CHAPTER 1

INTRODUCTION

INTRODUCTION TO THE STUDY

All organisations are required to handle multiple problems and procedures. The intention of
an organisation is to overcome these hurdles. Different techniques are being employed by
every organisation to accomplish a favourable organisation climate. According to Oliver
Sheldon, Organisation is the process of combining the work which individuals or group have
to perform with the facility necessary for its execution, that the duties so performed provide
the best channels for the efficient, systematic, positive and coordinating application of
available effort.
The study is to know the functions of the organisation. It is conducted in The Fertilisers and
Chemicals Travancore Ltd. The company The popularly known as FACT-was indeed a

revolution when it was established as the first large scale fertilizer factory in the country.
Since then, it has played a major role in creating fertilizer consciousness among our farmers,
and giving a positive direction to the modernization of agriculture in India.

The study mainly focuses on the industry, organisation and departments. The main purpose of
the study is to understand the history of the company, functioning of the organisation and its
structure etc. This study helps to get a full picture of the organisation. FACT is one of the
leading manufacturers of Fertilisers, Chemicals, and Oil & Gas Petrochemicals industries in
southern states.

CHAPTER 2
DESIGN OF STUDY

DESIGN OF THE STUDY

OBJECTIVES OF THE STUDY
The organizational study was carried out at FACT Ltd. Udyogamandalam to achieve the following
specific objectives:

To understand the organizational framework & its functioning.

To gain knowledge about different departments of the organization andthe functions.

To study the interdependence of different departments..

To make a SLOT analysis of the organization

SCOPE OF THE STUDY

The study focuses on the overall structure of the organization. In this study, overall
functioning of the various departments of the firm and also their products are analysed. This
study would prove a base for future plans and it would help to get a full picture of the
organisation and the history of the company.

METHODOLOGY
1. PRIMARY DATA
Primary data were collected from discussions with the Managerial head of the various
departments.

2. SECONDARY DATA
Secondary data were obtained from the annual report, from the website and other
concerned books

LIMITATIONS OF THE STUDY

Time was a major limiting factor.

Secondary data available from company manuals were outdated (the manuals are being
updated).

Lack of co-operation from certain departments due to their work load.

CHAPTER 3
INDUSTRY PROFILE

INDUSTRY PROFILE
Fertiliser is one of the key inputs in crop production. India is the second largest consumer of
fertilizers in the world next only to China. The Indian fertilizer companies produced around
37.6 million tones of fertilizers during the year 2012-13.The Indian fertilizer industry is most
efficient and bench marked at par with world plants. However, the fertiliser industry in India
is facing several challenges. Non-availability of sufficient funds and lack of new investment
in the sector is the most important challenge being faced by this industry. No new fertilizer
plants have been set up in India in the last 15 years. The existing plants have been
continuously investing to improve efficiency and increasing capacity through revamp.
Availability of natural gas and other raw materials such as Phosphoric acid is another
challenge being faced by the fertilizer industry. Due to non-availability of domestic Natural
Gas the industry resorts to import of gas. The high cost of imported gas is not affordable to
the industry. The Government of India is encouraging setting up of joint ventures in overseas
to ensure regular supply of raw materials and import of fertilizers. Attainment of self
sufficiency in food grain is vital for the food security of the nation. Agricultural
intensification, one of the basic strategies for enhanced food production is depended on
increased flows of plant nutrients to the crops for securing high yields. Fertiliser industry is
working hard to ensure food security in the country on a sustainable basis. For increasing the
average yield of crop, balanced use of fertilizers need to be given more emphasis. Sustainable
development of fertilizer industry is vital for the food security of the nation and the
overall economic growth of India.
Indian Agriculture is one of the most important sector in the economy of the country.
Agriculture in itself contributes more than 18.5 percent of the Gross Domestic Product of the
country and around 60 percent people of India are dependent on this sector.
The monsoon also has a very significant impact on the Indian agriculture. Because of the
shortage of irrigation system in Indian agriculture most of the farmers depend highly on
rainfalls which is uncertain. The amount of rain determines the nature of the crops and also
the production. Indian agriculture in the majority of the state is looked after by the State
Governments rather than the Central Government. Indian farmers dont get a sufficient
supply of chemical fertilizer for agriculture. The main objective of the fertilizer industry is to
ensure the supply of primary and secondary nutrients in the required quantities.

India is primarily an agriculture based economy. The agricultural sector and its other
associated spheres provide employment to a large section of the country's population and
contribute about 25% to the GDP.
The Indian Fertilizer Industry is one of the allied sectors of the agricultural sphere. India has
emerged as the third largest producer of nitrogenous fertilizers. The adoption of back to back
Five Year plans has paved the way for self sufficiency in the production of food grains. In
fact production has gone up to an extent that there is scope for the export of food grains. This
surplus has been facilitated by the use of chemical fertilizers.
The Fertilizer Association of India (FAI) has set up a model which is based on several factors
that include fertilizer prices, high yielding areas, irrigated areas, fertilizer nutrient prices and
previous years' fertilizer consumption. An estimate of the demand and supply till the end of
the 11th five year plan is given in the chart below:
Year

Supply

Demand

Demand

Demand

N+P

N+P+K

Supply

of K

Gap
N+P+K
2007-08

16950

23125

8835

2660

2008-09

17585

24085

9305

2805

2009-10

18595

25035

9405

2965

2010-11

19912

25960

9178

3130

2011-12

19965

26900

10235

3300

[ N = Nitrogen , P = Phosphate, K = Potassium ]

Today, India stands as the third largest fertilizer consumer and producer of the world. It has
been observed that the subsidies on Indian fertilizer have been rising at a constant rate. This
is due to the rise in the cost of production and the inability of the government to raise the
maximum retail price of the fertilizers.
The increase in the production of fertilizers and its consumption acts as a major contributor to
overall agricultural development.

CHAPTER 4
COMPANY PROFILE

COMPANY PROFILE

History of the company

Mans history is replete with revolutions, responsible for moulding his system of thought and
shaping his modes of living. Revolutions have, more often than not, emerged out of crisissituations it was one such crisis situation that guided the enlightened perception of a far
sighted visionary to form FACT. Yes! The FERTILISER AND CHEMICALS
TRAVANCORELIMITED-popularly known as FACT-was indeed a revolution when it was
established as the first large scale fertilizer factory in the country. Since then, it has played a
major role in creating fertilizer consciousness among our farmers, and giving a positive
direction to the modernization of agriculture in India. And that, of course is an interesting
story-a story of never ending challenges and constructive responses.
The beginning
The 1940,s were a time of critical food shortage in our country. The traditional approach to
cultivation was not of much help in finding a solution to this problem. And nitrogenous
fertilizer had not yet arrived on the agriculture scene in sufficient quantities to make any
perceptible impact. A revolution was indeed necessary to change the status quo. And when it
came, it did through the vision of Dr. C.P. Ramaswami Aiyar, the Dewan of the former
Travancore State, who mooted the idea of increasing food production by the application of
fertilizer as a long term solution to food problem. To give concrete shape to his idea, he
sought the help of Seshayee Brothers Ltd. Industrialist known for their pioneering work. And
Indias first large-scale fertilizer plant was set up in 1944 at Udyogamandalon the banks of
the river periyar in Kerala State. The new venture of course had to go through many teething
troubles. For instance, the raw materials necessary for the production of ammonium salts
were not available in the state. But this deficiency was overcome by adopting a revolutionary
method known as the FIREWOOD GASIFICATION PROCESS.

However, initial difficulties notwithstanding, the plant at Udyogamandal went into

commercial production in 1947, with the slated capacity to manufacture 50,000 tonnes of
Ammonium Sulphate (10,000 tonnes of N). This was followed by the production of
SUPERPHOSPHATE in a new plant with a capacity of 44,000 tonnes. A sulphuric acid plant

10

of 75 tonnes per day was also installed which was considered large going standard at that
time. Meanwhile the inner dynamics of FACT was finding another expression in the
formation of new unit with the help of the State Government and Methur Chemical &
Industrial Corporation Ltd., for the production of caustic soda which later become todays
Travancore-Cochin Chemical Ltd., a Kerala Government undertaking. This indeed was a big
leap forward as it replaced all the imports of that product, saving a considerable amount of
foreign exchange. FACT was the first to use its by-product, chlorine, as hydrochloric acid to
produce Ammonium Chloride. These by-products produced by FACT paved the way for
setting up of other industrial units around the FACT complex viz. Hindustan Insecticide
Ltd.,Indian Rare Earth Ltd., etc.
Expansion
In the late 50s, the Udyogamandalam Division launched its first expansion with an outlay of
Rs. 3crores. Highlights of the period were the installation of two plants to produce
Phosphoric Acid and Ammonium Phosphate (16:20 Grade). The second stage of expansion
involving Rs. 2crores saw the replacement of the Firewood Gasification Process and the
Electrolytic Process by the Texaco Oil Gasification Process for which a new plant was set up.
FACT became a Kerala State Public Sector Enterprise on 15th August1960. On 21st
November 1962, the Government of India became the major shareholder. The 2nd stage of
expansion of FACT was completed in 1962.
The 3rd stage of expansion of FACT was completed in 1965 with setting up of a new
Ammonium Sulphate Plant. FACT has been a pace-setter in marketing evolving a continuous
and comprehensive package of effective communication with farmers and promotional
programmes to increase the fertilizer consciousness among our farmers. In fact, FACT was
the first fertilizer manufacturer in India to introduce the village adoption concept since 1968
to improve agricultural productivity and enhance the overall socio-economic status of
farmers. FACT has a well organized marking net work, capable of distribution over a million
tones of fertilizers. With the licensing of Cochin Division in 1966 FACT further expanded
and by 1976 the production of sulphuric acid, phosphoric acid and Urea was started. In 1979
Production of NPK was commercialized.

11

Technical Divisions
FACT Engineering and Design Organization (FEDO) was established in1965 to meet
the emerging need for indigenous capabilities in vital areas of engineering, design and
consultancy for establishing large and modern fertilizer plants. FEDO has since then
diversified into Petrochemicals and other areas also. It offers multifarious services from
project identification and evaluation stage to plant design, procurement project management,
site supervision, commissioning and operating new plants as well as revamping and
modernization of old plants. FEDO received international accreditation ISO 9001 2004 for
quality system standards covering areas of consultancy, design & engineering services for
construction of large fertilizer, petrochemicals, chemicals and related projects including
purchasing, construction, supervisor, inspection and expediting services. FACT Engineering
Works (FEW) was established on 13th April 1966 as a unit to fabricate and install equipment
for fertilizer plants. FEW was originally conceived as a unit to fabricate and install equipment
for FACTs

12

THE VISION
To emerge as a leading company in the business of providing quality agriculture and
industrial inputs and providing engineering services for industrial and infrastructural facilities

THE MISSION
To function as a dependable and globally competitive producer of fertilizerand other allied
products and to develop self reliance in the field of engineering and technology, especially in
the field of fertilizers, chemicals,petrochemical, oil & gas industries

OBJECTIVES OF THE COMPANY

The main objectives of the company are: To be of service to the nation and to contribute effectively to its economic well being and
growth through the production and marketing of fertilizers and chemicals and through
the acquisitions/development and dissemination of engineering technology know-how
and skills.

To sustain and improve its pioneering role in the development of indigenous engineering
and technology through research and development.

To improve productivity and maintain high standards of quality and adopt effective
measures for controlling cost and minimizing dependence on imports.

To ensure for its customers the availability of its products and services on reasonable
terms, for its shareholders a fair return on capital invested and, for itself, development of
adequate internal resources for continual growth and expansion.

To actively work for rural uplift through guidance, advice and service to the farmers in
co-operation with all other agencies working for agriculture development and allied
activities.

To develop, train and maintain a team of motivated and disciplined personnel with
required skills and abilities, and to encourage innovation and to create a condition for
their functioning and career development so as to improve their overall quality of life.

To project a favourable image of the company and its operations, in the society in which
it operates, amongst its customers and suppliers and amongst the public in general.

13

To continuously plan its future operations for sustained growth and stability for
meeting the needs of the country.

LEGAL FRAME WORK OF THE COMPANY

FACT is a public limited company registered under the Companies act1956. As a major industrial
Organisation, FACT complies with all laws and statutes which govern industries in general.1.

Factories Act, 1948.

Excise Act, 1944.

Sales tax Act, 1959.

Industrial Disputes Act, 1947.

Employee Staff welfare Act, 1948.

Workmen Compensation Act, 1923

The Payment of Gratuity Act, 19728.

The Payment of Wages Act, 19369.

Trade Unions Act, 1926.

Standing Orders Act, 1946.

Payment of Gratuity Act, 1972.

