FINANCIAL Iffco Report

8/17/2019 FINANCIAL Iffco Report

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SALES, INVENTORY& FINANCIAL

MANAGEMENT

INIFFCO MARKETING

IN THE GUIDANCE OF SUBMITTED BY

Mr.Ajit Saxea, !ra"ee# !a"e$

Sr.Maa%er Fia'e & A''()t* MBA+Se+--- //0+11*


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ACKNO2LEDGEMENT

I feel great pleasure in extending my thanks to all who have helped me incompleting my summer internship.Without their support, I would have not been able

to complete this report.

The experience of training in IFFC is inexpressible in words. It has not

only ac!uainted me with the working of the corporate world but has also enhanced my

knowledge. "y training at IFFC,#$C%&W would certainly help in my

professional front.

I express my humble gratitude to "r.'lok (erma, "anager )'ccounts*

and "r.+.% 'garwal, 'ssistant "anager )'ccounts*, IFFC,#$C%&W for his

guidance and inspiration throughout my summer training which helped me to learn

about the companys working and to complete my pro-ect work. I would also like to

thank "r.'-it exana, /ead of The 0epartment)Finance 1 'ccount*, for giving me

chance to complete my Internship program from IFFC, #$C%&W.

I am also thank the finance 1 accounts departments staff for providing me

every type of support which was re!uired in completion of my training.

I would like to show my gratitude to "r.2.%.Tiwary, )0irector* Indira

3andhi Institute f Co4perative "anagement #ucknow.

I would also like to thank 0r.".%.5ha,Course Co4coordinator, Indira

3andhi Institute f Co4perative "anagement #ucknow.

Thank you6

!RADEE! !ANDEY*


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DECLARATION

I !RADEE! !ANDEY, a student of "+' III semester, +atch 7889478::,

Indira 3andhi Institute f Co4perative "anagement #ucknow. /ereby declare that I

have undergone summer training in IFFC,#ucknow from 5une ; th to 5uly 7


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TABLE OF CONTENTS

Fertili?er Industry

'bout IFFC

IFFC@ Indian Farmers uccess story

'bout cooperative

IFFCs "ission

IFFCs (ision

IFFC 3lory 78894:8

IFFC "anagement

rgani?ational Chart of IFFC

Alants of IFFC

Aroduct of IFFC

IFFCs 'ssociates

Aroduction in IFFCs Alants

ales 1 "arketing

Arices of IFFCBs Fertili?ers

Inventory management in IFFC

Finance Function

2esearch "ethodology

Findings

#imitation

Conclusion 1 2ecommendation

+ilblography

Ferti-i6er I")7tr$


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T8e 9erti-i6er i")7tr$ i I"ia '(7i7t7 (9 t8ree aj(r #-a$er7: T8e

%(;eret (5e" #)N!K 9erti-i6er i t8e '()tr$ at #re7et. T8e

9erti-i6er i")7tr$ (9 t8e I"ia 8a" a"e '(7tr)'ti;e )7e (9 t8e 9erti-i6er

7)


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7i%i9i'at a""iti( t( t8e 9erti-i6er #r(")'ti( 'a#a'it$.

Ferti-i6er i7 a 4e$ i%re"iet i e7)ri% t8e 9((" 7e')rit$ (9 t8e '()tr$

#r(")'ti( a" #r(")'ti;it$ (9 t8e 7(i-. T8e "(e7ti' 9((" %rai #r(")'ti(

tar%et 8a7


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I"ia Farer7 Ferti-i6er C(+(#erati;e Liite" 3 )IFFC* was

registered on &ovember , :9


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reputation for excellence and !uality. ' new growth path has been chalked out

reali?e newer dreams and greater hights through vision 78:8 which is presently

under implementation. 's a part of new vision, IFFC has ac!uired fertili?er

unit at !ara"ee# in Ori77a in eptember 788E. 's a result of these expansion

pro-ects and ac!uisition, IFFCs annual capacity has been increased to .


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services center )FC*. IFFC has promoted several institutions and organi?ations

to work for the welfare of farmers, strengthening co4operative

movement,improve Indian agriculture.Indian Farm Forestry 0evelopment Co4

operative #td )IFF0C*, Co4operative 2ural 0evelopment Trust) C20GT*,IFFC

foundation, %isan ewa Trust belongs to this category. 'n ambitious pro-ect JICT

Initiatives for formers and co4operatives is launched to promote e4culture in rural

India. IFCC obsessively nurtures its relations with farmers and undertakes a

large number of agricultural extension activities for their benefit every year .

't IFFC the thirst for ever improving the services to farmers and

members co4operatives is insatiable, commitment to !uality is insurmountable

and harnessing of mother earths bounty to drive hunger away from India in an

ecologically sustainable manner is the prime mission. 'll that IFFC cherishes

in exchange is an everlasting smile on the face on Indian farmers who forms

the moving spirit behind this mission.

IFFC,today is a leading player in a Indians fertili?er industry and ismaking substantial contribution to the efforts of Indian 3overnment to increase

food grain production in the country.


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IFFCO3 I"ia Farer7 S)''e77 7t(r$

0uring mid4 sixties the Co4operative sector in Indian was responsible for

distribution of ;8 percent of fertili?ers consumed in country. This sector had

ade!uate infrastructure to distribute fertili?ers but had no production facilities of its

own and hence dependent on publicDprivate sectors for supplies. To overcome this

lacuna and to bridge the demand supply gap in the country, a new co4operative

society was conceived to specifically cater to the re!uirements of farmers. It

was an uni!ue venture in which the farmers of the country through thire own C(+

(#erati;e S('ietie7 created this new institution to safeguard their interests. The

number of co4operative societies associated with IFFC has risen from E; in

:9


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0uring the year under report, the ociety conducted E,797 field programmes,

:,:: sale point personnel training programmes, :E crop seminars and 9:8

agricultural campaigns, that is, soil testing and bio4fertili?ers. The ociety analysed

:,E:,K: soil samples, in different tates, including E:,K soil samples tested by :8

mobile soil testing vans for recommending optimum dose of fertili?ers for improved

productivity. In addition, ,:7E Critical Input Aackage )CIA* %its containing seeds,

fertili?ers, bio fertili?ers, agro chemicals, etc., were also distributed to the farmers in

the field programmes for raising good crops. #iterature in the form of crop folder,

booklet, pamphlets, etc., was distributed during the field programmes.

In order to help the farmers at disadvantaged locations, IFFC undertakes

special pro-ectsto help the farmers in arranging natural local resources and thus

helping them in improvingtheir livelihood.

0uring the year 78894:8, the ociety has worked intensively in 7K special

pro-ects on agricultural,social and community development programmes in various

tates. These special pro-ects were onwatershed management, agricultural

development and micro enterprises, assisting elf /elp 3roupsin earning livelihood,

etc.


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MEANING OF COO!ERATIVE

'ccording to economic historian, Charles 3uide LCooperation is self4help and

each for all )mutual4aid*L. elf4help means the pride of supplying oneBs own needs by

oneBs own resources, of being oneBs own merchant banker, money lender and employer.

LGach for allL means to seek liberation, not only for oneself but for and through others>

The International Cooperative 'lliance )IC'*, at its "anchester Congress held in

eptember, :99E adopted a tatement on Cooperative Identity. The tatement includedthe definition of Cooperatives, a list of LCooperative (alues and a set of LCooperative

Arinciples>.

'ccording to IC', La cooperative is an autonomous association of persons united

voluntarily to meet their common, economic, social and culturalDneeds and aspirations

through a -ointly owned and democratically 4controlled enterpriseL

C((#erati;e ? Va-)e73

elf4help

elf4responsibility

0emocracy

G!uality

G!uity and solidarity

THE !RINCI!LES OF COO!ERATIVE

Cooperative Arinciples are guidelines by which cooperatives put their values into

practice.

