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SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENTS OF THE AWARD OF THE DEGREE OF MASTERS OF BUSINESS ADMINISTRATION
INDUSTRY GUIDE:
MR. ASHOK MAHESWARI (ACCOUNTS OFFICER) IFFCO, AONLA
SUBMITTED BY:
PRADEEP VERMA Roll No.- 0807270411 MBA IIIrd Sem. VT No- 464
SUBMITTED TO:
1 IIMT MANAGEMENT COLLEGE MEERUT
STUDENTS CERTIFICATE
Certified that this report is prepared based on the summer internship project undertaken by me in IFFCO, AONLA from 06th June TO 31st July 2009 under the able guidance of Mr. ASHOK MAHESWARI (Accounts Officer) at IFFCO Aonla Unit as Industry Guide and Mr. AFTAB AHMAD H.O.D at IIMT MANAGEMENT COLLEGE, Meerut Campus in partial fulfilment of the requirement for award of degree of Master Of Business Administration from Uttar Pradesh Technical University, Lucknow.
Date.
(Aftab Ahmad)
3 IIMT MANAGEMENT COLLEGE MEERUT
H.O.D. (MBA)
ACKNOWLEDGEMENT
Expression of sincere gratitude is just a partial acknowledgment. The accomplishment of this project INVENTORY MANAGEMENT & RATIO ANALYSIS OF IFFCO would have not been possible individually without the encouragement, assistance & valuable support from various sources. My vocabulary falls short of word to express my sincere gratitude to Mr. Ashok Maheswari (Accounts Officer) under whose guidance I had the opportunity to carry out the present work. I am very thankful to Mr. D. Kalia, Chief Manager (Training ) & Mr. K.K. Pandey, Dy. Manger (Training) who supported me & helped me throughout the project.
I am thankful to Finance & Account staff & to all the employees of IFFCO who cooperated with me during my training period. I OWE A DEEP SENSE OF GRATITUDE TO ALL THE RESPONDENTS WHO GAVE ME VALUABLE INFORMATION FOR THE PROJECT.
LIST OF CONTENTS
1) Introduction to topic 2) Objective of study 3) Research Methodology 4) Introduction about IFFCO 5) Objective of the company 6) Management
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Page No.
8 9 10 11-19 20 21-23
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7) Aim, Vision, Mission 8) Vision 2010, Approach 9) Commitment, Principles 10) IFFCOs Emblem 11) Organization chart of IFFCO 12) Investment outside IFFCO 13) All India share of IFFCO 14) Performance highlights 15) IFFCO Associates 16) Awards galore 17) Growth in Member Societies 18) Aonla unit 19) Finance and accounts department 20) Inventory management 21) Various sections of inventory 22) Payment against purchase 23) Delay in delivery 24) Imported material 25) Material coding 26) Packing & Dispatch 27) Inspection of material 28) Accounting of raw material 29) Store section 30) ABC List of Aonla I & II 31) Accounting for Stores 32) Insurance and verification 33) Techniques of Inventory control
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24-25 26 27 28 29 30-33 34 35 36 37-38 39 40-45 46-50 51-53 54-60 61-62 63 64 65-66 67 68 69-71 72-74 75-76 77-80 81-85 86-91
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34) Inventory software 35) Production department 36) Different vouchers 37) SWOT Analysis & Strategies 38) Ratio analysis of IFFCO 39) Conclusions & Recommendations 40) Bibliography
LIST OF GRAPHS
1) Inventory turnover 2) Working capital turnover 3) Current ratio 4) Cash ratio 5) Solvency ratio 6) Stock to current asset ratio 7) Raw material 8) Owned capital turnover 9) PBT to sales 10) Capital turnover
130 132 134 136 138 140 142 144 146 148
INVENTORY MANAGEMENT
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Managing the level of inventory is like maintaining the level of water in a bath tub with an open drain. The water is flowing out continuously. If water is let in too slowly, the tub is soon empty. If the water is let in too fast, the tub overflows. The dictionary meaning of inventory is stock of goods. The investment in inventory is very high in most of the undertakings engaged in manufacturing. The amount of investment is sometimes more in inventory than in other assets. About 90 percent part of working capital is invested in inventories. It is necessary for every management to give proper attention to inventory management. A proper planning of purchasing, handling, storing and accounting should form a part of inventory management. By proper planning it is possible for a company to reduce its levels of inventories to a considerable degree, without any adverse effect on production and sales, by using simply inventory planning and control technique. The reduction in excessive inventories carries a favorable impact on companys profitability. An efficient system of inventory management will determine 1) What to purchase 2) How much to purchase 3) From where to purchase 4) Where to store, etc.
Effective inventory management enables an organization to meet or exceed customers expectations of product availability while maximizing net profits or minimizing costs
OBJECTIVE OF STUDY
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The main aim of study is to check the efficiency and effectiveness of inventory management system at IFFCO Aonla. Investment in inventory incurs a high cost. Therefore effective management is necessary to minimize the cost and ultimately increases profitability of an organization. Apart from our main objective, our other objectives are: 1) To analyze the level of investment in inventory by IFFCO. 2) To study the inventory policy of the company. 3) To analyze the policy adopted by the company. 4) To analyze the financial position of the company. 5) To give suggestion if any, regarding effective inventory management, to ensure smooth and uninterrupted supply without making unnecessary investment of funds in inventory.
RESEARCH METHODOLOGY
Research covers the search for retrieval of information for a specific purpose. Basically research is the objective and systematic method of finding solution to a problem. The steps followed to conduct this study are as follows:(1) Formulating research problem The problem under study viz. how effective are the measures applied by Iffco, Aonla to control the inventory is basically studied through analytical research. Material is important for the efficiency of the system. It is a matter of great importance for inventory department. Inventory department of IFFCO, Aonla is responsible for efficient inventory control. Thus the whole study is conducted under the guidance of officers of this department. (2) Extensive literature survey Many published studies, books or material on effective control of inventory were referred to for getting a true direction to research process. (3) Data collection The study is conducted through collection of data through surveys, interviews with officials etc. Personal interviews were conducted where a set of preconceived questions were asked from the officers of inventory department regarding material control policies adopted by them. Books of accounts of Aonla I and Aonla II are studied thoroughly to details about inventory stock, cost of material consumed, increase and decrease in stock in the last few years etc. Sample of material was obtained randomly. ABC analysis was used where sample of material was graded under three categories: A, B, C.
(4) Analysis and interpretation The data about inventory is analysed to find out the effectiveness and efficiency of inventory policy. As regards the financial performance, the data about different financial indicators is analysed to calculate the different ratios and to draw the graphs.
engaged in production and distribution of fertilisers. The byelaws of the Society provide a broad framework for the activities of IFFCO as a Cooperative Society. A pioneer in this field, IFFCOs growth reflects its belief in the strength of the farmer. Several prestigious awards stand testimony to the fact that IFFCO is driven by its values and the dedication of its people. This is an organisation that believes in fair play and has always followed transparent and professional practices in corporate governance.
PRODUCTION
The largest producer of fertilisers in the country, IFFCO has five state-of-the-art plants that ensure its special position. These are considered to be among the best professionally managed fertiliser plants in the world. IFFCO had set up the KALOL plant for manufacture of Nitrogenous Fertiliser and KANDLA plant for manufacture of Phosphoric fertiliser. These plants commenced commercial production in the year 1974-75. . Another ammonia - urea complex was set up at Phulpur in the state of Uttar Pradesh in 1981. The ammonia - urea unit at Aonla was commissioned in 1988. As part of the new vision and in order to augment its complex fertilizer manufacturing capacity, IFFCO acquired DAP/NPK/NP plant in Paradeep, Orissa in September 2005. This was a historic moment, for it was the first private sector unit to be acquired by any Indian cooperative. The Paradeep unit was expected to achieve an optimal production load during 2008-09. During 2007-08, IFFCOs plants rolled out 68.47 lakh tonne of fertiliser material comprising 39.63 lakh tonne of urea and 28.84 lakh tonne of NPK/DAP/NP which bears ample testimony to its superlative performance. IFFCOs market share in N production is 20 percent and 25
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percent in P2O5 produced in the country. IFFCO has initiated energy saving schemes in all its five ammonia plants at a cost of Rs. 410 crore
. During 2007-08, IFFCO has notched up a record sale of 93.24 lakh tonne of fertiliser material comprising of 54.29 lakh tonnes of urea and 38.95 lakh tonne of NPK/DAP/NP witnessing a growth of 8.3% as against 86.10 lakh tonnes in the previous year. Best ever marketing productivity also sprang to 6158 tonne/head.
FINANCIAL PERFORMANCE
The society recorded an all time high turnover of Rs.12163 crore during 2007-08 while its pre tax profit stood at Rs.380.52 crore and profit after tax at Rs.257.59 crore. The society declared a dividend of 20% for its shareholders for seventh successive year.
With the firm belief that Information and Communication Technology (ICT) helps the people and the organisation to grow together, IFFCO has augmented its workflow applications. The Corporate Data Centre in New Delhi has been refurbished with the latest technology. A new VPN was created to provide round-the-clock connectivity in the plants, zonal office and head office. IFFCO has, over the years, successfully showcased its image in India and overseas. Its achievements and its contributions to the farming community are highlighted in various exhibitions and fairs. Given the fact that IFFCO acknowledge that people are the key drivers in its growth, there is little wonder, then, that the work environment here is one that encourages creativity and nurtures success.
