Project

CERTIFICATE

This is to certify that this REPORT ON ORGAINSATIONAL STUDY AT

FERTILISERS AND CHEMICALS TRAVANCORE LTD. is a bonafide

study of Chintu Francis of the third Semester MBA student of St. Teresa’s

School of Management Studies at the Mahatma Gandhi University

Place: Ernakulam Mrs. DEEPA VENKAT

Date: Faculty

DECLARATION

This is to declare that the Organization Study Report on Fertilizers And Chemicals

Travancore Limited, Udyogamandal is a bonafide record of the work done by me under

the guidance of Mrs. DEEPA VENKAT in partial fulfillment of the requirements for

the award of the Degree of Master of Business Administration of Mahatma Gandhi

University, Kottayam, Kerala and that no part of this report was submitted earlier for the

award of Degree, Diploma or Title.

Place: ERNAKULAM CHINTU FRANCIS

Date: 27/08/2012

ACKNOWLEDGEMENT

I would like to acknowledge my profound sense of gratitude to the Almighty for

giving me strength and ability to successfully complete the study and make this report on

time.

I would like to express my heartfelt gratitude to Rev. Sister AVITA Director,

School of Management and Business Studies, for permitting me to undergo this program.

I also extend my sincere gratitude to Mrs. DEEPA VENKAT, faculty,of School

of Management and Business Studies my guide of this study, who guided me with his

valuable suggestions. He was a source of inspiration for me to complete the study and

make this report on time and was instrumental in shaping this report.

I wish to express our gratitude to Mr. Joy Ukkan, Training Manager, FACT, for

granting us the permission to do our organization study in the company. I also express my

thanks to Mr.Anilkumar Raghavan AO (Doc), managers, staffs & employees who co-

operated with me to complete our organization study successfully.

I extend my token of love to all my friends for their support and encouragement for

the successful completion of this project.

CHINTU FRANCI

CHAPTER 1 – INTRODUCTION

1. INTRODUCTION

Organization Study is the systematic study and careful application of knowledge

about how people as individuals and as groups-act within Organization. An

Organizational Study encompasses the study of organizations from multiple viewpoints

method, and level of analysis.

In the modern world of tough competition and rivalry among the companies it has

become necessary that one should be able to understand each and every aspect of the

functioning of the organization than only concentrating on his work alone. Through the

study we will get awareness about the functioning of the organization, its organization

structure, vision & mission, communication pattern etc.

The chief objective of the study is to understand the working of various

department functions during a particular period and the concept of organization. It also

enables us to explore issues and problems in an organization, give suggestions to sort

these issues that would help the future managers to face the challenges ahead. It provides

the students the opportunity to know, observe, learn, collect and analyze the nature and

mission.

An organizational study includes the structure and functioning of every

organization. The structure is very important for its proper functioning and growth.

Organization as a structure refers to the network of relationships among individuals and

position in an organization. Organization structure is the structured frame work within

which the efforts of different people are coordinated related to each other. It is a blue

print of how management will take the various activities and function to be performed.

The rapid changes in the fields of science and technology have brought many changes in

the organizational system. Such changes become inevitable to achieve the basic objective

of the firm.

1.1. OBJECTIVES OF THE STUDY

The organizational study was done at FACT, Udyogamandal to achieve the following

objectives

1. To understand in detail about the overall working of the organization

2. To study about different departments & it’s functioning

3. To study the organizational structure of the company

4. To understand the manufacturing process of the company

1.2. SCOPE OF THE STUDY

Study covers overall functioning of FACT. There is much scope in FACT for

organization study because they have more than 15 major and minor departments.

Entire operation of the organization is analysed with the data available. Study is mainly

based upon the nature of work carried out by each department. The organization structure

and working conditions in FACT definitely helped us to understand how a big

organization is functioning. More over it is a central Government organization which

helped us to observe how government is managing the company.

1.3. REASON FOR SELECTING THE COMPANY

FACT is not merely one of the biggest fertilizers and chemical companies in

India, but it is the triumph of public sector companies and has established itself as a great

enterprise. It is a giant reputed multidivisional or multifunction organisation employing

around 3139 employees. As a result it is a perfect place to study the various functions and

responsibilities of an organization.

1.4. METHODOLOGY OF THE STUDY

(a) PRIMARY DATA COLLECTION

1. Interaction with different managers, departmental heads etc

2. Direct observation

3. Plant visit

(b) SECONDARY DATA COLLECTION

1. Company manuals

2. Website of FACT

3. Past records from library

4. Annual report

5. FACT diary

1.5. LIMITATIONS OF THE STUDY

1. Time constraints is a major limiting factor

2. Almost all the plants in Udyogamandal division and Petrochemical division were

under maintenance and tight security hence detailed study regarding the plants cannot be

made.

CHAPTER 2 –

INDUSTRY PROFILE

2.1. PROFILE OF FERTILIZER INDUSTRY

India is the third largest manufacturer of nitrogenous and phosphatic fertilizers in

the world. The Indian fertilizer industry provides a vital input for agriculture ensuring self

reliance in food grain production and food security of the nation. Growth and

development of fertilizer industry is playing an important role in the growth of the

economy as a whole.

Fertilizer is generally defined as “any material, organic or inorganic, natural or

synthetic, which supplies one or more of the chemicals required for the plant growth”.

Sixteen elements are identified as essential elements for the plant growth, of which nine

are required in macro quantities and seven in micro quantities. Of the 16 elements,

carbon, oxygen and hydrogen are supplies by air and water and are, therefore, not treated

as nutrients by the fertilizer industry. The main aim of the industry is to provide the

primary and secondary nutrients which are required in macro quantities.

Although the components of finished fertilizer products are relatively simple

chemicals, highly developed manufacturing technologies are employed in the production

of fertilizers, and the production plants are capital intensive. The production process

varies in accordance with the nutrients produced. Quality control during production

focuses on the declared nutrient content of the products and, in case of solid fertilizers, on

physical properties.

Chemical fertilizers are divided into three groups of Nutrient elements. They are

Nitrogen, Phosphorous and Potassium. The significant challenge being faced by the

Indian fertilizer industry is the volatility of the prices of feed stock and raw materials and

limited availability in international market. The cost of feed stock and raw material

constitute a large part of the total cost of production of fertilizers. The Government has

played and continued to play an important role in ensuring the availability of feed stock

and raw materials at a reasonable price.

2.2. INTERNATIONAL SCENARIO

The use of manure and compost is probably as agriculture itself and many other

materials such as ground bones, wood ash from burning the fallen trees. Dried blood and

fish were employed long before the chemistry of soil and crops was understood. The

disappearance of frontiers combined with improvements in the technology of fertilizer

manufacture and more effective transportation led to a growing role of fertilizers for

producing the needed food and fibre.

World's leading fertilizer producers are Russia and United states. Other leading

producers include China, Canada, France and India. The fertilizer industry in United

States is organized into separate segments for producing and marketing Nitrogen,

Phosphate or Potash intermediates and products. Industry in the European Union is

governed by a wide number of manufacturing regulations. Regulations pertaining to the

fertilizer industry cover the health and safety of employees and general public, conditions

for the safe storage and transportation of manufactured fertilizer material and

intermediates, limits on emissions to the atmosphere and water [fresh and marine], limits

on noise levels, and the treatment and disposal of waste products resulting from the

production of fertilizer or fertilizer intermediates.

All fertilizer manufactures in the European Union strive to minimize the

environmental impact of their manufacturing processes, both by improving the efficiency

of those processes and by abating emissions.

2.3 NATIONAL SCENARIO

The Indian fertilizer industry has helped in the growth of the Indian economy. The

fertilizer sector by enhancing the agricultural productivity has in turn resulted in

providing major support to the farmers who are primarily dependent on agriculture.

Fertilizer has also played a pivotal role in Indian’s food security.

The Industry had a very humble beginning in 1906, when the first manufacturing

unit of Single Super phosphate [SSP] was set up in Ranipet near Chennai with an annual

capacity of 6000 MT. The Fertilizers and Chemicals Travancore of India Ltd.[FACT] at

Cochin in Kerala and the Fertilizer Corporation of India [FCI] in Sindri in Bihar [now

Jharkhand]were the first large sized – fertilizer plants set up in forties and fifties with a

view to establish an industrial base to achieve self-sufficiency in food grains.

