to out sides hospital /doctors, security of HBL &

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conveyance loans etc., and to maintain personal records.

1714 INVENTORY Valuation of inventory, generation of various reports related with inventory, booking of various revenue expenses as well as capitalization of inventories issued on monthly basis. Review and concurrence of disposal proposals.

1715 BOOKS Maintenance of books of accounts like general ledger, journal, cash book and bank book, preparation of trial balance on monthly basis, quarterly annual reports, and coordination of internal audit / statutory audit. To release payments to GAIL, GEB, HPCL, ONGC, etc.

1716 O & M OF HAEP PLANT To deal with operation & maintenance contract for running and maintenance of HAEP plant and to keep all relevant accounting records.

1717 SCRAP SALES Receipt of payment towards sale of scrap and to maintain related accounting records.

1718 PO CONCURRENCE Scrutiny of proposals received from material department for procurement of material and to accord finance concurrence.

1719 WO CONCURRENCE Scrutiny of proposals received from various departments for procurement of services for running, maintenance and up gradation of the plant.

Financial Planning

Planning is the design of a desired future state of an entity and of the

effective way of bringing it about. Also it involves the determination of the future

causes or action for accomplishing the objective of the enterprise.

Financial planning is essentially concerned with economical

procurement & profitable use of funds. It is used for determined by realistic

investment decisions. Financial planning should estimate the resources that will be

required to carry out the operation of the firm and determine how for these resources

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can be generated by the firm itself and how far they will have to be attained

externally.

KRIBHCO has a fixed policy for financial planning and it depends upon

the requirements of the fund whichever they use. Then a report is prepared by the

finance manager including total requirements. He collects the information and

prepares the report and submits it to the Managing Director.

Capitalization

Capitalization means total capital of the firm that introduced in business to

carryout commercial activity. Capitalization concerns with the decision regarding the

total requirements of long term funds of the firms. Capitalization means total amount

of company’s capital or total of its capital stock.

In KRIBHCO, the shares are very high and it has large amount of reserves

and surplus.

FINANCING PATTERN

Original Final

  Rs. Cr US$ million

Rs. Cr US$ million

EQUITY        

Government of India

344 202.59 328 193.17

Cooperative Societies

22 12.96 20 11.78

IFFCO 105 61.84 97 57.13

Sub Total 471 277.39 445 262.08

LOAN        

Government of India 342.70 201.82 342.50 201.71

Internal Generation 15 8.83 ---- ----

IDBI & Other FInst. 129 75.97 102.50 60.36

Sub Total 486.70 286.62 445 262.07

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Cooperative Societies

4%

IFFCO 22%

Government of India 74%

Government of India Cooperative Societies IFFCO

FINANCIAL ACHIEVEMENT FROM BEGINNING (RS. IN CORERS)

NET PROFIT:

YEAR Before

tax

Prov. For

Income tax

After tax

1986-1987 45.06 - 45.06

1987-1988 126.80 - 126.80

1988-1989 85.75 - 85.75

1989-1990 91.51 - 91.51

1990-1991 94.65 - 94.65

1991-1992 158.04 60.00 98.04

1992-1993 227.78 82.20 145.58

1993-1994 183.86 72.00 111.86

1994-1995 292.89 95.50 197.39

1995-1996 286.95 85.00 201.95

1996-1997 328.48 99.50 229.38

1997-1998 447.96 148.35 299.61

1998-1999 390.40 129.27 261.13

1999-2000 79.85 24.00 55.85

2000-2001 210.10 77.00 138.10

2001-2002 248.29 60.97 187.32

2002-2003 40 5.77 34.23

2003-2004 220.45 66.81 153.64

2004-2005 186.43 45.33 141.10

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The following is the graphical representation of profit before and after tax:

DIVIDEND PAID TO SHARE-HOLDERS:(Govt. India, IFFCO, Other Society)

Year Amount(Rs. in

Crores)

Dividend %

1986-87 13.84 3

1987-88 26.86 6

1988-89 26.77 6

1989-90 26.81 6

1990-91 26.83 6

1991-92 35.82 8

1992-93 36.13 8

1993-94 36.29 8

1994-95 36.48 8

1995-96 50.39 11

1996-97 59.78 13

1997-98 83.36 18

1998-99 85.31 18

1999-00 57.87 12

2000-01 58.56 12

2001-02 97.92 20.06

2002-03 34.39 8

2003-04 88.33 20

2004-05 74.50 15

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The following is the graphical representation of dividend paid:

CAPITAL BUDGET

The other major budget is capital budget. The formation of capital budget is

on the same pattern and follows same procedure as revenue budget.

