2013
Dedication
I dedicate this report to my parents who conveyed love and respect for education, to my teachers who taught the skills and knowledge to accomplish all my educational tasks with confidence and ease, and especially to people who believed in me when I did not; and for always being a support and strength.
Acknowledgement
I have taken efforts in this project. However, it would not have been possible without the kind support and help of many individuals and the organization. I would like to extend my sincere thanks to all of them. I am highly indebted to Mr. Mohsin Raza H. Hashmi for their guidance and constant supervision as well as for providing necessary information regarding the project & also for their support in completing the project. I would like to express my gratitude towards my parents & members of Pakarab Fertilizers Ltd. (Fatima Group) for their kind co-operation and encouragement which help me in completion of this project. I would like to express my special gratitude and thanks to industry persons for giving me such attention and time. My thanks and appreciations also go to people who have willingly helped me out with their abilities.
Executive Summary
Pakistan is a developing country, economy dominated by agriculture. Pakistan's principal natural resources are arable land and water. About 25% of Pakistan's total land area is under cultivation and is watered by one of the largest irrigation systems in the world. The most agricultural province is Punjab where wheat and cotton are the most grown. Some people also have mango orchards but due to some problems like weather, they're not found in a big range. Fertilizers are used to improve the quality of food, growth, production of the crop. It is an important factor that is involved in the farming and cultivation. There are numbers of companies running in Pakistan proving quality fertilizers for such purpose. Pakarab Fertilizer is one of these companies which are currently owned by Fatima Group and Arif Habib Group. The company was taken over by the current management through the process of privatization in 2005. Pakarab is playing a vital role in providing farmers with quality fertilizer. Pakarab Fertilizer is committed to playing a substantial role in the promotion of balanced application of fertilizers and the sustainable development of Pakistan. The Directors of Fatima Fertilizer comprise of energetic, highly qualified and experienced professionals. The Directors have past experience of managing large industrial units and commercial businesses. The key management is directly responsible for managing the day-to-day operations (and profitability) of Pakarab Fertilizers Limited. Pakarab Fertilizers Limited plans to revamp and expand its existing fertilizer manufacturing capacity by making an investment of approximately PKR 22.000 billion. In this respect, Pakarab Fertilizers plans to increase its Ammonia plant production capacity by 138,000 tons per year from its current production of 316,800 metric tons per year. This internship report covers all important aspects of Pakarab Fertilizers; product range, production facilities, financial situation, PFLs contribution for minimizing the environmental pollution, ethics followed by the company and values & behavior being practiced at PFL. But the main focus of the report is on Marketing Department at Pakarab Fertilizer and its sub departments; i.e. distribution department, sales department and warehouses. Final compilation of the report is done by adding SWOT analysis of the company which includes; Strengths of PFL that gives it an advantage over others, Weaknesses (or Limitations) that place the company at a disadvantage relative to others, Opportunities which are the external chances to improve performance (e.g. make greater profits) in the business environment and Threats which are external elements in the environment that could cause trouble for the business.
A brief critical analysis is also added to the report which includes a careful evaluation of what company is lacking in its day-to-day business. Final addition to the report is the conclusion along with few recommendations.
Table of Contents
Introduction to Fatima Group ___________________________________________________09 Vision & Mission ____________________________________________________________10 Business Areas (Fatima Group) _________________________________________________11 Introduction to Pakarab Fertilizers Limited ________________________________________14 Vision & Mission_____________________________________________________________15 Board of directors and Management Team_________________________________________ 16 Products and Services _________________________________________________________17 Industrial Solutions ___________________________________________________________21 Production Facility ___________________________________________________________22 Competitors and Industry Status _________________________________________________26 Marketing Department at PFL and Its Functions ____________________________________29 Business Ethics ______________________________________________________________30 Product Quality ______________________________________________________________33 Marketing Areas _____________________________________________________________34 Business Associate (BA) / Customer _____________________________________________37 Sales Operations _____________________________________________________________39 Marketing Allowance _________________________________________________________45 Sales on Secured Credit _______________________________________________________48 Retirement of the Bank Guarantee _______________________________________________ 52 Warehouses _________________________________________________________________ 54 Sales (Warehouse) ____________________________________________________________62 Safety Standards for Warehouses ________________________________________________ 68 Safety Standards for All Employees ______________________________________________70
Security Precautions __________________________________________________________74 Social Responsibility _________________________________________________________ 77 Policy Statement of Ethics and Business Practices __________________________________ 79 Values &Behaviors __________________________________________________________ 81 PEST Analysis ______________________________________________________________ 83 RATIO Analysis _____________________________________________________________84 SWOT Analysis..107 Critical Analysis ... ... 112
Conclusion & Recommendations ... . 11515 References ... . 118 Annexes ... ... 119
Mission:
create continuous value for our customers and consumers, inspiring confidence and respect through the highest levels of product quality and service. To provide employees a work environment that's enabling and inclusive and where innovation and entrepreneurship are a way of life and where people work in an ethical and safe business, based on the principle merits and equal opportunity. To be a responsible corporate citizen, complying with all aspects of Corporate Governance and the full spectrum of Corporate Social Responsibility.
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East, Far East, China and other Asian Countries to gratify the bulk requirements with an assurance of unblemished goods and timely delivery of the ordered goods to its customers. The Company is in the best position to cater the bulk requirements with an assurance of flawless finish and timely delivery of the ordered goods to its customers.
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Mission:
To be the preferred fertilizer company for farmers, business associates and suppliers by providing quality products and services. To provide employees with an exciting, enabling and supportive environment to excel in, be innovative, entrepreneurial in an ethical and safe working place based on meritocracy and equal opportunity. To be a responsible corporate citizen with a concern for the environm ent and the communities we deal with.
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Board of Directors
Arif Habib Fawad Ahmed Mukhtaar Fazal Ahmed Sheikh Abdus Samad Nasim Beg Muhammad Kashif Rehman Naseem Chairman Chief Executive Officer Director Director Director Director Director
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1. Nitrophos (NP)
For farmers, choosing the right fertilizer for their soil is very important. In Pakistan, the soils are calcareous, have high pH and are alkaline in nature. Nitrophos (NP) being highly acidic is the most suitable fertilizer for these soil types.
Products
Nitrophos (NP) 22% Nitrogen - 20% Phosphorus (P2O5) Also contains 9~10% Calcium
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Properties
Nitrophos (NP) is a granulated fertilizer in which each grain has equal amounts of Phosphorus (P) 20% & Nitrogen (N) 22%. In addition to this, NP being a highly acidic product with a pH of 3.5, is the most suitable fertilizer for soils that have a high pH and are alkaline in nature.
Effect
The balanced combination of Nitrogen & Phosphorus is ideal for plant growth and development. It contains dual Nitrogen (Nitrate: readily available to the plants and Ammonical: available after its conversion to nitrate through the process of nitrification). Consistent and longer use of NP also improves soil health.
Application
Nitrophos (NP) can be applied universally on all types of soils, but is more effective where the soils have high pH and are alkaline in nature. In many crops it could be effectively applied at planting and at early growth stages of the crops. Each grain has equal amounts of N &P, hence the nutrients are equally distributed throughout the field.
Products
Calcium Ammonium Nitrate (CAN) 26% N (Dual Nitrogen) - 13% Nitrate and 13% Ammonical Other than Nitrogen, it supplies additional 5 elements required for plan growth: Potassium - 0.9% Calcium - 10% Magnesium - 0.05% Sulphur - 0.4%
Institute of Management Sciences BZU Multan
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Copper - 0.001%
Properties
Calcium ammonium nitrate (CAN) is a granulated nitrogenous fertilizer that supplies nitrogen to plants in a balanced and secure manner. The combination of ammonium nitrogen and nitrate nitrogen makes CAN a special product with neutral chemistry (pH). The excellent granulation and specific surface coating has very good spreading properties.
Effect
The composition of readily available nitrate nitrogen and reserved N (nitrate available after its conversion from ammonium nitrogen) is optimal for providing all crops with targeted nutrition. The nitrate nitrogen that is available immediately after the application and absorbed in water is taken up directly by the plant and nutrient losses are almost eliminated. CAN is a hygroscopic product and needs very low moisture to be absorbed by the plants. It is equally effective in water stressed areas where soil has low moisture. Furthermore Calcium and Sulfur available in CAN is also helpful in soil reclamation.
Application
Calcium Ammonium Nitrate (CAN) can be applied universally and is suitable for all crops, all seasons, soils and locations. The main components nitrate and ammonium are present in an ideal ratio and make CAN an affordable fertilizer for healthy plant growth in agriculture and horticulture. It is suitable for multiple methods of application; by drill, broadcast or through fertigation.
3. Urea
Urea is widely used in the agriculture sector both as a fertilizer and animal feed additive, which makes the production of urea considerably high in comparison to other fertilizers in the country.
Products
Urea - 46% Nitrogen
Properties
Urea releases nitrogen into soil which is thereafter taken up in by the plants. Once applied to the soil, urea undergoes vital transformations and breaks up into ammonium form and this total process is dependent on soil moisture. As soon as urea dissolves in the soil, it forms around it a zoning layer of high pH and ammonia concentration turning the soil to be acidic and toxic at the
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same level. Urea is available as prills that are crystalline white and highly resistant to moisture and thus facilitate long time storage as well.