Energy Conservation and Industrial Safety Award to Kalol Plant; and SUN and NDTV Green IT Award to Kandla Plant. In addition IFFCO has pocketed SMART WORKPLACE AWARD in the manufacturing and industrial segment by the prestigious Economic Times, Acer Intel Smart Workplace Award. At the world communications awards in London its associate IKSL has been conferred award for Best Content Service and Best Project Management. Another significant event was the laying of the foundation stone of Indias firstever Kisan SEZ (Special Economic Zone) by Dr. Y.S. Rajasekhara Reddy, Chief Minister of Andhra Pradesh. Further, IFFCOs Managing Director, Dr. U.S. Awasthi, received honorary Doctorate of Science degree from Dr Balram Jakhar, Governor of Madhya Pradesh, at the Vikram University Campus in Ujjain. Aonla Unit for the first time has crossed production of 20 lakh MT of urea which is commendable. Paradeep has achieved greater laurels by producing more than 13 lakh MT of NP/DAP despite shortage of raw material. Society has crossed the landmark sales and transportation of over 112 lakh MT of fertilizers material registering a sharp rise of 20% over the last year. With this, IFFCO has now become the largest marketer of process fertilizers not only in India but in the entire world. Society has already achieved the sales turnover of about Rs.32800 crore during the financial year 2008-09. During the year 2008-09, the society has entered into a long term agreement with LEGEND International for supply of rock phosphate along with equity stake. It has initialed an MoU with Kazphosphate, a leading chemical and fertilizer manufacturing company of Kazhakistan. Another agreement of intent has been signed with Qatar for setting up a Urea plant.
In line with its vision and mission statement, IFFCO has undertaken several social activities in the areas of education, community development, environment protection and horticulture, health care/medical facilities etc, all with the intent of reaching out to those in need and improving the quality of their lives. Adopting a village is of paramount importance to IFFCO. The programme started with an objective to bring about overall development in the living standards of rural community through integrated rural development with particular emphasis on agriculture development, creation of drinking water facilities, medical and veterinary check up. IFFCO has adopted 439 villages, thus empowering many lives. Another scheme that benefits the farmers is Sankat Haran Bima Yojana, launched by IFFCOs subsidiary, IFFCO-Tokio General Insurance Company Limited (ITGI). Here, farmers are provided insurance against accidents with the purchase of a 50 kilogram bag of IFFCO fertiliser. This reaches out to member cooperative societies. The policy has helped over 7,000 people since its inception in September 2001. ITGI also offers customized policies for farmers such as Barish Bima Yojana, Mausam Bima Yojana and Janta Bima Yojana. IFFCO has initiated several promotional projects to provide greater opportunities to the farmer by organizing field days, farmers meetings, sales point personnel training, crop seminars, special agriculture campaigns to effect transfer of modern farming trends. Besides, kits containing seeds, fertilisers, bio-fertilisers and agrochemicals along with booklets/literature were distributed to farmers. The aim: enhancing crop productivity and thus improving lives. In keeping with its intent of empowering the weaker sections of society, including women, IFFCO presents monthly scholarships to deserving students and also organizes training programmes for women. The organisation has instituted 17 IFFCO Chairs at agricultural universities and cooperatives. The emphasis is on current topics in
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agriculture. IFFCO uses its 12 storage-cum-community Centres for helping people come together and share their experiences. The environment is a major concern with IFFCO. Its units and townships comprise beautiful landscapes, surrounded by trees. IFFCO is also committed to improving the safety, health and environment of its manufacturing units, in line with international norms. The Kalol, Phulpur, Aonla and Kandla units have been awarded the ISO- 14001 certificate for Environment Management System. Further, the Kalol, Phulpur and Aonla plants have received the ISO-9001 certification for Quality Management. IFFCO has contributed Rs 10 crore to set up the IFFCO Kisan Sewa Trust. This Trust assists farmers in getting medical treatment. Employees also contribute regularly to it. The Kisan Sewa Trust organizes cancer detection and eye camps and arranges for blood through the Red Cross Society. The IFFCO Foundation has been promoted as the think tank of the organisation. Its objective is to focus on strengthening village level cooperatives in harmony with the law and culture of the country. Indian Farm Forestry Development Cooperative Limited (IFFDC), promoted by IFFCO, was given a certificate of appreciation by the Tata Energy Research Institute for its efforts towards good corporate citizenship. The Cooperative Rural Development Trust provides practical training to farmers and has organized 229 programmes in 2008, benefiting 22,221 farmers.
IFFCO is taking measures to develop web based services to provide exhaustive information on agriculture, fertiliser industry, agro-chemicals, and information on cooperative sector. For this purpose, 108 touch screen monitor based Farmers Information Kiosks or Cyber Dhabas in 10 languages have been installed in 17 different states of the country. Besides that, IFFCO has developed and implemented several ERP solutions and e-commerce solutions for internal use as well as for use in its joint projects. Some of these solutions have got recognition by Indian as well as by International Media Groups. During 2008-09, IFFCO has undertaken enhancement of WAN & Network security for all the plants and marketing offices across the country. Symantec antivirus server has been consolidated and clients installed on all the machines across the country for protection against virus attacks. In short, we can say that:
IFFCO IS:
1. 2. 3. Largest producer of fertilisers in the country No. of Plant Locations : Five Installed Annual Capacity (000 MT) a. b. c. d. UREA NPK/DAP TOTAL N - 4242.2 - 4335.4 - 2628.2
4. Only Fertiliser Institution in the country to produce 68.47 lakh MT of fertilisers and 93.24 lakh MT of sales during 2007-08. 5. Contributed about 20% to the total N and 25% to the total P 2O5 produced in the country during the year 2007-08. 6. Fertilisers marketed through 39564 Cooperative Societies and 158 Farmers Service Centers. 7. Service to the Farmers through a variety of programmes.
3) Ensuring availability of fertilisers at the farmers doorstep. 4) Creating scientific awareness among farmers. 5) Promoting nations growth through modern farming techniques. 6) Improving agricultural productivity through balanced fertiliser application. 7) Strengthening cooperation distribution system. 8) To promote the activity for enriching the life of the rural. 9) To achieve self reliant and self generated economy. IFFCO has grown steadily since its inception today. It has emerged not only as the largest fertiliser producing organization in India but also Asias largest fertiliser co-operative.
M.R.P.
4830
7197
7637
6295
9350
4455
MANAGEMENT
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The Representative General Body (RGB) which is the General Body forms the supreme body that guides the various activities of IFFCO. The RGB consists of: 1. Members of the Board of Directors. 2. One delegate from each of the Member Societies holding shares of the value of Rs.100 thousand and above; such delegate shall be as per the provisions of the Multi-State Cooperative Societies Act/Rules as amended from time to time; 3. Delegates to be elected from amongst the representatives of Member Societies (other than Members holding shares of the value of Rs. 100 thousand and above ) in each State/ Union Territory at the rate of one delegate for every 200 societies or part thereof. However the maximum number of such delegates from any State/Union Territory at the rate of one delegate for every 200 societies or part thereof shall not exceed 25. Such elected delegates shall be as per the provisions of the Multi-State Cooperative Societies Act/ Rules amended from time to time.
The Board of Directors of IFFCO carry out all functions as specified under the Multi-state Cooperative Societies Act/Rules. The Board of Directors frame policies, direct the various activities of the Society and undertake any other activities conducive to overall growth and development of Societies. The Board is headed by the Chairman. The Managing Director is the Chief Executive of the organisation with responsibilities for general conduct, supervision and management of day to day business and affairs of IFFCO. The The Finance Director oversees the financial aspects and the Marketing Director looks after the marketing functions of IFFCO. The Director (Technical) looks after the Techincal aspects, Director (HRD) is responsible for all the Human Resources, Director (Joint ventures) oversees all the
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Joint Venture operations and Director (Coop. Development) looks after Cooperative Development. These functional directors are assisted by Senior Executives who are experts in various disciplines.
BOARD OF DIRECTORS
The Directors of IFFCO Chairperson Shri Surinder Kumar Jakhar Vice-Chairperson- Shri N.P. Patel
DIRECTORS
Shri Chandra Prakash Shri S.L. Dharme Gowda Shri Kartick Chandra Sarkar Shri Harminder Singh Jassi Shri M.Gopal Reddy Shri Ankushrao R.Tope Shri Rajhans Upadhyaya Shri G.C. Maikota Shri Vithalbhai H. Radadia Shri Sheesh Pal Singh Shri Raj Kumar Tripathi Shri Balvinder Singh Nakai Shri Ravindra Pratap Singh Shri K. Srinivasa Gowda Shri K. Somashekhar Rao
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Shri Simachal Padhy Shri Pramod Kumar Singh Shri R.K.Dhami Shri B.S.Vishwanathan Managing Director Dr. U.S. Awasthi Deputy Managing Director-cum-Marketing Director Shri D.K. Bhatt Deputy Managing Director-cum-FD Shri Rakesh Kapur Director (Technical) - Shri V.K. Bali Director (Coop. Development) Dr. G.N. Saxena Director (HRD) Shri S.K. Mishra Director (Joint Ventures) Mr. K.L. Singh
BANKERS
India Overseas Bank State Bank of India Bank of Baroda Standard Chartered Bank The Maharashtra State Co-operative Bank Ltd. The West Bengal State Co-operative Bank Ltd. Madhya Pradesh State Co-operative Bank Ltd. The Karnatake State Co-operative Bank Ltd. The Punjab State Co-operative Bank Ltd.
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The Hongkong and Shanghai Baking Co-operation Ltd. ICICI Bank Ltd. IDBI Bank Ltd.
Movement by using duly tested and appropriate consultancy, advisory and technological interventions sourced from within the country and abroad and in accordance of the Cooperative Principles and in harmony with the law and culture of the land.