Provident Fund and Miscellaneous Provisions Act, 1952

OWNERSHIP PATTERN
The Fertilizers and Chemicals Travancore Ltd (FACT), is a Schedule A category
Government of India enterprise, under the administrative control of department of fertilizers
in the Ministry of Chemicals and Fertilizers. FACT was incorporated in 22/09/1943 and in
1960s the Government of India became the major shareholder. A Board of Directors manage
the Organisation. The chairman of the Board of Directors is the Managing Director. Fact has
a full time Finance Director, a Technical Director and a Marketing Director. There are also
six part time Directors on the Board, nominees of Central and State Government. Shares of
the company are listed at National stock exchange of India(N.S.E)
14

PERFORMANCE OF SHARES AT NSE

MONTH

HIGH(Rs)

LOW(Rs)

April 2012

33.80

31.00

May 2012

32.40

28.65

June 2012

29.50

27.80

July 2012

33.90

27.15

August 2012

29.50

26.20

September 2012

31.50

26.20

October 2012

31.90

27.80

November 2012

28.65

27.20

December 2012

33.20

27.50

January 2013

34.00

29.25

February 2013

29.70

27.40

March 2013

27.65

21.50

Source :-Annual report 2012-2013

TABLE NO:1

DISTRIBUTION OF SHAREHOLDING AS ON 31-03-2013

Shareholding of

Shareholders

nominal value of Rs10/-

Rs/-

Number
Upto 5000

Amount

14195

% to Total
89.96

15

16729530

5001-10000

875

5.55

7410810

10001-20000

355

2.25

5626750

20001-30000

122

0.77

3186950

30001-40000

53

0.34

1945370

40001-50000

56

0.35

2696500

50001-100000

74

0.47

5577230

100001 and above

49

0.31

6427546600

Total

15779

100

6470719740

Source :-Annual report 2012-2013

TABLE NO:2

BRIEF PICTURE ABOUT FACT

Name

FertilizersAndChemicalsTravancore Ltd

(FACT)Slogan

Pioneers in progress

Established in the year

1944

Location

Udyogamandal,Cochin, Kerala

Promoters

Government of India

Production units of Fertilizers

Udyogamandal & Ambalamedu

Caprolactum

Udyogamandal

Fabrication Division FEW

Palluruthy, cochin

Consultancy Division FEDO

Udyogamandal

Marketing Division Head office

Udyogamandal

16

Trivandrum, Chennai, Bangalore and

Area offices

Hyderabad
Liaison Offices

Trivandrum, Chennai, Mumbai, New Delhi

Marketing Territory South India

Kerala, TamilNadu, Karnataka, Andhra

Pradesh

TABLE NO:3

DIVISIONS OF F.A.C.T
Udyogamandal Division
FACT commenced operation at Udyogamandal with the commissioning of a50,000 tonnes
per annum Ammonium Sulphate Plant in 1947.In the decades that followed multi stage
expansion programs were undertaken bringing in the latest technologies of the day which
were quickly mastered and successfully implemented. Today the division is 40 year old small
capacity plants and 10 year old state of the art technology plants. The latest addition to this
unit was a 900 tonnes per day Ammonia Complex set up with an investment of RS 618
crores. FACT Udyogamandal division is certified to ISO 14001, the environmental system
standards.

Cochin Division
FACT Cochin Division was set up in the 1970's at Ambalamedu, 30 km from Udyogamandal
and adjacent to the Cochin Refineries. Phase-I of the division saw the setting up of an
integrated Ammonia urea complex utilizing Indian Engineering skills. A large scale complex
fertilizer plant of 485,000 TPA was set up as phase-II. Sulphuric acid and Phosphoric acid
plant of economy scale were also set up.

Petrochemical Division
FACT diversified into petrochemicals in 1990 with the production of Caprolactum. This
versatile petrochemical product is the raw material for the manufacture of nylone-6, which
finds extensive application in textiles, tyre cord and engineering products. Thanks to its high
quality, the product has been acknowledged as among the best in the world. The division is
17

located adjacent to the Udyogamandal division. Co-product Ammonium Sulphate is

transferred to the fertilizer plant of Udyogamandal division for processing.
FACT Engineering & Design Organization (FEDO)
FACT Engineering & Design Organization (FEDO) was established in 1965for utilizing the
considerable indigenous plant building expertise accumulated by FACT in its process of
nurturing the nascent chemical fertilizer industry. FEDO is today one of India's premier
project engineering organization, catering to a wide spectrum of industries like
petrochemicals, refining, pharmaceuticals, hydrometallurgy etc as well as
petroleumstorage, environmental engineering, offsite facilities etc. The divisionundertakes
project execution on consultancy and turnkey basis, handling the intricacies of the technology
sourcing, design and engineering, hardware procurement and construction with practiced
ease. FEDO is ISO9001 certified.

FACT Engineering Works (FEW)

Established in 1966, FACT Engineering Works was originally conceived asa unit to fabricate
and erect equipment for fertilizer plants. Over the years, it developed capabilities in the
manufacture of Class I Pressure Vessels, Heat Exchangers, Columns, Towers etc. required for
the fertilizer, petrochemical and petroleum industries. FEW received ISO 9002Certification
in 1998.

BOARD OF DIRECTORS
Shri Jaiveer Srivastava

Chairman & Managing Director

Shri P.Muthusamy

Director (Finance)

Shri V.K.Anil

Director(Technical)

Shri V.K.Subburaj,

Govt. of India Nominee Director

Shri S.C.Gupta

Govt. of India Nominee Director

Shri Sham Lal Goyal

Chairman & Managing Director

Dr..V.Rajagopalan

Govt. of India Nominee Director

18

Shri.P.K.Chandrasekharan

Director(Marketing)
TABLE NO:4

MILESTONES OF FACT+
22-09-1943 - Incorporation
26-06-1947 - Production started
15-08-1960 - FACT came under Public Sector
21-11-1962 - Govt. of India major share holder
1959-1960

- UD 1st stage expansion completed

1962

- UD 2nd stage expansion completed

16-03-1964 - ICMA Award for utilizing by-product gypsum

15-10-1966 - UD 3rd stage expansion completed
1971

- ICMA Award for technology transfer

01-10-1971 - UD 4th stage Ammonia Plant

01-10-1973 - UD 4th stage 150TPD Ammonium Phosphate
24-07-1965 - FACT Engineering and Design Organisation
13-04-1966 - FACT Engineering Works
07-06-1966 - CD Phase-I License issued
27-04-1973 - CD I Urea Plant commissioned
10-11-1976 - CD II Sulphuric Acid Plant commissioned
10-12-1976 - CD II Phosphoric Acid Plant commissioned
10-01-1977 - CD II NPK trial run started
01-04-1976 - CD II NPK commercial production started
18-05-1984 - PD Caprolactam technical collaboration agreement
14-09-1984 - PD Zero date of ASCL Project
06-08-1985 - PD Caprolactam License issued
13-12-1989 - FEW shifted to Palluruthy
26-07-1989 - Award for excellence in performance 1986/7 from the Prime Minister of
India
20-12-1990 - CD-12MW Captive Power Plant
01-03-1991 - PD Caprolactam commercial production started
01-03-1991 - UD New Ammonium Sulphate commercial production started
19

25-09-1993 - Foundation stone - 900 TPD Ammonia Plant

23-03-1998 - 900 TPD Ammonia plant commercial production started
09-11-1998 - Test run

FACT PRODUCTS
STRAIGHT FERTILISERS:-AMMONIUM SULPHATE: Ammonium Sulphate is a
nitrogenous fertiliser containing 20.6% nitrogen, entirely in ammonical form. It has excellent
physical properties; non-hygroscopic, crystalline and free flowing. It is ideal as a straight
nitrogenous fertiliser and also as an ingredient in fertiliser mixtures. It is the most widely
preferred nitrogenous fertiliser for top dressing on all crops. Another unique advantage is that
it contains 24% sulphur, an important secondary nutrient.
COMPLEX FERTILISERS:-FACTAMFOS (AMMONIUM PHOSPHATE SULPHATE):
FACTAMFOS 20:20:0:13 is a chemical blend of 40 parts of ammonium phosphate and 60
parts of ammonium sulphate. It contains 20% N and 20% P2O5. The entire N is in ammonical
form and P is completely water soluble. In addition, FACTAMFOS contains 13% sulphur, a
secondary plant nutrient which is now attaining great importance in the agricultural
scene.FACTAMFOS 20:20:0:13, with the granular form and non-hydroscopic and free
flowing nature, have excellent physical properties. It is ideal for application on all soils and all
crops. FACTAMFOS 20:20:0:13 can also be used for foliar application

FACTMIX:-FACT prepares on a very large scale all the standard NPK mixtures under the
brand name 'FACTMIX' for different crops for Kerala as stipulated by the Department of
Agriculture. In addition, FACT prepares special tailor made fertiliser mixtures of any required
grade for plantation crops like coffee, tea, rubber, etc. FACT mixtures are superior in quality
with the presence of ammonia cal nitrogen, water soluble phosphorus, and other major
nutrients like sulphur, calcium, etc.

GYPSUM:-A by product of phosphoric acid, is a rich and cost effective source of 16%
sulphur and 22% calcium. FACT is marketing bagged gypsum in brand name FACT Gypsum
all 4 southern states as a soil conditioner with fertilising properties.

IMPORTED FERTILISERS:-FACT markets imported Urea and Potash from Gulf Countries and Russia for
20

consumption in all 4 southern states as per requirement. Urea with 46% Nitrogen in the granular/prilled form a
with 60% K20 serves the nutritional requirement in the 4 southern states.
ZINCATED FACTAMFOS:-This special product containing 0.3% Zinc in FACTAMFOS
has been launched to address the widespread deficiency of Zinc in most soils of South India.
ZINCATED GYPSUM:-This soil amendment and ameliorant contains 2% Zinc in addition to
16% Sulphur and 22% Calcium for rectifying alkaline soils and improving soil fertility and
physical properties.

FACT ORGANIC:- FACT is also marketing organic manure produced from city compost, in
brand name Fact organic

CAPROLACTAM :- It is the raw material for Nylon-6. The product quality of FACT
Caprolactam is among the best available in the world.

Nitric Acid and Soda Ash - Small quantities of these are obtained from Caprolactam
Plant as by-product.

Nitric Acid (55%)

Capacity - 3800 TPA

Concentration (by weight) - 55% (min.)

Ammonium Nitrate (by weight) - 1% (max.)

Specific gravity at 20 Deg.C - 1.339

Delivery - Ex-factory - tanker load

Soda Ash (off grade)

Capacity - 4750 TPA

Total alkalinity (as Na2CO3) (by wt) - 95% (min.)

Sulphate (as Na2SO4) (by weight) - 1.5 to 3%

Bulk density (g/L) - 1.35 to 1.50

Delivery - Ex-factory bulk

BIO- FERTILISER:-R&D produces bio-fertiliser such as Rhizobium, Azospirillum, and

Phosphobacter (Bacillus Magatherium) from its 150 TPD plant. The Fertiliser Control Order
21

1985 has specified the bio-fertiliser quality requirement first time in its amended version of
June 2006.

PRODUCT MIX
Straight Fertilizers
Ammonium Sulphate :- Containing 20.6% N in Ammonical form and24% sulphur, an
important secondary nutrient.
Ultraphos: - FACT markets imported Rock Phosphate containing 32%P2O5
under the brand name "Ultraphos". This high analysis fertilizer is found suitable for
application especially in Coconut/ Rubber/ Oil Palm/ Tea Plantation. .

Complex Fertilizers
Factamfos 20:20:0:15 :- NPK complex fertilizer - Factamfos or Ammonium Phosphate
contains 20% N in ammonical form, 20% P in water soluble form and 15% sulphur; a
secondary plant nutrient, which is now attaining great importance in agriculture. Factamfos
also can be used for foliar spraying.

NPK Mixtures
NPK Mixtures:- FACT prepares crop specific standard mixtures for allcrops in Kerala and
also special NPK mixtures for plantation crops like Tea, Coffee, Cardamom, Rubber etc.
Rose Mixture :- A fertilizer tonic for Roses.
Vegetable Mixture :- A special blend exclusively prepared for vegetable.
Garden Mixture - A special nutrient combination for both flowering and foliage ornamental
plants.

Imported/ Traded products

- FACT has entered into direct import of MOP and also trading of Imported Urea.
Bio fertilizer
22

- FACT produces and markets 'N' fixing Bio fertilizers -Rhizobium, Azospirillium and 'P'
solubilising bio fertilizer -Phosphobactor.

CHEMICALS
Anhydrous Ammonia :- FACT produces Ammonia of over 99.96% purity.
Sulphuric Acid - FACT has one of the largest plants in Asia and it manufactures Sulphuric
acid of 98% purity.
Caprolactum :- It is the raw material for Nylon-6. The product quality of FACT Caprolactum
is among the best available in the world.