Subsequently, green revolution in late sixties gave an impetus to the growth of Fertilizer

industry in India. The seventies and eighties then witnessed significant additions to the

fertilizer production capacity.

The fertilizer industry in India consists of three major players- the Government

owned Public undertakings, Co-operative Societies like IFFCO, KRIBHCO and units

from Private sector. There are about 33 major producers producing N and NP/NPK

fertilizers in the country at present. The fertilizer industry of India had made constructive

use of the fertilizer subsidy provided by the government of India to ensure that the

country achieved reasonable self- sufficiency in food grain production.

The fertilizer industry has organized itself through Fertilizer Association of India

[FAI] to coordinate with the Government of India to achieve the macro- economic

objectives related to agricultural sector and to provide other services. The problem of

Industry are the seasonal demand for its product, large working capital requirements, long

credit period enjoyed by the buyer and the constant clamor of environmentalist lobby for

slashing the use of chemical pesticides and fertilizers.

Indian agriculture has witnessed a low rate of growth of around 1.5% in recent

years. Low and unbalanced use of fertilizer could be the major cause for this. Adoption of

new and improved technology and development and utilization of alternate and cheaper

sources of feedstock coupled with education and awareness creation among farmers on

balanced use of fertilizers are essential to correct the situation.

Fertilizer Industry in India is almost solely dependent on imported raw materials

like Rock Phosphate and Sulphur and intermediate products like Phosphate and complex

fertilizers. This overdependence and high volatility of prices of feed stock are major

issues confronting the industry.

2.4. STATE SCENARIO

Kerala has high degree of land use. The state’s agricultural productivity is

decreasing year by year. The production and cultivation of rice is decreasing and the

farmers are attached to commercial crops like rubber and coconut. Due to decrease in the

cultivation of rice, the consumption of nitrate and potash has come down.

In the per hectare consumption of fertilizers among different states in India, the

position of Kerala is one of the low ranking states

CHAPTER 3 – COMPANY PROFILE

3.1. HISTORY OF FACT

The birth of FACT emerged out of a crisis situation that guided the enlightened

perception of a far-sighted visionary. It is a tale of initiative, enterprise, innovation and

adventure, unheard in the annuals of industrial developments in India. It was conceived

by the foresighted statesman and administrated, Sir C.P. Ramaswamy Aiyer, the Divan of

Travancore. THE FERTILIZERS AND CHEMICAL TRAVANCORE LIMITED

popularly known as FACT, was indeed a revolution when it was established as the first

large scale fertilizer factory in the country. Since then it has plated a major role in

creating fertilizer consciousness among our farmers, and giving a positive direction to the

modernization of agriculture in India. And that, of course is an interesting story-a story of

never ending challenges and constructive response.

During the 2nd World War, there was an acute storage in the supply of food all

over the world. The 1940s were a time of critical food storage in our country. The

traditional approach to cultivation was not of much help in finding a solution to this

problem. Hence, the search for a long term solution led to the introduction of fertilizer in

our agricultural scenario. And when it came, it did through the vision of Dr. C.P.

Ramaswamy Iyer, who mooted e idea of increasing food production by the application of

fertilizer as a long term solution to food problem. To give concrete shape to his idea, he

sought the help of Seshayee Brothers, one of the most popular industrialists at that time

for making a fertilizers company. And India’s first large scale fertilizer plant was set up

in 1944 at Udyogamandal on the banks of the river Periyar in Eloor panchayath in the

Kerala state. Shri N. Gopalaswami was appointed as the first chairman of FACT. The

new venture of course had to go through many teething troubles. For instance, the raw

material necessary for the production of ammonium salts were not available in the state.

But this deficiency was overcome by adopting a revolutionary method known as the

FIREWOOD GASIFICATION PROCESS. However, initial difficulties notwithstanding,

the plant at Udyogamandal went into commercial production in 1947, with the slated

capacity to manufacture 50,000 tonnes of Ammonium Sulphate (10,000 tonnes of N).

This was followed by the production of SUPERPHOSPHATE in a new plant with a

capacity of 44,000 plants. A sulphuric acid plant of 75 tonnes per day also installed

which was considered large going standard at that time.

Meanwhile the inner dynamics of FACT was finding another expression in the

formation of new unit with the help of the state Government and Methur Chemical &

Industrial Corporation Ltd. , for the production of caustic soda which later become

today’s Travancore-Cochin Chemical Ltd., a Kerala Government undertaking. This

indeed was a big leap forward as it replaced all the imports of that product, saving a

considerable amount of foreign exchange. FACT was the first to use it by-product,

chlorine, as hydrochloric acid to produce Ammonium Chloride. These by-products

produced by FACT paved the way for setting up of other industrial units around the

FACT complex viz. Hindustan Insecticide Ltd., Indian Rare Earth Ltd., etc. In the late

50s, the Udyogamandal Division launched its first expansion with an outlay of Rs.3

crores. Highlights of the period were the installation of two plants to produced

Phosphoric Acid & Ammonium Phosphate. The second stage of expansion involving

Rs.2 crores saw the replacement of the Firewood Gasification Process and the

Electrolytic Process by the Texaco Oil Gasification Process for which a new plant was set

up. FACT became a Kerala State Public Sector Enterprise on 15th August 1960. On 21st

November 1962, the Government of India became the major shareholder. The 2nd stage

of expansion of FACT was completed in 1962. The third stage of expansion of FACT

was completed in 1965 with setting upon a new Ammonium Sulphate Plant.

FACT has been a pace-setter in marketing evolving a continuous and

comprehensive package of effective communication with farmers and promotional

programmes to increase the fertilizer consciousness among our farmers. In fact, FACT

was the first fertilizer manufacturer in India to introduce the village adoption concepts

since 1968 to improve agricultural productivity and enhance the overall socio-economic

status of farmers. FACT has a well organised marketing network, capable of distribution

over a million tonnes of fertilizers. With the licensing of Cochin Division in 1966 FACT

further expanded and by 1976 the production of sulphuric acid, phosphoric acid and Urea

was started. In 1979 production of NPK was commercialized.

3.2. VISION AND MISSION OF THE COMPANY

Vision of Fact

To be a market leader in fertilizer, petrochemical and a significant player in all

other business including engineering /technical service providing maximum customer

satisfaction, and reasonable return to shareholders adhering to business ethics and

professionalism and adequate concern for community and environment

Mission of Fact

To function as a dependable and globally competitive producer of fertilizer and

other allied products and to develop self reliance in the field of engineering and

technology, especially in the field of fertilizers, chemicals, petrochemical, oil and gas

industries

3.3. OBJECTIVES OF THE COMPANY

• To produce and market fertilizers and Caprolactum and other products efficiently

and economically, besides achieving reasonable and consistent growth.

• To effectively manage the resources and assets of the company to ensure a

reasonable return on investment.

• To focus on cost reduction and technology up gradation in order to become

competitive in its line of business.

• To invest in new business lines, where profit can be made on a sustainable basis

over the long term.

• To constantly innovate and develop new products and services to satisfy customer

requirements.

• To provide services to the farming community by organizing technical training,

soil testing and other productivity improvement services in agriculture.

3.4. DIVISIONS OF F.A.C.T

I. UDYOGAMANDAL DIVISION

FACT commenced operation at Udyogamandal with the commissioning of a

50,000 tonnes per annum Ammonium Sulphate Plant in 1947. In the decades that

followed multi stage expansion programs were undertaken bringing in the latest

technologies of the day which were quickly mastered and successfully implemented.

Today the division is 40 year old small capacity plants and 10 year old state of the art

technology plants. The latest addition to this unit was a 900 tonnes per day Ammonia

Complex set up with an investment of RS 618 crores. FACT Udyogamandal division is

certified to ISO 14001, the environmental system standards.