Effect
Urea has the highest nitrogen content, equal to 46 percent. This percentage is much higher than other nitrogenous fertilizers available in the market. The nutrient composition rendered by urea enhances the productivity of the soil and enriches its nutrient constituency. Providing each plant with relevant element needed, urea sustains plant life.
Application
Urea can be applied in various form, it can be spread in bulk alone or can also be mixed with other fertilizers before application. When urea is applied on acidic soils of higher pH i.e above 7.5, it should be incorporated into the soil as soon as possible. Urea is high moisture absorbent therefore it should be stored in sealed and well enclosed bags.
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Industrial Solutions
As a leading fertilizer manufacturer, Pakarab Fertilizers Limited has a strong production base for Carbon Dioxide.
Carbon Dioxide
Carbon Dioxide is a colorless, odorless, incombustible gas, formed during respiration, combustion, and organic decomposition. CO2 is used in food refrigeration, carbonated beverages, fire extinguishers, and aerosols. The CO2 plant at Pakarab Fertilizers Limited is equipped with the state of art technology online analyzing system, having Total Hydrocarbon, Total Sulfur, Total Moisture & Total Oxygen analyzers with latest infrastructure installation of vacuum insulated tanks & ambient vaporizers at customer sites to meet their needs to satisfaction. There are various applications of CO2 which range from the use in Beverages, Manufacturing of Urea, Fire Extinguishers, and Dry Ice and as Food Perseveres. PEPSI COLA and COCA COLA are also the customers of Pakarab Fertilizers for CO2.
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Production Facility
Pakarab is one of Pakistan's foremost chemical companies that process natural minerals and nitrogen into vital products for farmers and industrial customers. The main product is fertilizers, while industrial uses are also an important segment.
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Ammonia Plant
Based on Kellogg process, steam reforming of the natural gas, the plant commenced production in November 1978. The plant had capacity of 910 MTPD, which was enhanced by 50 MTPD through addition of Purge Gas Recovery Unit in April, 1986. The plant is designed to operate 330-days per annum (initially 320-days/annum prior to capacity increase). Present energy consumption at the plant is 9.6 G.Cal /MT of Ammonia (excluding non-productive gas), which was 9.464 G.Cal /MT of Ammonia during guarantee period.
2.
There are two units (three lines) of Nitric Acid production. The old line has a capacity of 180 MTPD of 60% Nitric Acid strength. This line commenced production in 1963. Other two lines have a capacity of 600 MTPD of 60% Nitric Acid. These two lines commenced production in December, 1978. The old line was modified in 1986 when an additional Absorption Tower was added, which resulted in increase of Nitric Acid concentration to 60% strength and reduced pollution level i.e. NOx Emission from 4000-6000 mg/cubic meter to 800 mg/cubic meter. The plant is operated as and when required. The two new lines have on stream factor of 330 days (originally 320 days). The old line consumes 0.310 MT Ammonia/ton Nitric Acid (100% basis) while the new lines consume 0.290 MT Ammonia/ton of Nitric Acid (100% basis). Thus old unit of Nitric Acid consumes higher energy. Approximately 40% of total Ammonia produced is used to produce Nitric Acid.
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Urea Plant
A new Urea unit of 280 MTPD capacity commenced production in April, 1986 based on Snam Progetti design. Old Urea unit, Evaporation unit and Prilling Tower were retained. The new plant has 330 operating days/annum. Urea unit is a trouble free unit. It has the highest production efficiency. The highest production achieved was 387 MTPD against design of 280 MTPD (38.2% higher). Last year a production capacity of 101,754 MT of Urea as compared to design of 92,420 MT/annum and was 10.12% higher despite gas supply disruption due to load shedding (+ 13,619 M. Tons).
Institute of Management Sciences BZU Multan
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5.
Designed capacity of this plant is 1,500 MT per day of Calcium Ammonium Nitrate having 26% Nitrogen contents and 1-2 % Potassium Sulphate as additional nutrient to stabilize the prills & fulfill the soil requirement. It is manufactured by mixing 75% molten Ammonium Nitrate and 25 % Calcium Carbonate in the mixing tank at 170 Celsius. Around 550 to 700 MT of Ammonium Nitrate is produced per day directly by reacting Ammonia gas and 60% Nitric acid in the Neutralization Reactor. 1,050 MT of Ammonium Nitrate is produced per day in the CN Section by reacting Calcium Nitrate solution with Ammonia and Carbon dioxide gases in the CN Reactors. 600 MT of Calcium Carbonate is also produced per day in the same CN Reactors. Calcium Ammonium Nitrate is hygroscopic by nature and absorbs moisture from the atmosphere therefore it can be used in the soil without sufficient water. It contains 13% Nitrate Nitrogen which supplies nutrients immediately to the plants and rest 13% Ammonium Nitrogen gives food slowly till ripe up of the crop. Process of the plant is designed by Hoescht whereas detail engineering is done by UHDE Germany. This plant is in production since 1979.
6. CO2 Plant
The CO2 Recovery Plant is designed to recover the impure, low pressure CO2 gas emitting from the Ammonia Plant as a by-product gas and to produce purified, high pressure liquid CO2. The capacity of this plant is 192 MT per day at a pressure of 21 bars. The temperature of the Liquid CO2 is -20 C. The liquefaction of gases is a complicated process that uses various compressions and expansions to achieve high pressures and very low temperature liquids.
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There are various applications of CO2 which range from the use in Beverages, Manufacturing of Urea, Fire Extinguishers, and Dry Ice and as Food Perseveres.
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Co-Generation
Pakarab Fertilizer Limited is a major fertilizer complex producing both Nitrogenous and Phosphatic fertilizers. Ever since its inception, the complex is not connected to the national electricity grid. Power and steam for the fertilizer processes as well as for common consumers within the Pakarab Fertilizers area was supplied by the captive power plant on-site, without any co-generation. On 20th July, 2007 Pakarab Fertilizers Limited submitted a plan for Co-generation Power Project. The objective of the project was: To generate power & steam by Gas Turbines with upstream Heat Recovery Steam Generators (HRSG) for supply to fertilizer complex using clean, renewable and sustainable cogeneration technology. Application of the energy efficient process of cogeneration of heat and power in natural gas fired cogeneration plant. To help achieving the objectives of combating climate change under UN-FCCC by reducing significant amount of greenhouse has (Carbon dioxide) emissions. Pakarab Fertilizers Limited hired the services of Fichtner GmbH & Co. KG; Germany as the "Project Development Consultants" and with a total project cost of $ 35 million, the project started on 1st January 2008 and was completed in one year. The cogeneration plant has an operational life of 25 years and the new gas turbine cogeneration plants estimated emission reduction capacity is 107,746 Tons of CO2 eq/year.
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Nitrogenous Fertilizers:
Engro Urea
Phosphatic Fertilizer
Engro DAP Engro Zorawar Engro Phosphate
Blended Fertilizers
Engro Zarkhez Engro NP
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Bubber Sher
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Sales Department
Sales Department at Pakarab Fertilizers has been divided into 10 regions including a recently added region Peshawar. I will explain the regions and coverage of the Marketing Department in detail on next pages. Warehouse network of Pakarab Fertilizers is operated with the help of private contractors as well as Pakarab has its own warehouses throughout the country.
Distribution Department
Distribution Department at Pakarab Fertilizers comprises of Plant Distribution and field distribution, which is handled from different localities and hence Pakarab has 56 distribution channels throughout the country.
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Business Ethics
Ethical way of doing business always brings success, repute and positive feedback to the company in the long-run. Hence, Pakarab has rigid ethical rules to follow and they have a clearly defined policy for doing Business in the market. They never compromise on the quality coordination with the valuable customers, hence they have clearly defined the areas of concern and preference for personal dealing, business dealings and all field personnel attached to the organization directly or indirectly.
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It has been, and continued to be Pakarab Fertilizers Limited policy that all transactions shall be accurately reflected in its books and records, and any off-the- record bank accounts are strictly prohibited. This policy is in accord with the previously stated policies of Pakarab Fertilizers Limited.
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Personal Dealings
o Giving or taking gifts should be avoided to the maximum. However, it confronted an unavoidable gift-giving or gift taking-situation; please make sure that gifts exchanged are of nominal value not exceeding US $15 as defined in PFLs gift policy. o It is preferred that all such receipt of gifts be reported to the immediate supervisor seeking his guidance on whether the gift can be retained by the employees or will need to be surrendered to PFL audit department for future course of action. o Entertainment should only be related to business and the cost should be small in relation to salary of the person being retained. o Accept in entertainment only what are you able to return.
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Business Dealings
All employees are expected to be honest in business dealings. For example: o o o o Never do a job or get a job done through payoffs/bribes. Always do accurate reporting of all facts. Never let anyone else act unethically on your behalf. Do not provide misleading, incomplete and inaccurate information documentation. For example: Show all discounts on the invoice Provide correct data on customer documentation Provide clear, accurate description of transactions on all documents Follow company policy and get the changing policy in written for record.
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Product Quality
Pakarab Fertilizers Limited follows a Product Quality Management Program. For the pursuance of a regular Product Quality Management Program, field officers monitor the product quality of PFL and Competitors Urea on monthly basis in the field. Every month one field officer form each region sends 01 sample of PFL Urea and 01 sample of each Competitors Urea (drawn simultaneously on the same day) to laboratory incharge, Pakarab Fertilizers Limited. Details of the sample are documented on the sample data sheet. Copies of his data sheet are sent to the regional office (for record). The samples received at laboratory, Pakarab Fertilizers Limited are analyzed physically and chemically for prill size, prill strength, fines, caking, nitrogen percentage, biurate contents, and moisture contents etc. The results are then conveyed by laboratory incharge, Pakarab Fertilizers Limited to Marketing Manager, who tabulates them for management information/action.