It is important to understand distinction between capital and revenue

expenditure. It benefits of an expenditure are expected to accrue for long time; the

expenditure is of capital nature. Any expenditure whose benefit expires within the

accounting year or expenditure that merely seeks to maintain the business or keep

assets in good working condition is revenue expenditure.

On face of it, this distinction seems easy, but many of times it becomes quite

complicated to differentiate between these two expenditures.

Capital budget involves the planning to acquire worth while projects, together

with the timings of the estimated cost and cash flows of each project. Such projects

require large some of funds and have long term implications for the firm. Capital

budgets are difficult to prepare because estimate of the cash flows over a long

period have to be made which involve a greater degree of uncertainty.

The capital budgets are generally prepared separately from the operating

budgets. In many companies, there is a committee separate from the budget

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committee. To appropriate funds for capital investment projects. In the capital

budgeting, the profitability of each project has to be carefully evaluated. Various

techniques can be used to determine the profitableness biases and capable of

clearly indicating whether the project should be accepted or not.

CAPITAL BUDGET PROCESS

BUDGET SUBMITTED TO DEPERTMENTS

MS DEPARTMENT

HEAD OFFICE

MANAGING DIRECTOR

BOARD OF DIRECTORS

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REVENUE BUDGET

A letter duly signed by Chief Manager (F&A) is sent to all departments asking

them to submit the likely requirements of the year, before specific date (mostly last

day of November). They will also have to send the justification with adequate proof

for the sum they demand. Concerned department while submitting their proposals

will also submit the report containing details of expenditure done under the same

head last year.

From all the information thus available, a preliminary budget formation takes

place. Subsequently discussions are held at various levels to check the validity of the

budget so formed and finally after passing through all checks it is presented before

the Board of Directors for final approval.

The above written procedure is not as simple as it seems and takes 4-5

months. The concerned department also has to ensure that it neither asks for too

much or too less amount for in first case it would be questionable for excess amount

lying unutilized, whereas in later case they would not be given any additional amount

to purchase in excess of budget.

REVENUE BUDGET PROCESS

BUDGET SUBMITTED TO DEPERTMENT

FINANCE & ASSETS DEPARTMENT

BOARD OF DIRECTORS

GENERAL MANAGER F&A

MANAGING DIRECTOR

HEAD OFFICE

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Working Capital Management

Management of Working Capital refers to the management of current

assets as well as current liabilities. It mainly deals with managing the short term

finance, negotiating favorable credit terms, controlling the movement of cash,

administering account receivable, and monitoring the investment in inventories. Also

it is changing with the change in current assets and current liabilities. We can get the

amount of working capital of KRIBHCO from the following data of the year.

Current Assets - Current Liabilities = Working Capital

193,647.03 - 29,678.63 = 163,968.4

Working Capital Management involves a good deal of time in managing

Inventories, Receivables and Cash and Bank Management.

Managing Inventory

Inventories are the stock of the Raw Materials, Work in Progress goods

and finished goods along with a stock of component that make up the product.

Inventory represents a large number of invested capitals. Therefore proper control of

inventory is an important function of management. The inventory build up should be

in consistence with the requirements of production.

To control the inventory level, the items are earlier divided into two

categories, Slow-Moving and Non-Moving. As far as KRIBHCO is concerned, the

Inventory of the same has been increased to a steady rate; the reason of the same is

that KRIBHCO is effectively controlling Inventory.

Managing Receivables:

Since the selling goods on credit is the most prominent force of the

modern business. The firm adopts this method of selling goods to protect itself from

the competitors and to attract a favorable terms. When the firm sells goods or

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services on deferred payment basis it is said that firm has granted trade credit to

customers. The trade credit involves an element of risk therefore it is most important

to keep an eye on it through sound Credit Policy and monitoring and controlling the

account receivables.