Nitric Acid and Soda Ash - Small qualities of these are obtained from Caprolactum plant as
by product.
Nitric acid (55%)
Capacity : 3800 TPAConcentration (by weight) : 55% (min.)Ammonium Nitrate (by weight)
: 1% (max.)Specific gravity at 200C : 1.339Delivery : Ex-factory - tanker load
Soda ash (off grade)
Capacity : 4750 TPA Total alkalinity (as Na2CO3) (by wt) : 95% (min.)Sulphate (as Na2SO4
) (by weight) : 1.5 to 3%Bulk density (g/L) : 1.35 to 1.50Delivery : Ex-factory -bulk

23

ORGANISATIONAL STRUCTURE

CMD

DIR FINANCE

DIR MARKETING

DIR TECH

G.M.MARKETIN
G

KERALA
TAMIL
NADU

GM HR

C.V.O

G.M.CP & PC

CM SALE

CM
DISTRIBUTION

CM
AGRONOMY

JGM UD

GM CD

GM UC

G.M.MATERIAL

CM PURCHASE

GM F&F

ANDHRA
PRADESH
KARNATA
KA

JGM PD

CM
MAINTENENC
E

CM
PRODUCTION

CSP

CM FEW

MGR TRAFFIC

MGR STORES

CME

TRAFFIC

AMMONIUM
SULPHATE

PE

AMMONIUM
PHOSPHATE

PHOSPHORIC
ACID

PE

SULPHURIC ACID

CM FEDO

PE

AMMONIA

MGR STORES

MGR
QUALITY

MGR SAFETY

MGR R&D

CHART NO:1

ABBREVATIONS OF ORGANISATION CHART

DIR- DIRECTOR
TECH- TECHNICAL
C.V.O- CHIEF VIGILANCE OFFICER
C.P- CORPORATE PLANING
24

COMPANY
SECRETARY

P.C- PRODUCTION COORDINATION

CD- COCHIN DIVISION
UC- UDYOGAMANDAL COMPLEX
F & F- FEDO & FEW
JGM- JUNIOR GENERAL MANAGER
UD- UDYOGAMANDAL DIVISION
PD- PETROCHEMICAL DIVISION
CM- CHIEF MANAGER
C.S.P- CHIEF SUPERINTENDANT PRODUCTION
C.M.E- CHIEF MECHANICAL ENGINEER
MGR- MANAGER
P.E- PLANT ENGINEER

25

CHAPTER 5
FUNCTIONAL DEPARTMENTS

26

FINANCE DEPARTMENT

1. OBJECTIVES
To Manage & account for the financial resource of the Organization, to forecast its
requirement in the future and plan accordingly and to check for deviation.

Report the financial performance of the company to Management, stakeholders & and to
comply with the Govt. rules and regulations

2. ORGANISATIONAL CHART OF FINANCE DEPARTMENT

DIR FINANCE

DGM IA

DGN FINANCE

MGR IA

CM BILLS & MAT

CM SALES

CM COSTING
BUDGET,MIS

CM GEN A/C

MGR CASH BANK

& PAYROL

MGR(TAX &
DUTIES)

CHART NO:2

3.FUNCTIONS OF FINANCE DEPARTMENT

Some of the main functions are Payroll, billing, Preparation of journal, ledger and trial
balance, Banking, Financial resources & materials accounting, Budget preparation, Cost
accounting, Auditing, Preparation of financial statements & reports, Corporate Planning.

\
27

4.PROCESS OF FINANCE DEPARTMENT

Finance department in FACT is divided into five sections for carrying outfits process. They
are:
1.Bills & Materials
2.Sales
3.Costing, MIS, Budget
4.Cash, bank & Payroll and
5.Tax & duties
BILLS & MATERIALS-The main functions are Stores accounting and Receiving, Dispatch
and holding of bills
Bills section
Bills section deals with the contract account for execution of civil works and
other construction/erection, maintenance and services.
It includes:

1.Sale of tender form

2.Remittance of EMD
3.Remittance of security deposit
4.Issue of materials to the extractors
5.Receipts to certified bill in the specified format
6. Security on running account bills and final bill
7.Statutory procedures and formalities in works contract

Stores accounting
Main functions of stores accounting are
1.Receipts of stores
2.Issue of stores
3.Returns of stores
4.Value adjustments
5.Reconciliation with control accounts
6.Unconsumed materials lying at site at the close of financial year

SALES ACCOUNTING
Some of the functions are
28

1.Accountability for selling and distribution of products & by-products

2.Recording the transaction
3.Transfer of information from depots to HO
4. Compilation of reports.

THE COSTING, MIS AND BUDGET SECTION is concerned with ascertaining the cost
of production, providing information, helping to prepare a budget, forecasting the
performance and finally making a plan.
Cost accounting
Identification of the cost centre - Direct expenses is recorded to the respective cost centre.
Indirect expenses are separately booked and allocated at the end of the year. Cost sheet is
prepared in two ways. The item in the cost sheet is compiled on the basis of process of the
products or on the basis of elements of the product.
Cost centre in Ugyogamandal Division
Process water, DM water, Steam, CPP, Ammonia, Sulphuric Acid, So2/Oleum, Phosphoric
acid, Pollution Control, Ammonium Sulphate, Ammonium Phosphate
Classification of cost
Variable cost
-Raw Materials, Intermediate products, Consumable, Products, Utilities, Packing materials,
Pollution control expenses.
Fixed cost
-Fixed cost of a product mainly consists of conversion cost of the product of Salaries and
wages (Direct, Indirect, Administration &Maintenance),Staff welfare expenses, Insurance,
Plant maintenance, Depreciation, Factory overheads, Administrative overheads, Head office
overheads, Gratuity and bonus, Interest on term loans and working capital.

MIS (Management information system)

To provide the management with vital facts which affects the efficient running of the
business for decision making on planning, organizing and controlling the major activities of
the organization and initiating suitable action.
MIS Briefly consists of:
1.Divisional Reports- Two monthly reports for each division - one for the finance department
and another for the GMs office
29

2.P & L Account-Statement and its analysis

3.Production performance of the division
4.Inventory position
5.Cost of production-Actual and budget for the month
6.Specific information important for the management-Major projects, man-hour utilisation
etc.

Budgeting
Two types of budget-Revenue and Capital budget Two types of estimates- Budget estimate
and revised estimate
Revenue Budget
Every year early in August detailed production targets and norms for consumption of
materials for remaining portion of the current year and also for the next financial year are
prepared by the head of Divisions.
Capital Expenditure
Shows all items of capital expenditure to be undertaken during the budget period like
expenditure on acquisition of new assets like machinery, furniture and office equipments
which have reasonable life; expansion of existing facilities and modification and
improvements to plant and machinery resulting in i) increase in capacity ii) Increase in useful
life iii)Improvement in quality of output and iv) reduction in cost of output istreated as capital
expenditure.
Budget revision
While preparing the next years revenue budget, the revenue budget for the current year is
revised, based on the actual from April to September and the anticipated trend for the
remaining period.
Monthly report
On closing of the accounts of the months a monthly P & L account is prepared for each
Division and the same is send it to the Division Head,FD and CMD. This report would give a
comparison of the actual for every month against budgeted performance.

THE CASH, BANK AND PAYROLL SECTION is concerned more with the day to
day activities and less of future forecasting & planning.

30

Cash and Bank Accounts Section

The various functions include:

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

2.Payment of cash, cheques, bank drafts, and letters of authority
3.Handling of bank deposits/withdrawals, custody of cash and inter unit transfer of funds
4.Maintenance of petty cash books and cash books
5.Reconciliation of bank accounts
6.Security arrangement of cash handling
7.Safe custody of valuable documents
8.Cash interests calculation
9.Any other duties assigned by authorized officer
Payroll Section
Functions of the section are:
1.Preparation and disbursement of salaries and wages to managerialand non-managerial
employees
2.Effect various recoveries through payroll and remit the same toconcerned agencies
3.Processing of various personal payments advances
4.Keeps books of account for the above transaction

TAX & DUTIES SECTION

is concerned with calculation & payment of various taxes and duties to the Government.

SOME KEY INFORMATION

Insurance schemes
Insurance schemes have undergone a drastic change in FACT due shortage in working capital
and lack of profit. From the earlier view of insuring everything under all, FACT prefers
selective coverage.E.g. Fire insurance is done only in departments or plants prone to fire.
Deciding on insurance scheme is not the prerogative of finance department alone. The
engineering department has to approve the plan and after the department wise approval, the
corporate level approval has to be obtained.
The various insurance schemes are:
1.Fire Insurance.
2.Machine break down insurance.
31

3.Electronic equipment insurance.

4.Fidelity insurance and cash in transaction/cash at safe/payroll insurance.
5.Insurance for vehicles and heavy equipment.
6.Open transit risk for all inland and all foreign purchases.
7.Loss on profit insurance.
8.Personal accident insurance.
9.Storage insurance.
10.Insurance for stock of finished goods, raw materials, industrial stores.

Corporate plan
Corporate plan is prepared by taking estimates and future projections for 5 years. The
corporate plan is revised every year by deleting one year in the
beginning and adding one year at the end, keeping the total budget period as 5 years. This
plan projects the companys position for the next 5 years.
Foreign Currency Management
A Committee is formed to look into and take decisions on a periodic basis relating to the
foreign currency. The committee has been constituted with chief of internal audit as chairman
and members being the chief of finance, head of Cochin division, petrochemical division and
head office.

Working Capital management

The Working capital is essential for any Organization to meet its day to day requirements.
Working capital may be specified as the firms current assets over current liabilities. As a
large scale company, FACT also requires sufficient working capital to meet its daily
requirements.

FACT uses letter of credit and bank guarantee mainly for the purpose of financing the import
of raw material. If it has to avail more than the assigned quota the finance department will
have to take permission of Board of Directors. FACT approaches different banks to meet its
working capital requirement and FACT maintains a consortium of banks for the same. They
are:
BANKERS SUPPORTING FACT:
1.State Bank of Travancore
2.State Bank of Hyderabad
32

3.State Bank of India

4.Bank of Baroda
5.Bank of India
6.Canara Bank
7. Dena Bank
At present FACT has availed cash credit facility up to an amount of Rs.188 crores and letter
of credit up to Rs. 100 crores and bank guarantee upto limit of Rs. 15 crores.
Auditing
Various types of audits in FACT are:
Statutory audit ,Government audit, Cost audit ,Income tax audit, Sales tax audit an Internal
audit.

Internal Audit Section

Some of the main functions are
1.Operational/ systems/ management audit
2.Proprietary audit and audit of sanctions
3.Routine audit
4.Surprise verification of physical stocks
5.Special audits and studies

CHALLENGES OF FINANCE DEPARTMENT

Working capital crunch Due to which

Up gradation of plants & machinery is not possible

High quality equipment cannot be purchased. For the same reason, FACT goes for the
lowest quoting bid.

Cannot maintain adequate stock of fertilizer for combating shortage

Lack of flexibility in production

Low availability of credit due to non-payment of loans & security to keep for loans.
Due to which the organization:

33

Cannot grow and therefore stagnates.

Cannot compete with other fertilizer companies due to lack of fund

MATERIALS DEPARTMENT
OBJECTIVES
1.To control and account for the materials in the organisation
2.To ensure the availability of materials and its quality.

ORGANISATIONAL STRUCTURE OF MATERIALS DEPARTMENT

GM MATERIAL

CM PURCHASE
RM

MGR TRAFFIC

DY CM RAW
MATERIALS

MGR.F.F.T.S

MGR.E.S.S

MGR STORES
CHART NO:3

FUNCTIONS OF MATERIALS DEPARTMENT

include:
1.Importing raw materials under the approval of
safe purchase committee constituted by the Board of Directors
2.Maintaining adequate raw materials needed for production
3.Procurement of Machineries, Intermediaries, equipment & spares

34

4.Inspection of Materials
5. Transportation of Raw materials, Products and By-products
6.Accountability for materials
7.Purchase of stationary, and other Equipment needed by individual department
8.Vendor Development
This department is divided into 3 Sub Departments. They are:
1.Purchase
2.Stores
3.Traffic (Logistics)

PURCHASE DEPARTMENT
The purchase procedure covers the following areas of procurement of goods and services for
the company.
1.Capital items (For project and other purposes).
2.Equipment and spares.
3.Raw material & Intermediary materials
4.Package items involving design, supply, erection and commissioning.

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

1.Raw materials
2.Equipment spares and supplies
3.FEDO & FEW Transport, Contracts and Stores.