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Marketing Areas
Marketing Regions and Marketing Districts
At present, the marketing area of Pakarab Fertilizers Limited comprises of ten (10)
Marketing regions, each region segmented into a number of sales districts. These are as follows: Zones South Zone Regions Hyderabad Districts Hyderabad Thattha Mirpur Khas Digri Tando Allah Yar Badin Sanghar Nawab Shah Rahim Yar Khan Rahim Yar Khan Sadiqabad Khanpur Daharki Sukkur Sukkur Shikarpur Noshero Feroz Dadu Jacobabad Khairpur Mirs Quetta Larkana Center Zone Bahawalpur Bahawalpur Ahmed Pur East Bahawalnagar Haroonabad/Chishtian Hasilpur Lodhran
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Kehror Pakka Multan Multan Shujabad Vehari Mailsi Burewala/Gaggoo Mandi Khanewal Mian Channu Dera Ghazi Khan Dera Ghazi Khan Muzaffar Garh Rajanpur DIK/BKR/BNU Layyah Kot addu North Zone Faisalabad Faisalabad Chiniot Jhang Sargodha Mandi Bahauddin Sahiwal Sahiwal Toba Tek Singh Depalpur Pakpattan Okara Lahore Lahore Kasur Sialkot Gujranwala Peshawar Peshawar Abbotabad Rawalpindi Mardan
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The locations appearing in the first column are the defined Marketing Regions (MR) of PFL. Each region is looked after by Regional Marketing Manager (RMM). The RMMs-Supervisors of all the ten regions report to the Director Marketing in the Head Office. Each marketing region is further divided Marketing Districts (MD). A marketing district is looked after by a DMM. The MDs have been worked out keeping in view the geography of the area and the functional convenience in operations. One MD may cover one or more political districts wholly or partially. These MRs and MDs are modified from time to time based on the environment, geographical alignments and business needs.
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5.
6. 7. 8. 9.
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BA Selection Criteria
A BA should be; Financially sound party. (Should be able to invest according to the business requirement) Having good reputation in the area. Having established contacts with the farming community. Has experience of fertilizer and/or associated business (e.g. seed, pesticides, agricultural implements, commission agent, ginning factory/rice mill owner). Owns a shop/go down which can accommodate a minimum of 1000 bags of fertilizer. Business set-up is located at a prominent site easily accessible to farmers. Go down/shop must be accessible to 10, 20 ton trucks/30 tons trailers. The prospective party should have potential to adequately represent PFL in the market in terms of annual volume up liftment and should have a positive impact on sales and market share. Willing to keep adequate quantity of all products. Willing to participate in Company-sponsored activities, e.g. farmer meetings, group discussions, demonstration plots, etc. Should provide reliable competitive market intelligence and maintain confidentiality when needed.
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Sales Operations
As per literature and technical definition Sales operations are a set of business activities and processes that help a sales organization run effectively, efficiently and in support of business strategies and objectives. Sales operations activities; help sales leaders make sound and timely business decisions to drive short term and long term performance, help sales leaders align selling resources with the greatest opportunities in the most cost effective ways, help ensure all sales personnel are treated fairly and are paid accurately, help improve sales performance through better processes, technology and methodologies, help to improve employee morale. Pakarab has managed to set its sales operations in a very effective way. Sales operations at PFL include components like customer order (CO) generation, Bank Guarantee (BG) approvals for the customers who want to have a deal on credit, cross-checks of Demand Drafts (DD), collaboration with the warehouses, co-ordination with BAs etc. I will talk about Customer Order generation and supplies at first place in this section and later on I will also write about the order handling, allowances and bank guarantees (BG).
The procedure for order generation and its processing through SALES SYSTEM for supply of product from each source of supply is followed in the sequence given below:
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i. DMM/Warehouse Copy ii. Customer Acknowledge Copy iii. Sales Accounting Copy iv. Regional Office Copy DMM/Warehouse Copy is for record purpose of MM/TMM/TMM TECH/Warehouse. Customer acknowledgement copy is handed over to the BA for its own record. The other two (sales accounting and regional offices) copies along with payment instruments are sent to concerned Regional office/Head office. Upon receipt of customer order Sales Assistant inserts the data on payment instrument and other relevant details in SALES SYSTEM. Once the payment is entered the amount will be credited into the BAs account. Sales Assistance then logs the customer order.
This entry is considered as evidence for the review of customer accounts. Sales system retrieves customer order detail from Payment information screen and updates the BA Account balance appearing in customer order screen. Hence forth, the BAs account balance will be updated on entry of every new payment and becomes the basis of payment for product ordered form all supply sources, by the representative BA. Both the manual customer orders as well as the SALES SYSTEM can accommodate multiple products provided the shipment mode for all products in same (i.e. OC or CC).
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invoice is the evidence of the delivery of product to the BA. This copy is later attached by the trucking contractor to his freight bill as the supporting document.
Supplies ex-Port The Distribution Officer, Port, retrieves Customer Order Log Sheet through the Product
Handling System in SALES SYSTEM. This sheet is generated on daily basis.
The Distribution Office then gets the order detailed through Detailing Screen in Product
Handling System of SALES SYSTEM. On the basis of detailed order, Truckers Backlog Report is generated through PH&S. This report contains the list of all the orders detailed for shipment. The Distribution Officer then hands over the Truckers Backlog Report to the Tally Contractor and Trucking Contractors at Port. The trucking contractors arrange transport for shipment of detailed customer orders. Whereas, the tally contractor monitors truck loading operation at port according to the Truckers Backlog Report. The tally contractor then generates invoice/PSA manually against the order for which the truck is provided or loaded for shipment. Invoice/PSA is issued in 04 copies for: BAs acknowledgement BAs own record Gate pass for Port Authorities Distribution officer Port Sales Assistance at pant, logs the data in SALES SYSTEM form the manual copy of invoice to generate the same through the system. After delivering product at the BAs outlet, the trucker takes the acknowledgement of the BA on the acknowledgement copy of the invoice and also gets it stamped. This copy of the invoice is the evidence of the delivery of product to the BA. This copy is later attached by the trucking contractor to his freight bill as the supporting document.
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The BA or his authorized representative arranges transport and brings a truck to the warehouse. The warehouse in-charge arranges loading of the product in the presence of the BA orhis authorized representative. The BA or his authorized representative then acknowledges receipt of the product on the Invoice/Sales Tax Invoice. The warehouse in-charge then matches the signatures of the BA and his authorized representative/ contact man with the specimen signature card of the representative BA. This step is followed in order to ensure that the shipment is made to the Companys authorized BA or his authorized representative. The BAs copy of the invoice is handed over to him. The companys responsibility now ceases and the product is transported to the destination at the BAs own responsibility. 8. The payment instruments are recorded on the DD listing by the warehouse in-charge and both are mailed to the regional office on daily basis. Production and shipment are recorded in daily shipment status report on daily basis.
Procedure:
Ex-warehouse Consignments Consignment shipment is made against DDs as covered in agreement. Bank Guarantees are however not entertained in consignment shipments. This agreement is executed on stamp paper of Rs. 100/- or special adhesive stamps of same amount may also be used. The cost of special adhesive stamps is born by the company as we normally do in the Seller Buyer Agreement.
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Agreement is signed by both customer and the companys authorized representative (DMM/Warehouse In-charge. Office assistants and RM, those who normally cab sign the invoices) in the presence of two witnesses. To entertain such customers, warehouse in-charges record consignments transactions at warehouses in separate STRs and this is done shifting the stocks form regular STRs to consignment STRs. The record of all consignment agreements although with details of DDs is maintained at warehouse and DDs are kept as security deposit till products get invoiced. Acknowledge of consignment shipments from customers is taken. All such consignment shipments are reported as sales; however, these shipments are reported separately by warehouse to Regional office to head office for record purpose. Bin cards are not updated against consignment shipments. Once price is given, all consignment shipments are invoiced and bin cards are updated.
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Steps at PH&S Plant and Karachi Port Distribution (once price is issued)
Both plants and Karachi PH&S generate the PSAs report of consignment orders for their record. As soon as regions confirm the data entry on log of payments and updating the PSAs for pricing, both Plant and Karachi PH&S once again generate the PSAs report to flag out if any PSAs pricing is not made. This will serve as double check in system and help to reconcile the data on shipment as well. If there seems any PSA/invoice without pricing then concerned region is informed and invoice get updated.
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Marketing Allowance
Marketing Allowance (MA) is paid to BA/direct customer to assist them to promote the usage of fertilizer. The amount of MA is the function of the sales volume promoted by the BA. MA payable to BAs/direct customer is usually defined in three forms as follows: i. Base Marketing Allowance (MA) allowed and adjusted up front in each invoice (in abeyance) ii. Special Marketing Allowance (SMA) allowed and adjusted up front in each advice (in abeyance) iii. Deferred Marketing Allowance (DMA) allowed and adjusted separately at end of a defined period (month) on the basis of volume lifted.
