internship report at ffc

7/23/2019 internship report at ffc

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The Islamia University Of Bahawalpur Rahim Yar Khan Campus


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Rahim Yar Khan Campus

Internship Report on FFC

Presented By:

Muhammad IrfanRoll # 31MBA (Finance)Morning

Presented To:SirTariq JavedTariq Javed

Department Of Management SciencesDepartment Of Management Sciences



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PREFACE

Practice makes one Perfect and Theory without practice is sterileare

the commonly Known proverbs. If Education is meat for Knowledge,

Training is there to make one Perfect. Taste is checked not told. Training

always helps people to prove what the real Essence of education is. That is

why, internship in our MBA program is set as an Integral part and must for

all the students so that they can check the difference between what is

taught and what is actually practiced in the market.

Different student are giver assignments of internship at different industries

in different Cities. I have been given the assignment of doing internship in

Fauji Fertilizer Company Ltd, Goth Machhi, Sadiq Abad, and Distt.Rahim

Yar Khan. I started Internship out there On SEP 8, 2009 and at the end of

Expiry of FOUR Weeks, I left it on Oct 02, 2009 with attaining almost all

of my goals and Objective.

I have tried my level best to gain whatever was possible in this short span

of internship Period. This report is having all the information about the

Company.



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DEDICATION

I dedicate this internship report to myBeloved Parents and Respected Teachers.



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L e a r n i n g a n d c h a n g e i s t h e s e c o n d t h i n g t h a t d i f f e r e n t i a t e s m a n

f r o m a n i m a l . L e a r n i n g a n d c h a n g e i s t h e l a w o f l i f e . B E o p e n f o r

new i deas and change .

B y t h e g r a c e o f A l m i g h t y G o d I h a v e b e e n a b l e t o c o n v e r t m y

k n o w l e d g e i n t o p r a c t i c a l i m p l e m e n t a t i o n . F o r t h e a c h i e v e m e n t o f

t h i s goa l many pe r s ona l i t i e s have he l ped me ou t .

F i r s t I a m h i g h l y i n d e b te d t o F a u ji f e r ti l i ze r c o m p a n y l i m it e d w h o

a ll ow ed m e f or i nt er ns hi p. I a m a ls o v e ry g ra te fu l t o M r. M .

Akhla q Hasan Kh an , Mr. Zub air Mu rtza , Mr. Reh an

A s g ar , M r. I j a z M a h d i , M r . M A s h fa q , M r . M . N ae e m R a sh i d , M .

S a le h , Mr .A t i f a n d a l l s t a f m e m b e r s i n f i n a n c e d e p a r t m e n t , w h o

gu i ded and he l ped me a l o t t h r ough ou t t h i s i n t e r ns h i p du r a t i on .

Wi t hou t t he i r he l p my r epor t wou l d have been i ncompl e t e .



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Executive Summary:

FFC was incorporated in 1978 as a private limited company. This was a joint venture

between Fauji Foundation (a leading charitable trust in Pakistan) and Haldor Topsoe

A/S of Denmark.

The initial authorized capital of the company was 813.9 Million Rupees. The present

share capital of the company stands at Rs. 3.0 Billion. Additionally, FFC has Rs. 1.0

Billion stakes in the subsidiary Fauji Fertilizer Bin Qasim Limited (formerly FFC-

Jordan Fertilizer Company Limited).

FFC commenced commercial production of urea in 1982 with annual capacity of

570,000 metric tons.

Finance Department Goth Machhi has three main sections which are General

Accounting Material Accounting and Cost and Reporting. The most important section

is cost and reporting section which deals with the budget of the company. Its main

responsibility is to prepare yearly budget. Capex proposals are prepared by each

department and they submit their proposals to Cost and reporting department which

then prepares the yearly budget. The material accounting section deals with the record

of fixed assets and inventory status. It also calculates depreciation monthly of fixed

assets. General accounting is further divided into employees payments book keeping

tax suppliers and contractors payments and payroll .Employees payments include

reimbursement of medical bills CAT and company maintained car maintenance

charges.



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INTRODUCTION OF FFC

NATURE OF THE BUSINES

The company is a public company incorporated in Pakistan under the Companies Act,

1913, (now the Companies Ordinance, 1984 and its shares are quoted on the stock

exchanges in Pakistan. The principal activity of the company is manufacturing,

purchasing and marketing of fertilizer, including investment in other fertilizer

manufacturing operations.

HistoryWith a vision to acquire self - sufficiency in fertilizer production in the country, FFC

was incorporated in 1978 as a private limited company. This was a joint venture

between Fauji Foundation (a leading charitable trust in Pakistan) and Haldor Topsoe

A/S of Denmark. The initial authorized capital of the company was 813.9 Million

Rupees. The present share capital of the company stands at Rs. 3.0 Billion.

Additionally, FFC has Rs. 1.0 Billion stakes in the subsidiary Fauji Fertilizer Bin

Qasim Limited (formerly FFC-Jordan Fertilizer Company Limited).

The Company was listed on Karachi and Lahore Stock Exchanges in 1991 and on

Islamabad Stock Exchange in 1992. Company employees were also allotted shares for

motivation and promoting a sense of participation. Based on related criteria of KarachiStock Exchange, primarily quantum of dividend payout, FFC has been placed in the list

of top 25 companies of Pakistan consecutively for seven years since 1994, topping the

list in 1997.



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FFC has many landmarks to its credit. Since commencement of its commercial

production in mid June 1982 till December 2000, the Company has sold 22.89 million

tons of fertilizers. This includes 17.79 million tons of Sona urea and 0.52 million tons

Sona DAP in the domestic market and 0.39 million tons urea exports to China, Iran,

Philippines, India, Bangladesh, Sri Lanka, Thailand and Tanzania. The remaining 4.19

million tons include imported fertilizers i.e. urea, DAP, NP, etc. Presently, it is

marketing over 2 million tons of fertilizers annually and holds 44% share of the urea

market. It has saved the country around US $ 3 billion through import substitution and

contributed almost Rs. 30 billion to the Government by way of taxes, levies, custom

duties, excise duty/ surcharge on gas purchases besides providing employment to

hundreds of individuals.

FFC together with Fauji Foundation from Pakistan and Jordan Phosphate Mines

Company from Jordan sponsored the establishment of a urea/ DAP complex at Port

Qasim, Karachi. FFC-Jordan Fertilizer Company Limited (FJFC) was incorporated in

November 1993 as a public limited company. FFC's shareholding is 30% of the paid up

capital of FJFC. Under an agreement FFC is marketing the entire production of FJFC

under its own brand name Sona.

FFC has progressed well from its inception till to-date. Three projects in a span of less

than 20 years have been set up each incurring over US$ 300 million is a performance

record unparalleled in the country. Building on its foundations the Company is

confident to take on new challenges. FFC's vision for the 21st century is diversification

and establishing projects beyond the territorial limits of the country in collaboration

with world famous international industrial holdings.

The manufacturing facilities, located in Goth Machhi near Sadiqabad in Rahimyar

Khan consist of two ammonia/ urea plants with a designed production capacity of 1.33

million tons of urea based on natural gas from Mari Gas Fields.



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Machi Goth is a village in Sadiqabad, Pakistan.

It is a sparsely populated area. Fauji Fertilizer Company (FFC) is located near the

village which derives its name from Machi ("fisherman") & Goth (village). There are

no fishermen living in this village. Machi is the name of the tribe settled in the area.

FFC is operating two plants (named as Plant-1 & Plant-2) located at Goth Machi & one

plant located at Mirpur Mathelo, approximately an hour drive from machi goth. Plant-

1 was comissioned in 1981 with the name plate capacity of 1785MeT Urea/ Day.

While plant-2 was comissioned in 1993 with a name plate capacity of 1925MeT/ day.