RAW MATERIALS SECTION

Objectives
1.Purchase of materials for production, from India and abroad
2.Make available adequate amount of material at the right time
3.Follow a fair & transparent procedure in the above activities
Functions
1.Importing raw materials under the approval of safe purchase committee constituted by the
Board of Directors
2.Procurement of Materials needed for production
3.Determination of quantity of materials required
4.Issue of Purchase order
5.Pre & post dispatch Inspections
35

6.Insurance
7.Payment
Raw materials are Sulphur, Rock phosphate, Furnace oil, Naphtha, Ammonia, Benzene,
Phosphoric Acid, Caustic soda and Sulphuric Acid.
RAW MATERIAL PROCUREMENT PROCESS

PURCHASE
REQUISITION

BID EVALUATION &

FINANCIAL
CONCERENCE

VENDOR DEVELOPMENT

ENTERING INTO
CONTRACTS

PURCHASE ORDER

RAW MATERIAL
REQUIREMENT

RAW MATERIAL
TRANSPORTING
RAW MATERIALS
DEPARTMENT

RAW MATERIAL STORING

PAYMENT

INSPECTIONS

PRODUCTION PLAN

CHART NO:4

CHALLENGES TO RAW MATERIAL PROCUREMENT

1.Scarcity of Raw materials
2.Sky rocketing prices
3.Shipping Problems
4.Working Capital crunch

EQUIPMENT & SPARES SECTION

Objectives
1.Purchase of Equipment & spares from India or abroad
2.Make available spares at the right time
3.Follow a fair & transparent procedure in the above activities
Equipment & Spares Include
1.Capital items like heavy machinery or plant (For project and other purposes)
2.Equipment and spares
3.Package items involving design, supply, erection and commissioning
Functions
36

1.Importing materials under the approval of

safe purchase committee constituted by the Board of Directors
2.Determination of actual requirement by checking with stores, technical department,
management and giving specifications
3.Vendor Development
4.Bid evaluation & financial Concurrences
5.Entering into Contracts
6.Issue of Purchase order for equipment & spares
7.Inspections of materials and stores
8.Insurance
9.Payment

EQUIPMENT & SPARES PROCUREMENT PROCESS

The User departments give their requirement which is validated by the Technical department
and is finally approved by the management for issue of purchase requisition. The purchase
requisition is checked with the stores stock. If the store already has the item then it is supplied
to the concerned department; otherwise items are procured with the help of a vendor. In case
of specific goods such as tube light, bulb and fan vendor are already specified by the
technical department and approved by the management. Whenever the user department needs
them the store department moves forward to procure them. The process can be
diagrammatically as follows:
USER DEPARTMENT
REQUIREMENT

RAW MATERIAL
PROCUREMENT

PAYMENT

INSPECTIONS

MATERIAL
PROCUREMENT

VALIDATING
REQUIREMENT
DESPATCH

PURCHASE
ORDER
PURCHASE
REQUISITION

YES

AVAILABLE AT
STORES

ENTERING INTO
CONTRACTS

NO

VENDOR
DEVELOPMENT

CHART NO:5

37

BID EVALUATION &

FINANCIAL
CONCURRENCE

Purchase order
Detailed purchase order is issued soon after the letter of intent and normally within 30 days
of issue of letter of intent.
Inspection & Monitoring
The materials department performs expediting of orders. In certain cases other agencies
appointed for the purpose. Materials department continuously monitors vendor's performance
to ensure timely delivery and periodic status reports is made available to all concerned
departments. Inspection may be carried out by FACT or by third party inspection agencies,
depending on the nature of items and facilities available. Department authorized for the
inspection, receives the dispatch document. The department responsible for the clearance
maintains a register for dispatch documents and updates entries on a day-to-day basis.
Payment of freight/certification of freight bills
It is the responsibility of the department head entrusted with clearance of goods. All goods
cleared from the carrier are forwarded to the receiving
section of the stores department or department authorized for this purpose. In case of bulk
materials like stationeries, the consuming department directly receives raw
materials/intermediates the goods. Materials received against turnkey jobs awarded to
agencies responsible for supply, transport, storage and erection are not taken into stock by
stores department.
Rejection/Damage of Materials
Rejected consignment is kept separate and the stores/receiving department send a first
information report to the supplier with the copy to finance and purchase department. In all
cases of rejection / shortage/damage other than for reasons attributable to supplier, the stores
department takes up the matter with the insurers under advice to finance department. Follow
up of the claims and settlement with insurer is done by finance department.
VENDOR DEVELOPMENT
Vendor Pre-qualification
Pre qualified vendor list shall be maintained by materials department. The vendor list
comprise of all pre-qualified vendors under each category stating clearly the respective
capability in terms of volume of work, specification, level of technology, etc with rating of
the vendors. Addition/deletion to vendor's lists is made on a continuous basis on the above
criteria. There are three types of Purchase Requisition (PR) as follows:
1.For projects and major capital equipment
38

2.For stores, including stationary and office supplies, spares

3.For services
Inviting Bid
Bids are invited by giving Advertisements in news paper, magazines, media, website etc. The
Purchase Manager invites the bid. Normally, 30days from the date of enquiry is given for
submission of bids in limited tenders. For open tenders, 30 days from the date of appearance
of advertisement is prescribed.
Receipt and opening of bids
Bids are opened by officers from finance, administration and purchase Department. Bidders
representatives read the Bid which consists of Prices, taxes and duties, payment terms,
delivery period, performance guarantee and brief description whichever is relevant.
Bid evaluation and financial concurrence
The technical part is forwarded to the indenting department by the purchase department as
soon as the bid opening formalities have been completed. The steps involved in bid
evaluation are:
1. Technical evaluation by indenter in consultation with other technical experts, where
necessary
2.Commercial evaluation by the purchase department in consultation with other concerned
departments
3.Review and approval of technical and commercial evaluation by the competent authority to
determine the bids, which are technically and commercially suitable
4.Comparison of prices and financial evaluation by purchase department in consultation with
other concerned departments
Financial Concurrence
For purchases above Rs. 25000, the purchase recommendation is forwarded to finance
department. Sanctioning authority is formed as per the delegation of powers. After financial
concurrence, the proposal is forwarded to the sanctioning authority through purchase order.
CHALLENGES OF EQUIPMENT & SPARE SECTION
1.Approval of Bids on the basis of lowest quotation where sometimes quality is compromised
2.Low working capital to maintain sufficient stock of goods
FEDO & FEW, Transportation & Stores (FFTS) Section
The Functions of the section are:
1.Project related procurement for FEDO & FEW
2.In-house procurement for FEDO & FEW
39

3.Storage of Raw materials

4.Raw material transportation & Technical assistance for handling

STORES DEPARTMENT Objectives

1.Collection and receiving of materials purchased
2.Inventory Management & Control
3.Issuing materials to user departments
4.Disposal of surplus and obsolete materials
Functions
1.Receiving
2.Holding
3.Inventory Control
4.Issuing
5.Disposal
PROCESS FLOW IN STORES DEPARTMENT

RECIEVING

INSPECTING

INVENTORY

HOLDING

MANAGEMENT

DISPOSAL

ISSUE

CHART NO:6

Codification and classification

All stocks items bears a 9 digit code prepared on a significant numbering system. First digit is
allocation for UD, CD and PD. Second to sixth digit classifies materials to mechanical,
electrical and general items. The materials received are classified and arranged into 6
compartments-A, B,C, D, E and F, each consisting of 20 shelves numbered from 1 to
20.According to the above classification, the shelves are allocated for each material.
Procedure followed
When a material is received, the stores officer inspects the items and is approved by the
stores manger for holding in the stores after verification. The store in charge allocates
materials to the specified shelf and records the data in the Bin card. The store officer updates
the data in the MIS. And for issue of materials, the requirements forwarded by the
40

departments is verified and approved by the manager for dispatch. The issue is and recorded
in the MIS. However, for disposal the list of items to be disposed is forwarded to the
management by the stores. Approved items are disposed or sold for scrap value and recorded
in the MIS. Store irresponsible for all activities for ensuring inventory control,
commissioning of codes and disposal of scrap. Materials move into store only after inspection
conducted by store employees. Technical department help is sort wherever required. Obsolete
items are disposed.
MIS
The stores maintain all its data in the computer and are updated every time movement of
materials takes place. The MIS gives the current status of inventory and helps in the speedy
replenishment of stock when required. The MIS used is the OIIS (online integrated system).
Items in the stores are known to the management and other departments which need that
information. During the stock verification, the figures in the MIS and physical stock are
tallied.
Stock verification
Stock verification is done by physical stock verification Team (PSVT) are attached to finance
department. A and B items are verified once in a yearend C items once in 2 years. For
those which are not covered under ABC analysis XYZ is taken and frequency of verification
is once in a year for X & Y Items and once in 2 years for Z items. Along with this
officer, stockholding in-charge verifies stock daily and submits the report to PSVT and when
they come for inspection, the deviations in the report are clarified.
INVENTORY ANALYSIS DONE IN FACTA-B-C Analysis
ABC analysis is prepared by the computer centre based on the value limits of: A Items > Rs
50,000, B Items < Rs 50,000 and > 5,000 and C Items
<Rs 5,000. Computer centre prepares the list on basis of annualconsumption. Accordingly,
items A are given more attention and require more control.
F-S-N Analysis
Here, analysis is based on the consumption rate. Items moved within the last 5 years may be
classified as Fast moving(F), and those moved between last 5 to 10 years are slow moving(S)
and those not moved within last 10 years are non-moving(N). The last two groups are
reviewed further to decide on disposal.

41

X-Y-Z Analysis
This analysis is done on the basis of stock in hand at the end of the financial year. 80% value
of total inventory is labelled as X, 15% value of total inventory as Y, 5% value of total
inventory as Z.
For spares-E-D Analysis Vital (V), Essential (E), and Desirable (D)Vital are those spares whose non-availability
results in very high production down-time loss and/or entails very high cost due to emergency
purchase. Essential spares are those whose non-availability is expected to cause moderate
production down-time. Desirable spares are those whose non-availability does not resulting
in any significant production down timeless. The list is reviewed once in 2 years.
CHALLENGES FOR STORES
1.Maintenance due to shortage of labour
2.Low stock of goods maintained due to shortage of Funds

TRAFFIC DEPARTMENT
Objectives
1. To ensure Loading and despatch of products
2.To ensure right quantity and right product to right vehicle and to the right destination
Functions
1.Loading
2.Arrangement
3.Movement Traffic department is responsible for the dispatch of products to various
markets. They maintain contacts with market department and production departments. The
dispatch section of marketing division gives the demand of various depots in each state to the
traffic department. Based on this, schedules are formed and product is dispatched.
Process flow in traffic department
The marketing division selects the depots where fertilizer has to be transported and gives the
dispatch information to the traffic department. The traffic department selects the vendor for
transport. Depots are allotted to vendors by the department.

42

MARKETING DIVISION

DEPOT

TRANSPORTATION

MDA ISSUE

DESPATCH INFORMATION

TRAFFIC DEPARTMENT

SIGNED MDA

WEIGHING

PAYMENT
VENDOR(TRANSPORT)

VEHICLE IN SLIP ISSUE

LOADING

CHART NO:7

The vendors are issued a vehicle in slip which is a slip for the vehicle to go into the loading
site in which the destination, vehicle no, product or by product to be loaded are recorded.
Before loading the empty weight of the vehicle is taken and after the loading the weight with
the load is taken by the C.I.S.F Security men. If deviation more than the specified limit is
noticed, the goods are either unloaded or reloaded. A copy of MDA(Material Dispatch
Advice) is given to the lorry driver for dispatching to the concerned depot. When the goods
arrive at the depot message is passed to the department. And the signed copy of MDA is
returned to the department by the Vendors so as to enable him to collect payment. If the load
dispatch is found damaged, loss in quantity noticed, penalty is charged from the vendor.
FACT has permanent workers for loading activity. The department engages contracts to
transport finished products from the plants to different depots or to the customers. Packing
the materials in the bag is also the responsibility of the department. The product is bagged in
HTPG bags. The product is transported by, trucks and railway wagons. There is a private
railway siding for FACT at Kalamassery and also at Cochin Division. A full rail wagon takes
2200 tones of product. A godown at Kalamassery stores fertilizer. Lorries and trucks for the
transportation are chosen based on the tender.
Major Transport Contracts

A.S.R.T- A.S.R transport

B.T- Bharat Transport

COSMO- COSMO Carriers

E.L.F- Expert Liner Enterprise

L.R.L- Lucky Road line

43

J & P- J & P Enterprise

M.R.D- M.R.D Transport

P.K.A- P.K Aboobacker & Co

P & P- P & P Logistics

S.K.L.S - Sree Krishna Lorry Service

S.P.M- S.P Muthuraman

U.R- Union Road ways Limited

Optimisation Techniques
1.Transportation by railway14 wagons of train booked at a time helps reduction of cost.
2.Outsourcing of Logistics Certain issues like labour, vehicle repair can be overcome. This helps
in preserving the core competence of the department.
CHALLENGES OF TRAFFIC DEPARTMENT
1.Lack of fleet management system
2.Labour issues
3.Vendors Performance & Review
PRODUCTION PLANNING DEPARTMENT
1.OBJECTIVES
1.Production planning
2.Co-ordination of production function
3.Co-ordination with Maintenance and Production department.
2.ORGANISATIONAL CHART OF PRODUCTION DEPARTMENT
JGM(UD)

CM PRODUCTION

MAINTENANCE

PRODUCTION

C.M.E

C.S.P

TRAFFIC

AMMONIUM
SULPHATE

SULPHURIC ACID

44

AMMONIUM

AMMONIUM
PHOSPHATE

PHOSPHORIC
ACID

CHART NO:8

FUNCTIONS OF PRODUCTION DEPARTMENT

Planning daily production according to annual target
2.Submitting Plan to govt. and getting approval
3.Monitoring actual production & checking any deviation
4.Making revision plans according to actual production
5.Maintenance of plants
PRODUCTION PROCESS

START HERE
PRODUCTION TARGETS

PLANT MAINTENANCE

APPROVAL OF PRODUCTION
PLAN

CHECKING DEVIATIONS
FROM PLAN

RAW MATERIAL AVAILABILITY(RM

DEPT)

MONITORING PRODUCTION

CHART NO:9

Annual production targets for the next year are prepared based on installed production
capacity of the plant and production data for the previous year. Necessary feedback is also
taken from marketing department while fixing the production targets. The production targets
thus fixed are presented to the corporate office for review and approval by CMD and the
plant managers are informed of the same. The production and consumption ratios for the
previous years are duly considered. All the data are compiled to form the production budget.
A copy of the production budget is sent to the finance department for preparing finance
budget. The production plan and budget are then presented to the govt. for approval. The
production budget then acts as the basis for further performance monitoring. Based on the
production plan, purchase department initiates action for procuring raw materials. In the
event of any change in the annual production plan becoming necessary, the corresponding
change in the raw material, requirements are intimated to the purchase department.
Production planning department receives data from all the plant and other interfacing
departments and compiles them. Various MIS reports consist of

daily production reports,

monthly reports and yearly reports they are sent to the management.