These considerations are reviewed by the RMM who examines the situation from the regional perspective. He then develops a proposal for consideration of the General Marketing manager. The General Marketing Manager accords approval through a serially controlled letter of pricing. After this approval pricing with new MA allowed then becomes applicable to all the orders generated OR shipments made during the period in which the MA is allowed. This MA can be allowed on orders generated or shipments made, depending on the approval accorded by the General Marketing Manager/Marketing Manager.
Deferred Marketing Allowance If the MA is allowed in the form of Deferred Marketing Allowance, the Marketing
Manager accords his formal approval through a serially controlled letter of pricing. The Admin assistant then logs into DMA Definition module in pricing screen for SALES SYSTEM. He then defines the different volume slabs against which the various DMA slabs are allowed per ton, as a part of pricing approved by the General Manager. DMAs allowed from separate sources of supply are to be entered in separate pricing in SALES SYSTEM. On completion of this transaction in SALES SYSTEM, the system generates another serial number known as SALES SYSTEM DMA number assigned to the pricing allowed.
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At the end of DMA period, Admin Assistance selects the names of the BAs (qualifies for various DMA slabs against defined volumes lifted) through the system. This is done on the basis of the DMA applicable to BA/sales point/sales district/region, defined for the specific supply source in step 2. Completion of this transaction in SALES SYSTEM in turn concludes the definition and claim of DMA. The last and final step is the final calculation of DMA and issuance of DMA through system. On the completion of the DMA period, the Sales Accounting runs the DMA Calculation process through DMA Calculation module in pricing screen of SALES SYSTEM. The system automatically completes the DMA process by retrieving the required data from DMA definition and selection modules and generates the DMA note for the concerned BA. DMA note thus generated is sent to the concerned DMM The amount against this DMA note becomes available in BA TAR balance in SALES SYSTEM. The BA can either request for refund of his DMA or get this amount adjusted in his next order. All deferred MA adjustments through DMA calculation process is SALES SYSTEM should be completed within 15 days from the date of expiry of the contracted period.
Amendments in Order
An order once it is logged in SALES SYSTEM can be amended or cancelled as per the request of the customer subject to its status in SALES SYSTEM. If the status is pending then it can be cancelled and money refunded. Or the balance thus available may be used for ordering any other product. If the status is partially shipped then the pending quantity may be cancelled.
Suspension of Order
An order once it is logged in SALES SYSTEM can be suspended up to 75% of total order amount, upon written request of the customer subject to its status in SALES SYSTEM. If the status is pending then it can be suspended and order for any other product can be raised. Original order will remain as suspended in the SALES SYSTEM for 15 days and afterward in case of no payment it will be cancelled automatically. In case of price change new price will be effective on original order activation. No BG orders can be suspended.
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Policy
Marketing Division authorizes the Marketing Division to manage credit within a maximum limit during a specified time period. Marketing Division further allocates the credit limit (amount outstanding against quantity ordered at any point in time) to the regions. The regions ensure that the amount outstanding for quantity uplifted against BG/LC should not exceed their allocation at any point in time. Bank guarantees can be issued from any of the scheduled banks, which include HBL, UBL, ABL, MCB, BOP, BAF, ACB and NBP. Additionally, BA may also issues BGs from any of PFL relationship banks, which include ABN AMRO, ANZ Grind lays, SCB, Citibank, Faisal Bank, and Bank of America. Letter of Credit (LC) can be advised only through UBL corporate Branch, Multan. The credit facility is applicable for all PFLs product viz. Urea, NP and CAN. Essentially, this credit is extended through the bank guarantee by way of two modes: i. Single Credit Sales for BA/buyer ii. Multiple Credit Sales for BA
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The DMM also checks for the credit due date of the BG which should not be less than six working days ahead of the bank guarantee period allowed to the BA. Additionally, the BG is signed by: a) Two attorneys from the issuing bank, who are executing officers duly authorized by the bank to sign on the document. The DMM should ensure that their respective power attorney numbers are explicitly mentioned with the signatures. In case of a single attorney branch, the document still needs to be signed by two officers of the branch. b) Two male witnesses with a note o their respective NIC numbers (NADRA issued) and addresses. One of the witnesses is preferred to be PFL employee. The DMM ensures that any corrections/modifications/cancelations in the text of the bank guarantee must be accompanied by the by the bank stamp and the initials of the bank executing officer. The DMM may send the BG along with a written request for verification to the Zonal/Regional Office of the issuing bank or to the Regional Office for arranging verification. Upon receipt of the original BG document from the DMM, PFL regional office seeks independent verification of the issuance of this BG document form the Zonal/regional office of the issuing bank branch through fax or letter. Upon receipt of authentication through verification letter from the Zonal/Regional Office of the issuing bank. Sales Accounting, will calculate the last shipment date falling within the BG expiry period. This will also be automatically calculated by SALES SYSTEM on entry of the BG data in the system. In case, credit period is for 90 days then the expiry date of the BG must be 31 days ahead of the last shipment date; In case the credit period is for 120 days then the expiry date of the BG must be 130 days ahead of the last shipment date, else SALES SYSTEM will not accept the data in BG detail field. All other particulars of BG are then logged into BA BG detail screen of SALES SYSTEM by Sales Accounting. The DMM , while filling out the customer order form manually, ensures that the sales quantity does not exceed the amount allowed in the BG as calculated on the basis of the applicable price of the product, enhanced by the applicable amount on account of BG charges. The DMM/Warehouse In-charge makes a note of the BG no., SALES SYSTEM no., and date of issue, amount, and issuing bank name on the customer order form. In case of plant shipment DMM send the Customer Order to the regional office. 12. Extra care should be taken while punching the data of Customer Order and invoices into SALES SYSTEM by Regional Assistance, so that the quantity of order, invoices and other particulars may not get wrongly punched. Verification should be made with the amount of product and the amount available for BG.
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13. The customer order form is sent to the DO, who will generate the Product Shipment Advice (PSA) and the invoice through the system on the basis customer order logged against the particular BG is SALES SYSTEM. 14. In case the BA lifts product from a warehouse, customer order is raised at warehouse and invoice is prepared once product is delivered to the BA.
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a. Performa invoice to clearly state that drafts to be required - with cost of stamp duty on applicants account. b. Letter of Credit to be advised through UBL Corporate Branch Abdali Road Multan. c. Performa invoice to bear unique number for identification purpose. Once LC is received by the Marketing Division it is routed to Finance Department for approval of credit. Finance Department checks the following before authorization: Authenticity of LC message (Fax/Original) LC amount to be consistent with Performa invoice LC to allow at least 30 days negotiation period LC validity to be at least up to the negotiation period Within documents are also required , following standard clause to be present: a. Commercial invoice to be presented in original b. Bill of exchange to be drawn on Applicant/Applicant Bank Delivery c. Credit Period as per the Performa Invoice.
3. Marketing Division provides the following documents (before shipment) to the Finance Department: i. Commercial invoice marked original ii. Original Letter of Credit received from customer 4. Finance Department to submit the documents received to the Advising Bank along with the bill of exchange as per the LC.
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Policy
This procedure is followed for collecting payments of all Bank Guarantees issued by any bank (Single sales as well as multiple sales). Credit period will be calculated on first shipment against a particular BG. The responsibility of monitoring the expiry dates and credit period is with Sales Accounting. If due date falls after expiry date, expiry date is constructed as the due date. Collection of BGs through bank is monitored by Bank Manager.
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desires to pay through DMM, he must pay five days in advance so PFL has adequate time to en-cash the BG.
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Warehouses
The huge portion and percentage of total sale of the products is operated and done at field warehouses and hence dependent on the warehousing network of Pakarab Fertilizers. Pakarab bound all warehouses a defined policy and set of rules. Even the warehouses owned by Business Associates are checked on regular basis and also before signing an agreement with any Business Associate. An applicant cannot be considered valid for being a BA unless he has a warehouse which meets the selection policy and requirements of Pakarab. In this section I will talk about the classifications of the warehouses, how these warehouses are selected, what safety measurements are followed at the warehouses, and few documents used in the warehouses and the sales process.
Classifications of Warehouses:
1. Permanent Warehouses 2. Permanent Plant Warehouses 3. Temporary Warehouses 4. Temporary Field Warehouses 5. Temporary Port Warehouses
Selection Criteria:
Several things are kept in view during the selection process of the warehouses. Few of them are as under: Warehouse should be located at the center of the main consumption area. Warehouse should be located close to railhead and have good transport aerials. Warehouse should be good enough to eater for the movement of all kinds of vehicles including trucks and vehicles.
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There should be enough space in the warehouse premises for about 2-3 trailers to park at the same time. Warehouse should have a telephone and electricity connection. Warehouse should have provision of an office and toilet facilities.
Lease agreement created for the purpose of acquiring the warehouse is distributed to: Legal Department Accounting Department Distribution Head office Warehouse Regional Office Distribution officer Landlord
Warehouse In-charge - as supervisor of the warehouse, the warehouse in-charge is completely and solely responsible for all operations. The warehouse in-charge is required to ensure that the handling contractors and laborers do not extort money from truck drivers. In failing to do so, the warehouse in-charge shall intimate the respective distribution officer who will investigate the matter. On the advice of DO, the Regional Manager may terminate the Handling Contractor Agreement. The terminated Handling Contractor will not have the right to re-bid.
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Temporary Warehouse:
Temporary warehouses are leased for a maximum period of six months for one term and are further classified into: a. Temporary Field Warehouses - Temporary field warehouses are situated on various field locations, based on either containment or temporary sales push.