II. COCHIN DIVISION

FACT Cochin Division was set up in the 1970's at Ambalamedu, 30 km from

Udyogamandal and adjacent to the Cochin Refineries. Phase-I of the division saw the

setting up of an integrated Ammonia urea complex utilizing Indian Engineering skills. A

large scale complex fertilizer plant of 485,000 TPA was set up as phase-II. Sulphuric acid

and Phosphoric acid plant of economy scale were also set up.

III. PETROCHEMICAL DIVISION

FACT diversified into petrochemicals in 1990 with the production of

Caprolactum. This versatile petrochemical product is the raw material for the

manufacture of nylone-6, which finds extensive application in textiles, tyre cord and

engineering products. Thanks to its high quality, the product has been acknowledged as

among the best in the world. The division is located adjacent to the Udyogamandal

division. Co-product Ammonium Sulphate is transferred to the fertilizer plant of

Udyogamandal division for processing.

IV. FACT ENGINEERING & DESIGN ORGANISATION

FACT Engineering & Design Organization (FEDO) was established in 1965 for

utilizing the considerable indigenous plant building expertise accumulated by FACT in

its process of nurturing the nascent chemical fertilizer industry. FEDO is today one of

India's premier project engineering organization, catering to a wide spectrum of

industries like petrochemicals, refining, pharmaceuticals, hydrometallurgy etc as well as

petroleum storage, environmental engineering, offsite facilities etc. The division

undertakes project execution on consultancy and turnkey basis, handling the intricacies of

the technology sourcing, design and engineering, hardware procurement and construction

with practiced ease. FEDO is ISO 9001 certified.

V. FACT ENGINEERING WORKS

FEW, the Fabrication and Engineering Division of FACT was established in the

year 1966. Over the years, it developed capabilities in the manufacture of Class I Pressure

Vessels, Heat Exchangers, Columns, Towers etc. required for the fertilizer, petrochemical

and petroleum industries. FEW received ISO 9002 Certification in 1998.

VI. MARKETING DIVISION

FACT has been a pacesetter in fertilizer marketing. The marketing network of

FACT is spread over the southern states of Kerala, Tamil Nadu, Pondicherry, Karnataka

and Andhra Pradesh. The distribution network consists of 100 Agro Service Centers, 50

field storage points and over 7900 retail selling points in these states, and serves the

farmers by supply of fertilizers and agronomy advice. Through innovative farmer

education and fertilizer promotion programs, FACT has created awareness about

scientific cultivation and fertilizer use.

3.5. CORPORATE RESPONSIBILITY

Village Adoption Programme

Under the village adoption Programme, 10 progressive farmers having at least one

acre of land, in a village is identified. The soils of the plots are analyzed for major,

secondary and micro nutrients. Based on the soil test results, soil and crop specific

nutrients as per the respective State Agricultural University recommendations in the form

of a proprietary fertilizer mixture developed by FACT are given to the farmers. In

addition, micronutrients specified by the University were supplied free of cost. FACT has

conducted 7 such Village Adoption Programmes in Kerala, Tamil Nadu, Andhra Pradesh

and Karnataka.

Farmer Training Programme

The farmer training programme is intended to impart training to impart training to

limited group of 20-25 farmers on balanced use of fertilizers based on soil test results.

The objectives of this programme are to create awareness on soil sampling methodology

and use of balanced fertilizer based on soil test results. FACT has conducted 13 two day

Farmer Training Programmes in all the four southern States.

Field Demonstration

The Field Demonstration Programme aims to demonstrate the

effectiveness of correct fertilizer application at farmer level. For this one acre of plot of

the farmer is divided into 2 equal cents plots-control plot and treatment plot. In control

plot, farmer’s practice is followed. In treated plot, Agricultural University recommended

FACTMIX is given based on soil test results. The yield difference between treated plot

and control plot are compared. FACT has conducted 9 Field demonstrations during the

year 2010-11. During the year, a farmer’s application was explained to the farmers.

Drinking Water supply to residents of Eloor Municipality FACT is supplying drinking

water for more than 3000 households of Eloor Municipality

Official Language

FACT continued to give top priority for the implementation of the provisions of

the Official Language act and Rules and the related instructions given by Government of

India. Official Language Implementation Committee meetings are held regularly

underthe Chairmanship of Chairman and Managing Director and the progress is reviewed

in the use of Rajabhasha. Company is providing incentives for encouraging employees

who are doing excellent work in Hindi. Parliamentary Committee on Official Language

has visited FACT Head Office in June 2010 and at Madurai Regional Office in January

2011. During the year 2010-2011, FACT has conducted Hindi workshops, spoken Hindi

classes, Rajabhasha Orientation Programme and Rajabhasha seminar. In addition to this,

the company has conducted various competitions for spouse and children of FACT

employees, students of neighbouring schools, students of the schools in Ernakulum

Revenue District and for the employees of other Public Sector Undertakings.

Pollution Control Activities

Production units of FACT are certified for ISO 14001, which always give top

most priority to ensure clean air and better living environment to the inhabitants around

the factory. The treatment plants and emission control facilities are kept in operation

along the with the parent plants throughout the year and treated liquid effluents and gases

emissions discharged from plants confirmed to the standards prescribed by the Kerala

State Pollution Control Board.

FACT has three computerised ambient air quality monitoring stations to monitor

the quality monitoring stations to monitor the quality of the air around the factory and to

ensure clean environment in the locality. The company is maintaining all effluent

parameters within the limits as specified by the Statutory Authorities. Part of the treated

effluent generated is used for dilution purpose in the Effluent Treatment Plant and for

irrigation in Plant area. During the year saplings were planted at company premises as a

measure of Green-belt development. During the year 2010-11, Udyogamandal Division

secured Third Place among large scale industries in making substantial and sustained

effort in Pollution Control, from Kerala State Pollution Control Board.

3.6 SHORT TERM STRATEGIES/PROJECTS

In order to improve the efficiency of operation and profitability, FACT has undertaken

certain short term projects. The following are the main Short-term Projects being

implemented by FACT to improve the operational efficiency and profitability.

a. Feed Stock conversion of Ammonia Plant to LNG

LNG is expected to be available at Kochi by end of 2012. It is proposed to carry out

modifications in the Ammonia Plant for using cheaper LNG as feed stock and fuel for

Ammonia manufacture as soon as it is available. The project will bring an energy saving

in the Ammonia. The total cost of the project is estimated as Rs 31.57 Crore. The

payback period of this project on account of energy savings alone is just six months.

b. Conversion of fuel for the boilers to LNG

It is also proposed to carry out modification in the 5 boilers at Udyogamandal Complex

to use LNG. The total cost of the revenue is expected to Rs. 45 Crore to be implemented

in 2 phases.

c. Automation of Bagging & Wagon Loading System at Cochin Division

The product handling and despatch facilities at Cochin division-NP plant is manual. The

scheme includes automation of bagging and loading operations with high capacity

automated bagging machines and wagon and truck loading machines, at an estimated

total cost of Rs 24 Crore.

d. Sulphuric acid Storage Facility at Willington Island

The company has decided to set up its own Sulphuric acid storage facility at Willington

Island to enable receipt of Bulk Acid shipments of above 5000MT. It is proposed to set

up 2 storages of 8200 MT each. The total cost of this project is Rs 12 Crore. The benefits

of this project are the availability of Bulk quantities of Sulphuric Acid which will

facilitate increasing captive production of phosphoric acid.

g. Production Marketing of SSP

Taking cue from the increasing prices of DAP, the Government of India has been

promoting the production and marketing of SSP in the country. FACT intends to set up a

500 Tonnes per day SSP plant. The estimated cost of this venture is approximately Rs 66

crore. The DPR is being prepared by FEDO and the funding avenues including JV

participation are being examined. FACT has also plans to enter into the area of SSP

marketing from existing SSP plants in the southern region through a tie-up with the

owner of the existing plants.

FACT has also plans to enter into the area of SSP marketing from existing SSP plants in

the southern region through a tie-up with the owner of the existing plants.