VISION To augment the incremental incomes of farmers by helping them to increase their crop
productivity through balanced use of energy efficient fertilisers; maintain the environmental health; and to make co-operative societies economically and democratically strong for professionalized services to the farming community to ensure an empowered rural India.
MISSION
IFFCOs mission is to enable Indian farmers to prosper through timely supply of reliable, high quality fertilisers and farm inputs and services in an environmentally
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sustainable manner and to undertake other activities to improve their socio-economic status. 1) To provide to farmers high quality fertilisers in right time and in adequate quantities with an objective to increase crop productivity. 2) To make plants energy efficient and continually review various schemes to conserve energy. 3) Commitment to health, safety, environment and forestry development to enrich the quality of community life. 4) Commitment to social responsibilities for a strong social fabric. 5) To institutionalize core values and create a culture of team building, empowerment and innovation which would help in incremental growth of employees and enable achievement of strategic objectives. 6) Foster a culture of trust, openness and mutual concern to make working a stimulating and challenging experience for stakeholders. 7) Building a value driven organization with an improved and responsive customer focus. A true commitment to transparency, accountability and integrity in principle & practice. 8) To acquire, assimilate and adopt reliable, efficient and cost effective technologies. 9) Sourcing raw materials for production of phosphatic fertilisers at economical cost by entering into joint ventures outside India. 10) To ensure growth in core and non-core sectors.
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11)
movement in the country. Emerging as dynamic organization, focusing on strategic strengths, seizing opportunities for generating and building upon past success, enhancing earnings to maximize the shareholders value.
VISION 2010
Having accomplished the objectives envisaged in vision2000andmission-2005 IFFCO embarked on vision2010 which focuses on future growth and development of the society and aims at: 1. Attaining an annual turnover of Rs.15,000 crore by 2010. 2.Installation of Ammonia and Urea plants including acquisition of fertiliser units
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3.Backward integration to meet feed stock requirements such as Phosphoric acid, Natural gas etc. 4. Generation of Power 5.Production and marketing of micro-nutrients, seeds, bio-fertilisers, pesticides etc. 6.Value addition to agri-products and marketing 7.Information technology and IT enabled services 8.Easblishment of retail chain in urban and semi-urban locations. 9.Diversification into new growth areas such as mobile telephony and communication Technology in the rural areas.
Under Vision 2010,IFFCO has set up a power generation company in Chattisgarh and formed a joint venture to manufacture Phosphoric Acid in Egypt
APPROACH
To achieve our mission, IFFCO as a Cooperative society, undertakes several activities covering a broad spectrum of areas to promote welfare of member cooperatives and farmers. The activities envisaged to be covered are exhaustively defined in IFFCOs Bye- laws
COMMITMENT
Our thirst for ever improving the services to farmers and member co-operatives is insatiable, commitment to quality is insurmountable and harnessing of mother earths bounty to drive hunger away from India in an ecologically sustainable manner is the prime mission.
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All that IFFCO cherishes in exchange is an everlasting smile on the face of Indian Farmer who forms the moving spirit behind this mission.
IFFCOS EMBLEM
The Emblem of any organisation i.e. the logo is very important by which the company is known to everyone or that is identity of the company. After one year of establishment in 1968, the organisation has decided to make an EMBLEM of IFFCO. The executive of the company said that which can be easily fit into any place or easily changeable according to the place and made by simple geometrical method. So the EMBLEM is made by Mr. M.I. Gupta, Chief Visualiser Developer and looks like
Logos ratio is1:2:5 and the color is green. The rectangle shows that the Indian economy is depend upon the agriculture and green color shows the faith of the farmers, they believe that after using the urea their fields will always be green, the remaining white color shows that the quality of the IFFCOs product is very good and oval shape is meant for the wealth and prosperity.
Board of Directors
Managing Director
Dy.MD-cumMkt. Director
Dy.MD-cumFinance Director
Director (Technical)
Director (HRD)
Paid up capital( Mar 31,2000) : Rs 95 million Activity : Marketing of Potash and imported fertilisers
Paid up capital (Mar 31,2000) : Rs 6.5 billion IFFCO has taken over the management and operational control of ICS Senegal in 200809.
ITGI has launched a new policy named Janta Bima Yojana which is providing insurance cover to the poorest of the poor at very nominal premium.
PARTNERS IN ITGI Joint Venture Partner : TM Asia Pte. Ltd. Total Equity : Rs. 220 Crore
Redeemable Preference Share Capital : Rs. 10 Crore Activity : On Line Trading in commodity futures
Activity
investments in new overseas Joint Ventures. * Includes Rs. 9.80 crore towards 9 bonus shares received during 2007-08.
Others
Indian Farm Forestry Development Cooperative (IFFDC) : Rs. 8.60 Crore
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Maharashtra State Coop. Bank Ltd. : Rs. 10 Lakh IFFCO Kisan Bazar : Rs. 9 Lakh
Highest Production of (Previous Best 70.12 lakh MT in 2006-07) Highest Production of (Previous Best 39.63 lakh MT in 2007-08) Production of (Best 32.26 lakh MT in 2006-07) Highest Sales of (Previous best 93.24 lakh MT in 2007-08) Highest Sales of (Previous best 54.29 lakh MT in 2007-08) Highest Sales of (Previous best 38.95 lakh MT in 2007-08) Highest (Previous best Rs.12163 crore in (2007-08) Plant (Best 1669 MT in 2005-06) Highest Marketing (Previous best 6158 MT in 2007-08) Composite Energy Lowest 5.907Gcal / MT in 2007-08)
Urea
40.68 lakh MT
IFFCO ASSOCIATES
1. INDUSTRIES CHIMIQUES DU SENEGAL 2. OMAN INDIA FERTILISER COMPANY S.A.O.C. 3. INDIAN POTASH LTD. 4. NATIONAL COMMODITY & DERIVATIVES EXCHANGE LTD. 5. NATIONAL COLLATERAL MANAGEMENT SERVICES LTD. 6. COOPERATIVE RURAL DEVELOPMENT TRUST
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AWARDS GALORE
KALOL UNIT
1) Seven awards received for overall performances from FAI. 2) Two awards for industrial safety from GOI. 3) Award for technical innovation from FAI. 4) Two Rajya Bhasha Shield for promoting Hindi. 5) Award for safety from National Safety Council, Chicago. 6) Indo German greentech environment excellence award.
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PHULPUR UNIT
1) Four awards for productivity from NPC. 2) Six national safetys award from GOI. 3) Two awards for overall performance from FAI. 4) Two awards for technical innovation from FAI. 5) FAIs Award for Best Overall Performance of an operating fertiliser unit for Nitrogen (Ammonia and Urea) Plant jointly with Zuari Industries Limited, Goa. 6) Three national energy conservation awards. 7) Three awards for best environmental protection from FAI. 8) Best environmental excellence awards from Indo German green tech foundation. 9) Best technical paper award by FAI.
KANDLA UNIT
1) Twelve safety awards from national safety council Bombay GOI. 2) Twenty-three safeties award from Gujarat. 3) Raj Bhasa award for promoting Hindi. 4) Six awards for overall performance from FAI.
AONLA UNIT
1) Award for best implemented project ( 2nd price) from GOI. 2) Award for conservation of energy from GOI 3) National Award for Excellence in Energy Management 4) C Indo German and Greentech Environment Excellence Award 5) C Award for Best overall performance from FAI 6) C Two Awards for Excellence in Safety from FAI
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7) C Two Safety Awards from National Safety Council of India 8) C Rajiv Ratna National Gold Award 2005 for Best Executive 9) C Excellence Award for papers published on Safety and Health in Chemical Industry and Hazard Identification & Risk Management 10) National energy conservation award 2006 11) Golden Peacock Environment Management Award 2008
: : : : : :
LOCATION State State Capital Distance from Lucknow Distance from New Delhi Nearest Airport Railway Station Road Area under Plant Area under Township Uttar Pradesh Lucknow 280 Km. 260 Km. New Delhi Aonla (10 Km. From the Plant) Plant is In BareillyAonla Bareilly highway. 260 Hectares 220 Hectares
PRODUCT
TECHNOLOGY
AMMONIA UREA N
The IFFCO AONLA Unit is located in the Gangetic Plains of Uttar Pradesh in Bareilly district about 28 Km. Southwest on Bareilly-Aonla Road. It was set up on 08 January 1985 and started commercial urea production at 16 July 1988. The infrastructure of AONLA unit is very big and constructed on 713 acres of land. IFFCO Aonla unit is the most efficient and quality-wise as well as environmental oriented unit so that M/s KPMG Peat Marwick, a quality registrar has certified it as ISO: 9002 unit and M/s BVQI London has accredited it as ISO:14001 unit. The Aonla unit, an Ammonia- urea complex is comprised of the two phases: o AONLA-1 o AONLA-2 AONLA -1 was established in 1988 and it was digested to nation by honourable Prime Minister of India late Shri Rajeev Gandhi on 17 May 1989. AONLA-2 was established in1996 December. This unit was designed to nation by honorable Prime Minister of India Shri I.K. Gujral on 28 Jan 1997.
Particular Capacity (P.A.) Ammonia Urea Project zero date Mechanical completion Ammonia started
Aonla-1
Aonla-2
production 15.05.1988
(Natural Gas from HBJ pipeline being supplied from Bombay high)
Name of Unit
Proposed
Increase
in
Capacity (MTPD) Capacity (MTPD) 2080 3000 3000 3000 11080 410 380 380 380 1550
The installed cost for the Enhanced Capacity is estimated at about Rs. 19 lakh per MTPD of Urea as against the Rs. 65-70 lakh per MTPD Urea in case of a Grassroots Plant. Therefore De-bottlenecking of existing Urea Units is the best route to create additional Urea capacity.