45

FEATURES OF PRODUCTION PLAN

1.Production plan is based on the idea of producing the maximum withavailable raw material
and production capacity of plant.
2.Day- to-day production is planned according to raw materialavailability.
3.Daily production plan is prepared and likewise annual plan is alsoprepared.
4.Day wise production plan is monitored.
5.Production plan is always flexible.

PLANTS AT UDYOGAMANDAL DIVISION

1.Ammonia plant
2.Ammonium Sulphate plant
3.Ammonium Phosphate plant/ FACTAMFOS4.

Acid Plant

Ammonia plant
The capacity of the Ammonia plant is 900 TPD. The investment for the plant was about
Rs.618 Crores. The plant has economy scale size and employs state of Art technology for the
process engineering and control systems.

Acid Plants
Sulphuric acid plant
The Sulphuric acid plant is designed to produce 1000 TPD of monohydrate. The plant is
based on the double conversion, double absorption process and was designed by FEDO in
collaboration with Davypower gas Plant.

Phosphoric acid plant

The Phosphoric acid plant is designed to produce 360 TPD of P205
through the dehydrate route. The plant designed by FEDO in collaboration with
Messer society de prayon of Belgium
employs the prayon convertible process to give a product having strength of 30% P205
46

. A separate concentration section is provided to concentrate this weak acid to strong acid
having strength of 45% P205

Ammonium phosphate Plant

The complex fertilizer plant was designed to produce quantities of N P Kfertilizers of
various grades. FACTAMFOS Consists of NPK and S in theratio 20:20:0:13.

PRODUCTS
1.Ammonium Phosphate/ FACTAMFOS
2.Ammonium Sulphate
3.FACT urea
4.Muriate of potash
PRODUCTS

TPD (IN MT)

TPA(IN MT)

NP:20:20(FACTOMFOS)

450

160000

AMMONIUM SULPHATE

667

210000

SULPHURIC ACID

1150

338570

PHOSPHORIC ACID

100

18000

TPD :-TONNES PER DAY

TPA :-TONNES PER ANNUM

TABLE NO:5

OPTIMIZATION OF PRODUCTION
The company is making all efforts to optimize production and reduce losses. Steps are being
taken to enhance the procurement of sulphuric acid as well as phosphoric acid. Steps are also
being taken to explore the possibility to import sulphuric acid.

ADHERENCE TO ISO IMPLEMENTATION

Do what you write or write what you do
1.FACT has a well defined procedure for production. So according to ISO implementation it
writes whatever it does.
2.Production standards are also kept as per ISO standards.
47

CHALLENGES OF PRODUCTION DEPARTMENT

1.Raw material scarcity is upsetting the entire production plant.
2.Working capital shortage is affecting the smooth functioning.

Around the globe, 2008 has witnessed acute shortage of raw materials and various natural
resources affecting various industries badly. Sulphur prices over the year have gone up 10
times and 5 times in case of naphtha. However, LNG can be substituted for naphtha which
again is witnessing an acute shortage. Some raw materials like Rock phosphate and Sulphur
are being imported, which again invites shipping problems for FACT being its demand for
raw materials is in low quantity. In addition Fertilizer industry is being looked upon as a sick
industry, even from the government side. The subsidy is not given by analyzing the real
situation.

MARKETING DEPARTMENT
GENERAL INFORMATION
Fertilizer Marketing is different from other product marketing. Fertilizer has a high demand.
Therefore, it can be termed as a
sellers market
.However, its demand is seasonal and is very much dependent on the Monsoon. Market
penetration is very difficult, and once a company captures a market its brand is substituted for
the product. The brand image plays an important role. The whole market is also dependent on
farmers awareness about fertilizers. All of these call for a planned marketing effort and huge
requirement of funds to meet the seasonal demand of fertilizer.

OBJECTIVES

Monitoring of sales & distribution

Study & respond adequately to the information from market research department and from
field establishment .
Liaison with bulk buyers, central and state government officials and officials of fertilizers
association of India
48

ORGANISATIONAL CHART OF MARKETING DEPARTMENT

DIR
(MARKETING)

GM(MARKETING)

CM SALES

C.Ag.AGRONOMY

CM
DISTRIBUTION

AM (KL)

AM(KAR)

AM(T.N)

AM(AP)

CHART NO 10
C.Ag-CHIED AGRONOMIST,

AM-AREA MANAGER

FUNCTIONS OF MARKETING DEPARTMENT

1.Sales
2.Market Research
3.Agronomy
4.Preparation of sales report
5.Processing and sending replies to audit queries at the divisional level
6.Liaison with bulk buyers, central and state government officials and officials of fertilizers
association of India
7.Sales force motivation through internal and external training programmes The marketing
department consists of various sub departments organized on the basis of their function. They
are:
1.Sales Department
2.Distribution Department
3.Agronomy

SALES DEPARTMENT

49

The sales department is headed by a Chief Manager who is responsible for sales coordination
of function across various depots, conduct an effective market research for analyzing market
and calculating the demand and finally promote the sales of FACT products. FACT today
holds major market share in Kerala, 11% in Karnataka and 6% in other states.

Main products
1.FACTAMFOS/Ammonium Phosphate
2.Ammonium Sulphate
3.FACT Urea
4.Muriate of potash
Sales Promotion Tools of FACT
FACT over the years have innovated various techniques of sales promotion. Many of them
are recognized as effective tools of promotion by national and international agencies. These
techniques are mainly grouped into two:
1.Mass Communication Techniques
2.Personal Contact Method
Mass Communication Techniques
This method involves catering to a large number of people in the
shortesttime possible. Advertisement are done through Films, Exhibition ,Radio jingles,
Hoardings, Posters, Farmers awareness programmes in AIR, Wall Painting, Advertisement ,
Direct mail service etc.
Personal Contact Methods
As the name implies, in this method, more personal and closer contact with farmers are
developed through promotional methods. The methods adopted by FACT are through
Demonstrations, Block demonstrations, Soil testing, Seminar, Study classes, Co-operative
training programmes, Dealer training, Squad programmes etc. Realizing the importance of
bringing the essential agricultural inputs and facilities for advisory service under single roof,
FACT has converted its major selling points into Agro Service Centres rendering service to
farmers. These centres advise the farmers on modern farm management techniques, credit
availability, marketing prospects etc. It also prepares detailed farm plans for each farmer
according to his agriculture pattern. FACT is the pioneer in fertilizer education and sales
promotion programs. These consist of fertilizer festivals, study classes, seminars, Krishi
VigyanKendras (KVKS), crop campaigns, crop demonstrations etc., with an ideal blend of

50

information and entertainment to drive home the message of balanced fertilizer use for
increasing crop production. The creative and
novel education programs like village adoption of FACT have gained national recognition.

DISTRIBUTION DEPARTMENT
Physical distribution of products is a major function of the marketing division. Chief
Distribution Manager is entrusted with planning, monitoring and implementing of product
distribution and co-coordinating the movement from production units and ports. Marketing
operations of FACT in respect of fertilizers follow a completely centralized pattern. The
marketing network of FACT is spread over the southern states of Kerala, Tamil Nadu,
Pondichery, Karnataka and Andhra Pradesh. In each state there are 4 area office and 16
regional offices. The distribution network consists of 100 Agro Service Centres, 50 field
storage points and over 7900retail selling points in these states, and serves the farmers by the
supply of fertilizers and agronomy advice. Through innovative farmer education and fertilizer
promotion programmes, FACT has created awareness about scientific cultivation
and fertilizer use. The states offices are called area and their sub- divisions are called regions.

AREAS

REGIONS

KERALA

ALLEPY

PALAKKAD

KOTTAYAM

KANNUR

TAMIL NADU

COIMBATORE

TRICHY

MADURAI

VELLORE

KARNATAKA

MANGLORE

BANGLORE

BELGAUM

HOSPET

ANDHRA PRADESH

HYDERABAD

VIJAYAWADA

KAKINADA

VELLORE
TABLE NO :6

MARKETING OPERATIONS
AGRO SERVICE CENTRES

100

SWC/CWC POINTS

43

SOIL TESTING LABORATARIES

AREA & REGIONAL OFFICES

20

FIELD SALES OFFICES

100

DEALER POINTS

7759
TABLE NO :7

51

AGRONOMY DEPARTMENT
Fertilizer sales are highly dependent on farmers awareness on modern techniques of farming
by using fertilizer for high productivity. Awareness creation involves an elaborate and wellplanned farmer education and fertilizer promotion program, which in turn calls for a
multiplicity of activities. Chief Agronomist has overall charge of the agronomy department,
which renders technical guidance, and supervision of all agronomy services.
PROCESS OF MARKETING DEPARTMENT
START HERE
SALES REPORT
MARKET RESEARCH

AGRONOMY

FINDING THE DEPOTS

SELLING PRODUCT

CALCULATING
REQUIREMENTS

DISTRIBUTION
CHART NO 11

Market Research department takes care of collection, analysis and interpretation of data
pertaining to fertilizer market and preparation of product wise, month wise and annual sales
plan for each area. Agronomy prepares the farmers to buy fertilizers. The sales department
monitors and reports competitor's sales and collects, scrutinizes, analyzes and compiles
region wise and area wise sales of performance and purchased
productsfor providing information to management on achievement against thetarget. The
distribution department finds out the various depots as per the information given by sales and
sells the products and subsequently sales report is prepared.

Marketing research
Marketing Research Department is essential for the success of marketing function. The main
function of marketing research is the collection, analysis and interpretation of data pertaining
to fertilizer market.

Functions
52

1.Preparation of product wise, month wise annual sales plan for each area.
2.Publication of annual report of division
3.Monitoring and reporting of competitor's sales as per perform a prescribed
4.Collection, scrutiny, analysis and compilation of region wise, area wise sales performance
of own and purchased products for providing information to management on achievement
against the target on a daily basis.
5.Submission of monthly performance report of the division to the CMD
6.Ensuring product availability, dispatch monitoring and inventory control
7.Submission of various statements to FAI for publication in their fertilizer statistics
yearbook.

Performance of the Marketing Division during the financial year2012-2013 as compared

to the financial year 2011-2012.

During the financial year 2012-2013 the fertiliser sales was 7.40lakh MT as against 8.40 lakh
MT during the previous year. Sale of Factomfos during the year was 541966 MT as
compared to 582471 MT during the year 2011-2012 .The sale of Ammonium sulphate during
the year was 134720MT as compared 175524 MT during the previous year.
CHALLENGES OF MARKETING DEPARTMENT
8.1.

Improper Subsidy poli cyGovt. Subsidy policy does not take into account the technology used
for production & cost of raw materials, and comes to the organization after a long gap after
actual sales, which leads to acute shortage of working capital.

Lack of fund for research activities

Narrow product range

Unnecessary intervention of state and central governments in distribution & sales

Recurring losses have put the organization on the back foot looking for survival in the present
than long term plans & resulting research, leading
to low level of research activities and narrow product range.
53

FINANCIAL
YEAR
Turnover

2012-13
239380.00

2011-12
293657.00
IN LAKHS

PRODUCTION
YEAR

2012-13

2011-12

Factamfos 20 : 20
Ammonium Sulphate

537081
126286

622256

Caprolactam

163468
37854

15544

IN TONNES

SALES
TABLE NO 8

YEAR
Fertilisers
Caprolactam

2012-13
740111
17695

2011-12
834580
40963
IN TONNES

QUALITY CONTROL DEPARTMENT

OBJECTIVES OF QUALITY CONTROL
Customer satisfaction through excellence in quality of production andservices
Adherence to documented quality system
Promoting quality culture among employees
Continuous improvement in the quality Management System
ORGANISATIONAL CHART OF THE DEPARTMENT
MGR(Q.C)

SHIFT IN
CHARGE

CHEMIST

CHART 12

LAB
ASSISTANT

54

FUNCTIONS OF QUALITY CONTROL

1.Quality checking
2.Process control assurance
3.Pollution control
QUALITY CONTROL PROCESS

Quality checking
Raw material-Pre and post despatch check. It is usually done by FACT Quality control cell or
external agency if expertise is required.
Product Quality check By-product Quality check-only in case of by-products sold[R &
D counter checks quality]

Process control assurance

The samples are tested in the Lab. There is one Main Lab for UD division and Sub Labs for
each plant.

Pollution control
By taking air and water samples. If samples contain more than required level of effluent, then
the matter is reported to the plant manager, Quality department and GM (UC)

POLLUTION CONTROL MEASURES

Hydrocarbon-detectors are placed in vulnerable areas in the plant for transmission to

control room..

Computerized automatic ambient air monitoring system is placed at stations, inside

the plant and two in the township to monitor ammonia, carbon monoxide, non-methane
hydrocarbon, sulphur dioxide and oxides of nitrogen on a continuous basis.