So, far both of the plants are working extremely well over the years, the plants have

demonstrated operational excellence which serves as a reference for the related process

technology engineering concerns. Delegations from China, Middle East and Far East

have visited the Plant site to acquire knowledge for their investment decisions.

Product quality is accorded high priority and ISO-9002 certification confirms the

excellent operational and maintenance skills of the employees and their level of

performance.

Great emphasis is placed on safe operations. Many awards of honor from National

Safety Council, U.S.A. reflect strict compliance of plant safety standards.

FFC commenced marketing operations in April 1979 with a pre-production

programmed called the Seeding Programmed. With the commencement of commercial

production in June 1982, FFC launched its product under the brand name "SONA".

Since inception, a growth oriented marketing strategy has been adopted keeping in view

future expansions. FFC operates in all the four provinces of the country and Azad

Kashmir. The marketing area has been divided into 3 sales zones, 11 sales regions and

61 sales districts with a network of over 3,000 well trained dealers. This network is

spread over 1400 locations. Due to seasonality of fertilizer consumption, the Company

has established a network of 120 field warehouses to meet its storage requirements.

Company's sales activities are well supported by planning, distribution and

warehousing, advertising and sales promotion, finance, administrative and farm

agronomic services.

http://en.wikipedia.org/wiki/Sadiqabadhttp://en.wikipedia.org/wiki/Pakistanhttp://en.wikipedia.org/w/index.php?title=Fauji_Fertilizer_Company&action=edithttp://en.wikipedia.org/wiki/Pakistanhttp://en.wikipedia.org/w/index.php?title=Fauji_Fertilizer_Company&action=edithttp://en.wikipedia.org/wiki/Sadiqabad


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From the very beginning FFC was able to meet the challenges. It was able to market its

entire production and capture the desired market share. Sona urea was accepted by the

farming community and Sona brand was established as a premium brand. With the

start-up of its plant, the country became not only self sufficient but also surplus in urea.

FFC exported urea to many countries from 1983-86. However, when local demand

again exceeded production in 1986 the country again started importing urea. FFC once

again came forward and put-up another urea manufacturing facility at Goth Machhi to

meet the growing demand. The new plant commenced commercial production in March

1993.

The Government of Pakistan deregulated the trade and prices of phosphatic fertilizers

in Aug 1993. Subsequent to this decision FFC started self imports of these fertilizers

and as a result timely imports were arranged. Farmers were provided quality product in

bags with guaranteed correct weight. This brought a very positive qualitative change in

the phosphatic fertilizer business.

FFC believes in selling a programme rather than just products. To this end, the

Company has adopted a customer oriented strategy by marketing quality products

backed by efficient and effective support services with emphasis on developing the

market through practical and innovative farmer education. Farmer Advisory Service

with well qualified agronomists was established by the Company in 1981, a year before

the commencement of commercial production. This free of cost and on the spot service

to the farmers is provided in the form of crop demonstrations, field days, farmer

meetings, group discussions, farm visits and distribution of technical literature in Urdu/

Sindhi on important crops. The farmers are also provided highly subsidized soil/ water

testing facilities through three laboratories equipped with the state of art equipment and

computerized recommendation systems. The Company pursues an innovative education

oriented advertising policy utilizing electronic/ print media and roadside advertising.

Radio commercials are developed in regional languages.



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FFC has conducted four international seminars on core agricultural issues. Through

these seminars which were attended by various local and foreign luminaries, special

recommendations were developed to address the issues and enhance agri. production.

Fauji Fertilizer Company Ltd. remains committed to continue to play its role in the

development of agriculture in Pakistan by not only supplying high quality fertilizers but

also technical services to the farmers in the years to come for improving agricultural

productivity and increasing their income.



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Vision Statement

FFC is focused on harmonizing its capabilities and maximizing

its potential. FFC's vision for the future envisages

diversification and undertaking ventures at home and abroad

in collaboration with leading international partners.



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Mission Statement

FFC's mission is to sustain its role as the leader in

industrial and agricultural advancement of

Pakistan by setting and achieving new and higher

goals, and taking initiatives. The Company is

committed to ensuring safe and conducive work

environment, providing high quality products and

allied services to its customers and profitable

returns to itsshareholders.



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Objectives of the company

The broad objectives of the company are,

To sustain its role as market leader in urea production and marketing.

To deliver exclusive values and services to the shareholders and customers

through its strategies

To place great value on social responsibilities and welfare

To develop a culture based on principles of honesty, integrity, faireness and

respect.

To create the agricultural awareness in farmers through media and training.

To provide farmers technical services through technical services department

free of cost.

To hire and retain satisfied workforce

To play a vital role in agricultural development of the country

To provide the quality products

To set high standards for production and sale and achieve these objectives

To be environment-friendly organization

To promote education in the farmers community by awarding merit

scholarships.

To help upgrade the capability of fertilizer research, extension and marketing

personnel in the transfer of fertilizer technology.

To provide a neutral common platform to resolve contentious issues in fertilizer

sector.



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ISO-9002 certification

Another major landmark for Fauji Fertilizer Company is ISO-9002 certification for its

manufacturing division 1st Goth Machhi. Quality in all areas has been a hallmark of the

Company right from the beginning and our product SONA UREA has already

established its rightful place in the market.

Therefore to bring their system in line with internationally recognized quality

standards, they decided to go for ISO-9002 certification. To achieve a total quality

management system, FFC surpassed the requirement of ISO-9002 standards by

including all support services like Admission, personnel, Finance Hospital, Schools and

Management Club etc. also in the certification scope. They selected Bureau of Veritas

quality international (BVQI), England, a leading certification agency as our registrar.

BVQI is honored by various accreditation authorities of the world. Quality management

system of FFC got ISO certified in its first attempt during November 1997 with the

honor of being the 1st Fertilizer Plant in Pakistan. Since then they have not looked back.

They have passed all surveillance audits with commendable remarks from their

registrar.

Since 21 February,2001 Quality Management system of FFC now stands recertified

(ISO 9002) by BVQI after successful completion of initial certification period of 3years.



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The Central Board of Directors

Lt. Gen. Syed Arif Hassan (chairman)

Dr. Haldor Topsoe

Mr. Qaisar Javed

Mr. Tariq Iqbal Khan

Mr. Khawar Saeed

Dr. Nadeem Inayat

Mr. Is taqbal Mehndi

Brig . Ari f Rasul Qureshi SI(M) Ret ired

Major Gen. Mohhamad Tahir HI(M) Ret ired

Brig . Rahat Khan SI(M) Ret ired

Mr. kamal Afsar

Mr. Tariq Bajwa



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MANAGEMENT

CHIEF EXECUTIVE AND MANAGING DIRECTOR

Lt. Gen. Malik Arif Hayat HI(M) (Retired)

GENERAL MANAGERS

General Manager Technology & Operations

Mr Syed Iqtidar Saeed

General Manager Finance (Operations)

Mr. Shahid Hussain

General Manager Marketing

Mr. Asa Sultan Chaudhry

General Manager (M&O) (Goth Machhi)

Mr. Tahir Javed

General Manager Plant (Mirpur Mathelo)

Mr.Naeem ur-Rehman

COMPANY SECRETARY

Brig. Khalid Kibriya (Retired)

Plant Description:

Plant location : Goth Machhi SadikabadProduct: Sona Urea FertilizerPlant- I



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Commencement of Commercial production: June 14. 1982.Project cost: Rupees 3300 MillionProduction capacity:

Ammonia-1 : 1220 Tones per DayUrea-1: 2105 Tones per DayPlant-II

Commencement of Commercial production: March 21,1993Project cost: Rupees 7215 MillionProduction capacity:

Ammonia-II: 1100 Tones per DayUrea-II: 1925 Tones per Day

AMMONIA PLANT DESIGNED BYHolder Topse A/S Denmark

Urea Plant Designed BySnamprogetti SPA, Italy

Urea Product Qual ity:

Nitrogen: 46.0 %( maximum)Moisture: 0.3 %( maximum)Biuret: 0.9 %( maximum)Raw Material:

Natural Gas Air

Intermediate Products:

Ammonia

Carbon Dioxide

Plant Sites



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The year witnessed exceptional performance at every level . plant operating

efficiencies surprised all previous records with large margins. Cost effective and

professional solution are adopted to address any major potential reliability threats.