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IFFCO has initiated action for De-bottlenecking of its plant at Aonla and Phulpur
Units for Capacity Enhancement. We are awaiting final clearance from DOF. Incidentally this will also reduce the subsidy to Government vis a vis imported Urea.
1. AMMONIA PLANT
There are two streams of Ammonia plants having the capacity to produce 2x1520 MTDP of liquid ammonia. The technology is based on Haldor Topsoe, Denmark process with Natural Gas and Naphtha as main raw material.
2. UREA PLANT
There are four streams of Urea Plant having the capacity to produce 4x1310 MTPD OF Urea Fertiliser. The technology is based on Snamprogetti, Italy on Ammonia stripping process.
General Manager
General Manager
JGM/DGM Technical
JGM/DGM Comm.
JGM/DGM F&A
Process
Purchase
F& A
Electrical
Offsite
Store
Product Handling
Laboratory
Traffic
Organisation Structure
FINANCE & ACCOUNT DEPARTMENT
BOOKS/FICC CELL
FINANCIAL CONCURRENCE
BILL SECTION
PAYROLL SECTION
PSL SECTION
Supply Section
Work Order
Indigenous supply
Imported supply
Work contract
Service contract
Sr.Manager (Account)
Sr.Manager (Account)
Sr.Manager (Account)
Sr.Manager (Account)
Manager Account
Manager Account
Manager Account
Manager Account
Sr. Account Officers Account officers Jr. Account Officer Sr. Accountant Jr. Accountant
Managerial finance functions are so called because they require skilful planning, control and execution of financial activities. Routine finance functions on the other hand, do not require a great managerial ability to carry them out. They are chiefly and are incidental to the effective handling of the material finance functions. The various areas covering under the preview of subsections are as follows
1. BOOKS SECTION
This section basically deals with accounting function, maintenance and keeping of records.
Books: Preparing and maintaining balance sheets. IFCC (Fertiliser Industries Coordination committee) Costing & Pricing Cells Reporting
This section deals with the payments of salary and wages to the employees and extending various other benefits are covering under to preview are Salary Leave Travel Concession (LTC) Medical Allowance Conveyance Advances Loans to employees
Aonla Unit undertakes processing of salary and other staff related payments of all employees through Human Resource Management System (HRMS). It is an integrated package based on Oracle DBMS. The System integrates Personnel & Administration Department and Finance & Accounts Department. Simultaneously, Financial Accounting System (FAS) which is also based on Oracle DBMS has been launched in F&A DEPARTMENT through which General Ledger Sub Ledger of Employees is maintained and Trial Balance and Financial Accounts are generated. There is also inter- relation of HRMS and FAS so that cash payment/receipt vouchers, Bank Payment Vouchers and Journal Vouchers generated in HRMS are automatically posted online to Payroll Section of Finance & Accounts Department.
3. Taxation Section
As per the status and operations of the society, It deals with the following Taxes: Central Excise Duty Income Tax
57 IIMT MANAGEMENT COLLEGE MEERUT
For sale in the ordinary course of business; In the process of manufacture for such a sale; For consumption in the process of production of goods and services for sale including maintenance supplies and consumables other than machinery spares. Inventory Management involves the control of assets being produced for the purpose of sale in the normal course of the company's operations. The goal of effective inventory management is to minimize the total costs - direct and indirect - that are associated with holding inventories. However, the importance of inventory management to the company depends upon the extent of investment in inventory. The term inventory includes: Inventory of Raw Materials : In the case of manufacturing concerns, various types of raw materials are being used in the production system. To ensure smooth production function and also to avoid any kind of production delays the concern has to keep inventory of raw materials. Inventory of Stores and Spare Parts : This inventory consists of those products which serve as accessories to the main products manufactured for the purpose of sale. Bolts, nuts screws, clamps, etc., are the examples of stores and spares parts. Such spare parts are either bought from outside or manufactured in the concern itself.
Inventory of Work-In-Process (W.I.P.) : Sometimes the manufacturing system involves various processes for converting raw materials into finished goods. As such, some materials might have
59 IIMT MANAGEMENT COLLEGE MEERUT
been issued to the production process but might not have been completed as finished goods. This is known as work-in-process. Inventory of Finished Goods : All goods manufactured during a particular period may not be sold immediately. These are to be kept in warehouse. The idea is to uncouple the production and sales function so that it is no longer necessary to produce the goods before a sale can occur. The application of managerial function on the basis of management principles in the field of inventory is termed as inventory management. Managerial functions are performed with respect to inventory; it may be called inventory management. The objective of inventory management is to plan the optimum size of inventory which is neither excessive nor deficient and is timely available. For timely availability along with optimum size, there is need for controlling as well. Only on the basis of various control techniques one can ensures whether inventory would be timely available. But effective control in itself depends upon organizing and coordination. Thus, inventory management comprises the functions of planning, controlling and organizing the types of all goods, quantity, status, flow and time- sequence etc.
MATERIAL DEPARTMENT
Material Department is responsible for the proper handling of inputs and controlling of material inputs. Proper handling of input materials ensures the smooth running of plant. Material department recognizes the need of the input materials and arranges them for the plant. It includes the procurement, verification and controls of materials in right quantity and at right time to facilities the production function. Material management includes two important functions: Purchasing Storing and control of materials
Thats why; it is divided into following sections: Purchase section ( It is responsible for purchasing of materials ) Store section ( It stores the inputs)
These both sections are interrelated and perform their function on coordination. All purchases are to be made only by the materials department except purchases of petty item through some vouchers and Department Managers within the limits prescribed in purchase procedure/power of officer. Material purchase indent should give following information: 1) Quantity in stores 2) Average monthly consumption since last purchase for stock items 3) Maximum /minimum level
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PURCHASE SECTION
The purchase department is at the interface of internal and external department. Purchase department do enquiry about the inputs whether it is required or not. This enquiry is done in two ways that are: 1) Single stage 2) Two stage After enquiry purchase department invites a tender. After confirmation of all terms and conditions the department contacts the supplier and orders for the inputs. Thus it is responsible for purchasing of materials and other raw materials whatever is required by the organization. Purchase department is responsible for the delivery of right amount of material at the right time and at the right location to avoid the hampering of the production. Purchasing is distinct from buying. Purchasing involves the extra knowledge as the tenders, various vendors, their prices, comparison between them, after sale service, dispatching follow up and payment terms. The purchase department considers various things before purchasing the raw materials. 1. Information about the input material 2. Sources of material- vendor 3. Reasonable price of that material
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4. All terms and conditions Indenter is that person who raises the indent.
PURCHASE PROCESS
The purchase process can be expressed as following:
INDENTER
Opening
The diagram can also be summarized as follows: 1) RAISING OF INDENT: First of all the indenter raises the indent. This indenter may belong to any department. Now the indenter informs to the store. If that particular material is not available at the particular point of time then store informs to the purchase department. After it the working of purchase department starts. 2) RECOGNITION OF NEED: The purchase department recognizes the need of indenter and checks whether that material is available in the store or not. The availability of input material at all points of time is the responsibility of purchase department. 3) REQUISITION TO PURCHASE: This is an intimation to purchase department by the indenter that he has need of certain materials. He raises indent by filling a form Material Purchase Requisition (MPR). For stock items MPR is raised by store keeping in view maximum, minimum & re-ordering lable. In this he gives several information like:a. Material description/ Proposed Reason b. Item code/ proposed code
65 IIMT MANAGEMENT COLLEGE MEERUT
4) MRP SCRUTINY: Next step involves scrutinizing of the MRP to certified the genuinely of the need, for this, first approval to given by immediate higher authority of the indenter. Next, the MRP is send to the stores, to check whether the material is available or not. If it is not available the MRP goes to the purchase department. For further action. Here it is scrutinize in three ways :-
5) SENDING or ENQUIRY/INVITATION TO BID : Enquiry can be done by two types: I. II. Single stage Two stage
SINGLE STAGE: Single stage is followed when there is no or very few chance of technical deviation. Here there is no restriction on supplier or vendor. This enquiry is done in case of nonproprietary items. TWO STAGE: Two stage enquiry is followed when there is more chances of technical deviation. This enquiry is done in case of proprietary items. Items can be classified in to two categories keeping in view the purchasing function Proprietary items: These are those items e.g. spares which have to be bought from particular supplier or vendor. Nonproprietary items: These are those for which there is no restriction on vendor. Enquiry is sent in order to know the prices and other terms and conditions of vendors. Bidding can be done in three waysI. II. Proprietary bidding: This is for the proprietary items and is sent to only one vendor. Here the proprietor is invited to set a competitive price. Limited tender enquiry: This is done for non proprietary items and bids are invited from a limited no. of vendors selected from the registered vendors with the company. III. Press tender/Open bidding: For non prosperity item, if approved vendor list is not available and amount involved in purchase is more than fifty lakh then press tenders are issued in various news papers. There may be global tenders also. However if estimated value of enquiry is less then fifty lakh, the vendor list shell be developed with the approval of Competent Authority
6) Receiving of offers: Bids are received by purchase department and opened on the date and time stipulated in the document before tender committee to compare the quotations- Quotations comparison statement (QCS), of technically & commercially acceptable bids, is made and bid with lowest landed cost is chosen. QCS is also sent to the technical department for its comments. Work Order/Rate contract can be given to more than one bidder as per requirement & terms of ITB but on the L-1 bidder rates.