The Cooperative principles are@


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):*(oluntary and open membership

)7* 0emocratic member Control

)* "ember economic participation

)K* 'utonomy and Independence

)E* Gducation, Training and Information

)


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+ased on the recommendation of the "irdha Committee and the L"odel

Cooperative ocieties 'ctL this 3overnment of India enacted the "ulti tate

Cooperative ocieties 'ct, 7887 which provided for democratic and autonomous

working of the Cooperatives. The "ulti tate Cooperative ocieties 'ct, 7887 came

into force with effect from 'ugust :9, 7887.


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IFFCO7 Mi77i(

IFFCs mission is =to enable Indian farmers to prosper through timely

supply of reliable, high !uality agricultural inputs and services in an

environmentally sustainable manner and to undertake other activities to improve

their walefare>.


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Mi77i(

To provide to farmers high !uality fertili?ers in right time and ade!uate

!uantities with an ob-ective to increase crop productivity.

To make plants energy efficient and continually review various schemes to

conserve energy.

Commitment to healthy,safety, environment and forestry development to

enrich the !uality of community life.

Commitment to social responsibilities for a strong social fabric.

To institutionali?e core values and create a culture of a team building,

empowerment and innovation which would help in incremental growth of

employees and enable achievement of strategic ob-ectives.

Foster a culture of trust, openness and mutual concern to make working a

stimulating and challenging experience for stake holders.

+uilding a value driven organi?ation with an improved and responsive

customer focus. ' true commitment to transparency, accountability and

integrity in principle and practice.

To ac!uire, assimilate and adopt reliable,efficient and cost effective

technologies.

ourcing raw materials for production of phosphate fertili?ers at

economical cost by entering into -oint ventures outside India.

' true Co4operative ociety committed for fostering cooperative movement

in the country. Gmerging as a dynamic organi?ation, focusing on strategic

strengths. ei?ing opportunities for generating and building upon past

success, enhancing earnings to maximi?e the shareholders value.


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IFFCO7 Vi7i(

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

increase their crop productivity through balanced energy efficient fertili?ers,

maintain the environmental health and to make cooperative societies

economically1 democratically strong for professionali?ed services to the farming

community to ensure an empowered rural India.

For sustaining growth and ensuring ade!uate return to the member

holders on their investments,IFFC is exploring opportunities for diversification


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into other profitable business areas apart from investment in fertili?er sector.

$nder the diversification plan, the society would retain focus on farmer4oriented

schemes, strengthening cooperative infrastructure. The following business

activities were identified under the =(II& 78:8>@

Ahosphoric 'cid plant

Foray into power sector to set up a E88 "W power pro-ect

Installation of a 'mmonia $rea plants including of fertili?er unitsN

IFFC %isan +a?aar

IFFC +ank

"ulti Commodity Gxchange

'c!uisition of fertili?er plants

&ellore Fertili?er Aro-ect

'gri business

0iversification into new growth areas such as mobile telephony and

communication technology in the rural areas.

VISION /1


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In pursuit of its growth and development, IFFC had embarked upon and

successfully implemented its Corporate Alans, J"ission 788E and J(ision 78:8.

These plans have resulted in IFFC becoming one of the largest producers and

marketeers of chemical fertili?ers by expansion of its existing $nits, setting up -oint

venture companies overseas and diversification into new sectors.

IFFCO 8a7 (5 ;i7)a-i7e" a '(#re8e7i;e #-a tit-e" Vi7i(+/1 58i'8

5i--


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To bring in sustainability and strategies to prevent climate change by reducing

energy consumption, better resources management and promoting renewable

energy sources.

To help the cooperative societies become economically strong, professionally

managed and to e!uip the farming community with advanced agricultural

practices for improved productivity, to ensure an empowered rural India.

'chieve fertili?er productionDmarketing target of :E million tonnes per annum

with an annual turnover of 2s. 8,888 Crore.


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IFFCO G-(r$ //0+1/

IFFC bagged the first4ever 0ot Coop 3lobal 'ward for Cooperative

Gxcellence, in a glittering opening ceremony of the 3eneral 'ssembly of

International Cooperative 'lliance )IC'* at 3eneva. The contest was hosted by

dot Coop ##C, which own the .Coop domain name.

KALOL UNIT

%alol $nit has achieved JA2'/'&' A'T2' from &ational afety

Council of India afety 'ward 788 in the "anufacturing ector for

J0eveloping and Implementing ccupational afety and /ealth

"anagement ystems and Arocedures.

Two %alol $nit employees have got "erit 'ward from JIndian &ational

uggestion cheme 'ssociation )I&'&*.

%alol $nit has been awarded by the 3u-arat afety Council and

0irectorate of afety and /ealth, 3u-arat, the prestigious J3u-arat tateafety 'ward@ 788 for the #owest 0isable In-ury Index for the Fifth

Consecutive Hear.

%alol $nit also bagged five pri?es from 3u-arat /orticulture

'ssociation for JInstitutional 3arden, JCut Flowers and (egetables,

Jociety 3arden, JTraffic Island, 3/47, and the overall first pri?e

J3overnors Trophy.

!HUL!UR UNIT Ahulpur $nit has received the 3olden 5ubilee 'ward in 2ecognition and

'ppreciation of Gxtraordinary 'ccomplishment and Contribution to the &ation

from Chamber of Commerce 1 Industry )Gastern $.A.*.

AONLA UNIT


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'onla $nit bagged JTG2I Corporate Gnvironment 'ward 7889 for its effort

towards environmental management and innovative initiative.

'onla $nit has won the J&ational 'ward for Arevention of Aollution for the

year 788;48 under Fertiliser Category.

F'I 'ward for J+est Aroduction Aerformance for &itrogenous Fertiliser 7889

from Fertiliser 'ssociation of India.

Juraksha Auraskar under &CI afety 'wards4788 from &ational afety

Council of India for excellent performance in the field of safety.

J3reentech Gnvironment Gxcellence 3old 'ward47889 in the fertiliser sector

for outstanding achievement in environment management.

!ARADEE! UNIT Aaradeep $nit has won the F'I 'ward for JImprovement in verall

Aerformance for the year 788489.

F'I 'ward for J+est Technical Innovation implemented in the field of fertiliser

technology for the year 788489.

Aaradeep $nit also bagged the Certificate of "erit in the field of Gnergy

Conservation from the +ureau of Gnergy Gfficiency, 3overnment of India. Aaradeep $nit has also been awarded the J+est Importer for the year 788489

from the Aaradeep Aort Trust.

IT A2ARDS Top :8 3reen I.T. Gnterprise 'ward from CI maga?ine and 'AC by chnelder

Glectric on the 3reen I.T. initiatives taken by IFFC.

The CI JIngenious :8847889 award for overall technology implementation in

IFFC by International 0ata "edia 3roup, India and CI maga?ine.

$ptime Champion 'ward 7889 in "anufacturing and 3eneral Industries

Category was given by The Gxpress 3roup and Gmerson &etwork Aower for

making IFFC infrastructure available almost round4the4clock.


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CI# Gnterprise Connect 'ward 7889 by Cyber "edia in association with

0ata!uest maga?ine.

The 3reat "ind Challenge for +usiness 'ward 7889 was given by I+" for

most innovative solution using

#otus oftware.

&etwork Computing maga?ine and $nited +usiness "edia honoured IFFCs

Alant "aintenance oftware

developed by 'onla $nit with an G03G Certificate for the use of IT for

maximising business impact.

IFFCOS MANAGEMENT

The representative general body )23+* which is general body forms the

supreme body that guides the various activities of IFFC . The 23+ consist of@


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:. 'll members of the board of directors.