Selection Criteria:
The warehouse shall have a telephone and electricity connection. Loading and unloading facilities should be easily and cheaply available. The structure and roof shall be strong and safe. The premises of the warehouse shall have provision of an office and toilet facilities. The warehouse floor shall be level and without any protruding edges.
b. Temporary Port Warehouse - These warehouses are leased for a maximum period of three months and should be very near to the port. No dealer servicing are carried out from these warehouses. These warehouses are only used for the storage of imported products, in cases when there are transportation problems at the port. As soon as the transportation problems are resolved the warehouse is vacated.
Selection Criteria:
The warehouse should preferably not be in a congested area. The structure and roof shall be strong and about 20 feet high. The floor should be in good condition and should not have any protruding edges.
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Product Storage
1. 2. 3. Permanent Field Warehouse Stacking Debagging Temporary Field Warehouse Stacking Debagging Temporary Port Warehouse Stacking Debagging
Procedure for stacking and debagging is almost same for all type of warehouses.
1. Stacking
Interlocking pattern of product bags shall be adopted. Ends of the bags in adjoining rows shall overlap each other by about inches. Product shall move on FIFO. Sides of the stacks shall be straight. Each complete row in the stack shall contain equal number of bags. The height of stack shall be as follows:
TSP/MOP
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2. Debagging:
Bags shall be used once a bag containing the product is damaged. A disposal policy is applied for the purpose of disposing these old bags which I will explain on next pages.
Product Receipt:
Product is received at the warehouses from the following sources: Multan Plant Karachi Port Field Warehouse
6. If the product received is less than that mentioned on railway receipt (shortage), the railway contractor obtains a short certificate from the railway authorities. Copies of short certificate should be forwarded to Regional Office and Distribution Head Office. 7. If the product received is more than that mentioned on railway receipt (overage), the Handling Contractor shall obtain an overage certificate from the railway authorities. Copies of overage certificate should be forwarded to Regional office and distribution Head office. 8. After receiving the product at the warehouse, the warehouse in-charge shall prepare a ROSP (Report for Overage/shortage of Product).
Institute of Management Sciences BZU Multan
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Preparation of ROSP:
1. In transit: This refers to the fact that whether the product was in transportation when the shortage/overage occurred. 2. Receiving Point: this refers to the receiving warehouse. 3. Shipping Warehouse: This refers to the source warehouse. 4. Discrepancy: This refers to the overage/shortage of the product. 5. Packing kind/code: On reverse of customer order. 6. The ROSP shall be distributed as follows: i. ii. iii. iv. Accounting Copy R/O Copy Receiving Warehouse Copy Distribution Head Office Copy
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Shipment Documents
1. Product Shipment Advice
This form is used at the time of shipment of the product from the port and / or the dealer/direct customers outlet. The PSA is issued by following authorities. 1. Plant distribution issues PSAs for shipment of product from the plant to the field warehouses and dealer/direct customers outlets. 2. The tally contractor issues PSAs for shipment of imported product form the port to the field warehouses. There are four copies of the PSA at the plant: i. ii. iii. iv. Warehouse Copy Accounting Copy Plant Distribution Copy Acknowledgement Copy
The correct PSA number is the one written against the computer number on the PSA form. When goods are consigned via truck, the truck driver is given two copies of PSA. The receiving warehouse copy and the acknowledgement copy.
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3. Invoice:
An invoice is prepared whenever product is sold from a field warehouse, plant or port to a dealer /direct customer.
Exceptional Conditions:
Mentioned below are few exceptions which warehouse personnel may face on product delivery: If product is damaged or bags are damaged, loss will not be immediately quantifiable. Product received not in accordance with the particulars on PSA/PTA. Fictitious receipt Product received over/short in term of weight. Taking delivery of product when railway receipt is not available. Taking delivery on product when PSA/PTA is not available. Missing railway wagons.
2. Acquisition
At the plant At the port (Trucks) Hired Mechanical Transport (HMT) o National Logistic Cell (NLC)
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Sales (Warehouse)
Sales will be made only to the duly appointed customers of the company. An updated list of these customers within their specific reference numbers as to be maintained at all warehouses. When the sale is made, the warehouse in-charge raises the invoice.
1.
Customer Orders:
Customers may book orders in person; the information received by the warehouse in-charge is thus recorded on the customer order form. In all cases, the warehouse assistance is responsible for obtaining the signatures of the dealer or his contact-man. However, in the case of all shipments, the dealer also has to stamp the customer order form on all pages. The copies of the customer order form are distributed as follows: i. ii. iii. iv. Warehouse Copy (original) Customer Acknowledgement Copy Accounting Copy District Managers Copy
2.
Invoicing:
An invoice is an acknowledgement of the customer that he has received the product in good condition. The customer or his authorized contact-man is supposed to sign the invoice after he has received and inspected the product. Invoice is generated at plant/port which is acknowledged by the dealer at the time of receiving product. Bill is claimed by the transporter on the basis of valid acknowledgement. Sales invoice includes: i. Customer Order number and date ii. Destination railhead or sales point iii. The customer code (CC number) iv. Invoice Date v. Warehouse Code vi. Delivery Mode vii. Pay terms and distance of sales point from the warehouse viii. Product Code ix. Quantity of products sold (Metric tons) x. Rate and Gross Amount xi. Sales District Code
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xii. Region Code xiii. Net receivable amount. The copies of the invoice are distributed as follows: i. ii. iii. iv. Customer Copy / Original Copy Sales Accounting Copy Warehouse Copy Regional office Copy
3.
This report is a statement of the physical inventory of all products at the warehouse, on a particular date. An STR is prepared on daily basis irrespective of whether any transaction has taken place on these days or not. The STR is dispatched to the head office within 24 hours of receipt or dispatch of product. Stock Transaction Report includes: i. Date ii. Warehouse name iii. Opening balance (stock) iv. Product receiving chart v. Product dispatch chart vi. Losses Column (ROSP referencing is used for mentioning any losses) vii. Closing Balance (stock) The copies of the STR are distributed as follows: i. ii. iii. iv. Warehouse Copy Plant Copy Regional office Copy Lahore Head office Copy
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Returned Product:
The following procedure is to be adopted for returned products: 1.The respective District Manager inspects the product at the dealers/direct customers outlet. 2. After a written request form the District Manager, the regional sales manager seeks approval from the marketing manager to receive the product at the warehouse. 3. The warehouse in-charge after approval from the relevant authority prepares a Returned Goods Advice (RGA). 4. The returned product quantity is entered on the STR by giving reference of the corresponding RGA number on it. The entry should be made in the appropriate product column of the receipt and overseas section. 5. It should be mentioned in the remark column.
Once approval has been granted by the marketing manager, accounting section cancels the invoice under which the shipment took place and the dealer will be refunded the amount.
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Warehouse Checklists
The warehouse checklist is prepared by the respective field distribution officers during their subsequent visits to the warehouse.
Quarterly Checklists
The checklist consists of three forms Form number 1 corresponds to the warehouse assets. Form number 2 corresponds to the random weight sampling of the product. 20 bags of the product inventory of each type of product are randomly selected and weighted. The average weight is recorded.
The standard for weight of Pakarab bags and acceptable error levels are as follows: Gross weight of Urea WPP Bags 50.135kg. Tolerance level for the above is 250 grams Gross weight for DAP WPP Bags 50.135kg. Tolerance level for the above is 250 grams Gross level of NP & CAN WPP Bags 50.135kg. Tolerance level for the above is 250 grams Form number 3 corresponds to the product inventory status at the warehouse.
The distribution officer is required to obtain the signatures of the warehouse in charge on all three forms.
Monthly Checklist
The quarterly checklist is carried out every quarter and it covers following issues: 1. Premises/Safety and Security 2. Inventory and Control 3. Housekeeping 4. Landlord and rent issues 5. Office upkeep 6. Handling contractor issues 7. Document (STR, invoice etc.)
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Disposal Policy
Disposal of old bags, product waste, off spec. product, surplus and broken assets is governed by the policy as stated by limits of authority. However, in all cases, the standard procedure of taking sealed bids has to be followed by the warehouse Incharge. The warehouse Incharge should obtain three sealed bids and forward bids to the respective distribution officer, who in turn should forward them to the competent authority for approval. The disposing off of the damaged/ off spec product ex Karachi port is to be done as follows: 1. Shipment of the above is to made in white/defaced bags only, and stenciled with the words Off Spec product: Not for retail sale 2. All shipment of off spec product x-port is to be weighted and the tonnage determined. The tonnage will be reflected in the pro forma letter, through which the shipment is made to warehouse. 3. The pro forma letter needs to be acknowledged by the warehouse assistant and the letter sent to DO Imports. 4. At least three sealed bids are to be invited for the disposal of the off spec product.
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5. When the bids for disposal are invited and sent to Multan for the off spec product, a copy of the acknowledged letter should be attached with them. 6. The disposal of the off spec product is to be done as per LOA with a copy of the acknowledgement as an integral part of the approval process.
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Warehouse Premises
Any leakage and weakness in any wall, pillars or doors should be reported immediately to the respective District Manager and Distribution Officer. The floors, walls and roofs shall be kept dry at all times. The electric points and wiring should be safe. All ventilators shall be covered by to prevent the entry of birds.
Product Inventory
All tom bags shall be replaced immediately. Care shall be taken that no animal should enter the barracks and spoil the inventory. The product shall be stacked properly. During product stacking by the laborers, a ramp can be used when required.