3.7 LONG TERM STRATEGIES/PROJECTS

a. New Urea Plant Udyogamandal

FACT has a proposal for setting up a new Urea Plant of capacity 1500 MT per day at

Udyogamandal utilising the CO2 being vented from the Ammonia Plant at a project cost

of Rs 940 Crore. A pre Feasibility report has been prepared by FACT Engineering And

Design Organisation (FEDO). It is proposed to prepare a DPR based data collected from

the Bids received,

b. A New 1000TPD NP Plant

FACT is considering to set up an additional NP plant of 1000 TPD capacity at Cochin

Division along with the revamp of Willington Island Facilities for handling increased

volumes of Raw-materials utilizing modern equipments to increase the discharge rates

from shipments. The estimated project cost is Rs 283 Crore (including Port improvement

schemes) distributed over 3 years.

3.8 OUTLOOK FOR THE FUTURE

FACT has submitted a Financial Restructuring proposal to the Government of India,

requesting assistance to tide over the interest burden and for sustainable growth of the

company in the long run.

On implementation of the financial restructuring package and new projects for expansion

and, modernization, FACT is expected to sustain profitability in the coming years. The

profitability will further improve once FACT is able to switch over from Naphtha to LNG

/NG as feed stock which is expected by 2012-13.

3.9 COMPETITORS OF FACT The major competitors of F.A.C.T are the following:

• SPIC

Short for Southern Petrol Industrial Chemicals. Urea, Di ammonium phosphate and

intermediaries. Aim to be globally competitive and JV for hybrid seeds, JV’S for urea

and phosphoric acid abroad.

• MFL

Madras fertilizer LTD (products –NPK 17:17:17 and variants Vijay Urea, Bio-fertilizers,

Agrochemicals) Plans to switch over to LNG from naphtha and import ammonia.

• NFL

Nagarjuna Fertilizer LTD (product-urea)

• MFL

Mangalore Fertilizer LTD. (products –urea, complex fertilizers)

• RCF

Rastria Chemicals Fertilizers LTD. (Products –urea, DAP, MOP, Complex Fertilizer)

• IFFCO

Indian Farmers Fertilizers Co-operative (Product- Urea, Ammonium Phosphate and

Complex Fertilizers

• Chambal Fertilizers and Chemicals-Urea

• KRIBCO 4

Produces urea only, participating in Indo Oman and Indo Iran projects for cheaper gas.

3.10 ENVIRONMENTAL OBJECTIVES (EMS of FACT)

I. Reduction of air pollution from ammonium phosphate plant

II. Improving quality of effluents on a continuous basis

III. Minimize dust pollution in Sulphur handling and prevention of its spillage to river

IV. Minimize and recycle effluents from phosphate plant

V. Zero effluent discharge from Sulphuric acid plant

VI. Reduce treated effluent to river

3.11 ENVIRONMENTAL POLICY

I. Continual improvement in its environmental performance and prevention in pollution

II. Compliance with environmental rules, regulations and other requirements applicable

III. Conservation of resources and waste minimization

IV. Training for improved environmental management

4. PRODUCT PROFILE

4.1. PRODUCTS

4.1.1. Finished products

Ammonium Sulphate - Udyogamandal Division

Ammonium Phosphate / Complex fertilizers / Factamfos - Udyogamandal

Division & Cochin Division

Caprolactum - Petrochemical Division

Biofertilizers - Research & Development Division

4.1.2. Exported Products

Caprolactum - Petrochemical Division

Ammonium Sulphate - Udyogamandal Division

4.1.3. Byproducts

Nitric Acid & Soda Ash - Petrochemical Division

Gypsum - Udyogamandal Division & Cochin Division

Carbon Dioxide Gas - Udyogamandal

4.1.4. Intermediary Products

Ammonia - Udyogamandal & Cochin Division

Synthesis Gas - Udyogamandal Division

Sulphuric Acid - Udyogamandal & Cochin Division

Oleum - Udyogamandal Division

SO2 Gas - Udyogamandal Division

Phosphoric Acid - Udyogamandal & Cochin Division

4.2. PRODUCT MIX

4.2.1. Straight Fertilizers

Ammonium Sulphate - Containing 20.6% N in Ammonical form and 24% sulphur, an

important secondary nutrient.

Ultraphos - FACT markets imported Rock Phosphate containing 32% P2O5 under the

brand name "Ultraphos". This high analysis fertilizer is found suitable for application

especially in Coconut/ Rubber/ Oil Plam/ Tea Plantation.

4.2.2. Complex Fertilizers

Factamfos 20:20:0:15 - NPK complex fertilizer - Factamfos or Ammonium Phosphate

contains 20% N in ammonical form, 20% P in water soluble form and 15% sulphur; a

secondary plant nutrient, which is now attaining great importance in agriculture.

Factamfos also can be used for foliar spraying.

4.2.3. NPK Mixtures

NPK Mixtures - FACT prepares crop specific standard mixtures for all crops in Kerala

and also special NPK mixtures for plantation crops like Tea, Coffee, Cardamom, Rubber

etc.

Rose Mixture - A fertilizer tonic for Roses.

Vegetable Mixture - A special blend exclusively prepared for vegetable.

Garden Mixture - A special nutrient combination for both flowering and foliage

ornamental plants.

4.2.4. Imported/ Traded products - FACT has entered into direct import of MOP and

also trading of Imported Urea.

Bio fertilizer - FACT produces and markets 'N' fixing Bio fertilizers - Rhizobium,

Azospirillium and 'P' solubilising bio fertilizer - Phosphobactor.

4.3. CHEMICALS

Anhydrous Ammonia - FACT produces Ammonia of over 99.96% purity.

Sulphuric Acid - FACT has one of the largest plants in Asia and it manufactures

Sulphuric acid of 98% purity.

Caprolactum - It is the raw material for Nylon-6. The product quality of FACT

Caprolactum is among the best available in the world.

Nitric Acid and Soda Ash - Small qualities of these are obtained from Caprolactum

plant as byproduct

CHAPTER 5-DEPARTMENTS

5.1 FINANCE DEPARTMENT

Fig. 5.1: Structure of Finance Department

Any organization whether big or bad, depends largely on its finance

department. This is the very department which is responsible to a great extent for the

growth of the organization. Some of the main functions of the financial departments are

Payroll, billing, Preparation of journal, ledger and trial balance, Banking, Financial

resources & materials accounting, Budget preparation, Cost accounting, Auditing,

Preparation of financial statements & reports, Corporate Planning.

Finance department is divided into five sections for carrying out its process. They are:

• Bills & Materials

• Sales

• Costing, MIS, Budget

• Cash, bank & Payroll and

• Tax & duties

DGM (IA)

CM (Gen A/C)

Mgr (cash, Bank & Payroll)

Mgr (Tax & Duties)

CM (Sales)

CM (Bills & Mat)

Director (Finance)

DGM (Finance)

CM (Costing, MIS, Budget)

Mgr (IA)

5.1.1 BILLS & MATERIALS

The main functions are Stores accounting and Receiving, Dispatch and holding of bills.

3 Bills section

Bills section deals with the contract account for execution of civil works and

other construction/erection, maintenance and services. It includes:

1. Sale of tender form

2. Remittance of EMD

3. Remittance of security deposit

5. Issue of materials to the extractors

5. Receipts to certified bill in the specified format

6. Security on running account bills and final bill

7. Statutory procedures and formalities in works contract

2 Stores accounting

Main functions of stores accounting are:

1. Receipts of stores

2. Issue of stores

3. Returns of stores

5. Value adjustments

5. Reconciliation with control accounts

6. Unconsumed materials lying at site at the close of financial year

5.1.2 SALES ACCOUNTING

Some of the functions are

1. Accountability for selling and distribution of products & byproducts

2. Recording the transaction

3. Transfer of information from depots to HO

5. Compilation of reports

5.1.3 COSTING, MIS AND BUDGET SECTION

This section is concerned with ascertaining the cost of production, providing

information, helping to prepare a budget, forecasting the performance and finally making

a plan.

1 Cost accounting

Identification of the cost centre - Direct expenses is recorded to the respective

cost centre. Indirect expenses are separately booked and allocated at the end of the year.

Cost sheet is prepared in two ways. The item in the cost sheet is compiled on the basis of

process of the products or on the basis of elements of the product.