7. ne delegate from each of the member societies holding shares of the value of

2s. :88 thousand and aboveN such delegate shall be as per the provision of multi4state cooperative societies actDrules as amended from time to time N

. 0elegate to be elected from amongst the representative of member societies

)other than members holding share of the value 2s. :88 thousand and above* in

each stateDunion territory at the rate of one delegate for every 788 thousand

societies or part thereof. /owever the maximum number of delegates from any

state Dunion territory shall not exceed 7E. uch elected shall be as per the

provision of multi state cooperative societies act amended from time to time.The board of directors of IFFC carry out all function as specified under the

multi state cooperative societies actDrules. The board of directors frame

policies, direct the various activities of society and undertake any other

activities conductive to overall growth and development of societies. The board

is headed by the chairman.

The managing director is chief executive of the organi?ation with

responsibilities for general conduct, supervision and management of day to day

business and affairs of IFFC. T/G finance director oversees the financial

aspect and the marketing director looks after the marketing function of IFFC.

The director )technical* looks after the technical aspect, director)/20* is

responsible for all human resources, director)-oint ventures* oversees all the

-oint venture operations and directors looks after cooperative development.

These functional directors are assisted by senior executives

who are experts in various disciplines.

ORGANISATIONAL CHART OF IFFCO


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1+ KALOL !LAN


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YEAR OF COMMISSIONING 3 10

INVESTMENT 3 R7. 1.= Cr(re

YEAR OF E!ANSION 3 100

INVESTMENT 3 R7. 10./ Cr(re

!RODUCT CA!ACITY TECHNOLOGY

T!D T!A

AMMONIA 11// =,@=,/// M.2. KELLOG & HTAS

UREA 1@/ ,,// STAMICARBON a" H&G

N 0 ,/,/


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+KANDLA !LANT


INVESTMENT 3 R7. .@ Cr(re

YEAR OF FIRST E!ANSION 3 101

INVESTMENT 3 R7. .@/ Cr(re

YEAR OF SECOND E!ANSION 3 1000

INVESTMENT 3 R7. /.=/ Cr(re


T!A

!O 0,1/,/// FOUR STREAMS A,B,C & D* BASEDON TVA SLURRY GRANULATION!ROCESS. T2O STREAMS E & F*

BASED ON AF !I!E REACTOR.

N =,1,/


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= ?!HUL!UR !LANT


INVESTMENT 3 R7. /. Cr(re !8)-#)r + I

YEAR OF E!ANSION 3 100

INVESTMENT 3 R7.110/ Cr(re !8)-#)r ? II

YEAR OF DEBOTTLENECKING 3 //

INVESTMENT 3 R7.1.= Cr(re


T!D T!A

AMMONIA 0 0,,1/ KELLOG & HTAS

UREA 1 1@,0,/ SNAM!ROGETTI

N =@ ,1,/11


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+AONLA !LAN


INVESTMENT 3 R7. @1.@ Cr(re AONLA+ I

YEAR OF E!ANSION 3 100@

INVESTMENT 3 R7. 0. Cr(re AONLA+ II

YEAR OF DEBOTTLENECKING 3 //

INVESTMENT 3 R7.10. Cr(re


T!D T!A

AMMONIA =/ 11,,// HALDOR TO!SOE

UREA @/@/ 10,00,// SNAM!ROGETTI

N 0,10,0/


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+!RAADEE! !LANT

INVESTMENT 3 R7. = Cr(re


T!A

!HOS. ACID ,,/// JACOBS ENG.

SUL!HURIC ACID =,1/,/// LURGI G


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!LANT HIGHLIGHTS OF //0+1/

KALOL

Aroduced highest ever


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!ARADEE!

Aroduced highest ever :E.88 lakh "T of &AD0'A during the year 78894:8

registering a rise of :K.9 O over last year.

The plant operated with lowest specific energy consumption of :.;K 3calD"T

of A7E. It has come down from .:


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!RODUCTS

1. UREA

IFFCBs $rea is not merely a source of K


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high & content )KDA!

's far as Indian farmer is concerned, IFFCBs &A%D0'A is not -ust a source of crucial nutrients &, A, % for the crops, but is an integral part of hisDher !uest for

nurturing mother earth. The bountiful crop that results from this care is an enough

reason for the graceful bags of IFFC &A%D0'A bags to be an integral part of the

farmersBs family.

The two grades of &A% produced by IFFC, :8@7


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Dia(i) !8(7#8ate

It is the most popular phosphatic fertiliser because of its high analysis and good physical properties. The composition of pure salt of 0'A is &47:.:9O and A78E P

E.;


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=. N!

A(i) !8(7#8ate S)-#8ate /+/+/+1=*

:. "oisture O by weight, maximum @:.8

7. Total &itrogen, per cent by weight, minimum @78.8

. 'mmoniacal &itrogen, per cent by weight,

minimum

@:.8

K. &itrogen in the form of urea, per cent by weight,

maximum

@7.8

E. &eutral 'mmonium Citrate soluble Ahosphates)as

A78E*, per cent by weight, minimum

@78.8


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. BIO FERTILIER

' biofertiliser unit was established at Cooperative 2ural 0evelopment Trust,

Ahulpur )$ttar Aradesh* in :99< 4 9; and other at %alol )3u-arat* in 78848K with an

annual capacity of ;E "T and :


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succeeding crops. The beneficiary crops

are 3roundnut, oybean, 2ed4gram,

3reen4gram, +lack4gram, #entil, Cow

pea, +engal4gram and Fodder legumes.

A6(t(


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IFFCO ASSOCIATES


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!RODUCTION IN IFFCOS !LANTS

ince its inception, the $nits have cumulatively produced :,:98.9: lakh "T

fertiliser materials comprising ;:K.9K lakh "T $rea and K;E.9; lakh "T &A%D0'A

up to the period ending "arch :, 78:8. 0uring the year 78894:8, the $nits surpassed

all previous production records by producing the highest4ever :.9 lakh "T of

fertilisers consisting of the highest4ever K.7K lakh "T $rea and also the highest4ever

.;K lakh "T &AD&A%D0'A. The previous best production level was ;:.


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The %alol and Ahulpur $nits achieved the lowest4ever Gnergy Consumption.

The overall composite pecific Gnergy Consumption per tonne of $rea for all the

Alants during 78894:8 was E.7 3CalD"T $rea, which is the lowest energy

consumption so far.

T8e )it+5i7e #r(")'ti( #er9(ra'e 5a7 a7 )"er3

Uit //0+1/ //+/0

!r(")'ti( >Ca#a'it$ Ut-. !r(")'ti( >Ca#a'it$ Ut-. La48 MT* #er 'et* La48 MT* #er 'et*

UREA

%alol4 N!

%andla4 7.;K 9. :;.9K ;K.

Aaradeep4 :E.88 ;.: :.8< DA!+ =. 0. =1.// 1.

TOTAL !RODUCTION+ 1.0 0.@ 1.@ @.

!r(")'ti( i ter7 (93

J&4 7E.E 9.K 7.79 9.9

JA7E ::.9E


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!RODUCT2ISE !RODUCTION !ERFORMANCE

La48 MT*

NUTRIENT2ISE !RODUCTION !ERFORMANCE

La48 MT*


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UNIT2ISE !RODUCTION !ERFORMANCE

%&ak$ '()


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IFFCO FERTILIERSBY

ROAD & RAIL

!CF

2AREHOUSE

!ACSNON+!ACS

FSC

FARMERS


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SALES !ROCEDURE IN IFFCO

The three concern involved in the sale procedure of IFFC are the field officer, the

societies and the agencies. IFFC does not sell its product directly to farmers except

FC. ale is made through the societies )A'C 2 &&A'C* or the Farmers

ervice Centre )FC*. The sale procedure for all the three societies are different.

IFFC sells its product to A'C through 3.A. che!ues )30 F2 A'H"G&T* to

&&4A'C ocieties through 0.0. i.e. 0G"'&0 02'FT and FC in cash.