Precautionary measures
The fire extinguishers should always be in working order. Warehouse will not operate without a functional fire extinguisher. The warehouse Incharge shall have adequate knowledge of using fire extinguishers. The warehouse Incharge shall train the watch and ward staff on the usage of the fire extinguishers. The fire extinguishers shall be installed in a place where their accessibility, safety and security are not compromised. No smoking signboards shall be installed on the barrack walls and no one shall be allowed to smoke within the premises of the barracks.
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Safety Policy:
The company gives the highest importance to safe operations and safe work practices in the conduct of its business. It is, therefore, company policy to take actions to prevent as far as possible, injury and ill health to employees and damage to company assets and the environment. The company adheres to the following principles to achieve safe operations and healthy working operations: Top management provides continued support and commitment to the implementation of this policy. Safety is always given the highest priority (ahead of production, sales and profits) in arriving at business decisions. Safety is a major responsibility of every manager, supervisor, worker and other employees and will be considered as such in personal performance appraisals. The company provides and maintains adequate protective equipment and safeguards for the hazardous jobs and educates employees in their proper use. Training programs are provided to all employees to enable them to recognize unsafe situations and to be conscious of safety, both on and off the job. The company selects and provides the necessary tools to perform work safely and trains employees in the proper use of these tools in safe operating conditions and makes sure that the tools are fit prior to use. A good standard of house-keeping is maintained at all company facilities. The company will operate its facilities in a manner that protects the environment and the surrounding communities. The company has developed safety rules, regulations and procedures. The employees are responsible for carrying out their work in a safe and efficient manner with the framework of these guidelines. The company encourages contractors to abide by its safety standards and regulation whilst performing task for the company. The company encourages off the job safety amongst employees and their families. Management tests the effectiveness of its safety programs from time to time to ensure adequacy, compliance and continuous improvement in standards.
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In the absence of the Functional Departmental Manager, and also the Functional Executive is not available, the CEO may be informed. In case persons with primary responsibility are out of town, on vacation or not available, the reporting line moves down as follows: i. Chairman Non-manufacturing Safety Committee ii. HRD Manager iii. Any other Department Manager
DOs
When driving, practice the three Cs - Control, Concentration and Courtesy. Have well planned scheduled, leave early and complete the day before dark. Ensure personal fitness before travelling. Lock your car and lock the steering while parking. Wear seat belts at all times and ensure that the passenger in the front seat also wears them. Drive at safe speed when on clear open stretches or good highways. When there is light or initial rain, apply brakes carefully as the road surface is greasy and slippery. Be careful of tractor trolleys whether moving or parked.
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When you see people who intent crossing the road, slow down considerably an watch their movements. Allow speedy buses or trucks to overtake you. Blow your horn when you intent to overtake to alert the other drive. When traffic from the opposite has full lights on, dip your lights and be extra conscious if overtaking other vehicles. When approaching a town, drop to a safe speed (say 20 - 50 km/hr). When nearing small towns always slow down and be extremely careful to watch out for speed breakers. When passing by a stationary bus, reduce speed, use the horn and be careful of passengers crossing the road from in-front of the bus. On the road, beware of animals and animal driven carts. Park the car away from the moving traffic. Carry a torch in your car at all times. Slow down considerably under wet conditions. Make allowances for the mistakes and poor driving habits of others. If it is raining very hard and you cannot see properly, pull over the side of the road and wait till the rain decreases.
DONTs
Do not overtake on curves and bridges and if a solid line is on your side of the road. Minimize driving after dark. Avoid deserted roads and risky shortcuts. Do not give lift to strangers including women. Do not carry fire-arms. Do not flaunt money at petrol pumps or other public places. Do not drive if under the influence of strong medical drugs or alcohol. Do not race with other drivers. Try not to smoke while driving and never smoke at filling stations. Do not overtake when there are two vehicles ahead of you and the vehicle in front of you. Do not use cell phone (head-set) while driving. If it is necessary stop your car off the road and attend the call.
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It is also the responsibility of the driver to ensure that the co-passenger at the front seat also wears the seatbelt. Motorcycle drivers in the organization are required to wear helmets while driving.
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Security Precautions
Field personnel are often exposed to situations involving potential risk to their security. This is mainly because of following reasons: Their job involves substantial travelling on highways. The law and order station may really bad in some suburban towns/highways where we operate. A field officer of PFL, because of his background, has relatively higher visibility in the town where he lives. The following are some possible hazards to which field personnel are exposed during the course of business. Hold up or robbery on the road Kidnapping Sabotage Political and ethnic disturbances.
Below are some guidelines which may help avoiding a possible security related situation in the field as well as at home.
In the field:
Park your car of the streets at night and if possible. Keep it in a locked garage. Always lock your car, even when parked in a garage. Always engage the steering lock when the car is parked. When approaching your car, be attentive of any signs indicating it could have been tempered with doors, windows, hood, trunk, wheels etc. Keep windows up and doors locked from the inside. Know your city well. Avoid civil disturbances and crowds. Do not give lifts to strangers. If you have a driver, do not distract him with conversation. Stay alert and know what is going around you. Keep the volume of the stereo down. To the extent possible avoid routine on routing and timing of your movements to and fro at work and in the field. If possible, drive through well-illuminated and much used routes. If you believe you are being followed by another car do not drive into your drive way and park in a deserted area. Try to drive to the nearest place where you can get help, such as police station, fire station etc. and call peoples attention by sounding the horn.
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At Home
Have your doors and windows locked at all time; make sure your locking devices are effective. An optical peephole is very useful on the front door. Have exterior light on at night. Keep all drapes closed at night. Investigate the background of domestic servants before hiring them. Do not open the doors to strangers until you are certain they have a valid reason to see you. Report any suspicious package, bicycles, cans or other objects left in or near your home. Do not touch or attempt to touch any object yourself.
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DONTs
Dont keep keys of filing cabinets, credenzas and steel almirah in your office. Keep these keys with you on your person. Do not keep cash in your desk or credenza etc. in the office. Dont leave your wallet, gold ring or other valuables on your desk.
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Social Responsibility
In the recent years, Pakarab Fertilizers has focused on programs increasingly on the issues that are linked to local people and communities. It has always been important to the Company to make a positive contribution to communities. Our approach to social investment is focused on programs which are based on sustainability, community needs having a measurable positive impact in the fields of education, health and skill development. The Company has positively contributed through donations and charities for health and education. Health, Safety & Environment Creating a Safe environment in all areas associated with our products is a priority at Pakarab. It is our policy to ensure a hazards-free workplace and comply with the best practices of product stewardship and the laws and regulations applicable to HS&E. Pakarab Fertilizers Limited is committed to assuring the quality of its products and services while ensuring that NO HARM TO PEOPLE OR THE ENVIRONMENT occurs through its operations. Health, Safety and Environment Policy followed by Pakarab Fertilizers is as under: Pakarab Fertilizers is committed to maintain safe, healthy and clean environment for all the employees, visitors and community. We comply with applicable standards, laws & regulations for Health, Safety and Environment (HSE) through Process Safety Management. We dedicated ourselves for continual improvement in HSE practices through effectives communication, motivation, team work and training
Social Contributions
On October 8, 2010, an agreement was signed between Governing Body of Worker Welfare Fund, Ministry of Labor and Manpower and Pakarab Fertilizers Limited for the construction of Mukhtar A. Sheikh Memorial Welfare Hospital, Multan, at a cost of approximately Rs. 2 billion. Under the agreement, Pakarab Workers Welfare Board (PWWB) is being established as a PublicPrivate partnership between Worker Welfare Fund (WWF) and Pakarab Fertilizers Limited for the efficient management and administration of the money to be allocated for the Project. For the establishment of the hospital 50% will be contributed by the WWF and the remaining 50% will be contributed by Pakarab Fertilizers Limited. The total project cost of Rs. 2 billion does not include the land cost. Land for the Project is being provided by Pakarab Fertilizers Limited. Once completed, it will be a self-sustaining hospital.
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Mukhtar A. Sheikh Memorial Welfare Hospital will provide free kidney and psychiatric treatment to all workers registered with EOBI or ESSI. This is the first Worker Welfare Board of its kind in the Country.
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Our Employees
We believe that highly engaged employees are the key ingredient in professional development and business success. Therefore, we invite our employees to contribute their best and to avail the opportunities for improvement and growth. We are an equal opportunity employer and promote gender diversity, self-development and innovation. We provide employees with tools, techniques, and training to master their current jobs, broaden their skills, and advance their career goals.
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Integrity
We are sincere, truthful and trustworthy in all our transactions and interactions and will honor commitments. We respect the dignity and rights of individuals and groups assuring that our judgments are free from discrimination and biases. We create an environment of fairness and transparency and abide by all applicable laws in letter and spirit.
Innovation
We encourage knowledge building and information sharing by creating an environment in which innovative ideas are nurtured and developed. We maintain an environment of openness towards new ideas that challenges the status quo while eliminating the fear of failure.
Teamwork
We consciously encourage We culture & discourage I/Me culture as we believe that teams can achieve more than what individuals can do. We take pride in the accomplishment of the teams while respecting differences in opinions and value diverse talents. We believe in working together for the achievement of common objectives by empowering employees collectively while retaining their individuality. Our team agenda takes precedence over personal goals as we take pride in team accomplishments and accept joint responsibility for any possible shortcomings.