Cost centre in Udyogamandal Division: Process water, DM water, Steam, CPP,

Ammonia, Sulphuric Acid, So2/ Oleum, Phosphoric acid, Pollution Control, Ammonium

Sulphate, Ammonium Phosphate

Classification of cost

• Variable cost - Raw Materials, Intermediate products, Consumable, Products,

Utilities, Packing materials, Pollution control expenses.

• Fixed cost - Fixed cost of a product mainly consists of conversion cost of the

product of Salaries and wages (Direct, Indirect, Administration &

Maintenance),Staff welfare expenses, Insurance, Plant maintenance, Depreciation,

Factory overheads, Administrative overheads, Head office overheads, Gratuity

and bonus, Interest on term loans and working capital.

2 MIS (Management Information System)

To provide the management with vital facts which affects the efficient running

of the business for decision making on planning, organizing and controlling the major

activities of the organization and initiating suitable action.

MIS Briefly consists of:

1. Divisional Reports - Two monthly reports for each division. One for

the finance department and another for the GM’s office

2. P & L Account-Statement and its analysis.

3. Production performance of the division.

4. Inventory position.

5. Cost of production - Actual and budget for the month.

6. Specific information important for the management - Major projects,

man hour utilization etc.

3 Budgeting

� Two types of budget: Revenue and Capital budget.

� Two types of estimates-: Budget and revised estimate

● Revenue Budget

Every year early in August detailed production targets and norms for

consumption of materials for remaining portion of the current year and also for the next

financial year are prepared by the head of Divisions.

● Capital Expenditure

Shows all items of capital expenditure to be undertaken during the budget

period like expenditure on acquisition of new assets like machinery, furniture and office

equipments which have reasonable life; expansion of existing facilities and modification

and improvements to plant and machinery resulting in

i) Increase in capacity.

ii) Increase in useful life.

iii) Improvement in quality of output.

iv) Reduction in cost of output is treated as capital expenditure.

● Budget revision

While preparing the next year’s revenue budget, the revenue budget for the

current year is revised, based on the actual from April to September and the anticipated

trend for the remaining period.

● Monthly report

On closing of the accounts of the months a monthly P & L account is prepared

for each Division and the same is send it to the Division Head, FD and CMD. This report

would give a comparison of the actual for every month against budgeted performance.

5.1.5 CASH, BANK AND PAYROLL SECTION

This section is concerned more with the day to day activities and less of future

forecasting & planning.

1. Cash and Bank Accounts Section

The various functions include:

1. Receipt of cash, cheques, bank drafts, and postal money orders

2. Handling of bank deposits/withdrawals, custody of cash and inter unit transfer

of funds

3. Maintenance of petty cash books and cash books

4. Reconciliation of bank accounts

5. Any other duties assigned by authorized officer

2. Payroll Section

Functions of the section are:

1. Preparation and disbursement of salaries and wages to managerial and non-

managerial employees.

2. Affect various recoveries through payroll and remit the same to concerned

agencies.

3. Processing of various personal payments advances.

4. Keeps books of account for the above transaction.

5.1.5 TAX & DUTIES SECTION

This section is concerned with calculation & payment of various taxes and duties to the

Government.

5.1.6 BANKERS SUPPORTING FACT:

State Bank of Travancore, State Bank of Hyderabad, State Bank of India, Bank

of Baroda, Bank of India, Canara Bank, & Dena Bank.

5.1.7 AUDITING

Various types of audits in FACT are: Statutory audit, Government audit, Cost

audit, Income tax audit, Sales tax audit and Internal audit.

Some of the main functions of Internal Audit Section are;

1. Operational/ systems/ management audit

2. Proprietary audit and audit of sanctions

3. Routine audit

5. Surprise verification of physical stocks

5.2 MATERIALS DEPARTMENT

Fig. 5.2: Structure of Materials Department

The functions of materials departments are;

• Importing raw materials under the approval of safe purchase

committee constituted by the Board of Directors.

• Maintaining adequate raw materials needed for production.

• Procurement of Machineries, Intermediaries, equipment & spares.

• Inspection of Materials.

• Transportation of Raw materials, Products and Byproducts.

• Accountability for materials.

• Purchase of stationary and other Equipment needed by individual

department.

• Vendor Development.

This materials department is divided into 3 Sub Departments. They are:

• Purchase Department

• Stores Department

• Traffic (Logistics) Department

Mgr E.S.S

Mgr F.F.T.S

Dy. CM Raw Materials

CM Purchase RM

Mgr Traffic Mgr Stores

GM Material

5.2.1 Purchase department

The purchase procedure covers the following areas of procurement of

goods and services for the company.

1. Capital items (For project and other purposes).

2. Equipment and spares.

3. Raw material & Intermediary materials

5. Package items involving design, supply, erection and commissioning.

Purchase Department is again divided into 3 sections. They are:

• Raw materials

• Equipment spares and supplies

• FEDO & FEW Transport, Contracts and Stores

5.2.2 Stores department

The functions of stores department are;

• Receiving

• Holding

• Inventory Control

• Issuing

• Disposal

5.2.3 Traffic (logistics) department

Traffic department is responsible for the dispatch of products to various markets.

They maintain contacts with market department and production departments. The

dispatch section of marketing division gives the demand of various depots in each state to

the traffic department. Based on this, Schedules are formed and product is dispatched.

5.3 PRODUCTION DEPARTMENT

Fig. 5.3: Structure of Production Department Annual production target for the next year are prepared based on installed

production capacity of the plant and production data for the previous year. Necessary

feedback is also taken from marketing while fixing the production targets. The

production targets thus fixed are presented to the corporate office for review and approval

by CMD, the plant managers are informed the same. The production and consumption

ratios for the previous years are duly considered. All the data’s are complied to form the

production budget. This production budget then acts as the basis for further performance

monitoring. Based on the production plan, purchase department initiates action for

procuring raw materials. In the event of any change in the raw material, requirements are

intimated to the purchase department. Production planning department receives data from

all the plant and other interfacing departments and compiles them. Various MIS reports-

daily production reports, monthly reports and yearly reports- are sent to the management

JGM (UD)

CM (Production)

PRODUCTION

Phosphoric Acid

MAINTENANCE

C.S.P

Ammonium Phosphate Sulphuric Acid

Caprolactum Ammonium Sulphate

C.M.E

Ammonia

The functions of production department are; planning daily production according

to annual target, Submitting Plan to govt. and getting approval, Monitoring actual

production & checking any deviation, making revision plans according to actual

production, Maintenance of plants.

Various sections in production planning are;

1. Ammonia plant

2. Sulphuric acid plant

3. Phosphoric acid plant

4. Complex fertilizer plant

5. Petrochemical division

5.3.1 Ammonia plant

The capacity of the Ammonia plant is 900 TPD. The investment for the plant was

about Rs.618 Crores. The main raw materials required are hydrogen and nitrogen

.Hydrogen is obtained from Naptha (which is acquired through pipe line from

BPCL).There is also a captive plant which enables continuous power supply. The plant

has economy scale size and employs state of Art technology for the process engineering

and control systems.

5.3.2 Sulphuric acid plant

The Sulphuric acid plant is designed to produce 1000 TPD of monohydrate. The

plant is based on the double conversion, double absorption process and was designed by

FEDO in collaboration with Davy power gas Plant. This produces 200 tonnes of oleum

and 500 tonnes of sulphuric acid. It supplies sulphuric acid to the petrochemical division

for the production of sulphur dioxide.

5.3.3 Phosphoric acid plant

The Phosphoric acid plant is designed to produce 360 TPD of P205 through the

dehydrate route. The plant designed by FEDO in collaboration with Messer society de

prayon of Belgium employs the prayon convertible process to give a product having

strength of 30% P205. A separate concentration section is provided to concentrate this

weak acid to strong acid having strength of 55% P205.

5.3.5Complex fertilizer plant

The complex fertilizer plant as designed was to produce quantities of N P K

fertilizers of various grades such as 17:17:17, 28:28:0, 18:36:0, 25:12:12:,11:12:22 and

0:56:0 in two trains each having a capacity of 50 to 56 TPH depending on the grade

produced. FACTOMFOS is the premium product of FACT. There is also an in house

phosphoric acid plant of 100 TPD. But due to the scarcity of raw material rock

phosphate, its not being functional anymore. Davy designed the plant power gas, inc.