COO!ERATIVE SOCIETIES

IFFC sells its fertili?ers through a network of more than :E8 cooperative societies

in different states of marketing territory. This societies are well scattered, covering

almost all village in the country and are the backbone of the cooperative system nearly


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makes the delivery challan. /e gives delivery challan to the truck driver and load the

material to the truck. Then the truck driver unload the truck, submit one copy of

the challan at the society and take the receiving of the material on other copy of the

challan from secretary of the society. /e gives this receipt copy of challan to the

godownkeeper. Then he submits all the receipt copy of the challan lifting delivery

statement at the agency on daily basis. Then the agency deposit 3.A. che!ues along

with the receipt copy of challan in 0C+. 'fter verifying the signatures on the challan,

the bank credit the value of fertili?ers in IFFC account. Then the F.. approaches

0C+ for the transfer of the funds to the $ttar Aradesh Cooperative +ank by the way of

the loan application or the demand draft. Then the funds from the $AC+ are

transferred to the /ead ffice.

Farer7 Ser;i'e Cetre

The ociety also sensitises farmers through its own :E Farmers ervice Centre

)FCs* spread over :8 tates, namely, Aun-ab, /aryana, 2a-asthan, /imachal Aradesh,

$.A., $ttarakhand, +ihar, "adhya Aradesh, West +engal and 3oa. 'part from the

supply of fertili?ers, seeds, agro4chemicals and so on, under one roof, these centre also

serve as the contact point for providing technical know4how to farmers. 0uring 78894

:8, these FCs sold about E.K9lakh tones of fertili?ers as against K.K;lakh tones in

788489. FCs have also organi?ed need4based promotional programs such as farmers

meetings, soil test campaigns and demonstrations in the villages around FCs with a

view to propagate the message of balanced and efficient use of fertili?ers.

SALE OF FERTTILIERS THROUGH FSC

F supervises the FCs of his area. It is the duty of F to assess the demand of

fertili?ers in the concerned district. 'fter assessing the demand, F issues the release

order gives it to the transporter. The transporter goes to the ACF and ACF gives the


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delivery order to the transporter. /e takes the delivery to the godown and

godownkeeper gives the fertili?er to the transporter and makes challan. The

godownkeeper gives the two copies of challan to the transporter. /e supplies the

fertili?ers to the FC. /e take the receiving on one copy of challan from the sales of

the FC and give the other copy to him. Then the transporter submit the receipt copy

of challan in the 'rea ffice along with bill verified by the salesman of FC.


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MARKETING

Sa-e7 !er9(ra'e

The year 78894:8 had not been very good from the agriculture point of view.

The south4west monsoon during %harif 7889 was the most deficient since :9;7. ut

of < meteorological sub4divisions in the country, 77 recorded deficient rainfall during

the south4west monsoon period )5une4eptember 7889*. "oreover, distribution of

rainfall was very erratic over time and space.

0eficiency in rainfall, particularly in 5uly and 'ugust 7889, severely affected

%harif crops, especially paddy. /owever, the recovery of monsoon in the last !uarter

of the year 7889 protected the %harif crops to some extent and improved the prospects

of 2abi crops in 78894:8. The overall production of %harif cereals in 78894:8

declined by about :.E: million tonnes over 788489. The foodgrain production

during the year 78894:8 is estimated at 7: million tonnes as against the actual7. million tonnes in 788489.

The fertiliser consumption in the country during 78894:8 is estimated to be slightly

higher as compared to last year at 7


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TOTAL SALE OF FERTILISERS

La48 MT*

SALES OF FERTILISER MATERIAL

La48 MT*

Materia- //0+1/ //+/0

$2G' 4wn K.77 K8.;:

4 Imported 78.: :;.9

SUB TOTAL @=.= .@0 &AD&A% 7;.9K 7K.K;

0'AD"'A 4 wn ::.:K DA!* .0 =.0

TOTAL UREAN!>N!KDA!* 11. 11.


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SALES !ERFORMANCE

La48 MT*

SALES !ERFORMANCE

La48 MT*


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SALES DURING KHARIF SEASON

La48 MT*

SALES DURING KHARIF SEASONLa48 MT*


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SALES DURING RABI SEASON

La48 MT*

SALES DURING RABI SEASON


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0uring the year, IFFC achieved the highest4ever sales of ::.7; lakh tonnes

of fertiliser material compared to the previous years record sale of ::7.E lakh

tonnes, representing an increase of about five per cent. /igher sales could be achieved

primarily due to effective planning, proper logistics management combined with

timely supplies and distribution, and intensive marketing strategy adopted by the

ociety at all levels. $rea sales during 78894:8 were


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!r(")'t M(;eet

The ociety despatched ::;.; lakh tonnes of fertiliser material )$rea and

&AD&A%D0'AD"'A* from the plants and ports during the current year. This included

9.E lakh tonnes of $rea from "IFC, :8. lakh tonnes imported $rea on 3I

'ccount, and :E.9 lakh tonnes imported 0'AD"'A. "IFC and imported $rea

were dispatched from the ports to different tates according to GC' allocation given

by the 3I.

FIELD STRUCTURE OF IFFCO

There are about 8 field officers in ;8 district under :7 'rea ffices in $A.

These area ffices are in @

:. '32'

7. '##'/'+'0

. +'2GI##HK. F'IR'+'0

E. 32'%/A$2


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)'pplicable only within India*

)Indian 2upees Aer Tonne )5.e.9. 17t A#ri-, /1/*

UREA N!K N! DA!

N+@ 1/+@+@ 1+=+1@ /3/3/31= 1+@+/

".2.A. E:8 ;9; ;


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$.A., $ttarakhand, +ihar, "adhya Aradesh, West +engal and 3oa. 'part from the

supply of fertilisers, seeds, agro4chemicals and so on, under one roof, these centres

also serve as the contact point for providing technical know4how to farmers.

0uring 78894:8, these FCs sold about E.K9 lakh tonnes of fertilisers as against K.K;

lakh tones in 788489. FCs have also organised need4based promotional programmes

such as farmers meetings, soil test campaigns and demonstrations in the villages

around FCs with a view to propagate the message of balanced and efficient use of

fertilisers.

Gra)-ar Urea 9r( OMAN

The 3overnment of India has entrusted the responsibility of the handling and

marketing of E8 per cent of "IFC $rea to IFFC. 0uring 78894:8, IFFC

handled 7 vessels carrying :8.:9 lakh tonnes of "IFC $rea at %andla, "undra,

Aipavav, (i?ag, %akinada 0eep Water, %rishnapatnam and Tuticorin ports.

0espatches of "IFC $rea were made to different tates against GC' allocation.

2ater S(-)


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C('e#t (9 I;et(rie7

'ccounting tandard 7 determines the valuation of inventories, on the basis of

cost price or net releasable value which ever is low. '47 provides for valuation of

inventories.

28at are i;et(rie7

Inventories are assets@4

/old for sale in the ordinary course of business. In the process of production for such sale.

In the form of materials or supplies to be consumed in the

production process or in rendering of services.

Inventories encompass finished goods produced or work in process being

produced by the enterprise and include materials, maintenance supplies,

consumables, loose tools awaiting use in the production process.

T$#e7 (9 i;et(r$

1. I;et(r$ (9 ra5 ateria-7@ This consist of basic materials that have

not yet been commited to production in a manufacturing firm.The

purpose of maintaining row material inventory is to uncouple the

production function from the purchasing function so that delays in

shipment row materials do not cause production delays.

. I;et(r$ (9 7t(re7 a" 7#are #art73 This catrgory includes those

products, which are accessories to the main products produced for the

purpose of sale. Gxamples of stores and spares items are bolts, nuts,

clamps, screws etc.