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We support communities and main a special focus on protecting environment across all our business operations.
Customer Focus
We are committed to exceeding our customers expectations by actively engaging with them and ensuring prompt actions for continuous improvement in our products and services. We conform to customer needs in everything we do by adopting a proactive approach we go to customers door step and do not wait for the customer to come to us.
Excellence
We endeavor to exceed expectations in everything we do. Our pursuit of business excellence is characterized by the formulation and implementation of world class processes and effective use of technologies. We continuously develop and improve skills and competencies of people and ways of working to achieve outstanding results and benchmark our performance with best inclass. We make optimal use of all resources for sustainable business growth. Valuing People With mutual respect at all levels, we develop sense of ownership by involving people in decision making. We treat all people equally with respect, dignity and without any discrimination. We provide an exciting and enjoyable environment, ensuring work-life balance, creating opportunities for growth and development and supporting gender diversity. We are working diligently in a divers culture while respecting and valuing people for their individuality. We ensure providing a career path for each individual. We believe in nurturing and helping people unleash their talent whilst rewarding their contributions through a high performance culture. Our environment will always be favorable for attracting and retaining the best talent through a transparent, merit based system.
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PEST Analysis
It is very important that an organization considers its environment before beginning the marketing process. In fact, environmental analysis should be continuous and feed all aspects of planning. The PEST analysis is a useful tool for understanding market growth or decline, and as such the position, potential and direction for a business. A PEST analysis is a business measurement tool. PEST is an acronym for Political, Economic, Social and Technological factors, which are used to assess the market for a business or organizational unit. Political factors are how and to what degree a government intervenes in the economy. Specifically, political factors include areas such as tax policy, labor law, environmental law, trade restrictions, tariffs, and political stability. Political factors may also include goods and services which the government wants to provide or be provided (merit goods) and those that the government does not want to be provided (demerit goods). Furthermore, governments have great influence on the health, education, and infrastructure of a nation Economic factors include economic growth, interest rates, exchange rates and the inflation rate. These factors have major impacts on how businesses operate and make decisions. For example, interest rates affect a firm's cost of capital and therefore to what extent a business grows and expands. Exchange rates affect the costs of exporting goods and the supply and price of imported goods in an economy Social factors include the cultural aspects and include health consciousness, population growth rate, age distribution, career attitudes and emphasis on safety. Trends in social factors affect the demand for a company's products and how that company operates. For example, an aging population may imply a smaller and less-willing workforce (thus increasing the cost of labor). Furthermore, companies may change various management strategies to adapt to these social trends (such as recruiting older workers). Technological factors include technological aspects such as R&D activity, automation, technology incentives and the rate of technological change. They can determine barriers to entry, minimum efficient production level and influence outsourcing decisions. Furthermore, technological shifts can affect costs, quality, and lead to innovation.
Political
To fulfill local demand for fertilizers at affordable prices, the Government is providing subsidy on the production and import of fertilizers. (Shayan Hassan Jafry IGI, 2007) Investors will be allowed to relocate second hand plant and machinery, with the same concession/exemption as applicable to new plants. Import by manufacturers of Rock
Tax relaxation has been offered in order to attract new entrants and to reduce the dependence on imported fertilizers by enhancing the local production capacity. The Government is providing a subsidy on the production and import of fertilizers. A massive subsidy of Rs.27billion in the supply of urea and
Economical
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Phosphate and Phosphorous of fertilizer free of customs duty. Tax relaxation has also been offered by the Government, giving export benefit to suppliers of capital goods for new/modernization projects involving fertilizer. (Federal Board of Revenue, 2009)
DAP in FY09. (Zee News, 2010) Ban on the export of fertilizer is also imposed for the economic stability.
Social
Although the adverse effects of this industry is very high because of the improper handling of the waste. Due to this, many diseases like asthma, kidney diseases, hepatitis etc are caused. Still, the usage of the fertilizers cannot be stopped because it gives farmers so much ease in terms of saving time and actually using it.
Technological
In order to meet the expectation of fertilizers in the country, a strong technological base is required in the planning and development of specific Engineering and expertise in project management and execution. The fertilizer industry is also carrying out several schemes, including energy saving and de-bottlenecking in their current plants to improve the capacity and reduce the energy consumption per ton of product.
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Financial ratio
Profitability Ratios:
Gross Profit Margin= Gross profit/Sales*100
Gross profit Sales GPM 2010 9,197 18,248 50.40 2011 9,513 16,701 56.96 2012 1,915 8,136 23.53
Net Profit Margin= Net profit/ Sale 2010 3133 18,248 17.71 2011 4589 16,701 27.48 2012 (2400) 8,136 (2.95)
Return on Assets = Net Income/Total Assets*100 2010 3133 Net profit 50,637 Total assets 6.18 Return on assets Return on Equity = Net Income/Total Equity 2010 3133 Net profit 14,724 Total equity 21.27 Return on equity
Leverage Ratios:
Debt Ratio = Total Liabilities / Total Assets *100 2010 35,913 Total Liabilities 50,637 Total Assets 70.92 Debt Ratio 2011 42,985 65,341 65.79 34740 54636 63.58 2012
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Debt to Equity Ratio = Total Liabilities / Total Equity *100 2010 2011 35,913 42,985 Total Liabilities 14,724 22,356 Total equity 243.90 192.27 Debt to equity Ratio
Equity Multiplier = Total Assets / Total Equity 2010 50,637 14,724 3.44 2011 65,341 22,356 2.92 54636 19,896 2.74 2012
Activity Ratios:
Inventory turnover= Cost of goods sold/Inventory Years Cost Of Goods Sold Inventory Inventory turnover 2010 9051 5305 1.70 2011 7188 4197 1.71 2012 6,221 4844 1.28
Total assets turnover= sales/total assets 2010 Sale Total assets Total assets turnover 18,248 50,637 36.03 16,701 65,341 25.55 2011 8,136 54636 14.89 2012
Liquidity Ratios:
Current Ratio = Current assets / Current Liabilities Years 2010 17,459 Current Assets 16,648 Current Liabilities 1.05 Current Ratio 2011 19,005 21,461 0.89 13,448 17,559 0.76 2012
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Quick Ratio=Current Assent-Inventory/Current Liabilities Years Current Assets Current Liability Inventory Quick Ratio 2010 17459 16648 5305 0.73 2011 19005 21461 4197 0.69 2012 13,448 17,559 4844 0.49
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SWOT Analysis
SWOT analysis is very important for any organization as it is a very effective way of identifying strengths and weaknesses, and of examining the opportunities and threats organization tends to face. Strengths and weaknesses are internal while opportunities and threats are external. Strengths and weaknesses have to be matched with the opportunities in the external environment and also to counter any threats that might pose a danger to plans. SWOT Analysis is generally considered a Marketing tool but although it has its origins in Marketing field and is predominantly used by Marketing people, and it can also be done for self. SWOT Analysis is a tool which guides one to see where one stand in terms of job prospects and career growth. Every picture has two sides, good and bad side. If organization has some strength, they also have some weaknesses in internal environment. At the same time organizations enjoy some opportunities and have to face some threats from the external environment. In the SWOT analysis of this report I have tried to mention some strengths, weaknesses, opportunities and threats of the Pakarab Fertilizers.
Strengths:
Is offering range of unique products; i.e. NP, CAN, UREA and CO2. Has monopolized and ruling the production of Calcium Ammonium Nitrate and Nitro Phosphate since long Nitrogen and Nitrate fertilizers supply balance amount of N nutrients and hence meet genuine crops N nutrients requirement. Is the oldest project of Fertilizer in Pakistan and hence it has a valued experience on production and marketing of fertilizer (products). Is located in the most productive agricultural belt of Pakistan. Enjoys the position of the 2nd largest fertilizer complex in Pakistan. Is one of the best corporate entities in the country. Has its own hospital with qualified doctors, nurses and staff in the residential area. Has its own separate dispensary within the industrial premises. Have three schools for the employees children within the housing colony. Has a management club for executive employees as well as a workers club for nonmanagerial employees. Has its own transport system with a number of buses, cars and trucks which are used by the organization as well as any employee can borrow these vehicles for their use. Industrial area has wide roads which make it easier for vehicles to move around within the industry.
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Residential area of Pakarab is adorned with trees, plants and greenery to reduce the impact of deadly emissions from manufacturing plants that can severely affect the health. Fool-proof security system makes it comfortable and convenient for employees to leave their family alone at home and hence employees are available at a phone call in exceptional situations. Has its own power generation plant which provides electricity to the industry as well as to the housing colony. Has recently planted a new power generation unit which has reduced the consumption of natural gas used in the electricity production. Newly installed CO2 collection units at PFL have made wasted material (CO2) a profitable by-product.
Weaknesses:
Is the oldest Fertilizer Complex of Pakistan that is why most of the plants are very old and hence have higher maintenance costs as compared to other fertilizer complexes of the country which are not as old as PFL Has outdated and obsolete plants with high operating costs. Driven by entrepreneurs wisdom, not by the system. Was a Government Institution with signature political environment normally seen in most of the Govt. Organizations, new management has tried to eliminate this political factor with the help new policies and regulations but outcomes are not as expected. There are a lot of Govt. compellations, especially for the pricing policy. The efficiency of plants is unsatisfactory because of its obsolete and outdated machinery. Warehouses owned by Pakarab Fertilizer are still not connected to the database, hence the entries are done manually which slows down the process and the chances of errors are higher. Upward Communication seems to be weak within the offices which results in dissatisfaction among employees and reduces employees efficiency. is located on the belt where it is facing undefined load-shedding of natural gas currently which has reduced the production of the company by 75%. Because of above mentioned load-shedding Pakarab is losing its market share. Because of the minimized profitability of the Company under current circumstances employees are in a fear to lose their jobs. A number of employees have left the organization to get rid of this uncertain situation and more are thinking about trying their luck in other organizations.