7) Purchase order: After selecting the best offer, purchase order is sent to that vendor with all the terms and conditions specified and details of the material to be purchased are also given. A bank guarantee of performance is taken from the vendor in advance which is usually 5% of the P.O.A. time limit is set for delivery of consignment and in case of delay a penalty is imposed @ 0.5% of P.O. per week to the maximum 5% of the P.O.A.
8) Receipt of materials: After the consignment reaches the stipulated place, the payment is done by the organization according to the purchase terms agreed upon by the two parties. The material is checked for quality conditions, quantity and then sent to the store where the store releases the Stores Receipt Voucher (SRV). From here it is delivered to the indenter. Normal payment is done after 30 days from the receipt or acceptance of material.
9) Follow up done for every order : It may be regarding delay in supply, changes in price, defective or damaged items supplied etc. For every indent, a separate file is opened and correspondence goes on. For every step,
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recommendations of indenter, manager (F&A), materials manager & general manager are sought. In case of damaged input materials the store does not accept the materials. A rejection report is prepared in case of damaged items.
1.
provided in the contract order, only then advance payment is given. The advance payment to contractors shall be made against submission of bank guarantee in the
69 IIMT MANAGEMENT COLLEGE MEERUT
Performa provided by IFFCO. Advance payment against indemnity bond shall not be released as provided in the purchase procedure.
2.
In case the terms of payment provide for full payment or part payment against dispatch documents through bank, the supplier will be negotiating the documents through the bankers. After the documents are received by the bankers, they are forwarding bank intimation along with a copy of the purchase order to ascertain that the invoice is raised for the material ordered and conforms to the other terms and conditions of purchase order. After the intimation from the bank is received the invoice of the suppliers will be scrutinized by the Finance and Account Department for the followingi. ii. iii. iv. v. vi. vii. viii. ix. Purchase order number Whether materials supplied are as specified in the purchase Whether materials supplied are as specified in the purchase order. Quantity supplied. Price basis whether F.O.R. or Ex-works Whether excise duty, sale tax and other taxes are as per the order. Whether bank charges are claimed as per the purchase order. Other terms and conditions of the purchase order. Document with bank for retirement should have consignee copy of GR. Where there is delay in supplying the material and the payment through bank is 90% to 95%. It should be ensured that penalty for delay, as provided in the purchase order, is recovered before releasing the balance payment. Where payment required to be
70 IIMT MANAGEMENT COLLEGE MEERUT
made, a clarification is to be sought from materials department and proper approval taken for waiving of penalty or otherwise before retiring documents. The payments under the contracts must be regulated as per the expressed terms and conditions. Any payment not covered by the contractual terms and conditions should not be released.
DELAY IN DELIVERY
In any contract, the time and date of the delivery is the essence of the contract. In the event of delay in the execution of the order beyond the date of delivery as stipulated in the order, the project authorities may take following actions 1. Accept delayed delivery at price reduced by a sum equivalent to 0.5 % if the value goods not delivered for every week of delay or part thereof limited to a maximum of 5% of the contract value. OR
2. Cancel the order in part or full and purchase such cancelled materials from elsewhere on account and at the risk of the suppler without prejudice to his right inspect of goods delivered.
IMPORTED MATERIAL
Materials procured may be either indigenous or imported. For major projects the foreign contracts are normally finalized at head office level and payment against these contracts are made by the concerned unit. Orders are also placed by the unit directly. Payment is made to the foreign party by debiting to the appropriate advance account. If the payments are made through L/C against documents, the same shall be debited to advances to foreign suppliers account. On receipt of material at site, project engineer shall accept the material and initiate for preparation of DCSRV/SRV. After receiving DCSRV/SRV project accounts will clear the suppliers advance account for material.
Clearing and handling of imported material is the responsibility of material department on the arrival of ship the materials will be cleared with reference to the invoices and bills. For any short landing or breakage between the port of dispatch and port of destination, claim action shall be taken by them.
MATERIAL CODING
It is very typical for the every organization to maintain the stock items in case of largenumber of items. It will be very typical to identify them at the time of requirement. So the items are coded to avoid confusion. For the coding of materials the account person assigns code for every item of store. Thus every item has a code that is called its material code. Material coding facilitates the account persons and store manager to maintain the transactions of the items whether of receiving or of issuing. Every item maintained by its code in the stock as well as in the store accounting section. The item/material code remains same in stores and accounting section. Whenever a transaction is done in store for the inventories the full details of that transaction is send to store accounting section also, because the computers of stores and accounting section are connected through Local Area Network. (LAN) In this way it is very comfortable task to maintain the inventories on the inventory software with the help of material coding.
Advantages of codification
1. Lengthy descriptions are replaced by a simple code. 2. It economizes space in forms and reduces clerical work. 3. Ease in identification of stores. 4. It is comprehensive. 5. It facilitates, mechanized accounting. 6. Secrecy of description can be maintained. 7. It ensures clarity.
CODING
There are different types of coding that are as follows: a) Numeric: Each item is given a number. b) Alphabetic: Each item is denoted by a combination of alphabets. If the alphabet selected indicates the inventory sound when it is pronounced, it is known as mnemonic system. This helps in remembering the codes. c) Alphanumeric: It is a combination of alphabets and numeric code. d) Decimal System: It is basically a numeric system; sub-group may be indicated by decimals. In IFFCO 12 digits coding is done. The various codes for the different materials are as follows: 1. 2. 3. 5. Ammonia 11 Urea Offsite - 12 - 13
4. Product handling -14 Power plant -15 2 digits = for the plant location 3 digits = for the equipment 3 digits = for the material 3 digits = for the size and 1 digit = for the item identification.
Inspection of Material
The material department shall coordinate with other departments and arrange inspection of material at vendors shop prior to dispatch. Inspection of materials in other cases shall be carried out on receipt of materials at site. Only materials those cleared by the inspection will be taken on charge in stores. The person inspecting the material will sign on the stores receipt voucher in token of having inspected and accepted the material. Generally indenter is called upon for the inspection of the material. Sometimes inspection is done at the gate of IFFCO. Only after inspection material enters into the store. If there is any damage in the material or they are insufficient in quantity then rejection report is prepared. Its copies are distributed among all the parties which are involved in it.
Damaged/Short/Rejected Materials
If the materials are received short or in damaged condition, there are some conditions in this regard. In cases where the responsibility for the transit insurance is on IFFCO, a claim should be lodged with insurance company for the value of material plus incidentals. This insurance is done by IFFCO TOKIO GENERAL INSURANCE COMPANY. As soon as the shortage per damage of the materials is noticed the material
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department will lodge the provisional claim with the underwriters and pass on the relevant papers to the finance & accounts department for lodging monetary claim.
In respect of transit insurance claims bill section will pass an adjustment Entry debiting claim recoverable account and credit the Advance to Vendors account. After the adjustments the bill section sent the copy of journal voucher along with all necessary details such as P.O. No. , MRR No. quantity and value, name of the supplier to the insurance section for following up the claim with the insurance company.
Where the responsibility for short supply or damages in transit is of the suppliers, the material department should take up the matter with the supplier for arranging replacement. A report is prepared in this case. Its copies are sent to the supplier, purchase department and finance and account department.
The consignment of phosphoric acid and Ammonia are received at Kandla and the material actually received is valued at the contracted cost & freight price. Where free on board (FOB) price is agreed, the ocean freight element is loaded separately. All connected expenditure like customs duty; handling charges etc. are also included in inventory valuation. The valuation of inventory at the month end is to be made on the basis of exchange rates prevailing on the last day of the month. The difference if any between the provisional rate and the actual payment rate shall be charged off to the consumption account, if the material is already consumed.
The account department also ensures that all claim suppliers for shortage are booked on monthly basis and necessary on quarterly basis for the pending claims.
Indigenous Ammonia
The indigenous ammonia is supplied by KRIBHCO / GNFC to Kandla unit. The quantity received is accounted at the price payable to the party which is fixed by the Govt. of India. This price is fixed at par with the landed cost of imported ammonia.
Potash
Potash purchase orders are placed by the commercial department time to time depending on the material requirement. The material received valued at agreed price plus local sales tax and freight for transportation of material up to plant site. The finance department at head office ensure that payment for these raw materials are released on due dates to avoid interest liability. After releasing the payments the
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inter unit debit advice is sent to plant. On receipt of the payment advices the suppliers account is adjusted in the plant.
Natural Gas
Kalol, Phulpur and Aonla plant consume as feed stock and fuel. As per the contract with ONGC, gas is supplied to IFFCO at the price fixed by Govt. of India from time to time. The meters provided at the inlet point in the plants are the basis for monthly billing. Meter reading is carried out jointly by ONGC / GAIL and IFFCO representatives. The unit sends the e-mail to head office for making payment to ONGC / GAIL after due certification of bill by the head of technical department about quantity of gas received.
Naphtha
Naphtha is supplied by IOC against advance payment terms. There are excise duty concessions available for these items provided they are consumed for manufacture of fertilisers. Accounts department in coordination with production department shall ensure that all the excise duty requirements are fulfilled that the duty concessions are fully availed. The inventory is valued based on the quantity received as per MRR received from production department on monthly basis. The price payable to IOC for naphtha is fixed by the Govt. from time to time. The naphtha is supplied by IOC from its refiners located at Mathura, Koyli, BRPL, Panipat & Bagoun to Kalol, Phulpur & Aonla units.
received is taken to inventory at the actual price paid and equivalent amount is credited to material received on loan account. This entry will be reverse when the material is procured by IFFCO and replenished for return of loan. The inventory and consumption account then shall be accounted at the actual procurement price.