Plants reliability improvements projects remained of prime importance and significant

progress has been achieved by addressing major unreliable areas and chronic problems.

System implementation through enforcement of FFC,s operational, maintenance, plant

monitoring, housekeeping and safety practices remained in the lime light and

deficiencies were overcome utilizing the gap analysis approach.

The continued with selective investments necessary to sustain profitability , improve

operations and maintain its position at the leading fertilizer manufacturer in the

country.

Plants Goth Machhi

Operational performance of the plants 1&2 Goth Machhi was excellent during the year

with a total SONA urea production of 1458 thousand tonnes. Plant 1 created a new

record of daily urea production this year.

Annual maintenance turnarounds of both plants were carried out in the first quarter of

2004 and were executed safely and successfully within the stipulated time.Comprehensive inspection and major overhauls of equipment and machines were

carried out in house . various modification jobs were also executed to improve

operational efficiencies. With on going efforts to improve plant reliability and

performance, maintenance turnarounds are now schedule on bi-annual basis.

The continious decline in natural gas supply pressure from Mari gas field poses a new

challenge with a direct impact on production . general water shortage in the country

with frequent canal closures and declining water fliw in the rivers in the past few years

has also put more strain on our water supply wells. Dedicated booster compressor have

been planned to be commissioned in the first quarter of 2005 to boost gas supply

pressure and further expansion of raw water resources and its optimization is currently

under way to meet water requirements.In our endeavour of self reliance in areas of



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critical maintenance activities, refurbishment of old bimetallic stripped of plant 3 was

successfully completed in the fabrication shop which made this expensive equipment

operational again at plant 1. detailed engineering of energy revamp project of plant 1

Ammonia unit is under process and commissioning is expected in 2006. this

implantation would result in an energy saving of 0.3 Gcal/ Met ammonia. Utilization of

the safe natural gas would also result in 18 thousand tonnes of additional urea

production.

]evaluation of existing BFW heat exchanger E-211 was carried out for vibration and

leakage estimation. The exchanger has completed its useful life and order has been

placed for a new exchanger with modified design.

Plant Mirpur Mathelo

Taping the potential of our recently acquired plant Mirpur Mathelo has resulted in a

noteworthy efficiency of 125% of name plate capacity with annual production 716

thousand tonnes, 14% in excess of last year output.

We are pleased to report that the company was able to achieve the required SONA

urea quality level forFFC urea produced by the plant 3, which was formally declared

As SONA urea on March 2004. we are confident that benefits will continue to

acquire to the company by providing value added quality products to our customers.

To fulfil our commitment with the GOP for enhanced urea production, annual

maintenance turn around of the plant was deffered to 2006 after careful technical

review of efficiency maintained during tge period of meet the increase in demand.

To meet its commitment to the Govt . FFC has also planned de- bottlenecking of its

plant three for increasing nameplate production capacity to 725 thousand tonnes

annually in a normal year.

Almost all the piping isometrics of Urea Hydrdolyzer projects have been approved and

most of the piping / equipment erection work has been completed. The project is ready



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for commissioning after turnaround 2006 and will help reduce NH3 contents of effluent

water and provide additional urea production of 17 MTPD. Cooling tower packing

replacement for another two cells shall be completed before the onset of next summer

season and is expected to yield a saving of Rs. 12.50 million per annum through

improved energy efficiency.

Information technology culture was successfully inculcated at the plant in order to

reduce and simplify routine workload and to keep pace with modern technology. the

marks are modern fiber optic network , new inventory management system and

computer training of all employees.

Managerial Policies:

AUDIT PRACTICES

A number of excellent manuals are available for the professional auditor or the member

of a directors examining committee who wishes to familiarize himself with specific

audit techniques. Good auditing can be said to consist of substantial verification of the

accuracy and completeness of a FFC records and of the safety and efficiency of its

operations. In FFC most direct form of auditing is simple rechecking have a second

person redo what someone else has already done. In addition to this, some direct spot-

checking has an importantplace in the audit program even where controls are well

developed.



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POLICIES FOR ATTRACTING DEPOSITS

Although management and directors of FFC do have absolute control over the level of

their deposits, they can never the less influence the amount the FFC hold. Because

deposits are so important to the profitable operation of FFC, the FFC tends to compete

aggressively for them.

Among the factors determining the level of deposits in a FFC are some that the FFC

usually cannot affect significantly, some of the leading are monetary and fiscal policy

and the level of general economic activity.

POLICIES REGARDING EMPLOYEES

Some of the policies adopted by the FFC regarding employees and personnel are

as:

RECRUITMENT

The standards set by FFC when it first selects its employee largely determine the

caliber of the staff in the future. The FFC urges the recruitment of several young

MBAs at competitive salaries.

There is a known need for officer replacements in five or 10 years, it behooves

management to look for prospective employees who are believed at the outset to have

officer potential because of their education, aptitude, interest or previous experience for

clerical personnel, the FFC maintains close relationships with guidance directors of

local high schools and colleges it also encourages employees to bring in their friends

and it see to it that students have opportunities to visit the FFC and head about some of

the advantages of working there.



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The FFC allows summer employment programs to allow college students to see the

challenges of fertilizer careers and are always alert for able and interested people

employed at other companies or in other fields.

TRAINING

The newly hired employee generally starts as a clean state on which nothing has yet

been written. The employees attitude towards the FFC and job are shaped by the first

few weeks of experience. In the process of learning the first few simple tasks the

employee grasps the relationship between what he is doing and the work of the

department or the FFC as a whole.

New employees have a fundamental need for a broad idea of their job- in short for

orientation.

As we can say, good training is an art if not a science and should be entrusted only to

those within an organization who have an aptitude for it or who have received special

training in the instruction of others. Thus FFC emphasizes both cases i.e. to challenge

the employees so that they will continue to be interested in FFC and will realize the

need for continued training as their responsibilities become greater.

SALARY (PAY SCALES)

The principal criteria for a well considered salary policy are, first, the relationship of

the FFC salary scale to salaries paid for comparable jobs in the community and the

industry and, second, the relationship of the salary paid to one person to that paid to

others for jobs of comparable difficulty within the FFC.

The salary administration of FFC is reasonable as at many factors contribute towards

the working conditions job security, prestige and opportunity for advancement all enter

into the competitive package.



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FFC provides fringe benefits to or better than those offered in other industries pension

plans, hospitalization, and group life insurance are the rules prevailing in the FFC. A

more effective incentive is a well designed profit sharing plan with benefits that vary

from year to year in direct proportion to the financial success of the FFC operations.

COMMUNICATION

A good deal of verbal interchange takes place in FFC each day. It is a two way street.

The competent officers discuss rather than directs, listens as well as interacts. The FFC

makes the communication channel more effective by staff meeting eventually it is an

extent ion of the conversational or discussion technique but embraces a larger segment

of the organization. Such meetings are regular features of efficiently operated FFC and

take a wide variety of forms, ranging from daily or weekly officers meetings to annual

weekend conferences.

The major portion of communication necessary for the day to day operations of a FFC

consists of simple person to person conversation more complex ideas, however, gain

clarity if they are put in writing. Thus the FFC is talented in the ability to write clearly

which is an invaluable management talent that needs constant practice and

development.