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Opportunities:
Pakarabs needs to produce products of N & P contents to meet the current demand in the industry. Consumption of phosphates has increased globally, so its essential to produce NP locally other than break up of gas supplies. Formal Brand development for effective sales promotion. Enhance End User access to PFL products by sustaining Proper placement and locality decision of warehouses by improving distribution network. Proper delegation of authorities is required and it will help in making decisions on the spot. Long-term profits should be preferred over short- term benefits. PFL can work on the project of placing a pipe line from the same natural gas reserves which are being utilized by Fatima Fertilizers currently, to run its daily operations. Installation of new UREA facility is also the requirement of the company and it will give a remarkable improvement in UREA production. All warehouses have LAN connection, the need is to provide them with the computer systems only which will result in error-free operations at warehouses. As the demand of the fertilizer is high as compared to the supply, Pakarab Fertilizer has an opportunity to expand capacity to fulfill the local demand. There are no quota restrictions by WTO since 2005, so there are more chances to export. Availability of gas from Iran can help in continuing and resuming of production facilities. As Pakistan is an agricultural country and farmers are getting awareness about the balanced use of fertilizer, demand of fertilizer has increased and is still increasing.
Threats:
Plant is not working since nine months because of unavailability of natural gas, and still the sources say that the load-shedding is for undefined duration. Last in place close is since Dec 6th 2012 till to date. Uninterrupted IMPORTS of Urea i.e. over supply of N fertilizers for the last 3 years is adversely affecting the overall Urea indigenous production. Unplanned & unexpected Imports since long. Decline in P industry due to high prices in Pakistan. The needs of agricultural lands of Sindh are majorly met by Engro, FFC, FFBL, and hence these are the major shareholders in the province.
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Government is importing unplanned & cheaper fertilizers from other countries which are also a threat for the sales level of facilities in the country. In peak season, a threat of disconnection of natural gas prevails as often done by tribes in Baluchistan. Because of the uncertain job situations, resignation of valuable human resource for doing a job at a better place with more job security is also a threat for the organization. Gradually increasing Gas prices are a continuous threat for profit level and rising prices of the fuel is resulting in expensive transportation. Gradually increasing prices of fertilizer inputs force farmers to look at cheaper nutrients Unstable political conditions in the country are also a bi threat to the whole fertilizer industry. Bio fertilizer is the main threat for the chemical fertilizer producers because it is cheap as well as environment friendly. Government policies are not consistent regarding fertilizer industry. Continuous Floods affecting crops of the country since 2010 onwards
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Critical Analysis
The image of Pakarab Fertilizer has remained as a leading and dominating fertilizer facility for decades but the undefined discontinuity of Natural Gas is affecting the image of the organization. Pakarab is in intense need to manage to take some steps forward for the purpose of getting natural gas supplies reserved for industrial use, i.e. Mari Field. Though this project will cost very high but it can be considered as a business investment. The condition of several plants, especially UREA plant is very uncertain, which is resulting in high repair/maintenance costs and disconnection of production can occur anytime unexpectedly as plant may collapse anytime. Natural Gas is the main requirement of this industry and it is very difficult to fulfill that. Main ingredient CH4 is taken from the Natural Gas as it is the cheapest wait to get this component, hence no other source can be adopted for continuing the operations but natural Gas. There is a lacking of proper career development of employees. Proper career development of employees will result in better and improved output of the organization. There are several people who are on the posts which are against their interest so proper analysis should be done and explore those employees which can do better than what they are currently doing in the organization. Some employees are working in the same department or section since they are appointed. Employees should be transferred within departments so there is job variety that develop their interests, update their information and improve their performance. PFL is doing a lot in safety measurements but management is required to take necessary and precise actions to avoid even minor accidents. The problem of logistics should be looked into. Transportation through railway (being cheaper) should be made available in peak seasons. Almost all production facilities are outdated and obsolete; PFL should invest some more capital to update their systems and machinery. UREA made by FFC is more popular among consumers as compared to UREA made by PFL, they should benchmark the quality made by FFC to get the reasonable market share in long-run. Absence of computer systems in the warehouses should be taken seriously. Even in the regional offices some work is to be done manually, not all the processes and entries are computerized. Adoption of fully computerized facilitated ways of doing tasks will result in error free operations/entries/book-keeping. Employees themselves think that the environment of the organization is highly political and executives are practicing favoritism in promotions and appraisals.
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I found employees engaged in talks about the non-credibility of the values and behaviors policy of the organization. According to then values and behaviors are just made to write a segment of the organizational policy and it does not exist in real. Lower level employees are dissatisfied with their pay packages and the way they are treated. The policies and environment of the organization are quite rigid and hence react slowly to market changes. Human Resource Department at PFL Is still not very established and effective, I found lack of communication and collaboration within the people working in the HRD as well as their collaboration with other departments does not seem to be very strong. Most of the target market is not highly educated and some are totally illiterate. PFL has tried to enhance its distribution network but still its distribution process and network is ineffective to some extent. PFL is playing its role in educating the farmers but there still more need to educate the farmers in balanced fertilizers. In regional offices employees are over-loaded with work and hence are frustrated and unhappy. The position of NSM is vacant since long ago because of which all three ZSMs are reporting to Director-Marketing. Recruitment should be done at this post as soon as possible. As we know that the country is facing heavy electric load-shedding nowadays and all the offices have managed to provide their offices with generators. Multan regional office is also facilitated with generator but the allotment and consumption of the generator is biased, few people who have contacts with higher authorities can enjoy their AirConditioners in load-shedding hours as well while others have to rely on fans only. Hence the environment of the office is not work friendly because of the continuous loadshedding after each hour. I was surprised when I got to know that office computers and systems are not facilitated with UPS. Absence of UPS makes computer systems restart after each hour (loadshedding) and often lot of data and work is lost and has to be done again which an overload and frustration for the person who is working on the computer. The IT Department at Multan regional office is not very co-operative. People are no happy with their efficiency and collaboration frequency. Plant Distribution Office of PFL should be re-constructed and needs maintenance because it does not look like an office for a very well to do and big organization. Plant Distribution is facilitated with fully computerized system but it is very congested and space allotted to the employees does not make them work in peace and pleasure. Company owned Warehouse offices are not facilitated with Air-Conditioners which makes working there tougher as compared to regional offices and distribution offices.
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Employees complain that pay packages are not the same for the people working on the same posts. This biased treatment should be eliminated as it results in dissatisfaction, unhappiness and rivalry among the employees. As Pakarab was privatized in 2005 and then new management fired maximum already working employees. New management hired new work force on both managerial and non-managerial positions. There is a noticeable difference in how current management treats early and newly hired work-force. Even officers working on executive posts are experiencing biased behaviors; the pay packages of newly recruited employees (at same level) are 1.5-2 times of the people who are attached with the organization since before it was privatized. This biased treatment has created jealousy, rivalry and compatibility problem among old and new employees at all levels.
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Farmers education plan should be more enhanced and developed as fertilizer can become a source of pollution when they are used in excess quantities. Among all the fertilizers produced by Pakarab Fertilizers and other fertilizer companies in the country, only Potassium fertilizer is not yet considered as a source of environmental pollution. Fertilizers like UREA, CAN and DAP, if used unreasonably, causes environmental pollution and mainly through increase of nitrate in agricultural products, drinking water, eutrophication of water resources and increase of cadmium. Moreover, company should be very careful in taking precise measures for the oxides of nitrogen as they cause respiratory diseases like asthma, lung cancer and bronchitis. It is noted that due to the existence of black market and heavy demand, farmers have to pay above than the stated price because demand is higher than the supply and moreover, the class who is buying this fertilizer is mostly not educated and hence they do not have realization and knowledge about their rights. The government should check the prices at which the farmers are getting fertilizer; they should make a platform for farmers where they come up with such problems. A list of fertilizer prices should be provided by the government to the local shops so that the farmers are aware of the prices which the Govt. has set. This step will help in saving the farmers form the curse of black market. As other players in the industry are financially strong, so they are doing their best to enhance their production levels according to the demand. Production facility of Pakarab is backward in technology and lack of resources cannot be ignored as well so Pakarab should also facilitate their current production facilities with more capacity and improved technology to sustain in the market. The expectations of employees from the employers have changed over the decades. Employees today expect employers to respect them and to facilitate them with work friendly environment if they expect employees to work with devotion and efficiently. Regional office Multan is lacking work friendly environment because the generator is not available for Air-Conditioners during load-shedding hours. Management should arrange generator for Multan Regional Office and other regional offices. Offices for warehouse Incharge should also be facilitated with airconditioners. All organizations are advancing their systems and operations in terms of technology. Pakarab has also created a data base, all regional offices and offices in the industry are connected to the database which is operated from the Lahore Head office. The need is to connect the warehouses to the same database, as Pakarab warehouses are still not provided with computer systems and operations and entries are done there manually.
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