STORE SECTION
Store of any organization is of vital importance. It is the responsibility of stores to receive the material required by the organizations operations to keep it properly & to issue it as when required. The stores are divided in two subsections for greater flexibility like receipt and custody section. In IFFCO there are two stores. a. Store A for Aonla-1( this store contains that spares which are used by Aonla-1) b. Store B for Aonla-2 unit.( it contains mainly catalysts used by Aonla-2 ) Store has the following warehouses: Main Store Cement godown Petrol Pump Cable yard Chemical godown Paint godown PDIL store
A.
RECEIPT SECTION This section is responsible for receiving the materials and inspecting them. The
process involves following steps. 1) The document regarding the material may be sent to the stores, purchase, concerned department. But ultimately they have to be send to stores. The documents may be: Goods receipt / railway receipt / challan
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2) 3) 4)
The particulars of the document are noted in the carrier receipt register (CRR). After the entry in the register, the document is given to an agent termed as handling contractor. He will collect the material. Consignments cases are intact. If not he will ask for open delivery. Then he has to deliver the goods to stores. In case of damage he has to give a certificate. Some consignment may receive without document i.e. door delivery and is some cases it may be face to face delivery.
5)
If any discrepancy is found during checking, the accounts section is informed for necessary action and getting claim from insurance company. The date of receipt is filled in CRR.
6)
The next operation is filling the stores receipt vouchers (SRV). Here the quantity mentioned in challan and purchase order are compared, SRV Has 7 copies, two for accounts and one for each purchase, stores, indenter, master file & custody section.
7)
Inspection is done by the indenter: Suppose all items are accepted then the material is handed to custody section after putting identification & giving a SRV control number. If some items are defective then the accepted items will be sent to custody and for defective ones, information is sent to supplier, accounts, indenter & insurance company and the particulars noted in rejection register. If there is some breakage then either item may be replaced by company or claim against insurance is obtained, when an item is replaced, its dispatch advice is made.
8) Direct charge SRV (DCSRV) is prepared when indenter wants material directly from receipt section.
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B)
CUSTODY SECTION This section is responsible for proper keeping of materials and issuing them
when required by different department and contractors. The material received here is first checked as per SRV for every material there is a card. These cards are located in bins according to code of material is received in custody the card information is updated. When someone wants to issue certain material he has to fill the store issue voucher (SIV). Once the item is issued again information is updated in the kardex. When a particular part is returned then this received in stores by internal stores return voucher (ISRV). After issuing the material the number of issue and the quantity issued is noted in SIV control registers. Custody section takes care of spares. SPARES About 36848 spares of Aonla Unit-1 are housed in store and 17799 spares of Aonla Unit-2 are housed in store. Spares have been classified plant wise. The first digit of the code of item is numbered according to given criterion Ammonia Urea Product handling Power
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In IFFCO inventory is divided into two types: i. ii. General and Spares General are those inputs which can be used at various sites as wire, pipe etc. Spare are those inputs which are specific to a particular plant and are of particular size.
AONLA UNIT -1
Verified A Class in the General Spar year e 2000-01 2001-02 2002-03 2004-05 2005-06 2006-07 2007-08 0 0 0 0 0 0 134 0 0 0 0 1 0 402
B Class
General Spar e 0 0 0 22 72 49 384 0 0 0 20 122 0 630
C Class
General Spar e 0 7 3 8323 3512 41 3982 1 1 6 1038 1 1277 0 4072
Unclassified
General Spar e 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Total
General Spare 0 7 3 8345 3584 90 4500 1 1 6 10401 1400 0 5104
0 Total 134
0 403
23 550
112 884
229 16097
613 1638 1
523 523
1876 1876
775 17304
2631 19544
B Class
General Spar e 110 0 0 271 0 0
C Class
General Spar e 203 2 2713 393 11 5353
Unclassified
General Spar e 0 0 0 0 0 0
Total
General Spare
313 2 2713
86
664 11 5353
0 0 134 0
1 0 389 0 389
0 0 257 0 367
0 0 626 0 897
0 0 0 139 139
0 0 0 1115 1115
Total
134
c. Maintenance of records for all quantitative transaction of packing material is the responsibility of bagging department. Similarly the raw materials are handled by production department with all responsibilities in respect of quantity accounting.
1. 2. 3. 4.
Accounting of receipts, issues, return and transfer of materials. Accounting of imported materials for capital works and operations. Associating with stores section for stock verification. Valuation of stores items should do on weighted average basis.
b) The corrections and financial and financial adjustments are made to arrive at final check list after scrutiny of final check list entry in priced store ledger is to be processed. The section shall ensure that all receipts, issues and returns / transfer voucher raised by the stores section are finally posted in the price store ledger. c) For clearance of imported materials, amount deposited for custom duty in the PD account etc. Shall be cleared against individual MRRs on receipt bill of entry d) The issue notes shall be priced on the weighted average rate basis after accounting the last receipt of material.
e) After ascertaining the nature of expenditure, the job for which material is issued; an appropriate account code shall be given in accordance with the chart of account. f) In case of material like steel plates etc. where materials are received on actual weight basis and the issues are accounted are on theoretical weight basis as per sectional measurements, the quantity accounting shall be kept on weight basis. The difference in quantity in weight basis, if any, shall be adjusted to revenue / capital account, as then case may be, in consultation with consuming department, in case the shortage is more than the consumption norms, the same should be recovered from the contractor.
g) For all issue notes relating to works contracts, one copy of the price issue notes may be sent to the work accounts section to enable them to debit the contractors
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account. A monthly abstract also be prepared and passed on to works accounts group for check.
h) Details for receipts and issue of materials received / issued on loan shall be maintained by the store account section loan transactions shall be approved by the competent authority. It is the responsibility of material department to take action to square up the transactions within the reasonable time.
i) Inter unit transfer of material shall be accounted at cost basis freight and other incidental charges shall be borne by the transferee unit.
j) Materials issued to contractors shall be priced at the monthly weighted average rate and debited to materials issued to contractors account. The accounting for the difference between issue price and recovery price provided in the contract shall be cleared by the accounts section dealing with the works. Recovery should be predefined basis and must be uniform.
k) For material returned to stores, return note shall be priced by the stores accounting section at the same rate which it was issued and the Value shall be debited to the relevant code of stores and spares parts inventory accounts by credit to the cost center / job number where the material is received back. The return note shall be priced on the basis of the original issue requisition against which the material was drawn if such reference is available, otherwise the same should valued at the prevailing average monthly rate applicable to that material.
l) No material shall be transferred to one card to another card without giving proper information to the stores account section. Such transfers shall be made by means of a transfer voucher on receipt of such transfer voucher and pass adjustment entries by debiting and crediting respective accounts.
m) Under the mechanized system of store accounting, all documents, such as MRRs issue notes return notes and transfer vouchers shall be sent to the EDP section after exercising the prescribed checks. The EDP section shall prepare the all accounting abstracts with the summary figures with monthly journal entry. In addition, it shall prepare the priced store ledger. Ledger abstract for all items transacted during the month giving the opening stock, receipts, issues and past closing balance shall also be prepared. A copy of this statement shall be forwarded to store section for verification of the bin card balances. Discrepancy if any shall be reconciled by the store section with the stores accounts section.
n) The price store ledger balance for each category store shall reconciled value wise with the control account balance in the ledger wherever possible. The accounts section shall draw out reconciliation on monthly basis. After reconciliation a monthly material consumption statement, cost center wise, is prepared and circulated to concerned department by the 10th of following month for verification of its correctness and for monitoring the budgeted expenditure, if any discrepancy is reported, the same is adjusted in the ensuring month.
For stocks of ammonia, naphtha, general stores, bags, phosphoric acid, and finished products held at plants, insurance shall be taken to cover the risks arising out of fire explosion, riot, strike terrorism, malicious damage, earthquake, etc. The stock of finished products lying at different marketing warehouses should also be adequately covered through the warehousing agencies. According to the value of stores and finished products keeps on varying from time to time, insurance shall be obtained in the form of declaration policy whereby the average daily stock for each product held during the month shall be declared to the insurers in the first week of the next month. According to the declaration policy, the insured amount for each product shall be stated separately. The liability of the insurers is limited to the insured amount. At any time if it is found that the actual stock is more than the insured amount to avoid less amount of insurance. In case of a declaration policy, insurance premium is payable for minimum 35 % of the insured value. Before insurance is obtained, various categories of stores shall be reviewed with a view to select such items for which insurance is considered necessary.
Verification of Inventories
The officer of stores will coordinate the job of physical verification and the accounts officer in charge shall render all assistance to ensure that the physical verification of inventories is carried out as per the policy and the policy and the approved program. The store department will ensure that the posting in the Kardex are updated before the verification of inventories. Kardex contains all the information that is in the store.
The inventories are classified in three categories for verification purpose. Raw material & Packing materials Stores, Chemicals & Spare parts Finished products
The stocks of raw materials, packing materials and finished products are to be verified on quarterly basis by an independent surveyor by the society. No adjustments need be carried out in the books of accounts unless the discrepancies in liquid raw materials and solid raw material are in excess of 1% to 5% respectively. This is as per guidelines issued by the head office. In case of finished goods also the same principle applied except that no adjustments in the books of accounts shall be made. However the stock registers shall be adjusted on the basis of actual stock in order to replace the notional figures of stocks by more accurate estimate based on physical verification. The inventories for other items such as stores, spares, construction materials etc. are also verified every year keeping in view ABC analysis of stock items value and exercise of verification may be completed by March every year. For the purpose of verification of stores, chemicals & spare parts shall be classified in to A, B, C categories.