USA and employs the well known TVA granulation process.

5.3.5 Petrochemical division

FACT PD is one of the two manufacturers of Caprolactum in India. They have

strictly adhered to documented quality system. In Feb 1996, FACT PD was certified to

ISO 9002 (1995) and ISO 15001(1996). FACT Caprolactam plant was built with license

and know-how from the world leaders in Caprolactam technology. The plant can produce

50000 TPA of Caprolactam and 2,25000 TPA of ammonium sulphate as co-product.

FACT Caprolactam is available in 25 kg packed in multilayer bag. Caprolactam is a

popular monomer of the versatile Nylon-6 polyamide. Textile yarn manufactured from

Nylon-6 exhibits fine drape, high flexibility, biological and chemical stability. Nylon-6 is

widely used in the manufacturing of fish nets.

The other plants in PD are Anone plant, Hyam plant, Cyclohexane plant, and

Captive power plant and Replacement Ammonia plant. Products from these plants are

used for the production of Caprolactam and Ammonium sulphate

5.5 MARKETING DEPARTMENT

C. Ag -CHIEF AGRONOMIST, AM - AREA MANAGER

Fig. 5.5: Structure of Marketing Department

The key success of any business is definitely the quality of the product but somehow,

there is something that has more important role as the key to the success of the business.

This key element is referred to as marketing. Marketing here also consists of promotion,

advertising etc. usually it is said that the marketing and advertising costs of the business

could reach upto 80 percentage of the total production costs. This implies that marketing

plays a very significant role in the success of any business enterprise. Thus the life of the

company does not depend on the director, but the marketing manager and the staff.

The functions of marketing department are;

• Processing and sending replies to audit queries at the divisional level

• Sales force motivation through internal and external training programs

The marketing department consists of various sub departments organized on the basis

of their function. They are:

1. Sales Department

2. Distribution Department

3. Agronomy Department

DIR (Marketing)

AM (AP)

C.Ag. Agronomy

GM (Marketing)

AM (KAR)

CM Distribution

AM (TN)

CM Sales

AM (KL)

5.5.1 Sales Department

The sales department is headed by a Chief Manager who is responsible for sales

coordination of function across various depots, conduct an effective market research for

analyzing market and calculating the demand and finally promote the sales of FACT

products. FACT today holds major market share in Kerala, 11% in Karnataka and 6% in

other states.

FACT over the years have innovated various techniques of promotion. Many of them

are recognized as effective tools of promotion by national and international agencies.

These techniques are mainly grouped into two:

i) Mass Communication Techniques

This method involves catering to number of people in the shortest time possible.

Advertisement is done through Films ,Exhibition, Radio jingles, Hoardings,

Posters , Farmers awareness programmes in AIR , Wall Painting etc.

ii) Personal Contact Method

As the name implies, in this method, more personal and closer contact with

farmers are developed through promotional methods. The methods adopted

through FACT are through demonstrations, soil testing, seminars , study classes ,

dealer training etc. FACT has converted its major selling points into Agro service

centers rendering service to farmers. These centers advice the farmers on modern

farm management techniques, credit availability, marketing prospects etc. It also

prepares detailed farm plan for each farmer according to his agriculture pattern.

FACT is the pioneer in fertilizer education and sales promotion programmes.

These consists of fertilizer festivals, study classes , seminars , etc within an ideal

blend of information and entertainment to drive home the message of balanced

fertilizer use for increasing crop production.

5.5.2 Distribution Department

Physical distribution of products is a major function of the marketing division.

Chief Distribution Manager is entrusted with planning, monitoring and implementing of

product distribution and co-coordinating the movement from production units and ports.

Marketing operations of FACT in respect of fertilizers follow a completely centralized

pattern. The marketing network of FACT is spread over the southern states of Kerala,

Tamil Nadu, Pondicherry, Karnataka and Andhra Pradesh. In each state there are 5 area

office and 16 regional offices. The distribution network consists of 100 Agro Service

Centers, 50 field storage points and over 7900 retail selling points in these states, and

serves the farmers by the supply of fertilizers and agronomy advice. Through innovative

farmer education and fertilizer promotion programs, FACT has created awareness about

scientific cultivation and fertilizer use. The states offices are called area and their sub-

divisions are called regions.

5.5.3 Agronomy Department

Fertilizer sales are highly dependent on farmer’s awareness on modern techniques of

farming by using fertilizer for high productivity. Awareness creation involves an

elaborate and well-planned farmer education and fertilizer promotion program, which in

turn calls for a multiplicity of activities. Chief Agronomist has overall charge of the

agronomy department, which renders technical guidance, and supervision of all

agronomy services.

5.5. PUBLIC RELATIONS DEPARTMENT The image builder of the organization is Public Relations Department, as the

person in the department maintains close relationship with the public and media to carry

out all related functions. Public Relations Department is under the control of Public

Relation Officer. The backbone of the brand building process is public relation officer.

Public Relation is the latest entry to the management discipline when the company starts

expanding and becomes relevant when the market competition increases. Any novel idea

or concept introduced by the companies in the market is part of public relations. Public

Relations become saturated when the conventional methods are saturated and the

company should move one step ahead in the competition. Public Relation Department’s

role is proportional rate with competition. Whenever there is competition there should be

a role of Public Relations. No Competition-No need of Public Relations

Two aspects of PUBLIC RELATIONS

1. Internal Public Relations

2. External Public Relations

1. Internal Public Relations

The best tool for internal PUBLIC RELATIONS is FACT News (House magazine) and is

circulated to all employees on a monthly basis. It is to bind the employees together to

make them a part of FACT family.

2. External Public Relations

Press meetings are conducted twice in a year, Press release; handouts are the main tools

for external PUBLIC RELATIONS.

5.6 QUALITY CONTROL DEPARTMENT

Fig. 5.6: Structure of Quality Control Department

The functions of quality control department are;

• Quality checking

• Process control assurance

• Pollution control

5.5.1 Quality checking

Raw material-Pre and post dispatch check: It is usually done by FACT

Quality control cell or external agency if expertise is required.

Product Quality checks: Byproduct Quality check-only in case of byproducts sold.

5.5.2 Process control assurance

The samples are tested in the Lab. There is one Main Lab for UD

division and Sub Labs for each plant.

5.5.3 Pollution control

It is done by taking air and water samples. If samples contain more

than required level of effluent, then the matter is reported to the plant manager, Quality

department and GM (UC).

Mgr (Q.C)

Chemist

Shift-In Charge

Lab Assistant

5.7 RESEARCH & DEVELOPMENT DEPARTMENT

Fig: 5.7 Structure of Research & Development Department

FACT began research in a modest scale in 1962 with just four scientists. Over

the years this nucleus has grown in to a full-fledged but compact integrated division with

a team of about 12 personnel. The division is recognized by the ministry of science and

technology for in house research and by the ministry of environment and forests, Govt. of

India. R&D plays a vital role in giving the company and its products the cutting edge in a

competitive environment. Fact’s well-equipped R&D section has advanced facilities

equipped with pilot plants, modern equipment and accessories. It is backed by a team of

highly motivated research scientists. Various processes have been developed and

patented by FACT R&D division of which several have been commercialized

successfully. Field trials on slow release fertilizers developed by the division have been

successful. Production of biofertilizers has commenced with an installed capacity of

150tonnes per annum. FACT R&D division has got modern and sophisticated laboratory

and the facilities are continuously expanded and updated. A wide variety of tests

conforming to Indian and international standards are carried out.

Mgr (R & D)

Asst Mgr

Officer

Staffs

5.8 FIRE &SAFETY DEPARTMENT

Fig.5.8 Structure of Fire & Safety Department

As per the factory’s ACT 1958, any organization with more than 1000

employees or for Industries classified as Major hazardous unit (MHU) by the Govt. of

India, requires a safety department. FACT has well established safety departments to look

after the needs of respective divisions. It is the firm policy of the company that no

operation is so important and no job is so urgent that one cannot find time to perform it

safely. Further, it aims to see that an employee remain as healthy as he entered the plant,

by providing safe environment and safe working conditions, safe tools and procedures to

carry out all operations.