Managing Cash

Cash, the most liquid asset, is of vital importance to the daily

operations of business firms. Crucial for the solvency of the business, it is referred as

the “Life Blood of a Business Firm”. AS KRIBHCO is a big and prosperous concern,

the daily transactions are carried out very carefully through the Cash Budgeting and

applying modern techniques like prompt billing, expeditious collection of cheques,

control of payables, etc. with a good reporting system.

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Ratio Analysis

Financial Analysis is the process of identifying the financial strengths and

weakness of the firm by properly establishing relationship between the items of the

Balance Sheet and Profit and Loss account.

In Financial Analysis a ratio is used or an index or yard sticks for evaluating

the financial position and performance of a firm. The relationship between two

accounting figure expressed mathematically is known as financial ratio.

To measure the Profitability of any firm it is necessary to know the profitability

ratios of that firm. The different profitability ratios for KRIBHCO are:

Liquidity Ratios

Liquidity refers to the ability of a firm to meet its obligations in

the short run, usually one year. Liquidity ratios are generally based on the

relationship between current assets and current liabilities. The important

liquidity ratios are:

>>Current Ratio

Current Ratio is widely used for showing the proportion of

current assets to current liabilities.

Current Ratio = Current Assets / Current Liabilities

2004-2005 = 1,712.05 / 299.83

= 5.71:1

The Current Ratio measures the ability of the firm to meet its

current liabilities. Apparently, the higher the current ratio, the greater the

short-term solvency. The general norm for current ratio in India is 1.33:1 and

internationally it is 2:1. The KRIBHCO is having a Current Ratio 5.71:1 which

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is a more than a twice of the standard measure, thus KRIBHCO is in a sound

financial position.

>>Acid-Test Ratio

Acid Test Ratio also known as Liquid Ratio and Quick Ratio is a

fairly stringent measure of liquidity. It is based on those current assets which

are highly liquid. Inventories are excluded from the numerator of this ratio

because inventories are deemed to be the least liquid component of current

assets as well as excluding bank overdraft from Current Liabilities.

Liquid Ratio = Liquid Assets / Liquid Liabilities

2004-2005 = 1565.35 / 299.83

= 5.22:1

As the liquid assets are equal to or more than liquid liabilities,

the company is in a better position to manage liquid liabilities. As the

KRIBHCO is having Liquid Ratio equal to 5.22:1, it is in a sound financial

position.

>>Debt-Equity Ratio

The relationship between borrowed funds and owners’ capital is

popular measure of the long-term financial solvency of the firm. This

relationship is shown by debt-equity ratio. This ratio indicates the relative

proportions of debts and equity in financing the assets of a firm.

Debt-Equity Ratio = Outsiders Fund / Shareholders Fund

2004-2005 = 0 / 2060.35

= 0:1

As acceptable norm for this ratio is considered to be 2:1 where

as capital intensive industries like Fertilizer and Cement a norm of 4:1 is

standard. A high ratio shows that the claims of creditors are greater than

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those of owners and vice versa. A high debt company will likely to get funds

borrow on a very restrictive terms and conditions. As KRIBHCO is having

Debt-Equity Ratio equals to 0:1, it represents good position if company going

to borrow money from financial institutions. But KRIBHCO is not taking

advantage of Leverage due to absence of long term debt equity.

Profitability Ratios

Profit is the engine that drives the business enterprise. Profit is

an index of economic progress. Profits are the test of efficiency and a

measure of control to the management. It is a measure of the worth of

owners’ investment. There are two types of Profitability ratios.

>>Gross Profit Ratio

The Gross Profit Ratio shows the relationship between gross

profit and sales.

Gross Profit Ratio = Gross Profit / Net Sales * *100

2004-2005 = 185.83 / 924.22 * *100

= 20.10%

Normally, the Gross Profit Ratio should remain the same from

year to year, because cost of sales will normally vary directly and in the same

proportion with sales. Higher ratio is better. A ratio is generally of 20% to 30%

may be considered good. Therefore, KRIBHCO is doing well as near to

standard.