Categories A
B C
70% 25%
A team of stock verifiers shall prepare a stock verification sheet giving the kardex balance and the physical balance of each item covered in the stock verification. After filling up the particulars of the value and quality discrepancies with reference to the priced stores ledger balance, the stock verification sheets shall be forwarded to the materials department for scrutiny and reconciliation and adjustment in consultation with finance department accepted shortage shall be processed for the approval of the competent authority.
Internal Check
1) One set of document for receipts, issues and return of materials shall be sent to
the accounting section of finance department. Based on these documents, priced store ledger shall be prepared for each item for stores. The material code number between stores and accounts shall be identical. The priced store ledger shall provide value of each receipt, Issue and return transaction along with quantity ledger. The quantity balance appearing in priced store ledger shall serve as counter check for accuracy of bin card balance in store which is essential for proper functioning of inventory control system
2)
The priced store ledger shall not be maintained for large number of low value
items such as stationery, medicines, canteen stores etc. in this case the expenditure shall be charged to the appropriate expense account at time purchase. Quantitative record shall be kept by the concerned department and shall be produced as and when required for audit purpose.
Inventory Control
Inventory control is concerned with minimizing the total cost of inventory. The three main factors in inventory control decision making process are:
a. b.
The cost of holding the stock (e.g., based on the interest rate). The cost of placing an order (e.g., for row material stocks) or the set-up cost of production.
c.
The cost of shortage, i.e., what is lost if the stock is insufficient to meet all demand. The third element is the most difficult to measure and is often handled by
establishing a "service level" policy, e. g, certain percentage of demand will be met from stock without delay. The Inventory Management system and the Inventory Control Process provides information to efficiently manage the flow of materials, effectively utilize people and equipment, coordinate internal activities, and communicate with customers. Inventory Management and the activities of Inventory Control do not make decisions or manage operations; they provide the information to Managers who make more accurate and timely decisions to manage their operations. Inventory control is a systematic control and regulation of purchase and usage of materials in such a way so as to maintain an even flow of production at the same time
95 IIMT MANAGEMENT COLLEGE MEERUT
avoiding excessive investment in inventories. Efficient material control reduces losses and wastage of materials that otherwise pass unnoticed. Inventory control is the core of material management. The need and importance of inventories varies in direct proportion to the idle time cost of men and machinery, and urgency of requirements. If men and machinery in the factory could wait and so could the customers, materials good not lie in want for them and no inventory need to be carried. But it is highly uneconomical to keep the men and machine waiting and the requirements for modern life are so urgent that they can not wait for materials to arrive after the need for them has arisen. Because materials constitute a significant part of the total production cost of the product. Thus, cost is controllable to some extent; proper planning and controlling of inventories are of great importance. If investment in inventory will be more then the company has to bear carrying cost and that finance can not be utilized. A good inventory management policy should ensure smooth and uninterrupted supply without making unnecessary investment of funds in inventory. This requires that inventory management policy must balance the requirements of the following two opposing and conflicting ends: i) ii) To maintain a large quantity for smooth operation and efficient customers services. To maintain only a minimum possible inventory because holding costs and opportunity cost of funds invested in inventory.
1) To provide the continuous flow of required materials, parts and components for efficient uninterrupted flow of production. 2) To minimize investment in inventories keeping in view operating requirements. 3) To provide for efficient store of materials so that inventories are protected from losses by fire and threat and handling time and costs are kept at minimum. 4) To keep surplus and absolute items to minimum. 5) To protect the inventory against deterioration, obsolescence and unauthorized use. 6) To ensure that finished goods are available for delivery to customers just to fulfill the orders.
1) Min-Max plan:
97 IIMT MANAGEMENT COLLEGE MEERUT
In this plan analyst lays down a maximum and minimum for each stock item. Minimum level establishes the reorder point and order is placed for quantity of material, which will bring it to the maximum level.
Normal issues of stock usually stopped at this level and made only under specific instructions. Safety stock is a buffer to meet some unanticipated increase in usage. Safety stock level = Ordering Level (Average rate of consumption * Re-order level) OR = (Maximum rate of consumption Average rate of consumption) * Lead Time.
Inventory turnover ratio =Cost of materials consumed / Cost of average stock held during the period Where, Cost of average stock = [Cost of opening stock + Cost of closing stock] / 2
Inventory turnover ratio [in days] =Days during the period /Inventory turnover ratio.
99 IIMT MANAGEMENT COLLEGE MEERUT
The percentage of slow moving stores = Slow moving stores / Total Inventory
of its usage, lead-time , technical or other problems and its relative money value in the total investment in inventories. Critical, i.e. high value items deserve very close attention, and low value items need to be devoted minimum expense and effort in the task of controlling inventories.
The ABC Reports are made: A inventory reports lists parts having little or no turnover. Turnover frequency is measured by an exposure index. We calculate the index by dividing a parts inventory quantity by its usage during the most recent 24 month period. B report shows the parts with more than a one year supply but less than a 2-year supply. C report lists the parts with more than six months supply but not more than one year.
Inventory system range from the utterly simple to the complex ones. Irrespective of how simple or how complex a system is, regardless of whether it is automated or manual, it should be clearly understood by all affected parties. The system must be properly explained to all concerned people so that its purpose, logic and rationale are transparent.
This generates enthusiasm for the system and enhances its credibility. Otherwise it is likely to be perceived as a mysterious Black box of dubious value.
Adaptability The questions raised in this context are: 1. Is the system responsive to change? 2. Can new products, new situations and new requirements be handled by the system? A certain degree of flexibility and adaptability must be desired into the system to make it versatile. Of course this cannot be and this should not be carried too far. The system must not provide for every possible and imaginable contingency. If it is developed with this ideal, it is likely to be a complex monstrosity. Remember the caveat that the design of any system should ordinarily take care of about 90% of the cases, leaving the balance 10% to be handled by hand.
Timeliness Inventories may suffer loss in value on account of a variety of factors. The more common sources of value decline are: Obsolescence caused by changes in technology & shifts in consumer taste. Physical deterioration with the passage of time.
102 IIMT MANAGEMENT COLLEGE MEERUT
The inventory system should be capable of inducing timely action. It should provide adequate forewarning which triggers appropriate corrective steps
Inventory Software
In IFFCO the PSL software is used for the management of inventories. This software holds all the transactions of the stocks. So this software helps much in maintenance of stocks. It makes very easy to account persons to maintain the transactions of inventories. A part of this software is installed on the systems of the stores, whenever a transaction is made in the store, the details of that transaction is reaches to the systems of the store accounting section, because both the systems are connected in the local area network (LAN). So with the help of LAN environment it is very easier to accountants to retrieve the information regarding the transactions made by the stores. Apart from this, this software has the variety of qualities which we can discuss with the help of menus of software. There are six different menus in this software these are as follows: i. ii. iii. iv. v. vi. Data entry Queries Reports Processing Calculator Exit
Data Entry
Document entry
Adjustment SIV
Adjustment ISRV
The very first menu that is data entry is used for the various types of entries of transactions. In the data entry menu there are several options shown in above diagram.
Document Entry:
This option is used to enter the data in various types of documents like SRV, SIV, ISRV, STV (in), STV (out) etc.
Adjustment Entry:
With the help of this option we may easily make the adjustments in the stock issue voucher (SIV), due to any previous adjustment. If the value of material has wrongly feed in the documents or the valuation is high then it is used to decreases the value of that material.
Adjustment ISRV:
This option of data entry menu has the same working in issue stock return voucher (ISRV). This is used whenever the valuation of any material has to increase. Thus easily adjustments are made.
Physical Verification:
In case of verification of stock the person responsible for stock verification estimates a range of items for verification and after verifies the selected range of items, they punched the quantity verified or lock the verified quantity till the next verification.
This option is used for adjust the surplus items which is declared by the plant. The surplus items means, the items which are exceeds from the records. So in case of this situation the accountants make entry @ of 1 Rupee per unit of items. There are some spares which are not in used. We give entry them in surplus. While the spares which are not in working condition or they are outdated, comes under obsolete items.
REPORTS MENU
Reports
Summary account head wise Month Report before PSL runs PSL JV Month Report after PSL runs Inventory Consumption Kardex Code wise inventory status Yearly summary for HO
107 IIMT MANAGEMENT COLLEGE MEERUT
The working of this option is same as the previous option but the difference is that the reports made after the PSL run are more accurate updated and non volatile in nature.
PSL JV:
After processing of PSL run all the documents becomes updated and all the transactions also gets updated. So that by this option we can see all the journal voucher of the entries of inventories.
Inventory consumption:
This option of the report menu shows the data regarding the consumption of materials according to the date. We can see the consumption of a particular item. This report helps in forecasting of material purchasing for the future consumption of the materials. It helps in deciding the re-order level of inventory.
Kardex:
The kardex is the very useful tool for showing the current status of all the items. Kardex shows the update inventory and also shows the past status of every past tears. The accountant may see the past status as on any past date. The kardex retain all information about the material. As when the material was received i.e. receipts, when
109 IIMT MANAGEMENT COLLEGE MEERUT
the material was issued i.e. issues, its balance in the store, vendor, its current stock, its value, location in the store and as well as its minimum, maximum and reorder level. Thus it reserves every information about the materials.
It is in form of a software in IFFCO. Here I have given a example of kardex in which each detail of material is written. It is as follows.
QUERIES MENU
Queries
This menu has single option that is brows inventory master. In this option we may see the status of various materials or items.