EDUCATION:

FFC focuses on the higher quality of education. The officers employed in the FFC are

mostly graduated from either foreign universities or some of the leading universities in

the country.

MOTIVATION LEVEL

Job design for motivation is another personnel approach that has been increasingly

emphasized in recent years. Job contents, methods and relationships are structured not

only to satisfy technological and organizational requirements but also to accommodate



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human needs for meaningful and self-fulfilling work. Jobs are being designed to fit the

people who hold them in the hope that greater employee motivation (which is essential

to higher productivity) will result.

Sensitivity training and / or organizational development programs have been used to aid

in the broad development of Top executive talent and teamwork.

RETIREMENT

The FFC does not emphasis on having regular employees. Mostly the employees are

hired on contractual basis, making them feel insecure about their jobs. Therefore most

of the time the employees are interested in finding secure and more appropriate job.

GROWTH OPPORTUNITIES

FFC provides growth opportunities to its employees and officers, as it deals with many

leading institutions.



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Major managerial policies, practices/styles

FFC has the strong management system to run the business. Today FFC is one of the

most successful companies and its all due to its superb managerial policies. There are

many planned policies which are adopted by the company.

Human Resource PolicyHuman Resource Policy

FFC has strong human resource policy. The management believes that their employees

are major assets of the company. Just because of this policy the company continues to

benefit from the efforts of its valuable people, who are actually, the strength of FFC

through training and development activities the human resource policies aim at the

improved working conditions all over the organization. The various personnel strategies

can be that the employees are chosen solely on the basis of merit and they are given

monetary rewards and incentives with a view to increasing the commitment and

motivation of the employees. Although the salaries are not really competitive if you

look at the market scenario yet the employees are quite satisfied as they are working inan excellent environment and enjoying as an employee of a market leader.

Marketing and Sales PoliciesMarketing and Sales Policies

Marketing and sales departments serve as backbone in the company. FFC has fully

planned and organized marketing and sale policies. Meetings are held where decisions

are taken for the efficient functioning of the companys marketing and sales areas

because the company depends a lot on its marketing and sale policies. Marketing

budget is carefully determined and sales people incentives and salaries are reviewed

from time to time. There are certain other essential things about the sales strategies.

Products are sold throughout Pakistan with no change in prices anywhere. In case of

consumer products the freight are born by the company. The customers are offered no



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discount and also products are sold on cash basis. In case of industrial products freight

are the responsibilities of the customer. Moreover, the cost of change in design is

charged to the customer. Marketing, however, supports all these sales strategies by

product development through the creation of public awareness, promotion and customer

contacts.

Backward Integration StrategyBackward Integration Strategy

FFC follows the backward integration to support their business. They try to acquire the

related companies or part of business to give a boost to the business growth.

Financial PoliciesFinancial Policies

FFC has the well established rules for their financial transactions. One of the most

important strategies in this regard is of investment. Before making investment future is

seen rather than the present i.e. investment is made only in the projects, which will

increase the sales in the future.

Customer RelationshipCustomer Relationship

FFC adopts the strong customer relationship policy. They think customer as the king.

They are following 20 80 strategy in dealing with the customers.

Internal Strong RelationshipInternal Strong Relationship

Packages maintain a strong relationship between the departments. All departments are

interrelated. It is one of the main aspects of strategic management that all the various

functions performed in the company by the different departments must



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haveinterrelation and collaboration if company wants to achieve success. Thus synergy

is given a lot of importance.

FFC has many other policies to run their business. These all contribute to the success to

the success of the FFC.

MANAGERIAL STYLES

Management is process of utilizing material and human resources to accomplish

designated objectives. It involves the organization, direction, coordination and

evaluation of people to achieve these goals. The role of manager is to assemble the best

work team he can obtain and then to provide a supportive motivational environment to

guide that team to accomplish agreed upon objectives. The essence of management is

the activity of working with people to accomplish results. It involves organizing,

motivating, leading, training communicating with and coordinating others.

MANAGING THE ORGANIZATION

The management of the FFC focuses on some of the objectives that it wants to achieve.

The way managers treat and deal with their subordinates in order to accomplish the

multiple objectives of the organization is determined primarily by management system

of beliefs about the nature of man and about the determinants of cooperation in an

organized endeavor.

IMPACT OF MANAGEMENT STYLES ON EMPLOYEES:

MOTIVATION

The term motive implies action to satisfy a need. Motivation can be defined as a

willingness to expend energy to achieve a goal or a reward.

The management styles adopted by the FFC affect greatly, and employees are

motivated in order to enhance their performance and achieve the derived goals.



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MORALE AND PRODUCTIVITY

The employees of the FFC possess high morale, and thus exhibit high productivity. The

employees are happy and are also productive workers. Job attitudes and morale arequite positive for two reasons.

Firstly employees gain social satisfaction from interactions at the work place. Working

conditions and supervision good, secondly high morale result from high motivation to

produce. In other words we can say, that management should put its eggs in the basket

that creates a high-motivated work force.

PROMOTION

FFC decisions about promotions are decided upon the basis of merit in ones presentposition and ability and potential to assume the impossibilities of higher level positions.

Sometimes other factors are considered such as length of service, education, training

courses completed, previous work history and the like.

The guiding principles for RecruitmentThe guiding principles for Recruitment

FFC encourages the recruitment of fresh graduates than experienced once, except for

high managerial posts where experience is must. The management believes in

developing the employees according to the requirements of the organization.

Recruitment and Selection CriteriaRecruitment and Selection Criteria

FFC has designed a sound but easy method of recruitment. When any department needs

an employee, it sends its requirement to the Human Resource Department, which in

turn advertises the vacancy in the leading newspapers and asks for the qualified people.In case of the posts requiring some experience, only interview method is used to select

the best candidate.



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Recruitment of WorkersRecruitment of Workers

Minimum qualification for the post of the workers is Matriculation 2nd Division with

science subjects. The workers should not be more than 21 years old and must be

medically fit. These are employed as "Apprentice Trainee". If the performance of the

worker is satisfied during the probation period, he is hired. Normally workers get

promotion after two years on the recommendation of their supervisors. This post is not

advertised.

Recruitment of Executives

Job Identification

When any department requires an employee, it sends its requirement to the Human

Resource Department.

Recruiting & Hiring

For recruiting and hiring some factors are taken into consideration. These factors are as

follow:

Nature of the job; and

Time required filling the vacancy.

Keeping in view the time constraints, advertisements are given in the newspapers.

Otherwise if the vacancy has to be filled immediately, the Human Resource Department

contacts the authorized institutions, universities etc.

Budget constraints

Process



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The recruiting and hiring process starts from the applications submitted by the degree

holders. They provide their CVs along with the applications. These applications and

CVs are screened out on the basis of:

Merit;

Institute; and

Experience etc.

After this, approximately 50% of the applicants are selected for the further process.

Then the H.R Department lists out the salient features of the CVs (only the accepted

CVs). Then the H.R. Manager takes a test based on:

English comprehension;

Basic mathematics;

Data sufficiency;

I.Q. and

Some questions about the particular job, for which the applicants have applied.

After taking the test, the top 10, 20 or 30 applicants (according to the job requirement)

are chosen for the first interview. At this stage the selection of applicants also depends

on the H.R. Manager and the departmental head. Normally 30% of the applicants, who

have given the test, are selected for interview. Through telephone calls or letters, the

selected applicants are informed about the date and time of the interview. Normally two

interviews are taken. H.R. Manager and the departmental head take first interview. In

this interview they observe:

Alertness;

Confidence;

Leadership skills;

Relevant knowledge;

Social acceptance;



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Interests;

Communication skills;

First impression; and

Maturity

According to these observational factors rating or grading is made. Normally 5% rating

in each factor is acceptable. Then successful candidates are called for final interview

which is taken by:

General Manager

Deputy General Manager

Human Resource Manager

Departmental Head (sometimes)

Previous traits or factors are once again examined. After the final interview, the

selected applicants are sent for medical test and then the Industrial Relations Manager

issues them the appointment letters.