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=. I;et(r$ (9 5(r4+i+#r(%re773 This catrgory includes those

materials that have been committed to the production process but have

not been completed. The more complex and lengthy the production

process, the iarger will be the investment in work4in4process

inventory.

. I;et(r$ (9 9ii78e" %(("73 These are completed products awaiting

sale. The purpose of finished goods inventory is to uncouple the

production and sale functions so that it no longer is necessary to

produce the goods before a sale can occur.

NEED TO HOLD INVENTORY

&ormally there are motives to hold inventory. They are as follows@

:. !re'a)ti(ar$ (ti;e73 necessitates holding of inventory to guard against the

unpredictable changes in the demand and supply forces 1 other factors.

7. Tra7a'ti( (ti;e73 emphasi?es the need to maintain inventory to facilitate

smooth production and sales operation.

. S#e')-ati;e (ti;e3 influences the decision to increase or decrease the

inventory level. To advantage of price level.

ther factors which may necessitate purchasing 1 holding of raw material

inventory are !uantity discounts and anticipated price increase. The firm may

purchase large !uantity of raw materials then desired for exact production and sales

level.


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INVENTORY CONTROL

Inventory control is the systematic control and regulation of purchase storage and

usage of material in such a way as to maintain an even flow of production and at same

time avoiding excessive investment inventories. 'n efficient control reduces losses

and wastage of material that otherwise passed unnoticed.

Inventory control is the core of "'TG2I'# "'&'3G"G&T. The need and

importance of inventories varies in direct proportion to idle cost of man and

machinery, and the urgency of re!uirements man and machinery and the factory could

wait should could customers material would not lie for want of them and no

inventories need to be carried. +ut its highly uneconomical to keep men and machine

waiting and the re!uirements for modern life are so urgent that they cant wait. /ence

firm must carry inventory either in the form of raw material or work in process or

finished goods.

TECHNIUES OF INVENTORY MANAGEMENT

:. GC&"IC 20G2 S$'&TITH@ It meansL what should be the si?e of the

orderL and L't what level should the order be placedL. GS model assumed

that inventory can be obtained without time lag.

7. 2G20G2 AI&T@ It can be defined as that level of inventory when a new

order should be placed with supplier for replenishment. It determines the avg.daily consumption, lead time and the safety stock.

. 'FGTH TC%@ It is the buffer or minimum stock may be defined as the

minimum additional inventory to serve as a safety margin to meet an

unexpected increase in usage or delay due to shipping in the supply of

inventory.


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COSTS OF HANDLING INVENTORY

:. 20G2I&3 CT@ relating to purchased items pertaining to re!uisitioning,

order placing, transportation, receiving4inspecting 1 storing, clerical staff.

7. C'22HI&3 CT@ relating to warehousing, handling, clerical staff, insurance,

deterioration 1 obsolescence.

. /2T'3G CT@ arise when inventories are short of re!uirement for

meeting the needs of production or the demand of customers. When a firm

carries a large safety stock to reduce shortage costs its carrying costs tend to behigh.

LOSSES IN IFFCO+

:. T2'&IT #4 When the fertili?ers are dispatched from the plants to the

transport mode )rail or road*, then the loss of bags due to carelessness of

anybody is called Transit #oss. The plant is responsible for losses.

7. /'&0#I&3 '&0 T2'&A2T'TI& #G4 It occurs while handling

the fertili?ers. These losses occurred between the rake point to the warehouse

and the warehouse to the sales point. These losses are handled over by the

transport agency concerned at that time.

. T'&0'20I'TI& #G4 0uring transition there might be some

physical losses in the bags carrying fertili?ers due to which there is spill over

of fertili?ers. The fertili?ers of these damaged bags are collected and repacked

into new bags, the losses due the above reason are called

T'&0'20I'TI& #osses.


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I&$2'&CG F FG2TI#IRG2 'T T/G W'2G/$G4 'ccording to the value of

stock and the stores finished goods keeps varying, insurance shall be obtained in the

form of declaration policy where by the average daily stock for each product held

during the month should be declared to the insurer in the first week of next month.

The stock of product lying at different warehouse like ACF, 0C0F etc should also be

covered through warehousing agency.

K. 2GG2('TI& F T/G T2'3G4

ACF P 7K9:E8.88 "T

WC P E9888.88 "T

0C0F P 79988.88 "T

T2'3G P 7


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Inventories constitute about C,

where 'U annual re!uirement, U ordering cost per unit, C U carrying cost per

unit per annum.


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When should the firm place an order to replenish inventory

The inventory level at which the firm places order to replenish inventory is

called re4order level. It depends on lead time, usage rate 2e4order level U lead

time V usage rate #ead time is the time normally taken in replenishing

inventory after the orderhas Alaced.

$nder uncertainty about lead time. Therefore firms maintain safety stock

which provide buffer or cushion to meet contingencies.

Re+(r"er -e;e- P 7a9et$ 7t('4 -ea" tie )7a%e rate

' firm which carries number of inventories that differ in value, can follow a

selective control system. '+C analysis classifies4 ' category consists highest value, +

category consists high value items, C category consists lowest value item. Tight

control may be applied for high value item and loose control for low value item.

#arge number of companies these days follows the total !uality management

)TS"* system which re!uires companies to adopt -ust in time )5IT* and computeri?ed

system of inventory.

/ow are inventories valued under '47.

Inventories are valued at the lower cost and net reali?able value. The cost of

inventories should comprise all costs of purchase, costs of conversion and other costs

incurred in bringing the inventories to their present

location and condition.

The cost of purchase consists of the purchase price including duties and

taxes freight inwards and other expenditure directly attributable to the ac!uisition.

Trade discount, rebate, duty drawback and other similar items are deducted in

determining the cost of purchases. The cost of conversion of inventories includes costs

directly related to the units of production such as direct labor.


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INVENTORY VALUATION AT IFFCO

Inventories are valued at lower of cost or net reali?able value.

a* The cost in respect of various items of inventory is computed as under@

i* 2aw "aterials, Aacking "aterials, Construction "aterials, #oose Tools in

tock, Chemicals 1 Catalysts in tock and tores 1 pares at monthly

weighted average cost.

ii* tock4in4Arocess at direct cost and an appropriate portion of overheads.

iii* Finished 3oods@

"anufactured &itrogenous Fertili?ers covered by 3roup Concession cheme at

'nnuali?ed Cost of Aroduction at Alant after ad-ustment of subsidy as

determined as per the 2evised &orms of the Fertili?er Industry Coordination

Committee )FICC*.

"anufactured Ahosphatic Fertili?ers at 'nnuali?ed Cost of Aroduction at Alant

plus freight unto the warehouses after ad-ustment of subsidy as estimated in

accordance with known policy parameters in this regard.

Imported &itrogenous Fertili?ers at procurement cost plus direct expenses less

reimbursement of handling cost as fixed by the 3overnment of India.

Imported Ahosphatic Fertili?ers at procurement cost plus direct expenses after

ad-ustment of subsidy as estimated in accordance with known policy

parameters in this regard.

b* &et reali?able value of Finished 3oods is determined at estimated selling price

in the ordinary course of business less the estimated costs necessary to make

the sale.

C(7t 9(r)-ae 9(r "eterii% '(7t (9 i;et(rie7

2ei%8te" A;era%e Met8("


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IFFC are using weighted average method. $nder this method the issue

price is calculated by dividing the value of materials in hand by the number of units

in hand. Thus it takes into account both !uantities and money value for arriving at

the issue rate. Whenever a new consignment is received, a new weighted average

price is calculated by adding the value of the consignment to the cost of stock in

hand. The rate thus, calculated is used to price all issues until a new consignment

is received. The method is more scientific as it smoothens the fluctuations in

purchase price. Further, inventory is valued at one rate.