>>Net Profit Ratio

This ratio is used to measure the overall profitability and hence it

is very useful to investors.

Net Profit Ratio = Profit After Tax / Net Sales *100 1

2004-2005 = 140.59 / 924.22 *100 1

= 15.21 %

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This ratio shows the earnings left for company as percentage of

net sales. The KRIBHCO is having Net Profit Ratio equals to 15.21% which

shows a sound ratio of profitability.

Inventory Turnover Ratios

This ratio shows a relation between sales and inventory. It

shows the leg of time an inventory is converted in the sales or realized.

Inventory Turnover Ratio = Cost of Goods

Sold

/ Average Inventory

2004-2005 = 1,114.53 / 12707.80

= 8.77 times

The inventory turnover reflects the efficiency of inventory

management. The higher the ratio, the more efficient the management of

inventories and vice versa. A high inventory turnover may be caused by a low

level of inventory which may result in frequent stock outs and loss of sales

and customer good will. Through a using of good inventory control technique

the KRIBHCO is able to maintain a fairly efficient Inventory Turnover Ratio.

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- 127 -

- 128 -

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Accounting policies: -

1. Basis of preparation:-

The financial statements of the society are prepared under historical cost

basis and in accordance with the generally accepted accounting principles

applicable in India and provisions of multi state cooperative societies Act,

2002.

2. Investments: -

Long term investments are valued at cost. Provision for diminution in the

value of such investments is made only if such a decline is, other than

temporary, on individual investment basis.

3. Inventory valuations: -

I. Stores spares & packing materials are valued at weighted average cost.

Spares, which are, repaired either departmentally or through outside

agencies, are taken into inventory at a nominal cost of Rs.1/- each. Items

of stores & spares, which are surplus, slow & Non-moving, are valued at

lower of cost or net realizable value based on technical estimates.

II. Stock-in-process at the close of the year is valued at lower of cost or net

realizable value.

III. Finished stocks are valued at lower of cost or net realizable value.

IV. Stocks of seeds, chemicals, Dap and damaged good are valued at lower

of the cost or net realizable value.

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V. Tools issued, expect each valuing less than Rs.1,000/- are written off over

a period of three years and are stated at depreciated cost. Tools issued

each valuing less than Rs.1000/- are written off in year of issue.

4. Assets: -

Fixed assets are stated are historical cost less accumulated depreciation.

5. Depreciation: -

Depreciation on fixed assets is charged on straight line methods as follows:

I. On the assets added up to March 31, 1991, at the rates derived from the

rates provided for the corresponding assets under the income tax rules in

force at the time of purchase or acquisition of assets. In respect of plant

and machinery, they are based on normal rates even where the rules

provide for higher rates.

II. On the assets added from April 1, 1991, at the rates prescribed under

schedule XIV to the companies Act, 1956.

III. With effect from April 1, 2001, additions during the year are depreciated on

pro-rata basis. Similarly, depreciation on the pro-rata basis is provided on

assets sold/discarded during the year.

IV. Assets individually costing up to Rs. 5,000/- are fully depreciation in the

year of acquisition.

V. Leasehold land is amortized over the period of lease.

VI. Intangible assets representing computer software is amortized on straight

line method over 3 years on pro-rata basis.

6. Retirement Benefits: -

I. In respect of accruing liability for gratuity, the society’s makes contribution

to the gratuity fund trust on the basis of advice received from the life

insurance corporation of India. The trust has taken a group gratuity policy

under cash accumulation scheme from life insurance Corporation of India

to cover the gratuity liability.

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II. Encashment of earned leave and medical leave is being provided for on

actuarial basis.

III. The society has been depositing provident fund and pension contribution

with KRIBHCO employees provident fund trust and provident fund

Authorities respectively.

7. Incomes/ Expenditure Accounted for on Cash Basis

I. Claims for;

a. Shortage/ Damages on movements of fertilizer.

b. Under-charges on freight paid to railways.

c. Rebate on freight from Railways.]

d. Interest on overdue payments.

e. Insurance other than transit.

f. Refund of purchase tax, Sales Tax, Turnover Tax, customs, and

Excise and electricity duties excess charged.

g. Dispatch money.

h. Additional handling remuneration.