Training & Development*

Appointed persons are trained for six months; they are given the title Management

Trainee. In the Consumer Products Division after one year they are given the

designation of Assistant Manager Sales.

The trainee is given a brief view (orientation) of the company, various processes, rules

& regulations etc. this orientation is two months. After the orientation program, the

participants may ask to put forward a short report or presentation



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After the 6 months training, the trainee goes to H.R. Manager and tells him what he has

learnt in this program. Some external courses may be offered not only to the existing

employees but also to the new trainees. These courses are held in,

LUMS

PIM

British Council

Informatics

Employers Federation of Pakistan



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FINANCE DEPARTMENT: Finance department has three sections that are

1. MATERIAL ACCOUNTING2. COST & REPORTING

3. General Accounting

FFC-GM has current accounts in Head Office, FFC-MP (Mir Pur) and Marketing

Division Lahore. In FFC-GM Trial Balance is the final document. Balance Sheet and

income statement is prepared in the Head Office at Rawalpindi. The Trial Balance is

prepared in oracle. All the entries recorded in oracle by various departments of the

Finance department are posted by the Book Keeping section at the end of the month.

1) Material Accounting:

The Material Accounting is one of the most important sections of the finance

department. This section deals with the record keeping of all kinds of material,

inventory and assets. This department records the assets at their actual value because

value of an assets falls down due to wear and tear and efflux of time. To continue to

show an asset at

its original cost in the Balance Sheet will be to over-estimate the value of asset. The

Material Accounting department can be further divided into main parts:



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1) Inventory Control

2) Asset Accounting

1) INVENTORY CONTROL:An inventory is a stock or store of goods. Firms typically stock hundreds or even

thousands of items in inventory, ranging from small things such as pencils, paper clips,

screws, nuts and bolts to large items such as machines, trucks, construction equipment,

etc. Fauji Fertilizer Company carries supplies of raw materials, purchased parts, spare

parts, tools and other supplies. At the end of six months schedule of every material is

prepared with stock code description. It includes the following items

Description

Unit of measurement

Opening-Quantity Amount

Receipt-Quantity, Amount

Consumption-Quantity, amount

Closing Balance- Quantity Amount

The statements of bags, diesels, petrols and gases are prepared monthly.

Material Receiving Report (MRR):

When the suppliers supplies the material at the warehouse the end user

inspects the material for specifications and a report is prepared called Material

Inspection Report when the unit manager finds that the end user is satisfied with the

material supplied he prepares Material Receiving Report. Then this report is sent to

Material Accounting section of the Finance department along with other supporting

documents.

1) Date

2) Name of supplier

3) Order no.

4) Item code

5) Description



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6) Unit price

7) Location on warehouse

8) Unit of measure

.Material Issue Voucher (MIV):

The material is issued to plant and other department as per

requirement. The department who needs any material from the warehouse issues a

voucher called Material Issue Voucher. That voucher is duly signed by the department

manager. That issued voucher contains three copies. The unit manager at warehouse signs

it and sends one copy en user keeps one copy for warehouse and sends one to the Material

section. The Material section records that how much material has been issued during one

month.

MIV contains the following information:

o Date of issuance

o Quantity

o Unit of measure

o Item code

o Description of items

Stock Movement report(SMR):

At the end of each month the department prepares a Stock Movement

Report which tells about the transaction of stock during the month. The report includes

the following items

Date

Description

Item Code

Quantity

Unit

Price

Debit Value



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Stock Status Report (SSR):

This report tells the status of stock at the end of each month, quarter and at the end of

each year. This report is then sent to Head Office for further analysis and control

purposes. This report is then sent to Head Office for further analysis and control

purposes. This report is basically prepared by compiling the various closing inventory

reports from the plan which states the opening balance, receipt, usage and closing

inventory. It includes the following items

Serial No

Item Code

Type

Unit of Measurement

Price

Stock on HandWarehouse location

Stock Reserved

Stock In order

Order Number

Value

The accountant prepares a journal voucher (JV) in which the stock consumed is expensed

out and debited where as store account is credited.

Reconciliation of stock/store:The accounts are reconciled with the balance as per books and as per stock status

report. The difference is due to the computer variance as the computer calculates up to

4 decimal places. The balance in the Stock Status Report is more accurate than the

balance in the books. If the balance in books is less then SSR then respective entries

are passed and the account is reconciled.

Physical Inspection of Inventory:



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The Material department inspects the inventory in the warehouse. The items in the

books are matched with the items physically present in the warehouse. The items are

identified by the stock codes, which are mentioned on the racks. In case of any

discrepancy, the unit manager of the warehouse is responsible. It may occur due to

unavoidable condition. The loss of item is written off by debiting loss account and

crediting stock account. The inspection report includes the following items

Class

Item Code

Unit Of Measurement

Physical Balance

SSR Balance

Variance

The Inspection report is checked and signed by the Finance Manager.

Foreign/ Imported Material:Some times the material is purchased from abroad. Such material includes tools,

machinery, equipment, chemicals, catalysts, vehicles, etc. In this case Letter of Credit

(LC) is opened in the name of the vendor. FFC has bank accounts of Head Office at

Rawalpindi whom pays on the behalf of the company. That transfers amount to the

foreign bank of the vendor. After payment the Head Office sends the debit note to the

Finance department to record the expense.

When the vendor receives the amount, he supplies the goods/ material through ship or

by air. There is a clearing agent of FFC in Karachi who receives the consignment from

the port. He clears the material and pays clearance charges, custom duty and other

expenses. The



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freight and cost is paid by the Head Office at Rawalpindi. The clearing agent also

arranges transport to transfer the material to Plant site at FFC Goth Machhi.

When the material reaches the warehouse the end user inspects the material for

specifications and a report is prepared called Material Inspection Report (MIR).

When the unit manager finds that the end user is satisfied with the material supplied he

prepares Material Receiving Report (MRR). Then this report is send to the Material

Accounting Section of the finance department along with other supporting documents.

The accountant at this section records the entry in the inventory control system

prepared in Oracle. The Material section receives all the details of expenses which are

debited to the purchase order and goods in transit account are credited.

2) Assets Accounting:

Assets accounting is the second important part of the material accounting section of the

Finance department. This section maintains the records of all assets either fixed or

current. The actual value of the asset is calculated because the value of every fixed

asset falls with the passage of time due to wear and tear, this fall in the quality or value

of an asset is called depreciation. To calculate the depreciation of all assets is the

main function of this section.

What Is Deprecation?

Depreciation means expiration of the cost of the fixed assets concerned during the

period for which accounts are being prepared. In other words it means cost of the fixed

used up in the period. To continue to show an asset at its original cost in will be to

over-estimate the value of any asset. Depreciation, therefore, must be accounted for in

order to present the assets at their proper value.

The amounts debited in the profit and loss account are retained in the business. These

are available for the replacement of assets when its life is over. The factors that cause

depreciation are:



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1) Wear and tear due to actual use.

2) Efflux of time-mere passage of time will cause a fall in the value of an

Asset even if it is not used.

3) Obsolescence- a new invention or a permanent change in demand may render

the asset uses less.

4) Accidents, and

5) Fall in the market price

Method for providing depreciation:In FFC straight line method is used for changing depreciation which is charged on

monthly basis. Under this method, a suitable percentage of original cost is written off.

For calculating depreciation, the basic factors are:

o The cost of the asset.

o The estimate residual or scrap value at the end of the life.

o The estimated number of years of its life.