The company continues to give top priority to pollution control activities. It has

already invested lot of money especially for setting up pollution control plants at
Udyogamandal, Cochin and petrochemical divisions. FACT Udyogamandal, Cochin Division
are ISO 14000 certified units. As commitment to humanity, the company has taken all
necessary safeguards to prevent water and atmosphere pollution caused by effluent gases and

55

liquids thrown out from the factory. The company could maintain all effluent parameters
within limits as prescribed by the statutory authority. Treated liquid effluent and gas emission
from plants conform to the Kerala State Pollution Control Board norms. The guidelines
specified by Kerala State pollution control board are followed in the disposal of all hazardous
wastes generated. The ambient air quality monitoring stations continuously monitor the level
of pollutants like sulphur dioxide, Oxides of Nitrogen, Ammonia, Carbon Monoxide,
Hydrocarbons and Suspended Particulate matters.

ACTIVITIES CARRIED OUT

1.Reduction of air pollution from amorphous plant and phosphoric acid plants
2.Improving the quality of effluents on a continual basis
3.Minimize dust problem in sulphur handling and prevention of sulphur spillage to river
4.Reduction of contamination of raw effluents with vapour condensation from Hyam plant
5.Reduction of noise level in SO2/Acid plant main air blower
6.Reduction of SO2emission during start up of sulphuric acid plant
7.Minimize and recycle waste water from phosphate plant and sulphuric acid plan
t8.Improving housekeeping in phosphate and sulphuric acid plant

CHALLENGES TO QUALITY CONTROL

Lack of expertise to handle raw materials quality checking7

Aged machinery Effluent discharge likely to exceed the permissible limit High noise
pollution

RESEARCH AND DEVELOPMENT

GENERAL INFORMATION
FACT began research in a modest scale in 1962 with just four scientists. Over the years this
nucleus has grown in to a full-fledged but compact integrated division with a team of about
12 personnel. The division is recognized by the ministry of science and technology for in
house research and by the ministry of environment and forests, Govt. of India. R&D plays a
vital role in giving the company and its products the cutting edge in a competitive
environment. FACTs well-equipped R&D section has advanced facilities equipped with
pilot plants, modern equipment and accessories. It is backed by a team of highly motivated
56

research scientists. Various processes have been developed and patented by FACT R&D
division of which several have been commercialized successfully. Field trials on slow release
fertilizers developed by the division have been successful. Production of bio-fertilizers has
commenced with an installed capacity of 150tonnes per annum. FACT R&D division has got
modern and sophisticated laboratory and the facilities are continuously expanded and
updated. A wide variety of tests conforming to Indian and international standards are carried
out. FACT R&D division has a unique mobile laboratory equipped with state of the
art instruments for monitoring, assessing, computing and recording air data. FACT has won
Indian Chemical Manufacturers Association award twice for outstanding performance in
Development of technology & Export of technology.
OBJECTIVES
To carry out in-depth research, to provide specialized services to other divisions of the
organization, and is involved in the production of environment friendly bio fertilizers.

ORGANISATIONAL CHART OF R&D DEPARTMENT

MGR(R.D)

ASST
MANAGER

OFFICER

STAFFS
CHART NO 13

FUNCTIONS OF R & D DEPARTMENT

Quality assurance /Quality control cell

As per the directive from Ministry of Agriculture, Government of India, a Quality control cell
has been set up in R & D centre, for efficient monitoring of quality of fertilizer products at
the dispatch and selling points.
57

Bio-fertilizer research and development

FACT has set up a 150 TPA bio-fertilizer plant at R&D premises. The plant was
commissioned during the end of 1999, to take up the production of N-fixing Bio fertilizers
like Rhizobium, Azospirillum and P-solubilising bio-fertilizer like Phosphobactor. The
carrier material employed is exfoliated vermiculite
The Biofertilizers plant at R & D centre is capable of producing three kinds of Biofertilizers
namely Rhizobium, Azospirillum and Bacillus Megatherium under the trade name BIOFACT. Owing to the short shelf life, production of these Biofertilizers is based on specific
demands of marketing Division. Efforts are underway to changeover to a new carrier material
called Lignite that conforms to the recently laid down FCO regulation.

Quality maintenance of product at various depots across the states

Corporate Quality Survey

FACT is committed to provide quality products to consumers. As a part of this strategy,
FACT R&D Centre has been entrusted with checking the quality of fertilizer samples from
production divisions. The Quality check is usually period wise; sometimes surprise visits
are also conducted.

Consultancy work especially for clients such as Govt. of India

Nyrip Process
FACT & IIT Chennai have signed an MOU for setting up of pilot plant to produce fiber
reinforced polymer matrix composites from caprolactum and carrying out scale up studies.
Pilot plant studies at IIT Chennai are continuing. This project has been funded by planning
commission, Govt. of India under Technology mission programme.

ACTIVITIES CARRIED OUT

1.Development and filed testing of slow release fertilizer
Slow fertilizer release
R&D Centre of FACT has formulated slow release fertilizers in order to increase the efficient
use of plant nutrients. The slow release fertilizer project has been selected for partial funding
58

under PATSER scheme by DSIR, New Delhi, for, Agronomical evaluation by Tamil Nadu
Agricultural University, Coimbatore and Kerala Agricultural University, Trichur. Presently a
collaborative project between FACT and Tamil Nadu Agricultural University for agronomic
evaluation of these slow release fertilizers on cotton and turmeric is underway. A field trial
on field is going on at Coimbatore, under the supervision of FACT marketing division.
2.Recovery of sulphur from the waste sulphur muck of sulphuric acid plants
3.Utilization of the by-products of the company for value addition
4.Corporate quality survey of our products from Udyogamandal and Cochin Division to
ensure quality of products as per FCO and also to reduce nutrient loss.
5.Pollution monitoring in factory premises and in ambient air in Udyogamandalam,
Ernakulam, Wellington Island and Ambalamugal to ensure emission are within the limit.
6.Rock phosphate Characterization R&D centre is having a bench scale Rock Phosphate
testing facility, which is approved by MMTC. Management has constituted a technical
committee for Rock Phosphate evaluation. R&D Centre conducts analysis and pilot plant
studies for outside parties and MMTC.

BENEFITS DERIVED
1.During the year 2006-07, R & D centre has produced 3.91 MT of Bio-fertilizer and
supplied to various Agro service centres and there by meeting the entire requirement of the
Marketing Division.
2.Functioning of quality control cell enabled to maintain good quality of products and to
reduce considerably the P205 loss due to extra nutrient content in NP 20:20
ENVISAGED ACTIVITIES
1.R & D centre plans to conduct research to know the effect of particle size of vermiculite, a
carrier material, on the growth of Bio-fertilizer inoculants
2.R & D centre plans to conduct studies on the incorporation of Zinc as Micronutrient in NP
fertilizers
3.Development and field testing of suitable Bio fertilizers for the acidic soil especially of
Kerala
4.Development of liquid fertilizer solution

59

5.Development of a closed circuit pollution free process for the manufacture of weak nitric
acid

EXPENDITURE ON R & D
Details of expenditure on R & D are given separately.
IN LAKH

YEAR

CAPITAL

REVENUE

TOTAL

AS % OF
TOTAL
TURNOVER

2010-2011

0.00

73.27

73.27

0.029

2011-2012

0.00

71.60

71.60

0.024

2012-2013

0.00

72.49

72.49

0.030
TABLE NO 9

SOURCE ANNUAL REPORT 2012-2013

FIRE AND SAFETY DEPARTMENT

GENERAL INFORMATION
As per the factorys ACT 1948, any organization with more than 1000employees or for
Industries classified as Major hazardous unit (MHU) by the Govt. of India, requires a safety
department. FACT has well established safety departments to look after the needs
of respective divisions. It is the firm policy of the company that no operation is so important
and no job is so urgent that one cannot find time to perform it safely. Further, it aims to see
that an employee remain as healthy as he entered the plant, by providing safe environment
and safe working conditions, safe tools and procedures to carry out all operations.

OBJECTIVES

To ensure safety of the organization and of its employees and to act under emergency .

Train the employees for ensuring safety and to prevent accidents.98% of the accidents
are due to unsafe conditions. Therefore, they are avoidable and only 2% accidents are
unavoidable. The department aims at avoiding unsafe condition and reducing unavoidable
accidents.
60

FUNCTIONS
1.Training Activity
2.Checking compliance with the safety measures
3.Acting in case of emergency

ORGANISATIONAL CHART OF THE DEPARTMENT

JGM (UD)

MGR (FIRE)

MGR(SAFET
Y)

INSPECTORS

ASSISTANTS

FIREMAN

INSPECTORS
CHART NO 14

PROCESS IN FIRE & SAFETY DEPARTMENT.

Training
Taking safety measures by training
Employees : Permanent as well as contract workers is trained to adhere to the safety
measures. Office staff is also given necessary training to react in case of emergency and
about the preliminary precautions to be taken during their stay in the organization premises.
Barge operators: Barge transports hazardous materials like phosphorous and sulphur through
the inland water ways. Operators are trained to handle raw materials with care and ensure
their own personnel safety.
Lorry drivers: Training is given on handling hazardous materials while transporting.
Plant operators: Training is given to plant operators, to act in case of emergency and in
handling safety equipments.

61

Emergency action(safety drill)Mock drills are conducted for employees and for Fire team to
improve the operational efficiency.
Checking compliance with safety standards

Departmental Inspection
Inspectors are posted to production sites and premises on shift basis. They continuously
monitor the safety measures taken and checks for deviation. The maximum permissible limit
for each chemical in the environment, working condition & noise pollution level is checked.
Ammonia 25ppmSo2 2ppmChlorine 2ppmNoise: maximum 115 db -3 mts from machine.
Permissible 90-105 db When any deviation from the above said level is noticed then
inspectors inform the matter to the concerned plant manager or department head. If the
deviation is beyond the permissible limit, then production/process is stopped and resumes
only after the defects are cleared
Measurement with sensors
Plant has inbuilt systems to measure deviations and is reported to the control room and safety
department.

Acting in case of emergency

If major problems are detected, then either the whole plant is stopped orpart of the plant is
stopped.

In case of fire or smoke: Built in safety mechanism inside the plant generates automated
extinguisher spray to put off the fire or excess smoke. If the fire could not be stopped by
automated system the fire department starts their action. The fire crew consists of 1 inspector,
4 firemen & 1 driver

SAFETY MEASURES
1. Bringing up all levels of working to a correct safety attitude through training and
interaction
2. Safe production by prompt attention on built-in- safety or integrated safety
3. Effective effluent treatment system in operation to render it harmless before letting it out of
the factory
62

4.In addition to the safety department prevalence of safety committee is set up to promote
active participation at all levels which meets once in two months
5.Housekeeping inspection committee is set up to inspect the whole factory area at least
thrice in a year and decides inter departmental housekeeping awards
6.A safety manual highlighting safety practices/ instruction is distributed among employees
as guideline
7.Routine plant inspection by safety fire staff and other staff in the line function notices
unsafe condition to take corrective measures
8.Display of safety cartoon or caution boards at important locations
9.Preparation of valuable information of safety and distribution among employees
10.Organizing and conduct of mock drills based on onsite emergency plan to further improve
upon the emergency plan

CHALLENGES OF FIRE & SAFETY DEPARTMENT

Aged plant and machinery: Prone to fire

Modern control precaution and control of fire through installation of sensors is not
possible

Maintenance of safety equipments: Safety equipment brought with lowest coating bid
Constant need to renew safety equipments

COMPUTER SERVICE DEPARTMENT

GENERAL INFORMATION
The computer department of fact was launched in the year 1965, with the introduction of
first generation computers in finance to meet the growing need for the speedy data
processing. This multi system computer department is constantly updating its hardware
and software. They started online computing in1986.The centre is equipped with servers in

63

all its divisions connected by FACT NET. A complete implementation and interlinking of
various departments were completed in 2004.

OBJECTIVES

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

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

FUNCTIONS OF COMPUTER DEPARTMENT

1.Planning and procurement of computer systems in all divisions
2.Software development and system support to all divisions
3.User training on computer awareness and applications
4.Maintenance of FACTNET connecting all divisions
5.Process data and prepare relevant information for various levels of management for
appropriate and speedy decision making
6.Prompt and efficient services for meeting information requirements of the employer,
payment of wages and settlement of claim
7.Access control of data between and within department
ORGANISATIONAL CHART OF COMPUTER DEPARTMENT
CHIEF MANAGER

DY CHIEF
MANAGER

MANAGER

SYSTEM
ADMINISTRATOR

STAFFS

CHART NO 15

64

Process Flow In Computer Department

PLANNING &
PROCUREMENT
OF COMPUTER
SYSTEM

FUTURE
REQUIREMENT
& PLANNING

SOFTWARE
DEVELOPMENT

SYSTEM
MONITARING &
MAINTENANCE

USER
TRAINING

DIAGRAM NO 1

Today, CSC is equipped with Divisional database servers (SUN Enterprise250) at each of the
3 production divisions and around 700 PC nodes. The computing nodes are connected via
WAN (Wide Area Network) at interdivisional level through 64 Kbps/ 2Mbps BSNL leased
lines / fibre optic link and Ethernet LAN (Local Area Network) at department level. A
corporate Intranet on Windows NT platform provides e-mail access to officers, besides
hosting web pages containing daily updates of key production and financial figures. Major
applications are on INGRES platform and being migrated to Oracle 8. The On-line Integrated
Information System (OIIS) that links all the functional areas of the enterprise had been jointly
developed and implemented by M/s Tata Consultancy Services and CSC. The integrated
system, which runs on Oracle-8i database platform optimizes business processes of the
enterprise and provides information for decision-making.
Main modules of Online Integrated Information System (OIIS)are finance, human
resource, production, traffic/logistics, Maintenance, Materials, Marketing and sales. Major
software systems in the organization are developed and maintained in-house by the skilled
workforce at CSC.