CLASSIFICATION OF MATERIALS AT IFFCO

IFFC is engaged in the production of fertili?ers. It is one of the leading

industries of India. The final product of the company is $2G'N which is produced

with the help of 'mmonia and Carbon dioxide. C7 is obtained directly from air and

'mmonia is produced at 'mmonia plant using the following materials@

• &aphtha

• &atural 3as

• 2#&3

)Where inventory for &atural gas and 2#&3 is nil.*

C(7)#ti( (9 Ra5 Materia-, Uti-itie7 a" St(re7

The ocietys greatest strength is its cost competitiveness and customer

focus. 0uring the current year, the ociety further reduced its manufacturing costs by

better production management, which has contributed to increase in perating

"argin. The ociety is also pursuing many operational excellence programmes so as

to optimi?e the costs and achieve higher operational efficiency.


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I;et(r$ C(7(-i"ati(

' data warehouse has been created at / where the Inventory data of all

the Alants except Aaradeep is being replicated automatically due to which information

like availability of any item of stores 1 spares at any $nit, status of surplus and

nonmoving

inventory can be accessed on line by the persons to whom access rights have

been assigned. The ystem is expected to help in optimi?ing the inventory of stores 1

spares at the $nits.

Ne5 Materia- Maa%eet S$7te MMS*

' new material management system has been developed at %alol with

active input and support of other units. The system has been implemented at %alol

and it is likely to be implemented in Ahulpur, 'onla and %andla by 5une 788. The

eprocurement

system has been modified to support both &ew "" and old "".

!-at Maitea'e S$7te !MMS*

A"" Ahase4I having modules on G!uipment 0ata +ank, "W2, #og +ook,

/istory card, Areventive "aintenance chedules and hutdown have been

successfully implemented in all the $nits except for Aaradeep. It is expected to help

effective Alanning and 0ecision making related to Alant G!uipment "aintenance.

Consumption of 2aw "aterials, tores etc.

+esides these raw materials, certain stores and spares must be considered.

• Geera- S#are7• Geera- St(re7• C8ei'a-7

• Stea-• Ceet


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• Cata-$7t

MATERIAL HANDLING"aterial /andling includes moving, packaging and storing all the materials

used by the firms. The material handling systems is -udged by how it serves the

production into most economical cost.

EFFICIENT INVENTORY CONTROL

Inventory control is a systematic control and regulation of purchase and

usage of materials in such a way so as to maintain an even flow of production at the

same time avoiding excessive investment in inventories. Gfficient material control

reduces losses and wastage of materials that otherwise pass unnoticed.

Inventory control is the core of material management. The need and

importance of inventories varies in direct proportion to the idle time cost of men and

machinery, and urgency of re!uirements. If men and machinery in the factory could

wait and so could the customers, materials good not lie in want for them and no

inventory need to be carried. +ut it is highly uneconomical to keep the men and

machine waiting and the re!uirements for modern life are so urgent that they can not

wait for materials to arrive after the need for them has arisen. +ecause materials

constitute a significant part of the total production of cost thus, cost is controllable to

some extentN proper planning and controlling of inventories are of great importance.

Inventory control is planned method of determining what to indent, so that

purchasing and storing cost is to be minimum without affecting the production or

sales. Without proper control inventories have a tendency to grow beyond economic

limits. Funds are tied up unnecessarily in surplus stores and stocks. Aroductive

operations are stalled, and finances of the plant are severely sprained. #ack of control


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over inventory also leads to excessive consumption and wastage, as operatives are

liable to become careless with irrational supply of materials.

' good inventory management policy should ensure smooth and

uninterrupted supply without making unnecessary investment of funds in inventory.

This re!uires that inventory management policy must balance the re!uirements of the

following two opposing and conflicting ends@4

• T( aitai -ar%e )atit$ 9(r 7((t8 (#erati( a" e99i'iet ')7t(er7

7er;i'e7.

•

T( aitai (-$ a ii) #(77i


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with inventory control@4

"in4"ax plan

rder cycling system Fixation of various levels

$se of control ratios

2eview of slow and non4moving items

The '+C 'nalysis

Mi+Max #-a

In this plan analyst lays down a maximum and minimum for each stock

item. "inimum level establishes the reorder point and order is placed for !uantity of

material, which will bring it to the maximum level.

Or"er C$'-i% S$7te

In this system, !uantities in hand of each item or class of stock are reviewed

periodically )8,


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It represents the minimum !uantity of stock that should be held at all the

time.

Mii) Le;e- P Re(r"er -e;e- ? N(ra- '(7)#ti( N(ra- Re+(r"er

#eri("*

Sa9et$ Le;e-

&ormal issues of stock usually stopped at this level and made only under

specific instructions.

Sa9et$ 7t('4 -e;e- P Or"eri% Le;e- ? A;era%e rate (9 '(7)#ti(

Re+(r"er -e;e-*

OR

P Maxi) rate (9 '(7)#ti( ? A;era%e rate (9 C(7)#ti(* Lea" Tie.

Or"eri% Le;e-

It is a level at which indents should be placed for replenishing stocks.

Or"eri% Le;e- P Mii) -e;e- C(7)#ti( ")ri% t8e -a% #eri(".OR

P Maxi) C(7)#ti( Maxi) re+(r"er #eri(".

USE OF CONTROL RATIOS

Inventory turnover ratio helps management to avoid capital being locked $p

unnecessarily. This ratio reveals the efficiency of stock keeping.

I;et(r$ t)r(;er rati( PC(7t (9 ateria-7 '(7)e" > C(7t (9 a;era%e

7t('4 8e-" ")ri% t8e #eri(".


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28ere,

C(7t (9 a;era%e 7t('4 P C(7t (9 (#ei% 7t('4 C(7t (9 '-(7i% 7t('4 > ,

I;et(r$ t)r(;er rati( P Da$7 ")ri% t8e #eri(" >I;et(r$ t)r(;er rati(.

REVIE2 OF SLO2 MOVING AND NON+ MOVING ITEMS

tock turnover ratio should be as high as possible. #oss due to obsolescence be

eliminated or these items used in some profitable work. low moving stock should be

identified and speedily disposed off. The speed of movement should be increased. The

turnover of different items of stock can be analy?ed to find out the moving stocks.

T8e #er'eta%e (9 7-(5 (;i% 7t(re7 P S-(5 (;i% 7t(re7 > T(ta- I;et(r$

THE ABC ANALYSIS

With the numerous parts and materials that enter into each and every industrial

production, inventory control leads itself, inventory and foremost, to the problem of

analysis. uch analytical approach is popularly known as '+C )'#W'H +GTTG2

C&T2#* 'nalysis.


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This Alan is based upon segregation of arterial for selection control. It measures

money value i.e. cost significance for each materials item in relation to total cost and

inventory value. The logic behind is that the management should study each item of

stock in terms of its usage , lead4time , technical or other problems and its relative

money value in the total investment in inventories. Critical, i.e. high value items

deserve very close attention, and low value items need to be devoted minimum

expense and effort in the task of controlling inventories.

INVENTORY SOFT2ARE

There is very powerful software in IFFC for inventories of the various

items. This software holds all the transactions of the stocks. o this software helps

much in maintenance of stocks. It makes very easy to account persons to maintain the

transactions of inventories.

' part of this software is installed on the systems of the stores, whenever a

transaction is made in the store, the details of that transaction is reaches to the

systems of the store accounting section, because both the systems are connected in

the local area network )#'&*. o with the help of #'& environment it is very easier

toaccountants to retrieve the information regarding the transactions made by the

stores.

'part from this, this software has the variety of !ualities which we can discuss

with thehelp of menus of software.