Cost- Estimated scrap valueEstimated life

Material accounting department prepares fixed assets schedule in which the amount of

depreciation as lessened from its cost to arrive at the actual value of an asset. The

column of cost includes the following:

o Opening

o Additions/ Transfers In

o Deletions/ Transfer Out

o Net amount

The column of depreciation includes:

o Opening



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o For the period

o Deletion

o Addition

o Written down value

o Depreciation rate

Controlling Documents: Controlling documents means the documents through which the MaterialAccounting department comes to know that the company has certain lists of items.These controlling documents are:

o RAICE

o DCMR

o MRR

The cost and reporting department sends the list of completed work In progress items

that have been completed. The material Accounting department capitalizes it and debits

it as asset whereas capital work in progress account is credited.

TYPES OF MATERIAL RECEIVING REPORT

FOREIGN

It includes all the material purchased from abroad. The code series used for

foreign is from 3001 onwards.

LOCAL

There are further two types in Local MRRS

o Yard Section: It includes chemicals bags gases and electrodes. The

code series is from 6501 and onwards.



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o Main Window: It includes all the material except foreign material.

The code series starts from 4001 and onwards.

COST & REPORTING:

The Cost and Reporting section deals with the budget of the company and reporting. It

prepares the budget plan yearly wise and then the budget is sent to the head office for

approval. There are two types of expenditures:

a) Capital expenditure

b) Revenue Expenditure

a) Capital Expenditure:

The expenditures for the purchase of any fixed asset are called as capital expenditure. It

includes the following

:

Purchase of fixed asset

Improvement of fixed assets

Increasing the earning capacity

Increasing the capital

Development expenditures

Expenditure for attaining rights



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b) Revenue Expenditure:

The expenditures done for daily operations of the company are called rev expenditures.

For example payment of salaries, telephone bills, and stationary bills. etc

Types of budgets:The cost and reporting section prepares budgets for both types of expenditures. The

budgets are:

CAPEX Budgets

Expense Budget

1) CAPEX budget:

The CAPEX budget as the name signifies is prepared for the capital expenditures.

Following are the steps for preparation of the CAPEX budget:

Issuance of circular:

Finance GM issues a circular before end of June, inviting the capital expenditure

proposal for the next calendar year. The departments submit proposal by 15 august.

These proposals should be comprehensive and should include the following:

Project title

Deptt./ Section

approximate time of project initiation

working capital requirement

justification

cost estimate basis

Complaints and approvals:



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Finance department prepares a list of projects received from various departments. A capital expenditure proposal meeting is called in last weak of August by GMP to

decide the opportunities of each proposal. The list of proposed new projects for the next

year is finalized in this meeting. The General Manager finance consolidates the list ofproposals for GMPs signatures and submits one copy to head office and GMT&O.

After review of GMF and GMT&O the proposal is sent back to the GMP for further

review. The revised proposal is discussed in management review meeting around mid

of October. Then all the agreed proposals are submitted to head office for board of

directors review. After their approval head office forward list approved proposals to

finance department.

Distribution of approved plan:

After receiving CAPEX plan from head office, the finance department distributes

approved plans to cost controller

Request for authorization to incur capital expenditure (RAICE):

Concer

ned sections submit a RAICE to finance for final appropriation of funds. They also

submit justification, drawings and sketches and comparative statements of bids along

with RAICE form. RAICE for projects included in approved CAPEX plan bearing cost

up to rs.100 k shall be submitted to GMP for approval, whereas the plans bearing cost

above Rs.200 k is sent by GMP directly to management for approval after local finance

review. All RAICE above 200 k shall be forwarded to CED (Central Engineering

Department)-Rawalpindi and to Finance head office. The RAICE no will be affixed

after approval of RAICE by management.

Accounting procedure of RIACE:

All payments relating to RAICE are debited to capital work in progress account. All

issues of material from material warehouse and expenses on imports against RAICE

are also debited to the capital work in progress account. This account is updated on

monthly basis and a statement is prepared which reflects the monthly expenditure

incurred. When a project is completed, a certificate is received named RAICE



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Completion certificate. On the receipt of this certificate the work in progress account

is capitalized.

CAPEX Reporting:The purpose of this report is to communication the progress of CAPEX projects to cost

controllers and to management on quarterly basis. The scope involves reviewing and

incorporation data given by cost controllers and as per books of accounts in CAPEX

reports files maintained on computers and issuing various reports for analysis and

control purposes.

2) Expense Budget:The expense budget is prepared for the revenue expenditure of the company. The cost

and reporting section of the finance department issues a letter to all cost controllers to

submit budget proposals by 15 August for collating overall plant budget by the due

date. These proposals are also knows as Budget Inputs. Finance department in order

to facilitate cost controllers in developing budgetary proposals also sends work sheets

of the respective cost

centers showing actual data for the previous years. The guidelines of the Head office

for developing the proposals are also enclosed.

Thy are advised not to inflate their proposals by arbitrary additions to cover

inflation as it will be taken care by the cost and reporting while finalization the overall

budget plan. Any variance exceeding 10% of the historical trend in all charge accounts

should be properly justified. The budgetary inputs should be completed in all respects

including all detailed supporting computations, justifications and basic assumptions

used.

Budget Reporting:

All the end of each quarter expense wise budget variance report is prepared which

shows the difference between the budgeted amount and the actual expense incurred.

Any variance up to 10% is acceptable but when this exceeds the maximum limit, a



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letter is issued to that particular cost controller and is asked for the reasons of the

variance.

They submit a justification letter to the finance letter supporting computations,

justifications and basic assumptions used. The cost and reporting section then send this

letter to the head office.

Reporting:

Progress Report of General Accounting section

The cost ant reporting section of the finance department also sends reports to the head

office. The purpose reporting is to communicate the progress of the finance department

on monthly, quarterly and annual basis. These reports are then used for analysis and

control

purposes. The progress report is prepared for all the sections of the finance department.

These reports are:

1. Progress Report of General Accounting section

2. Progress Report of Material Accounting section

1. Progress Report of General Accounting section:

The progress reports of General accounting section sent to head office includes:

1) Bank Reconciliation Statement

2) Debit / Credit advice sent to Marketing division at Lahore3) Pay and allowances budget variance report is sent to head office.

4) E-summary statement u/s 26(5) of the sales Tax Act 1990.

5) Monthly statement u/s 165 of the income Tax ordinance 2001.

6) Employees recoveries amount

7) Summary of income tax deducted at source along with copies of Challan.



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8) The account pertaining to advances to suppliers and employees.

9) Number of bids or quotation or bids opened during the month.

10) The status of suppliers and contractors bills received and processed during the

year.

2. Progress Report of Accounting section:

The progress report of the material accounting section includes:

1) Material Receiving Report (MRR)

2) Material Issuance Report (MIR)

3) Material Returns Report

4) Direct Charge Material Receipt (DCMR)

5) Insurance claim status

6) Insurance premium status

7) Opening balance of inventory

8) Closing balance of inventory

9) Additions/ deletions in fixed assets

Other reports:

For Nightly reports:

Production status report

Gas consumption status report.