65

ENVISAGED ACTIVITIES
1.Upgradation of WAN and LAN through OFC (optical fibre cable) by2009
2.Web based connectivity for OIIS across various depots
3.Real time information transfer across depots to head office
CHALLENGES OF COMPUTER DEPARTMENT
Alarming rate of employee turnover.
The online integrated system is not web based at present. Hence there is no online
connectivity with depot.

HUMAN RESOURCE DEPARTMENT

GENERAL INFORMATION
Human resource management is one of the most complex and challenging fields of
endeavour. It is considered to be the most expensive and important resource of every
organization. In FACT the scope of Human Resource Department is very vast.
OBJECTIVE OF HR DEPARTMENT

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

To motivate & manage human resource and train them to ensure their personal and
organizational development.
CMD FACT

GM HR

DGM ADMIN

CM
WELFARE

MGR PUBLIC
RELATIONS

CM IR

CM Est

CM LEGAL

CM TRNG

CE (IND ENG)
CHART NO 16

66

FUNCTIONS OF HR DEPARTMENT
1.Organizational human resource planning & development
2.Retirement & selection
3.Wage & Salary administration
4.Employee records maintaining
5.Performance appraisal
6.Welfare programme
7. Job evaluation
8.Handling employee grievances
9.Handling the legal issues within & outside the Organization

PROCESS OF HR DEPARTMENT
The human resource department has 3 blocks which are:
1.Establishment
2.Industrial relation
3.Welfare

Establishment Section
The main functions are:
1.Recruitment & selection
2.Transfer, rotation and placement of employees in consultation with divisional heads
3.Wage and salary administration
4.Performance Appraisal
5.Retrenchment

Industrial Relation
Industrial relation operates only within the Organization. The Inter-organizational relation is
handled by the corporate cadre. 60 to 70 % of management time is lost in resolving IR issues.
Therefore the H.R department is of paramount importance.
The main functions are:
1.Communication between management and trade unions
2.Grievance handling
3.Settlement of dispute
4.Handling disciplinary action
67

5.Safeguarding Employee rights

6.Career related issues like promotion, transfer & rotation
7.Resolving daily petty issues

Welfare
Welfare schemes can be divided into Statutory, Agreement, Voluntary and Incentives The
main objective of welfare measures is to maintain healthy working environment and raise the
standards of living of employees which create harmony to the society and finally to the
organization. FACT has always maintained very healthy welfare measures.
Statutory scheme
1. Employees state insurance
2. Provident fund and miscellaneous provisions act, 1952-exempted scheme in FACT-FACT
employees provident fund trust.
3. Payment of gratuity Act, 1972
4. Kerala labour welfare fund board rules, 1975
5Industrial employment (standing orders) Act 1946
6.Factories Act, 1948-Covers(Health, safety, welfare)
Agreement scheme
1. Family relief fund
2. Superannuation benefit fund
3. Family pension scheme of company
4. Retirement benefit fund
5. Employees welfare fund
6. Transport subsidy
7. Local travel expenditure
8. Subsidized bus service facility
9. Special vehicle loan
10. Uniform & footwear
11. Leave travel concession
12. Evening snacks
13. Childrens education allowance
14. Interest subsidy
15. Free tea-twice a shift
16. Production incentives
68

17. Leave & holidays

Voluntary Scheme
1. Contributory health scheme
2. Group personnel accident insurance scheme
3. Aid towards funeral expenses
4. EX-gratia payment for accident deaths
5. Gratuity payment-company scheme
6. Vehicle loan
7. Work clothes
8. Rain coats & Umbrellas
9. Free milk supply
10. Supply of coconut oil, soaps, and towel
11. Conveyance allowance for physically handicapped
12. Special Tiffin for fire and safety personnel
13. Laundering of special clothes
14. Sports & Recreation
15. Lalith kala Kendra
16. Fact employees consumer cooperative society
17. Fact employees housing cooperative society
18. School facilities
19.Company accommodation
Incentives scheme
1.Incentives for employees acquiring higher qualification while service
2.Incentives to promote Hindi
3.Incentive to promote family planning
4.FACT merit award
5.FACT service award
6.Attendance bonus
7.Suggestion scheme
8.Incentive for blood donation
9.Incentives to promote sports &players
10Merit scholarship scheme for employees children
INDUSTRIAL ENGINEERING
69

The main objective of this section is to make effective utilization of the manpower resources
and restructure it for the benefit of the organization.
The main functions are:
1. Manpower planning that compose of Manpower audit & Forecast future requirements
2. Custodian of manpower inventory
3. Work study
a. Removing system bottlenecks
b. Production incentive etc.
4. Maintenance scheduling
5. Work environment study
6. Employee problem analysis
ADMINISTRATION WING
The wing is headed by DGM and maintains orderliness in internal affairs of the department.
The main functions are:
1. Checking the performance of each department
2. Consolidating the reports of different HR sections
3. Act as a linking chain between different sections
4. Office and admin work of HR department

LEGAL SECTION
The department looks after the Legal affairs of the organization. It is entrusted with the duty
of handling cases within and outside the organization in which the company is involved.

SOME KEY INFORMATION

RECRIUTMENT POLICY
The Recruitment policy is done as per prescribed recruitment specification with proper
authority appointed by B.O.D. The following are the sources of recruitment.
1. Confirmed employees within the division or company
2. Employment exchange as per provisions of Employment Exchange Act
3. Employees on deputation from Govt. of India
4. Casual labours who were initially taken after employment exchange
5. Transfer from public sector undertakings
6. Apprentices who completed training in FACT
70

7. Dependents of deceased employees who died in service

8. External source

PERFORMANCE APPRAISAL
Performance Appraisal in FACT started in 1962. In 1984, the system was further revised to
include potential assessment, assessment of training needs and performance counselling.
The main functions are:
1.Self Appraisal for all management employees
2.Reporting and receiving officers specified for each level of appraisal
3.Assessment by the Assessment Committee
4.Grading on the basis of assessment
5.Communication of final rating to employees formally
6 Provision for appeal by employees formally

WORKERS PARTICIPATION IN MANAGEMENT

FACT is one of the pioneer industrial undertakings, which initiated action to promote worker
participation in management. Even as early as 1959, when FACT had only one division, the
idea of having the active association of employees in various aspects of productive operations
in true participative spirit, creating a climate of involvement and commitment in order to
motivate the work force to enable the work force to contribute their best to the sustained
growth and prosperity of the organization was in the mind of management. It was with this
idea that a Joint Council, Shop Council and Joint Labour Management Action Groups were
formed.

MANPOWER OF FACT
As part of cost reduction measures, from 1998 onwards FACT reduced its employee strength.
FACT had more than 9000 employees earlier, but it is now reduced to less than 3000
employees by the successful implementation of VRS. FACT has several divisions, which all
together consist of 2991 employees now.

71

TRAINING DEPARTMENT
GENERAL INFORMATION
The training and development activities of the company have been centralized with effect
from April 2004. With this arrangement, the management development centre (MDC), the
training centres of Cochin division, Udyogamandal division and Petrochemical division have
been centralized into one department called FACT Training Centre. Centralization was
effected with a view to:
1. Utilize all resources efficiently and to ensure more productivity
2. Identify the training needs of all employees based on a uniform approach and imparting
required training Training Centre of FACT has started job-oriented courses in Fire & Safety
Engineering. New courses in Heavy Equipment operation & maintenance, Welding
technology and Process Plant operation are being organized. These courses are planned to be
offered in association with Governmental agencies and statutory bodies. The objective is to
convert the training centre in to a Skill Development Academy with a view to provide
facilities for skills development and making educated youth employable.
OBJECTIVES OF TRAINING
1. To identify training needs of the employees as a whole on the basis of uniform criteria
2. To impart required training, which equip the employees consisting of officers and workers
of the company with knowledge and skill, required for improved performance.
3. To meet training needs with specific reference to ISO 9001:2000 and ISO 14001:2004
standard requirements
4. To maintain a database of training details and development activities

ORGANISATIONAL CHART OF TRAINING DEPARTMENT

CM TRAINING

MANAGER
TRAINING

OFFICER
TRAINING

INSTRUCTORS

CHART NO 17
STAFFS

FUNCTIONS OF TRAINING DEPARTMENT

Training Centre is involved in four broad functions:
1. Training officers and workers of the company as a whole in identified areas
2. Meeting the obligation of Apprentice Act 1961/1973
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3. Facilitating post qualification training, in plant training and project work to students
4.Facility for employees to attend external training programmes

TRAINING PROCESS
Identification of training needs, trainees & programmes

Department-wise identification of people to be trained.

Suggestion of programmes by department head.

Final selection of programmes by training department

Preparing detailed programme schedule by training department

The training activity plan prepared is generally for a period of three years i.e. one cycle.
During the period, the plan may however be revised. At least7 different programmes are
conducted in a cycle.
IDENTIFYING PEOPLE TO BE TRAINED

IDENTIFICATION OF TRAINING NEED

IDENTIFIYING THE TRAINING PROGRAMMES

PREPARING TRAINING PLANS

PROGRAMMES

FACILITIES

METHODS

TRAINERS

IMPART TRAINING

MEASURE AND ANALYZE RESULTS

VALIDATE

EVALUATE

FEEDBACK
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CHART NO 18

After the training plan is prepared, the programmes, facilities, method of conducting and
trainers are identified. Non-technical training programmes are conducted in FACT Training
hall at the Training Centre.

Imparting training
In FACT, there are two methods of training for employees. The method of training is decided
on the basis of requirements.

On the job training

This is specific to the job and concentrates on imparting knowledge and skill to the
concerned employee. Induction training include introduction of an employee to the
organization and job by giving him all the possible information about organizations culture,
climate, objectives, policies, practices, products etc. In job instruction training, necessary
instructions about the job are given by the concerned superiors. Instruction manual is also
supplied for the same and it helps the employees to deal with work conditions. Job rotation is
another on the job training in which an employee made to move from one job to another at
certain intervals. Job rotation in FACT is intradepartmental, interdepartmental and interdivisional. Intra-departmental job rotation is done within the departments so that all
employees are exposed to different functions carried out in their departments. Workers
employed to different plants are rotated among the plants at periodical intervals. These
rotations give skill and knowledge to the employees in different jobs.

Off the job training

This method is employed to impart knowledge and skills in the employees in general areas
which enable them to perform the job better. The main objective of this programme is
personality development such as leadership quality, communication skills, attitude change
etc. These methods consist of lectures, conference, group discussions, case studies, role
playing and transactional analysis. Off the job training is carried out with the help of internal
or external faculty on the basis of their availability and suitability. Examples of programmes
conducted by internal faculty are fire fighting training, employee development programme,
fire and industrial hygiene, safety etc. Some of the external organizations which provide
training programme in FACT include National Productivity Council, Confederation of Indian
Industries, National Safety Council and Regional Labour Institute. Some of the technical
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programmes conducted are innovative approach in industrial pollution control,

instrumentation and energy conservation of boiler operations and maintenance of bearings.
Apart from the training conducted at training centre for the employees &students there are
external training conducted for the corporate cadre managers i.e. for chief Managers and
above. External training programs are mostly conducted outside FACT.
Feedback
The important aspect of training is feedback since it checks the validity and effectiveness of
training. Feedback is usually obtained department wise from the department heads, prepared
by the immediate supervisors of the trained employee. The change in work behaviour or
general behaviour forms the feedback.

CHALLENGES TO TRAINING

Improper feedback

Improper selection of employees from the various departments

Limited time available due to the pressure of production targets

VIGILANCE DEPARTMENT
GENERAL INFORMATION
Vigilance is an integral part of the management function. The departments a statutory
requirement for all public sector companies. The Department in FACT is headed by a chief
vigilance officer (CVO).The incumbent CVO is an IPS or IAS officer. He or she possesses
the status rank and perquisite of a functional director. Under him/her there are two Chief
Managers from vigilance department posted at FACT head office at Udyogamandal.

OBJECTIVE
To act as a policeman and deter fraud or any unscrupulous activity in the organization and to
punish such activity when takes place, thereby, creating an environment of mutual trust
and fair play in the organization.

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ORGANISATIONAL CHART OF VIGILANCE DEPARTMENT

CVO FACT

CHIEF
MANAGER

DY CHIEF
MANAGER

INSPECTOR
CHART NO 19

The CVO has the power of dual reporting either to the CMD or directly to CVC of Govt. of
India.
FUNCTIONS OF VIGILANCE DEPARTMENT

Acting on complaints.

Inspecting high value files.

Maintaining transparency and accountability of jobs.