There are six different menus in this software these are as follows@

0ata entry

Sueries

2eports

Arocessing


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Calculator

Gxit


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1


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1

FINANCIAL !ERFORMANCE

's per its tradition, the ociety has again exhibited an impressive financial

performance in all its ma-or parameters, namely, revenue growth, margins and

resource utilisation, testifying to the robustness of its Corporate trategy of creating

multiple drivers of growth in spite of constraints in the availability of raw materials

and the inordinate delays in the receipt of large subsidy amounts from 3overnment of

India. It was made possible due to higher production, sales volume and improvement

in operating efficiencies. With the efforts of your ociety, international prices of

fertilisers have eased to reasonable levels, which is good from the point of supplying

strategic plant nutrients to farmers at affordable prices. 's a conse!uence of lowering

of international prices of inputs and imported fertilisers and subsidy levels, the ales

Turnover of the ociety in value has come down to 2s. :


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amount of 2s. :77 Crore attributed to the financing cost of funding the delayed receipt

of subsidyDconcession from the 3overnment of India during the year.

F(rei% Ex'8a%e Maa%eet

The year witnessed wide volatility in Foreign Gxchange Aarity of different

currencies particularly in respect of I&2D$0 parity. 's a result of efficient Foreign

Gxchange "anagement, the ociety earned Foreign Gxchange gain of 2s. :8E Crore

during the year. The +oard will like to place on record the outstanding performance of

the 5t. "anaging 0irector and CF and his team for the excellent performance on this

Foreign Gxchange "anagement.

Net !r(9it

(arious business segments of the ociety achieved healthy growth in

profitability over the previous year. The Arofit +efore 0epreciation, Interest and Tax

)A+0IT* was 2s. :,;98.78 Crore as compared to 2s. :,9E.EE Crore in the previous

year. The Arofit +efore Tax at 2s. E


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providing for 2s. 8.K; Crore as contribution towards the Capital 2epatriation Fund,

the &et 'llocable Arofit works out to 2s. K88.


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Net Di7#(7a


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current liabilities have decreased to 2s. :,;99 Crore as compared to 2s. 7,


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. U7e (9 E7tiate7

The preparation of financial statements, in conformity with the 3enerally

'ccepted 'ccounting Arinciples, re!uire estimates and assumptions to be made that

affect the reported amount of assets and liabilities as on the date of the financial

statements and the reported amount of revenues and expenses during the reporting

period.

0ifference between the actual results and estimates are recognised in the period

in which the results materialise.

=. Fixe" A77et7

a* Fixed 'ssets are stated at historical cost less accumulated

depreciation. Cost comprises of the purchase price and any attributable cost of

bringing the asset to its working condition for its intended use.

b* 'ssets retired from active use and held for disposal are shownseparately under Fixed 'ssets at lower of net book value and net realisable

value.

. Ex#e"it)re i')rre" ")ri% C(7tr)'ti( !eri("

In respect of new D ma-or expansion of $nits, the indirect expenditure incurred

during construction period upto the date of the commencement of commercial

production, which is attributable to the construction of the pro-ect, is capitalised on

proportionate basis.

. Ita%i


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'n intangible asset is recognised where it is probable that the future economic

benefits attributable to the asset will flow to the ociety and the cost of the asset can

be measured reliably. uch assets are stated at cost less accumulated amortisation.

@. I#airet (9 A77et7

't each balance sheet date an assessment is made whether any indication exists

that an asset has been impaired. If any such indication exists, an impairment loss

i.e. the amount by which the carrying amount of an asset exceeds its recoverable

amount, is provided in the books of account.

. I;e7tet7

a* #ong Term Investments are carried at cost. Arovision for diminution

in the value of such investments is made to recognise a decline, other than

temporary, in the value of the investments.

b* Current Investments are valued at lower of cost and fair value

determined on an individual investment basis.

. I;et(rie7

Inventories are valued at lower of cost and net reali?able value.a* The cost in respect of various items of inventory is computed as

under@


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i* 2aw "aterials, Aacking "aterials, Construction "aterials,

#oose Tools in tock, Chemicals and Catalysts in tock and tores and

pares at monthly weighted average cost.

ii* tock4in4Arocess at direct cost and an appropriate portion of

overheads.

iii* Finished 3oods@

"anufactured &itrogenous Fertilisers covered by

3roup Concession cheme at 'nnualised Cost of

Aroduction at Alant after ad-ustment of subsidy as

determined as per the &orms of the Fertiliser

Industry Coordination Committee )FICC*.

"anufactured Ahosphatic Fertilisers at 'nnualised

Cost of Aroduction at Alant after ad-ustment of

subsidy as notified D estimated in accordance with

known policy parameters in this regard.

Imported &itrogenous Fertilisers at procurement

cost determined on weighted average basis plus

direct expenses less reimbursement of handling cost

as fixed by the 3overnment of India.

Imported Ahosphatic Fertilisers at procurement cost

determined on weighted average basis plus direct

expenses after ad-ustment of subsidy as estimated

in accordance with known policy parameters in this

regard.


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b* &et realisable value of Finished 3oods is determined at estimated

selling price in the ordinary course of business less the estimated costs

necessary to make the sale.

0. De#re'iati( > A(rti7ati(

a* 0epreciation on Fixed 'ssets is provided on traight #ine "ethod as

follows@

)i* In respect of assets ac!uired upto :st "arch, :998 at the rates

prescribed under Income Tax 'ct, :9


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g* 'ddition to assets are depreciated for the full year irrespective of the date of

addition and no depreciation is provided on assets sold D discarded during the year.

/owever, in the case of capitalisation of pro-ect, depreciation is provided on a pro4rata

basis from the date of commencement of commercial production.

h* Intangible assets are amortised over their estimated useful lives but not

exceeding ten years when the asset is available for use.

1/.Re;e)e Re'(%iti(

2evenue is recognised to the extent that it can be reliably measured and is

probable that the economic benefits will flow to the ociety.

a* Sa-e7 (9 G(("7

0omestic ales are recognised on the basis of issue and acceptance of

2elease rders whereby all significant risks and rewards of ownership are

transferred to the buyer and the ociety retains no effective control of the goods

transferred to a degree usually associated with the ownership.

/igh ea sales are recognised upon endorsement

of bill of lading in favour of buyer.


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i* 0ividend income is recognised when the right to receive payment is

established.

ii* Interest on delayed payments from customers, insurance claims, coal

grade slippage claims, 2ailway claims for finished goods and claims receivable

on account of despatch money on shipments are recognised when no significant

uncertainty exists with regard to the amount to be realised and ultimate

collection thereof.

iii* Income from transfer of Certified Gmission 2eduction )CG2* is

recognised on delivery of CG2s to the buyerBs account as evidenced by the

copy of transfer documentation, confirming the transfer of CG2s.

iv* Income from crap D salvage and waste material is recognised when

sold.

11.F(rei% C)rre'$ Tra7a'ti(7

a* Foreign Currency transactions are recorded on initial recognition at the

exchange rate prevailing on the date of the transaction. n settlement of transactions,

the realised gains and losses on foreign exchange transactions are recognised in the

Arofit and #oss 'ccount.

b* Foreign currency monetary items remaining unsettled at the end of the year

are reported at year4end rates. The exchange rate differences arising thereof are

recognised in the Arofit and #oss 'ccount. &onmonetary items, which are carried at

historical cost denominated in a foreign currency are reported using the exchange rate

at the date of the transaction.


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c* In respect of forward contracts premium or discount arising at the inception

of forward exchange contracts is amortised as an expense or income over the period

of the contract. Forward contracts remaining unsettled at the end of the year are

reported at year end rates.'ny profit or loss arising on cancellation or renewal of

forward exchange contracts is recognised as income or expense in the year in which

such profit or loss arises.

d* Financial statements of Foreign +ranches are considered to be integral and

are translated as follows@

"onetary assets and liabilities at exchange rates prevailing at the end of

the year.

&on4monetary items at exchange rates prevailing on the date of

transaction.