Monthly report:



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Vehicle expense report

Telephone expense report

Chemical consumption report

Quarterly report:

Budget variance report

Medical expense report

Training expense report

CAPEX status report

Performance report

3) GENERAL ACCOUNTING :

The general accounting section has further sub sections

Employee Payments

Contractors/ Suppliers Payments

Tax

Bookkeeping Pay Roll

EMPLOYEES PAYMENTS:

It is also one of the important sections of general accounting. It includes all thepayments made to the employees for their claims. Employees are reimbursed fordifferent claims which are as follows

o Medical Bills

o Company Assisted Travel

o Telephone bills

o Company maintained car fuel and service charges

MEDICAL BILLS



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According to the company policy all its employees and their wifeand children are given facility of medical services. For children there are fewconditions. Sons are only given medical facility till the age of 25 and daughters tillmarriage. For reimbursement of medical bills payment order is filled by the employeewho should be attached with the following documents

o Referral of Doctor

o Medicine bills

o Consultancy Fee receipt

The payment order is sent to the finance department. The Finance department sends thepayment order to the chief medical officer of medical centre. After CMO approval thepayment order is sent to the Human resource department which checks the employeestatus. After HR verification it is again sent to the finance department. After thepunching of the payment order and posting it to general ledger software built in oracle.The Bank disbursement report is printed. A Bank payment voucher is made for the

payment and then a cheque is made for the total payment. The cheque is sent to thebank which credits the required amount into the account number of the respectiveemployees and after a bank transfer is received by the finance department that theamount has been transferred intimation slips are sent to employees to inform them thatthe payment has been credited in their accounts.

COMPANY ASSISTED TRAVEL

According to company policy 9 CAT are given only to the

management employees of the company. There are two types of Cat

Simple CAT:

9 cat are given to each employee for the whole year. Incidental charges ofRs-1000 are also given for each cat. If you travel from RYK-Khi and then return backfrom KHI

to RYK then one cat is complete. The employee has the option to travel by air train orby car. If he travels by car then RS 5.5 per km is given to the employee. The totalnumber of kilometers traveled by the employee are multiplied with the per km chargeand the total amount is reimbursed. If he travels by air then the payment order shouldaccompany the air

ticket boarding pass and Request for travel booking form if the employees purchase theticket thru company representative. The employee can also purchase air ticket on hisown.

Education CAT:



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4 cats are given to the children of the management employees who are studyingin universities. No incidental charges are given for education cat. A verification letterfrom the University of the Child who is studying in the university has to submit to thehuman resource department. When the payment order is made and it is sent to HRdepartment it verifies it thru its records and the verification letter of the university.

OFFICIAL TA/DA VISIT: When the employees are sent abroad for official purposehe is given official daily allowance and out of pocket allowance for the duration of hisvisit. The allowance is according to company policy which is made according to thedesignation of the employees.

TELEPHONE BILLSThe company also gives telephone bill facility to some employees. Their phone bills

can be reimbursed to a certain limit as according to the company policy.Reimbursement also includes their mobile bills.

Recoveries:Recoveries are also done through the salary of the employees. Following

are the deductions made through employee payroll

Amenity Transport Bill

Management Club Bill

School Fees of Children

CONTRACTORS SUPPLYER PAYMENTA:

The company has different contractors andsome are monthly paid and some are paid annually. The contracts are given to companyapproved contratctors.For any contract a job request is made by the concerneddepartment. It is then sent to finance department for the approval. If the job request iswithin the prescribed budget then it is sent to planning department. After the approvalof Planning

department request for quotations is issued to the contractors. The contractors send theirquotations and bids to the company. A comparative statement is made and thecontractor who has the lowest bid is issued the contract. The bids are opened inplanning department and there is a bid opening committee which has members fromfinance admin planning and



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the end user. After the contract is issued a job order is issued which has the details ofthe contract, the duration period and the total cost of the work order.

Job Order:

A job order is issued to the successful contractor after awarding of contract.

Job order has five copies. The white copy is for the contractor. The pink copy is for theplanning department. Blue copy for finance department before commencement of workand yellow copy to finance department after completion of work. The green copy is forthe end user. Following documents are required with job order

1) Contractors Bills2) Workmen Compensation insurance3) Yellow copy of Job Order4) Blue Copy of Job Order5) Original Job Request6) Original Comparative Statement

Types of Job Order:

Company approved rates:The contractors are paid according to the company approved rates.

2) Lump Sum Basis:Following are the contractors that are being done on lump sum basis.

Bus for Employees(GM-RYK)

Buses for apprentices

Security of gas pipelines

3) Unit Rate Basis:Following are the contractors that are based on unit rate.

1) Loading/ handling of Bagged Products

2) Welding Jobs

3) Air Conditioners and Refrigerators

4) Polish Works

5) Washerman Services

6) Painting jobs

7) Rewinding of motors

4) Previous Rate

5) Single bid Basis

Payment to Chemicals Supplier:Payments are also made to those suppliers who

supply gas petrol diesel and urea bags .For the payment three documents are required

Material receiving report from warehouse



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Purchase order

Contractors Original Invoice

The quantity mentioned on the invoice and material receiving reports are tallied and

the unit rate is verified by the purchase order. After verification a payment summary is

made for each contractors and it is signed by the authorized finance officer. Then a

bank cash voucher is made and then a cheque is issued which is sent to the bank and

the amount is credited to the account of the supplier.

TAX:

Following are the tax rates applied by the general accounting section

Sale of Goods---- 3.5 %

Services---------- 6%

Commission----- 10%

Transport of urea---- 2%

COMPUTER PURCHASE RECEIPT:

After the tax deduction of the different companys general accounting section sends thecheque of the payment to the bank with the list of companies which mention theamount of tax deducted. The bank transfers the amount and a computer purchasereceipt is issued. The CPR is given to the tax payer as a proof that his tax has beendeducted at source and he can show it to CBR when he files his income tax returns. Acopy of CPR is kept in the finance department. The CPR contains the following items

o The Company name

o The company National Tax Number

o Amount of Tax deducted at source

o The account number of the company

o Bank name

o Name of company which deducted the tax

o Company National Tax Number who deducted the tax



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o Signature of Finance officer

NATIONAL TAX NUMBER VERIFICATION

Verification of the National Tax number of different companies is done through

Central Board of Revenue Online Verification system. When we enter the NTN

number on the

website it gives the name of the company its correct NTN number the address and its

computerized national identity card number. It is very important to have the correct

National tax number of the company as the CBR has made it mandatory for all tax

payers to have a national tax number.

MONTHLY INCOME TAX REPORT PART-1A monthly income tax report Part-1 of those companies is generated whose payments

have been made after the deduction of tax at source. It contains the following

o Serial number

o Name address and NTN of the person

o Nature of Payment

o Section No of income tax ordinance under which tax has been deducted

o The amount on which tax has been deducted

o Amount of Tax Deducted

o Rate at which tax collected and deducted

o Amount of tax deposit

o Date of deposit

o Computer Purchase Receipt number

MONTHLY INCOME TAX PART-2

It includes all those companies whose payments have been not made and their taxhas been not deducted. The report contains the reason for which tax has been notdeducted. Tax is not deducted from those companies who have tax exemption

Certificate issued by the commissioner income tax. Tax deduction is also exempt onforeign items imported from abroad such as computer accessories.

TAX DEDUCTION CERTIFICATE



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A yearly tax deduction certificate is issued by the general accounting section to theconcerned company. There are two types of certificate one for suppliers and one forservices. It includes the following items

o Company name

o NTN number

o Section under which tax has been deductedo Amount of tax deducted

o For the period

o Total amount on which tax was deducted

o Amount deposited in the particular bank

o Name address and NTN of FFC

o Signature of the authorized finance officer

DEBIT ADVICE AND CREDIT ADVICE

The marketing department Lahore makes the payment of the expenses incurred on

behalf of ffc Goth machhi.they send a debit advice to ffc gm for recording

purposes.FFC Gm has current accounts with head office Rwalpindi marketingdepartment Lahore and FFC mirpur mathelo. Expenses incurred in marketing

department Lahore include guest house

Charges, material transportation charges and other expenses. Head office also sends

debit advice to FFC GM.expenses incurred in head office are salaries of officers,

foreign import which includes cost of freight which is paid by head office on behalf of

FFC GM and gas payment. Head Office sends a debit advice to finance dept FFC GM

for recording purpose. Marketing department Lahore also sends a credit advice to FFC

GM.Credit advice includes all the receipts and income details incurred on behalf of

FFC GM.Karachi office sends a bank statement to FFC GM which includes the debit

advice and credit advice and supporting documents. The bank statement which is sent

to FFC GM from Karachi office includes the following items



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o Bank charges

o Clearing charges

o Advances to employers

o Advances to suppliers

RECONCILIATION OF ACCOUNTS

At month end thru fax FFC gm reconciles its accounts with FFC Mirpur mathelohead office Rawalpindi and Karachi office. A confirmation fax is received at FFCGm confirming the accounts. All the debit and credit advices are also counted.Accounts are reconciled every month.