Department-wise monitoring of frauds and malpractices

START HERE

START HERE

DEPT-WISE MONITORING FOR

FRAUD AND MALPRACTISES

INSPECTING HIGH
VALUE FILES

NO
CHART NO 20

RECIEPTS OF
COMPLAINTS

SUSPICIOUS
ACTIONS

FRAUD DETECTED

YES
TAKE
ACTIONS

ACTING ON
COMPLAINTS

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Vigilance Notice boards have been installed in all the offices all over the company displaying
the address and telephone numbers of the CMD, CVO, and CVC. These authorities can be
approached on complaints of corruption. They can be accessed by e-mail also.
Start here Start here Dept-Wise monitoring for frauds and malpractices

Acting on complaints
Anonymous and pseudonymous complaints are not taken cognizance of survey of employees
suspected of indulging in corruption is undertaken and on getting reliable information their
names are included in the agreed list for keeping a close vigil on their activities.

Suspicious action of employees

The names of employees who are charge sheeted in the court in a corruption case or have
been punished or likely to be punished in departmental proceedings on charges of corruption
and irregularities are included in the list of officers of doubtful integrity. Both the lists are
sent to the CBI for keeping a watch on the activities of listed employees. Employees are also
monitored if suspicious actions are detected.

Inspecting High value files Some of the high value files are:
1.Files of high financial importance such as Budgeting and payroll
2.Susceptible Files: E.g. Stores accounting.
3.Files of importance. E.g. Raw material procurement, traffic of materials
4.Adherence to policies: Transfer, promotion, awards, incentives given to employees
5.New projects & development related activities

Actions taken
The cases of fraud charged against a department or an employee is circulated throughout all
departments which act as a deterrence to malpractices for fear of being caught. If the case
involves above Rs. 25 lakh, then the case is handed over to the CBI. The CBI can also take
over the case from the department if paramount importance has been attached to the case. An
employee is suspended from service during the period of trial and if found guilty from the
court of law, then he or she is terminated from service considering the gravity of the case.

77

COMPANY SECRETARIAT
GENERAL INFORMATION
Company secretariat is a statutory requirement for all companies having more than Rs.
2 Crores worth assets.

OBJECTIVE
To carry out the company affairs as directed by the Board of Directors and to act as a link
between B.O.D and the company.

ORGANISATIONAL CHART OF COMPANY SECRETARIAT

CMD FACT

COMPANY
SECRETARY

ASST
SECRETARY

OFFICER

STAFFS

CHART NO 21

FUNCTIONS
To act as the principal officer of the company
Carries out Board Directors instructions.
Public information officer complying with Right To Information Act (RTI Act).
Compliance or adherence to the legal requirement of the organization.
Supervision of share transfer/depository agents

78

CHAPTER 6
FUNCTIONAL INTERDEPENDENCE OF
DEPARTMENTS

79

FUNCTIONAL INTERDEPENDENCE OF DEPARTMENTS

H
U
M
A
N
FIRE & SAFETY

R
E
S
O
U
R
C
E
M
A
N
A
G
E
M
E
N
T

DIAGRAM NO 2

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Finance & Materials

Finance department procures fund for production and accounts for it. With these funds
materials are brought. During purchase the company has to enter into contract, give letter of
credit and other necessary documents, which is done by the finance department. The traffic
section of the materials department helps the finance department in rising of fund by
providing a link in production and marketing its products. Finance department plays a major
role in vendor development by opening the bid sand deciding the feasibility of vendors.
Marketing, Materials and finance
Marketing department sells the goods and raises the fund required by the finance department.
Materials department transports the goods for the marketing department.
Finance and Production
Production targets are made on the basis of finance budget which checks the economical
feasibility of the plan and finance budget cannot prepared without knowing the production
plan.
R & D and production
R & D researches new technology for decreasing the production cost, and further by
its manufacture of Biofertilizers.
Quality, Marketing and R & D
Quality preserves the customers delight by ensuring the quality of goods sold. R & D counter
checks the quality. R & D further goes to the depots and check the products whether it
reaches the market safely with quality.
H.R
H.R department ensures the development of human resource and its productive utilization by
directing it in the right channel.
Computer service centre
The department enhances inter-departmental and intra-departmental flow of information and
speedy data processing. Data access is controlled within and between departments. Constant
updating is done to catch up with the modern developments.
Fire & Safety
It operates all over the organization to ensure its safety and quickly responds to emergency
cases.

81

All departments are interdependent and interrelated to each other for their functioning. One
department cannot operate without the absence of the other. The performance of the company
depends on the interdepartmental functioning rather than the department wise functioning.

82

CHAPTER 7
CORPORATE SOCIAL
RESPONSIBILITY

83

CORPORATE SOCIAL RESPONSIBILITY

Some of the measures taken by FACT as a part of its Corporate Social Responsibility are:
Dealer Network
The dealer network plays a very crucial role in marketing of fertilizer in the country. In most
cases dealer, not only gives the fertilizer but also imparts substantial knowledge and
information on the use of fertilizer and improved agricultural practices.
Community Awareness
Community awareness programs on safety, pollution control measure in plants, onsite
emergency plan and so forth are being carried out through the public relations department.
Social welfare
The company has implemented the reservation policy of the government of India for
scheduled castes and scheduled tribes as well as for the other backwards classes. It is
presently employing 1855 SC/ST/OBC employees, and has been actively implementing the
special recruitment drive for the employment of SC and ST. Consequent to this drive; the
company has-been implementing the directives of the government of India on reservation for
other backward classes.
Hospitals
There are two full-fledged hospitals, one each at Udyogamandal complex and Ambalamedu
respectively. These hospitals provide both inpatient and outpatient treatment to the company
employees who are members of the contributory health scheme. The hospitals also extend
their service to those who are not members.
School
Schools are established both at Udyogamandal complex and atAmbalamedu. Schools
provide free education to the children of company employees and on payment basis to
children of neighbouring public sector employees and for general public. The curriculum
ranges from ICSE, Plus2 and SSLC.

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CHAPTER 8
ENVIRONMENTAL ANALYSIS

85

Environment Analysis

INTERNATIONAL SCENARIO
Around 95 percent of the fertilizer produced in the world is used for farm crop. Fertilizers
include both natural and artificial substances that increase the productivity of agricultural
land. It is clear that the rapidly growing population of the world will increasingly depend on
commercial fertilizers for its food and fibre. The worlds leading fertilizer producers are the
Soviet Union and United States. Other leading producers are China, Canada, France and
India. The worlds leading producer of phosphate rocks is the United States. The Soviet
Union and Morocco has the largest resources phosphate rock. The largest deposits of
potassium chloride, the major source of potassium fertilizer, occur in Canada and Soviet
Union. The fertilizer industry of the United States is organized into separate segments for
producing and marketing Nitrogen, Phosphate or Potash intermediaries and products. Some
European countries are following the elemental system, N and K and it is likely that rest
of the world will adopt this system.

NATIONAL SCENARIO
India is one of the worlds largest producers and consumer of both phosphorous and
nitrogenous fertilizers. The pesticide in the country is also among the fast growing sector in
the world. There are around 25chemical fertilizers used in the country at present. The total
fertilizer capacity in India is 12.02 million tonnes in nutrient terms, and consumption was is
13.05 million tonnes. Roughly a sum of Rs.130 million has been the total investment in this
industry. The problem of the industry is the seasonal demand for its product and large
working capital requirements. The Govt. of India has implemented
and commissioned major fertilizer projects in 1998-1999 and invested4122.02 crores. They
will add 9.75 lacks of DAR (Di-ammonium phosphate and one lack tones of NP).It is
unfortunate that fertilizer industry has been a victim in the recent past under the controlled
piercing subsidy regime of the Government
1.Government is contemplating complete decontrol in phased manner by2006-07.
2.Quantitative restrictions on fertilizer imports have been removed since April 1, 2001.
3 The implication of present policy environment for fertilizer sector in India is not promising.
There are possibilities that domestic production and consumption of fertilizers may decline.
4.The policy considerations which are likely to be implemented may result in making the
domestic production of fertilizers unviable.
86

5.At present there is no demand-supply gap in urea.

6.A switch over in feed stock from naphtha to LNG for urea is envisaged depending on its
availability and price.
7.High energy cost does not permit further expansion in urea capacity within the country.
Joint ventures abroad are likely to be developed.
8.For phosphate and potash also, joint ventures abroad are likely to be developed as there
is no potential reserve within the country.

STATE SCENARIO
Kerala has high degree of land use and cropping intensity. The states agricultural
productivity is decreasing year by year. The production and cultivation of rice is decreasing
and the farmers are concentrating on commercial crops like rubber and coconut. Due to the
decrease in the cultivation of rice, the consumption of nitrate and potash has come down.
Kerala has one of the lowest consumption of fertilizer in the country perhectare of land area.
FACT has the major market share in Kerala. To gainthe market share FACT is planning to
increase its marketing programs inseveral areas of the Kerala state.

COMPETITORS OF FACT
SPIC- Southern Petrol Industrial Chemicals (Products-Urea, di-Ammonium
Phosphate and intermediaries)

MFL- Madras Fertilizer Ltd. (products-NPK 17:17:17 and variants Vijay urea, Bio
fertilizers, Agro Chemicals).

NFL- Nagarjuna Fertilizer Ltd. (Products-Urea)

MFL- Manglore Fertilizer Ltd. (Products-Urea, Complex Fertilizers)

RCF- Rastria Chemicals Fertilizers Ltd. (Products-Urea, di-ammoniumphosphate,

MOP, Complex fertilizers)

IFFCO- Indian Farmers Fertilizer Co-operative (Products-Urea, Ammonium

phosphate and complex fertilizer)

87

CHAPTER 9
SWOT ANALYSIS

88

SWOT ANALYSIS OF FACT

STRENGTH

High capacity utilization.

High quality products. FACTAMFOS is a premium product in complex fertilizer

containing Sulphur

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

Well-qualified and technically skilled manpower.

Good support with farmers/end segment.

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

ISO Certification to most of the divisions.

Strong dealer network in South India.

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

FEDO has own process know-how for hydrogen, Sulphuric Acid, Ammonium
Sulphate, DAP and complex fertilizers.

FEDO has worked in association with many international process licensors, and has
acquired the capacity of customizing and designing projects to the requirements of the
Indian consumers..

FEDO is an approved centre of surveyors and audit for portliness, installation, nondestructive testing energy audits, ISO audits and soon.

WEAKNESS

The government controls the prices of finished goods, but the prices of raw materials
are uncontrolled. So it is forced to operate in an uneconomic situation.

The average age of employee is very high (49 Yrs). The number of younger
professionals is decreasing and some managerial personnel are forced to handle more
than one position due to freeze on recruitment.

Lack of product line diversification.

Lack of working capital resources.

89

Several unskilled jobs, which could be sub contracted are undertaken by the
permanent employees at high cost.

OPPURTUNITIES

Premium product in the complex fertilizer segment containing

Sulphur

Strong Marketing network in Southern India

Substantial infrastructure facilities

Operational efficiency and high capacity utilisation of plants.

Scope for expansion and diversification

Availability of land resources for generating additional revenue

THREATS

Non-availability of Natural Gas, High prices of RLNG and lack of

level playing field for Gas.

Non-availability of sufficient quantity of Phosphoric Acid and

other inputs.

Volatility in the prices of raw materials and feedstock.

Fluctuations in the price of Caprolactam.

Exchange rate variations

Over dependence on import of raw materials

90

CONCLUSION
About FACT
FACT is the pioneer in fertilizer production which paved the way for increased productivity
in agricultural sector. It started with a vision to become a dependable global player in
agriculture and provide self reliance in engineering and technology especially in fertilizers.
With this vision it navigated through all difficulties which came on its way in the initial
stages of growth. Setting up of R & D centre was an envisaged activity to keep abreast with
the latest development, especially for Bio fertilizers manufacture. With commercialization of
its production at Udyogamandal, it began its expansion stage to Cochin division and finally to
petrochemical division. But the reigning period of FACT came to an end with the scarcity
and skyrocketing prices of raw materials. It could hardly do anything to save its declining
trend as the product pricing is done by the Govt. of India. The show case example has been
the drift of the company to loss even after making a record production in 1999-2000. Today,
the organization runs at loss and is short of working capital. The working capital crunch has
stopped most of its envisaged activities. The organization as of now is stagnating and is in a
difficult stage of production. The immediate impact is seen in its low funding to R&D
department, reluctance in adopting new technologies, revising the corporate plans to the bare
minimum targets and reduction in welfare measures of the company. The trend has badly
affected its market share and has stepped behind in competing with its contemporary
organizations. However, even in this tragic situation, the company is operating above
90%capacity utilization. The management and its staff are putting their best to sustain the
company. Trade unions are cooperating with the management by understanding the
companys situation and responding to its need. The future however looks bright when the
opportunities and strengths of the organization are considered. FACTs real strength is its
experienced employees who have tasted the different stages of its growth. Further, it tries to
acquire new technology for cutting the cost of production. Governments new policy on
subsidy may rewrite the history of FACT.

91

About the study

FACT is divided into 3 main divisions Udyogamandal division (UD),Cochin division (CD)
& Petrochemical division (PD). This study was conducted at Udyogamandal division. FACT
has 12 main departments and are interdependent on each other as shown in Organizational
chart (ChartNo 1) & Diagram 2. The study was conducted with a view to understand the
functions of FACT and its department. During the course of study I was successful in
achieving these objectives and could familiarize with an organization and its
environment. This study has improved my confidence by its successful completion to
undertake such studies in the future.

92