Penalties and compensation on acceptance/receipt.

Disposal of scrap

Deductions from subsidy claims by fertilizer industry

coordination committee.

Subsidy on seeds/Bio-fertilizers

8. Catalyst and Resign:-

Initial charges of catalysts and resins issued at the time of commissioning

of the plant are capitalized. Subsequent replacements are charged to

revenue in the year of replacement.

9. Sales:-

Sales are accounted for on the basis of Released orders issued to customers.

Sales in the state of Gujarat are accounted for on dispatch basis and sales through

Krishak Bharti Sewa Kendra’s are accounted for on cash and carry basis.

10. SUBSIDY FROM GOVERNMENT UNDER RETENTION PRICE SCHEME: -

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The subsidy from the Government of India under Retention price scheme as

notified from time to time on account of retention price and Equated fright is

accounted for as income on the basis of movement of stocks from the factory.

Increase/decrease in subsidy on account of changes in the Retention price/equated

fright, are accounted for in the Financial Year in which notification for it is issued by

Department of Fertilizers.

11. PRIOR PERIOD INCOME/EXPENDITURE: -

Income/expenditure relating to prior period(s), which does not exceed

Rs.5000 in each case, is treated as income/expenditure for the current year.

12. PREPAID EXPENSES: -

Expenditure up to Rs.5000/- in each case, incurred in advance relating to the

following year is accounted for in the year in which the same is incurred.

13. PROJECT EXPENDITURE: -

The expenses on pre-feasibility study reports, market survey reports, techno-

economic feasibility reports etc. on new projects including joint venture project is

allocated to the fixed assets on completion of the projects. Where the projects are

proved in fructuous they are charged off in the year in which the decision is taken to

scrap the same by competent Authority.

14. CURRENCY TRANSLATION OF FOREIGN BRANCH ACCOUNTS: -

The accounts of foreign branch are maintained in local currency and in U.S

Dollars. The Accounts of foreign branch are merged in head office based on

following:

i. All the amount transferred in U.S dollars or Omani Rial to the branch, whether

for equity investment or for any expenditure, is accounted for based on rupees

expenditure incurred by the society.

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ii. All the money received on account of income/reimbursement of expense in U.S

Dollar or Omani Rial through the branch is accounted for based on the

exchange rate prevailing on the date of receipt.

iii. Bank balances at the year end are being converted into rupees terms based on

exchange rate applicable as on the date of balance sheet and differences in U.S

Dollar/Rupee Parity worked out is adjusted through and exchange fluctuation

account.

iv. All the outstanding liabilities/ provision in the books of branch are being

converted on the basis of exchange rate prevailing as on the date of balance

sheet.

15. TAXATION:-

Provision for current income tax is made on the basis of assessable income

as per Income Tax Act, 1961 Deferred Tax is determined in accordance with

Accounting Standard 22 of the Institute of Chartered Accounts on India. Deferred

Tax is recognized, on timing differences, being the differences resulting from the

recognition of items in the financial statements and in estimating its current

income tax provision. Deferred Tax assets and liabilities are measured using the

Tax rates and the tax laws that have been enacted or substantively enacted on

the balance sheet date.

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FUTURE PLANS

FUTURE PLANS

A joint venture fertilizer project in Oman:

Society has invested US$ 80 million as equity in Oman India Fertilizer plant which

has achieved commercial production on 14th July 2005. The Project has annual

capacity of 16.52 lakhs MT Urea and 2.50 lakhs MT surplus ammonia and has been

built at a cost of US$ 969 million. Marketing of Urea produced by this plant has since

been commenced by the society.

Hazira Phase-II

Society is in the process of setting up a state of the art mega size ammonia

plant of capacity of 1850 MTDP and urea plant of capacity of 3250 MTDP at existing

fertilizer complex at Hazira. Existing infrastructure facilities will be utilized resulting in

saving of cost. Plant will be based on natural gas and we have energy consumption.