BOOKKEEPING:

It is the one of the important section of general accounting. Trial balance is made in

FFC GM.Income statement and Balance sheets are made in head office Rawalpindi.It is the last stage. Its main task to keep a record of all transactions.

PAYROLL SECTIONPayroll section is one of the most important sections of general accounting section. Itcalculates the salaries of all staff employees working in FFC GM. Following monthly

allowances are given to the staff employees

1. Cost Of Living Allowance2. Conveyance Allowance3. House Rent Allowance

4. Washing Allowance5. Ad Hoc Allowance6. Site Allowance7. Utility Allowance

8. Meal Subsidy Allowance9. Educational Allowance

Conditional Allowances:There are few conditional allowances which are given to only few employees

1) Technical Allowance:It is given only to the technicians and supervisors.



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2) Shift Allowance:

It is given to only those staff employees who work in shifts.

3) Out Of Living Allowance:

Yearly Allowances:Following are the yearly allowances given to staff employees

Bonuses

Leave Fare assistance

SWOT



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Analysis

Strengths

FFC is the market leader in the fertilizer having 65% of the market share.

FFC is using a single brand name SONA for its products like SONA urea,

SONA DAP helping farmers to remember the name.

Company being the market leader sets standards for the industry

FFC devotes considerable time and efforts to promote awareness regarding

good farmers techniques and methods among growers community

The company continues to enhance the facility of providing farmers free

farm advisory services through farm advisory centres. Currently company is

having 5 FACs all over the country.



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FFC peruses an innovative education oriented advertising policy utilizing

electronic/ print media and road side advertisement

FFC is only fertilizer company in the industry conducting seminars on core

agricultural issues. Inviting local and foreign luminaries

In 2004 FFC had record urea production of 2174000 tons from all the plants

Company is having strong dealer network all over country that helps in

proper availability even in far-flung areas.

FFC has developed a well [planned network of 170 field warehouses to

ensure that fertilizers is available to the farmers uninterrupted

Company has employed well-trained, disciplined and motivated workforceto facilitate to achieve desire targets

FFC is offering best package of salaries to its employees comparable with

any multinational organization

FFC is among one of the top taxpayers in country

FFC is introducing Farmer Friendly Culture

SONA being the farmers first choice

ISO certificatio

Weakness

Size of the company is very large which produces administrative problems.

The promotion of the management employees is made after the period of

three years.



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Sales force has to face a tough time when moved to far- flung areas equally

in other provinces.

Transfers are made after the period of three years , which cause the lack of

performance of policies.

The high differences between the salary packages of the executives and the

employees.

The ideas from the bottom are not welcomed; for the most part orders are

assigned from higher authorities.

Lengthy organizational hierarchy.

Non- availability transport during peak season.

Dumping of fertilizer by the dealers

Opportunities

Having a strong financial position company can start production of the new

product line.

Adding some new unit can enhance the production capacity of the plants.

Company is in a position to set up a new plant in the country.

FFC can participate in the acquisition of their companies being privatized

by the government.

If FFC decides for the export of Urea it can earn much better revenues.



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Being an agriculture country and due to increasing awareness about the

balanced use of fertilizer, demand for the fertilizer will increase.

Company can start over sea investment like that one of PAKISTAN

MARCO PHOSPHORSE-SA.

The increasing governmental support for meeting the demand pf fertilizer in

the country.

FFC can export Urea to Afghanistan and other neighbouring countries.

Availability of natural gas from Iran can helping setting up a new Urea plant

in that vicinity and thus meeting the demand of Urea in the country at cheap

rates.

Threats

Natural gas

Farmers liquidity

Weather conditions

Future fertilizer demand

Availability of raw material

WTO challenges



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Fertilizer supply in remote areas.

Dumping of under priced imported urea in local markets

Inconsistent governmental policies

Importing urea due to rising demand

Changing fertilizer prices

Difficult coexistence between public and private fertilizer

producer/importer

Lack of education in grower community

New competitors in the industry

Long of gas supplies

No availability of railway wagons

Unbalanced use of fertilizer

Phenomenal increase in the prices of basic feedstocks

Internal Factor Evaluation (IFE) Matrix

KEY INTERNAL FACTORS

Internal Strengths Weights Rating Weighted Score

1. Larger fertilizer Producer .05 3 . 15

2. Highest Market share .04 4 . 163. Growing Sales .10 3 .30

4. Countrywide location of plants .05 4 .20

5. Goodwill in market .05 3 .15

6. Strong Financial Position .03 3 .09

7. Corporate Culture .05 3 .15



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8. Strong Distribution Channel .03 4 .12

9. Wider Product line .09 4 .36

10. ISO Certification .10 3 .30

Internal Weaknesses

1. Dumping of the fertilizer by dealers .04 1 .04

2. Insuffiency of technical sales officers .04 2 .08

3 The administrative problems due to large

size of the company

.03 2 .06

4. Centralized authority .05 1 .05

5. Non availability of transport during peak

season

.05 2 .10

6. Low advertising campaigns .10 1 .10

7. Sales force has to face tough time in remote

areas

.03 2 .06

8. Very frequent transfers .04 2 .08

9. Lengthy hierarchy .03 2 .06

TOTAL 2.61

0.0 = Not Important 1.0= Important

1 = Major Weakness 2 = Minor Weakness3 = Minor Strength 4 = Major Strength

External Factors Evaluation (EFE) Matrix

KEY EXTERNAL FACTORS

External Opportunities Weights Rating Weighted Score

1. Adding some new units can increase

the production capacity of the plants

.08 4 .32

2. having strong financial positioncompany can introduce new products

.07 3 .21

3. the increasing govt support for meetingthe fertilizer demand in country

.05 2 .10

4. Opening new marketing office inforeign countries to improve themarketing campaign

.05 3 .15



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5. Advertising in international media andmagazines to increase the market share

.06 3 .18

6. Increasing sales by implementing thecredit policy strategies

.04 1 .04

7. WTO in 2005 (no quota Restriction)

more chances of export

.10 3 .30

8. Strong demand of products in future .05 2 .10

9. Increasing the customer satisfaction byimproving the quality of products

.03 3 .09

10. Availability of gas from Iran canincrease the production of plants

.05 3 .15

External Threats1. Natural gas prices .10 3 .30

2. Domestic Competition, entry of newand well financed organization infertilizer sector

.05 4 .20

3. Farmers liquidity .03 3 .094. Per unit cost in increasing, reduction in

profits.06 2 .12

5. Instable political situation in country .03 2 .06

6. WTO challenges .03 2 .06

7. Availability of raw material .02 2 .04

8. Weak economic structure of Pakistan .03 2 .06

9. Weather conditions .05 3 .15

10. Increase in prices of raw material .02 1 .02

TOTAL 2.74

Competitive Profile Matrix

Sr

. #

Critical

Success

Factors

FFC Engro NFC

Weight Rating Score Weight Rating Score Weight Rating Score

1

Customer

Loyalty .20 3 .60 .20 3 .60 .20 2 .40

2 Market share .10 4 .40 .10 3 .30 .10 3 .30

3PriceCompetitiveness

.10 3 .30 .10 3 .30 .10 3 .30

4 Management .10 4 .40 .10 4 .40 .10 2 .20


7/23/20

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