JGM (UD)

Mgr (Fire)

Inspectors

Mgr (Safety)

Fireman

Assistants

Inspectors

FUNCTIONS

1. Functions of safety department is not limited to reporting accidents and arranging

compensation, it also involves making a detailed investigation regarding the cause of the

accident, communicates suggestion to the concerned authority and takes necessary steps

to improve the condition and to avoid further occurrence of similar accidents.

2. Prevention at source by correction of unsafe acts, unsafe situations or both. Good

preventive maintenance programme, ensuring material quality etc.

3. By sticking the factory to the Factories Act and regulation and laid down safety

procedures.

5. Bringing up all levels of working to a correct safety attitude through training and

interaction.

5. In addition to the safety department, safety committee is set up to promote active

participation at all levels. Safety committee meets once in two months.

6. Housekeeping inspection committee is set up to inspect the whole factory area at least

thrice in a year and decides inter-departmental housekeeping awards.

7. A safety manual highlighting safety practices/instructions has been prepared and

distributed among employees as guidelines.

5.8.1 PROCESSES IN FIRE &SAFETY DEPARTMENT

1. Training

a. Taking safety measures

b. Emergency action

2. Checking complaints with safe guards

a. Departmental inspection

b. Measurement with sensors

3. Acting in case of emergency

5.9. HUMAN RESOURCE DEPARTMENT

Fig 5.9 organizational chart of HR Department Human resources are a term use to describe the individuals who comprise the

work force of an organization. Human Resource management is one of the most complex

and challenging fields of endeavour. It’s considered to be the most expensive and

important resource of every organization. In FACT the scope of Human resource

department is very vast. The basic HR functions include all the basic HR function that is

ought to be performed by them. This includes recruitment, selection, induction, training

and development, motivating the employees, performance appraisal, grievance handling

etc. HR department deals with the basic personnel and general administrative functions of

the company.

As the part of cost reduction measures from 1998 onwards FACT reduces its

employee’s strength. FACT had more than 9000 employees earlier, but it is now reduced

to approximately 3139 employees by successful implementation of Voluntary Retirement

CMD

DIRECTOR (TECHNICAL)

GM (HR)

CM (EST)

CM (IR)

CM (T&D)

CM (IE)

MANAGER (WELFARE)

MANAGER (LEGAL)

MANAGER (PR)

Scheme (VRS). From selection to recruitment, the HR department of FACT is there to do

all things which are necessary for the betterment of employees and for the growth of the

organization.

5.9.1 OBJECTIVES OF HR DEPARTMENT

1. To maintain the optimum manpower required to sustain the growth of the

organization.

2. To provide, create, utilize, and motivate employees to accomplish

organizational goals.

3. To manage and train the Human Resource to ensure their personal and

organizational development.

5. Maintain high morale, encourage value system and create environment of trust

and mutuality of interest.

5. To provide attractive incentives, rewards and other benefits to ensure retention

of competent employees

5.9.2 FUNCTIONS OF HR DEPARTMENT

A. ESTABLISHMENT FUNCTONS

• Recruitment and Selection

The recruitment policy is done as per prescribed recruitment specification with

proper authority appointment by board of directors. The following are the sources of

recruitment

1. Employment exchange as per provisions of employment exchange act

2. Employees on deputation from government

3. Apprentices who completed training in FACT.

5. Casual labours who were initially taken from employment exchange

5. Transfer from public sector undertakings.

• Performance Appraisal

Performance appraisal in FACT started in 1962.in 1985 the systems was further revised

to include assessment ,assessment at training needs and performance 32tilizatio,

potential. Continues evaluation of performance of employees and appropriate suggestion

at correct time will help to improve their performance. For managerial employees, self

appraisal system is adopted. Rating is given according to some scales like job knowledge,

quality of work.

• Redressal of Employee’s Grievances

FACT has a systematic mechanism to handle the grievances. There is different

mechanism for managerial and non managerial employees

1. Handling of managerial grievances

The issues that lead to grievances in this level relate to work, work place, transfer,

promotion etc. The concerned officer will bring the grievance orally to the next

immediate superior officer. If the issue is not resolved at this stage, officer submits a

written petition to CMD. Normally all grievances arise out of decision taken at the

division level shall be processed within the time.

2. Handling of non managerial grievances

The major issues are relating to wage payment, complaints against colleagues etc.

According to the procedure the trade union will present the grievances. At first stage the

employee in person will take up his grievance with foreman or assistant manager. The

answer will be given within 58 hours. If it is not satisfactory to the employee, either he in

person or accompanied by his department will present his grievance to the head of

department for solution. If it is also not satisfactory to the employee, he can request to

forward the grievance to the grievance committee consisting of representative of

management, unions and department where the solution would be given.

3. Training

The training and development activities of the company have been started from April

2005. With this arrangement the Management Development Centre (MDC), the training

centre of Cochin division, Udyogamandal division and the petro-chemical division have

been combined into one department called “FACT Training Centre”. Centralization was

effected with a view to utilizing all resources productively and to identify training needs

of employees based on a uniform approach and imparting required training.

B. Industrial Relation Function

Industrial relation operates only within the organization .the inter-organizational relation

is handled by the corporate cadre.60-70% of management time is lost in resolving IR

issues. Employees have to follow the standing orders approved by Labour Department of

Government of Kerala. Standing order is a book containing DO’S & DONT’S. Whenever

there is a violation of these rules or misconduct by employees there is procedure for

punishment including principle of natural justice. Employees will be given a chance to

explain the reason for such violation.

In organizations there will be tendency to employees to join in trade unions for

protecting their own rights and help the management to run the organization in a good

manner. In various divisions of FACT there are total of ten recognized trade unions

functioning

UDYOGMANDAL DIVISION

1. FACT employees association

2. FACT workers union

3. FACT employer’s congress (INTUC)

5. FACT employee’s organization

PETROCHEMICAL DIVISION

1. FACT employee’s association

2. FACT workers organization

COCHIN DIVISION

1. FACT employees union

2. FACT employees association

3. FACT workers congress

FEDO

1. FEDO employees association

2. FEDO employee’s congress

C. Welfare Functions

a. Statutory schemes 1. Employees State Insurance (ESI) 2. Provident Fund and Miscellaneous Provision Act 1952-exempted scheme in FACT 3. Payment of Gratuity Act 1972 5. Kerala Labor Welfare Fund Board Rules, 1975 5. Industrial Employment (standing orders) Act, 1956 6. Factories Act 1958-covers (health, safety, welfare)

b. Nonstatutory schemes 1. Family relief fund 2. Superannuation benefit fund 3. Family pension scheme of the company 5. Retirement benefit fund 5. Employees Welfare Fund 6. Uniform 7. Children’s education allowance 8. Medical allowance 9. Leave and holidays

c. Incentive schemes 1. Incentives for employees 2. Incentives to promote Hindi 3. FACT Merit Award 5. FACT Service Award 5. Incentives to promote sports and players.

d. Voluntary schemes 1. Contributory Health Scheme 2. Sports and Recreation 3. FACT employee’s consumer co-operative society 5. FACT employees Housing co-operative society 5. School facilities 6. Company accommodation (quarters facility)

D. Industrial Engineering

The main objective of this section is to make effective 36tilization of the

manpower resources and restructuring it for the benefit of the organization.

Main functions are

1. Manpower planning that compose of manpower audit and forecast future requirements

2. Custodian of manpower inventory

3. Work study

a. Removing system bottlenecks

b. Production incentive etc

5. Maintenance scheduling

5. Work environment study

6. Employee problem analysis

Working Time

The working time of administration section and workers are different. The administration

section works from 8AM to 5PM.

The workers work on shift basis. There are 3 shifts

1.8AM-5PM

2.5PM-12PM

3.12PM-8AM

5.10. TRAINING DEPARTMENT

Fig: 5.10 Organization Structure of Training Department The training and development activities of the company have been centralized with effect

from April 2005.Traiing centre of FACT has started job oriented courses in Fire & Safety

Engineering. New courses in Heavy equipment operation and maintenance, welding

technology and Process plant operation are being organized. These courses are planned to

be offered in association with Governmental agencies and statutory bodies. The aim is to

convert the training centre into a “Skill Development Academy “with a view to provide

facilities for skill development and making educated youth employable.