Gujarat state energy generation limited (GSEG)

Society has diversified to power sector and has invested Rs. 48.75 Crores being

30% equity in Gujarat State Energy Generation Limited, a joint venture company

promoted by government of Gujarat, GSEG is operating 156 MW Power Plant at

Mora, District Surat

Kribhco’s Hazira plant is also going to be expanded. The society is also

exploring the possibilities to set up a 200 MW liquid fuel based power project at

Jhunjhunu, Rajasthan. Society has deposited a development security of Rs.25 lakhs

with Rajasthan State Electricity Board (RSEB). Minister of power has given No

Objection Certificate (NOC).

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Swot Analysis

Strength

Kribhco is having Sound financial position.

The Management of Kribhco is very professional.

Kribhco has larger proportion of reserves and surplus and further it has no

debt capital.

Kribhco has long standing reputation in the Indian Fertilizer Market.

Staff of Kribhco is very co-operative and hard working.

Kribhco is having skilled employees staff.

Good cooperation between employees.

Kribhco is having own Training Centre for training of employees as well as

apprentice students of different discipline.

It is having a full support of the Government of India.

Kribhco having strong and wide marketing network towards country.

High Production capacity of Kribhco leads to low production cost.

Savings in Production cost because Kribhco is having own Nitrogen and

Ammonia Plant.

Capacity Utilization more than 100%.

Still the starting of production, Kribhco plant has no major break down in

Plant.

Kribhco has extra land and fully developed infrastructure facilities so it can

be further developed.

Thus, we can say that the position of Kribhco in the Fertilizer Market is

Satisfactory.

Weaknesses

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Government interference in the management is more comparatively

private units.

Due to Government’s interference it takes longer time in decision making.

So the decisions delayed and thus sometimes bias decision are also

taken.

Kribhco is having overstaffing.

Kribhco is having demotivated employees because of job security and

safety.

Kribhco is having no debt capital so the advantage leverage can not be

taken.

Thus, we can say that the Kribhco will must be careful regarding its

staff and to government also.

Opportunities

Investment in Oman Project will raise the profit of Kribhco.

Expansion of existing plant at Hazira.

Look for newer Market with diversified product.

Diversifying the business.

Threats

The price of the Row material, i.e. Natural Gas, is increasing continuously.

There is a chance of sharp reduction in Government subsidy in near

future.

Kribhco is having very little market share.

In the era of Free Trade, the import of fertilizers may affect the business of

the Kribhco.

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Recommendation

After having completed our general training in Krishak Bharti Co-

operative Limited, Hazira, we have come to know its working and understand various

departments therein. The training makes us able to understand the various aspects

of management.

After having a detailed study of the various departments of KRIBHCO,

we are giving our conclusion.

By looking at various financial ratio of the KRIBHCO, we are able to

conclude that the company is having a sound financial position with a good liquidity

but KRIBHCO is not having long-term debt which is necessary for leverage. In other

words the KRIBHCO is not using it capacity to raise long term debts.

Personnel in the KRIBHCO are treated very well. KRIBHCO is having

proper manpower planning and a good policy of Recruitment & Establishment with

good training opportunities for its employees as well as for students from different

disciplines. It is also running various cultural activities for the total development of its

employees. At last, KRIBHCO is having a very low man power turn over ratio from

last few years.

The company is also having good marketing channels to promote its

products. The KRIBHCO is promoting its products through train the farmers,

launching campaigns, releasing jingles on Radio, TV, etc.

The KRIBHCO is achieving more production capacity than installed.

On an average, the KRIBHCO is running on 108 % capacity utilization. It is having a

skilled staff to running the plant. The KRIBHCO is also implementing the good

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Inventory Control Techniques to control the stocks of materials with a good

purchasing policy.

Finally, KRIBHCO is having a professional management to control all

the activities carried out therein. So, we would like to conclude that KRIBHCO is

having a bright future to expand and diversify.

Bibliography

1. Kribhco Manual

2. Annual Report of KRIBHCO

3. KRIBHCO at Glance

4. KRIBHCO Pragati

5. Websites

http://www.kribhco.org.

http://www.kribhcosurat.com

http://www.google.com