2evenue items are accounted for at the exchang rate, which

approximates the rate prevailing as on the date of transaction.

2esultant translation differences arising therefrom are recognised in the


1.C)rret Tax a" De9erre" Tax

Tax expense for the period, comprising Current Tax and 0eferred Tax is

included in determining the &et Arofit D )#oss* for the year.

a* Arovision for Current Income Tax is made as per provisions of

Income Tax 'ct, :9


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laws that have been enacted or substantively enacted as on the +alance heet

date. 0eferred Tax assets are carried forward to the extent it is reasonably D

virtually certain that future taxable profit will be available against which such

0eferred Tax assets can be realised.

1=.B(rr(5i% C(7t

+orrowing costs that are attributable to the ac!uisition construction of

!ualifying assets are capitalised as part of cost of such assets. ' !ualifying asset is one

that necessarily takes substantial period of time to get ready for intended use. 'll other

borrowing costs are recognised as an expense in the period in which they are incurred.

1.E#-($ee Bee9it7

a* S8(rt Ter E#-($ee Bee9it7

hort Term Gmployee +enefits are recognised as an expense on anundiscounted basis in the Arofit and #oss 'ccount of the year in which the

related service is rendered.


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and the fair value of plan assets is reduced from the gross obligations

under gratuity scheme, to recogni?e the obligation on net basis.

ii* The contribution to Arovident Fund and Family Aension

cheme is recognised as expense and is charged to the Arofit and #oss

'ccount. The ociety has an obligation to make good the shortfall, if

any, between the return from the investments of Arovident Fund Trust

and the notified interest rates. #iability, on account of such shortfall,if

any, is recognised on the basis of actuarial valuation carried out at the

year end.

'* L(% Ter E#-($ee Bee9it7

The liability for #eave Gncashment D Compensated 'bsences is

recognised on the basis of an actuarial valuation made at the end of the year.

"* Teriati( Bee9it7The compensation paid under (oluntary 2etirement cheme is

amortised over a period of five years in e!ual instalments. The unamortised

amount is shown as L"iscellaneous Gxpenditure not written4offL. 3ains and

losses arising out of actuarial valuation are recognised immediately in the


1.!r(;i7i(7, C(ti%et Lia


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iii* the amount of the obligation can be reliably estimated.

b* Contingent liability is disclosed in case of@

i* a present obligation arising from a past event when it is not probable

that an outflow of resources embodying economic benefits will be re!uired to

settle the obligation.

ii* a possible obligation, unless the probability of outflow in settlement

is remote.

c* 2eimbursement expected in respect of expenditure re!uired to settle a

provision is recognised only when it is virtually certain that the reimbursement will be

received.

d* Contingent assets are neither recognised nor disclosed in the financial

statements.

[email protected]#erati% Lea7e7

'ssets ac!uired on leases wherein a significant portion of the risks and rewards

of ownership are retained by the lessors are classified as operating leases. #ease

rentals paid for such leases are recognised as an expense on straight line basis over the

term of lease.

1.!ri(r !eri(" I'(e > Ex#e"it)re


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Income D Gxpenditure items relating to prior period)s* not exceeding

2s.7,88,888D4 each except depreciation is treated as Income D Gxpenditure for the

current year.

1.!re+!ai" Ex#e7e7

Gxpenditure upto 2s.E8,888D4 in each case except insurance premium is

accounted for in the year in which the same is incurred.

FINANCIAL !ERFORMANCE

!ROFIT BEFORE TA !BT*


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1

I R7. Cr(re*

!ROFIT AFTER TA !AT*

I R7. Cr(re*

TURNOVER


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I R7. Cr(re*

NET2ORTH

I R7. Cr(re*

!er9(ra'e Hi%8-i%8t7 9(r t8e Year //0+1/


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1.0 La48 MT

/ighest Aroduction of Fertilisers )Arevious +est ;:.


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RESEARCH METHODOLOGY

2esearch represents =a systematic method of exploring actual persons and

groups, focused primarily on their experience within their social worlds, inclusive of

social attitudes and values, the mode of analysis of these experiences which permit

stating proposition in the form. >2esearch covers the search for and retrieval for a

specific purpose. +asically research is a search for knowledge with the help of

b-ective and systematic method of finding solution to a problem. teps followed to

conduct the study.

FORMULATING RESEARCH !ROBLEM3

The problem under study vi?. how effective are the measures applied by

IFFC, 'onla to control the inventory is basically studied through analytical research.

"aterial is important for the efficiency of the system. It is a matter of great

importance for inventory department. Inventory department of IFFC, 'onla is

responsible for efficient inventory control. Thus the whole study was conducted under

the guidance of officers of this department.

ETENSIVE LITERATURE SURVEY3

"any published studies, books on material, their effective control were referred

for getting a true direction to research process.

DATA COLLECTION 3

The study is conducted using Collection of data.


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METHOD ADO!TED3

Aersonal interview were conducted where a set of pre conceived !uestion were

asked to the officer of inventory department regarding material control policies

adopted by them. +ooks of account of 'onla I and 'onla II were studied thoroughly to

gain details about inventory stock, cost of material consumed, increase and decrease in

stock during last year etc.

Mar4et Re7ear'8 Met8("(-(%$

+efore the following five steps are discussed it is important to make a few

comments about these steps. First although the list does strongly imply an orderly

step4by4step process, it is rare that a research pro-ect follows these steps in the exact

order that they are presented in the figure. "arket research is more of an interactive

process whereby a researcher, by discovering something in a given step, may move

backward in the process and begin again at another step X"arket research 788


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)7* identify information types and sources and

)* determine and design research instrument.

's stated earlier, every research pro-ect and every business is different. till,

there are enough commonalities among research pro-ects to categori?e them by

research methods and procedures used to collect and analy?e data. There are three

types of research design@

Gxploratory research design

0escriptive research

Causal research

C(--e'ti% a" aa-$6i% "ata

0ata collection is usually done by trained interviewers who are employed by

field data collection companies to collect primary data. ' choice has to be made

between collecting the data yourself or hiring an external office who are speciali?ed

in interviews.


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FINDINGS

"a-ority of the farmers are using IFFC product and rest are using other

including Tata, &armada 1others.


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In IFFC, there employees are not having that much time to give us the

information about the topic.

There employees do not want for external interference.

ome employees are not that much !ualified according to the -ob profile.

Aroblem occurred in material coding.

Inade!uate recording of material store


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CONCLUSION & RECOMMENDATION

It might seem axiomatic that inventory control is efficient as long as inventorylevel is going down. +ut the fact is that, if inventories are minimi?ed without ade!uate

operations, inventories have been mismanaged rather than controlled efficiently. Thus,

the basic ob-ectives of inventory management appear to be conflicting in nature.

Inventories should increase or decrease in amount or time as related to sales

re!uirements and production schedules.

In most inventories a small proportion of items accounts for a very

substantial usage )in terms of monetary value and annual consumption* and a large

proportion of items accounts for a small usage. '+C analysis based on this empirical

reality advocates in essence a selective approach to inventory control, which calls for

a greater concentration of efforts on inventory items accounting for the bulk of usage

value.

2esponsibility for control of inventories is of the top management, though

decisions in this regard might well be based upon the combined -udgment of the

production manager, the sales manager and the purchasing manager. This is desired

in view of the financial considerations involved in the problem and also because of

need for coordinating the different kinds of inventories and conflicting viewpoints of

different departments. 0ecisions relating to inventories should be taken by higher

authority of the organi?ation as well as departments .

There are some points may be given as recommendation or a program

may be constructed for inventory monitoring and controlling, which consists some

following elements@

'ctive disposal of goods that is surplus, obsolete and unusable.


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"ore effective exercise should be followed of vigilance against imbalance of

raw material and

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FINANCIAL Iffco Report

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