5.10.1 FUNCTIONS

1. Training officers and workers of the company as a whole in identified areas

2. Meeting the obligation of apprentice Act 1961/1973

3. Facilitating post qualification training, inplant training and project work to students

5. Facility for employees to attend external training programmes.

CM (Training)

MGR (Training)

OFFICER (Training)

INSTRUCTORS

STAFF’S

5.10.2 CHALLENGES TO TRAINING

1. Improper feedback

2. Improper selection of employees from the various departments.

3. Limited time available due to the pressure of production tar.

5.10.3 Training programs

a. Employee Developments Programs

FACT Training Centre conducts training programs for Supervisory/Managerial and Non-

Managerial Employees of FACT and other companies/organizations in Kerala. The

training centre includes Programs on Refresher training in various branches of knowledge

like Mechanical, Electrical, Instrumentation, Civil Unit Operations, general topics related

to HRD, ISO standards, Safety, Health, Environment, Energy Conservation etc.

b. Skill Development Programs

FACT Training Centre is conducting a one-year full time diploma course in Fire & Safety

Engineering. It also conducts Certification course in Heavy Equipment Operation,

Instrumentation Maintenance & Welding.

c. Apprenticeship Training

FACT Training Centre is an approved Centre for Apprenticeship under Board of

Apprenticeship Training/Regional Directorate of Apprenticeship Training Chennai.

d. Academic programs

Technical & Non-Technical it includes In Plant Training/Project work for

Engineering/Professional students.

5.11 COMPUTER SERVICE DEPARTMENT

Fig 5.11 organization structure of computer department The computer department of fact was launched in the year 1965, with the introduction of first generation computers in finance to meet the growing need for the speedy data processing. This multi system computer department is constantly updating its hardware and software. They started online computing in1986.The centre is equipped with servers in all its divisions connected by FACT NET. A complete implementation and interlinking of various departments were completed in 2004. 5.11.1 OBJECTIVES

• To keep the management abreast of the fast paced technological changes in the field of information technology and recommending timely enhancements of the IT resources in the enterprise.

• To project FACT into the promising area of e-commerce as soon as the technology is adopted in a big way in the Indian business sector.

5.11.2. FUNCTIONS OF COMPUTER DEPARTMENT

• Planning and procurement of computer systems in all divisions • Software development and system support to all divisions • User training on computer awareness and applications • Maintenance of FACTNET connecting all divisions • Process data and prepare relevant information for various levels of management

for appropriate and speedy decision making • Prompt and efficient services for meeting information requirements of the

employer, payment of wages and settlement of claims

CHIEF MANAGER

CHIEF MANAGER

CHIEF MANAGER

CHIEF MANAGER

CHIEF MANAGER

5.12 VIGILANCE DEPARTMENT

Fig.5.12: Structure of Vigilance Department

Vigilance Department of FACT is headed by a Chief Vigilance Officer (C.V.O),

who possesses the status rank and perquisites of a Functional Director. Vigilance is an

integral part of the management function. It has adopted preventive vigilance as the main

theme. The stress is on transparency and accountability in the working of the company.

Anonymous complaints are not taken. Vigilance Officers are deputed from time to time

to speak on vigilance matters during the service training programmes of the company to

sensitize the employees and the public about evil of corruption.

CVO (FACT)

Chief Manager

Inspector

DY Chief Manager

CHAPTER 6- SWOT ANALYSIS

6.1. STRENGTHS

1. High capacity utilization of available space through residential areas, banks, shopping

facilities etc.

2. Being a Government firm they get all necessary funds from the Government of India.

3. High quality products. FACTAMFOS is a premium product in complex fertilizers

containing sulphur

4. Sustained operating parameters of the plant at good level and productivity of plant at

good level

5. Well qualified and technically skilled manpower

6. Good support with farmers/end segment

6. One of the two producers of Caprolactum in India with world-class quality

7. ISO certification to most of the divisions

9. Strong dealer network in south India

10. Good engineering and consultancy design, perhaps one among the best in Indian

fertilizer segment

11. FEDO has own process know-how for hydrogen, sulphuric acid, ammonium sulphate,

DAP and complex fertilizers

12. FEDO has worked in association with many international process licensors, has

acquired the capacity of customizing and designing projects to the requirements of the

customers.

13. FEDO is an approved centre of surveyors and audit for portliness, installation, non-

destructive testing energy audits, and ISO audits and so on.

6.2. WEAKNESS

1. Doesn’t have a significant market reach outside South India.

2. Procedures followed are cumbersome and often led to delay in decision making.

3. Lack of product line diversification

4. Lack of working capital resources

5. Several unskilled jobs which could be sub contracted are undertaken by permanent

employees at high cost.

6. Unwillingness of employee to make important decision.

6. No serious attempt at career planning and succession.

6.3. OPPORTUNITIES

1. Strong marketing network in southern India.

2. Operational efficiency and high capacity utilisation of plants.

3. Scope for expansion and diversification.

4. Utilization of land for generating additional revenue.

6.4. THREATS

1. Non availability of sufficient quantity of phosphoric acid and other inputs.

2. Volatility in the prices of raw materials and feed stock like Naphtha, furnace oil, etc.

3. Fluctuations in prices of Caprolactam.

CHAPTER 7-

FINDINGS AND SUGGESTIONS

7.1. FINDINGS

• The core areas of FACT are the production and marketing of fertilizers and petro

chemicals. • The authority and responsibility is clearly defined in FACT

• Strict rules and procedures are followed by FACT for issuing quotations

• FACT produces high quality products and accepted by world at large.

• Good canteen, drinking water, medical clinic facility available to employees

• It gives more importance to the employee’s safety measures.

• FACT conducts training programmes for the employees for the purpose of

increasing the efficiency.

7.2. SUGGESTIONS

• Improving the efficiency and productivity of existing plants.

• Growth and diversification in core sector (fertilizers and petrochemicals)

• Re organizing marketing network with special focus to new products, organic

fertilizers, bio fertilizers, trading of fertilizers.

• Effective and productive use of all other assets of the company such as gypsum,

land and human resources for growth and diversification.

• Enter into the joint ventures with global company’s inorder to compete globally.

• Young and talented innovative workers should be given opportunities as there is

lack of fresh and young blood in the organisation.

• Fact’s product has already captured South Indian market but there is a need to

expand operations to North India.

CHAPTER 8 - CONCLUSION

8.1 CONCLUSION

The Fertilizers and Chemicals Travancore Limited (FACT), incorporated in the

year 1943 at Udyogamandal, is a Multiproduct, Multi-Divisional Company focused in the

manufacture and marketing of Fertilizers, Chemicals and Caprolactam. Currently FACT

is running at 23 crore profit. It has been a great experience for us to do the organization

study in a reputed organization like FACT as we understood the importance of FACT for

the farmers and also for the Indian economy.

FACT is transparent in all its activities, adheres to values and malpractices are not

encouraged. The study about the Organization FACT was done to understand the various

departments, the functional aspects and other areas regarding the functioning and

governance. During the course of the Organization Study, we have been able to achieve

the same and familiarize ourselves with the functioning and working of an organization.

This study has improved my confidence by its successful completion to undertake such

studies in the future. Even though our study was limited to

Udyogamandal Complex we got opportunities to visit Cochin Division and Willington

Island .We were also provided an opportunity to do clerical work in the payroll section of

Udyogamandal Division.

CHAPTER 9 -BIBLIOGRAPHY

9.1. BIBLIOGRAPHY

1. FACT 67th Annual Report (2010-2011)

2. FACT diary

3. FACT department manuals

4. FACT news

5. Kotler Philip, Kevin Lane Keller, Abraham Koshy and Mithileshwar Jha

(2009), Marketing Management, Delhi: Pearson

6. Pestonjee, D.M. “Organizational Structures and Job Attitudes”. The Minerva

Associates Calcutta, 1973.

7. www.fact.co.in