110 IIMT MANAGEMENT COLLEGE MEERUT
As the name of this menu, we can perform the query task, on the basis of material codes, that are of twelve digits number. This option is very helpful in search of any particular transaction in inventories. In a query task we are supposed to enter the material code in the material code box and then click over the retrieve button. As soon as we click over the retrieve button the whole in formation regarding that code is appears on the screen. The appearing statement contains the material code, material description, opening quantity, closing quantity, values, PSL rate that is the per unit price and also the location of that material.
PROCESSING MENU
Processing
group
in
Reverse stock for Physical Kardex mismatch Cumulative process Reverse stock for PSL Kardex mismatch PSL Process 1
Processing is the most important task of this software, because all the reports which are forwarded to the concerning authorities and are the basis for the further actions are made only after the processing or the PSL run. PSL processing makes update all the documents.
PSL Process I:
The option process I update and calculate the values for all documents and makes available to create the final reports. Once a PSL run is processed the data can not be changed, So that this task is very sensitive so the operating person should have the great care and responsibility in processing task. PSL Process is done for tallying codes and value of the material.
The calculator menu has no sub option we can use the calculator only by clicking on the calculator menu. It helps much in manual calculations make the surety of correctness. Apart from this the exit menu is simply for quitting the software, whenever we click over the exit menu it exits from the software.
PRODUCTION DEPARTMENT
IFFCO Aonla is town to production of Urea. It is carried out with the help of two ammonia plants. For every ammonia plant there are two urea plants each of 1100 MTPD capacity. Urea Plant is linked with two product handling plants. So, we can study the production department into three parts as follows: 1. Ammonia Plant 2. Urea 3. Product handling Plant
Ammonia Plant:
Ammonia plant is designed to produce 1380 MTPD liquid ammonia based on Haldore Topsoe Process with Natural Gas the main raw material. For the production of Ammonia Hydrogen & Nitrogen are required in the ratio 3:1. The source of hydrogen is Natural gas, water and the source of nitrogen is atmospheric air. Nitrogen gas is supplied by GAIL through HBJ pipe line from Bombay High and is used as feed stock which contains large percentage of Methane, along with Ethane, Propore, Butane, Pentane, CO2, Nitrogen and Sulphur compounds. Small quantity of Sulphur compound in the gas is removed by passing the gas through de-sulphurisation unit. Sulphur free gas is yhan mixed with steam and sent to primary reformer where reforming reaction takes place in the presence of catalyst and produces a gaseous mixture of hydrogen, carbon mono-oxide
115 IIMT MANAGEMENT COLLEGE MEERUT
and carbon- dioxide. Further reforming takes place in the secondary reformer where air is added to furnish the nitrogen required for ammonia synthesis. Hot reformed gases from Secondary reformer are cooled by heat recovery in Waste Heat Boilers, and introduced in the shift Converters where most of the CO get converted into CO2. Carbon dioxide from gaseous mixture is separated in CO2 absorber using benefield process and sent to urea plant. Residual of oxides of carbon in synthesis gas leaving absorber are converted to methane in the Methanator. Pure synthesis gas from methanator exit is compressed and sent to Ammonia converter where ammonia is formed ammonia product obtain in sent to urea plant for manufacturing urea.
Urea Plant:
Two streams of Urea plant each having capacity of 100 MTPD has been provide. Urea process is based Snamprogetti Ammonia Self Stripping process. Ammonia and CO2 obtain from NH3 plant are sent to Urea Reactor operating at 150 ATM pressure and 180o C temperature. In urea Reactor Ammonia and CO2 react to form Ammonium Carbonate a part of which dehydrates to urea. Reactor product from urea reactor flow to a steam heated H.P stripper where most of them converted carbamate get stripped of as gaseous ammonia and COS. Urea solution having the bottom of stripper still contains some amount of carbamate. Further purification of urea to about 72 % concentration takes place in medium and low pressure decompressors. Vapour of ammonia and CO2 obtained from the above purification section are converted into ammonium carbamate and recycled back to Urea Reactor for production of Urea Vaccum concentration are provided to concentrate 72 % Urea solution to 99.8 % in two stages operating at 0.3 atm and 0.03 atm respectively. Urea melt ( 99.8 % concentration) from
116 IIMT MANAGEMENT COLLEGE MEERUT
the concentration section is pumped to the top of natural draft Prilling Tower and sprayed by the means of rotating pril bucket. The fine droplets while descending through the lower come into contact with cold air are solidify to form prills. Product Urea from the bottom of prilling tower is sent to Urea Silo or Product handling plant.
Each is capable 10 weights to 50 kg or more weightments at the rate of 600 bags per hour. The system is equipped with Data logge facility which can display and record various figures and fact from the plant. The field bags from these automatic bagging machines are moved on slate conveyor and mouth is closed by industrial stitching machine supplied by M/S Unimee, Calcutta. The product in filled bags can be transported for various purposes such as : 1. 2. 3. Stacking on filled bag storage. Loading directly into truck. Loading directly into wagons.
Product handling plant is designed to load a rack of 2,400 MT of fertiliser in 8 hrs. Plant is equipped with covered platform three in number. One for stacking filled bags which can store equivalent to 2 rack loads i.e. 5,000 MT and another two platform which are equipped with 6 Nos. of automatic wagon loader ( 3 on each platform ), each has capacity of automatic loading of wagons at the rate of 1,200 bags per hr. These 3 covered platforms are sufficiently long to accommodate a complete rack so as to load from filled bags storage as well as directly from bagging stations. These automatic wagon / lorry loading machines are supplied by M/S Mollers, West Germany. Average time taken for each wagon loading is 20 to 25 min. An average time in loading a lorry is 10 to 12 min only. Wagon on average will carry 450 bags i.e. more than on an average two truck carry. A truck on an average will carry 200 bags approximately.
Empty Bags:
Empty bags size is 36.25 in inches or 915 X 610 in mm, weighing 10 grams in case HDPE bags made out of 10 X 10 mashes per inch using. Denier of tape equal to 1,000 and width of tape 1.5 mm. The monthly requirement of bag is around 10 Lakhs. There are 2 million bag storage capacities in 1400 m 2 area. The cost of bags varies from Rs 11.40 to 11.90 for HDPE and around 6.5 for Jute bag. The bag will be supplied various vendors based at Kanpur, Calcutta, Hyderabad, Ahmadabad, Aurangabad etc. The movement of empty bags from these destinations to out side is by road. Average daily traffic will be two to three trucks. IFFCO has very strict quality control of bags. The bags once are ready for dispatch from vendors workshop are got inspected by various up to date inspection agencies sponsored by us. The consignment on its arrival at site is also screened by our Laboratory before it is piled for storage. Storage is equipped with EOT crimes two in number, each having lifting capacity of 1 tonne.
Railway Siding:
From main track of Chandausi- Barely broad quage, NR section tapping has been taken at Bisharat Ganj Railway, Take-up station. Two additional loop lines and simultaneous reception facilities have been incorporated at Take-up station. Railway track has been laid which is 09.38 km long through major one villages acquiring 110 acre approx. of land. In plant, yard forms 2.3 km in length and is equipped with: I. II. 3 loading lines (from 700-715 meter in length). 4 lines for dealing incoming and out going traffic (from 715-803 meter long).
119 IIMT MANAGEMENT COLLEGE MEERUT
III.
In addition to it, the plant has: a. 2 lines each 340 meter long accommodating one rake length for fuel oil stock. These lines are laid over ballast less platform and have concerts floor in order to recover spillage / leakage while handling fuel oil stock. b. 2 line each 340 meter long to accommodate off loading of completing Naphtha rake, an alternative fuel for power plant.
DIFFERENT VOUCHERS
In IFFCO there are 3 types of receipt and 1 issue voucher are generally used for the particular receipt and issue material. These are listed as below:
1. RECEIPT VOUCHER SRV (Store receipt voucher) ISRV (Internal store receipt voucher) DCSRV (Direct consumption store receipt voucher)
3. ADJUSTMENT VOUCHER SAV (Stock adjustment voucher) STV (Stock transfer voucher)
SRV
When material is checked with challan / invoice and the purchase order for quantity SRV (store receipt voucher) is prepared and the material kept in section. SRV can be of two types: (a) FIS (Receipt from supplier voucher) These vouchers are generally generated by the store whenever the material is received from the supplier/ vendor in stores.
(b) H.P (Receipt voucher for direct consumption) These vouchers are generally generated when material is directly received by the indenter for direct consumption of raw material.
121 IIMT MANAGEMENT COLLEGE MEERUT
The copy of these SRV will be dispatched departments such as: (a) 1 copy to purchase department. (b) 1 copy to indent department. (c) 2 copy account department. (d) 1 copy lie with stores itself.
Note: The copy of these ISRV will be send to the following departments mentioned as:
122 IIMT MANAGEMENT COLLEGE MEERUT
(a) One copy to store. (b) Two copy to account department. (c) One copy lies with the indenter itself.
Note: The issue notes shall be priced on the Weighted Average Rate basis after accounting the last receipt of the material. After ascertaining the nature of the expenditure , the job for which the material is issued , an appropriate account code shall be given in accordance with the chart of account.
(b) One copy to indenter. (c) Two copy to account department. (d) One copy lie with the store itself. (e) One additional copy to security.
No. Deptt.
Exp. code
department
See.
S no.
1 2 3 4 Please use one voucher for max. Hash Total four items Preferable same group Authorised by Name Received Issued Kardex by by posted by Checked by MGR/ J.S.O./ S.O. MGR(S) Sr. P.S.L. Posting
Designatio n
Date Date
Job/work order
Vendor Code
Exp. code
department
See.
Qty Retu rn
Reason for Return- New/Serviceable/Recondition/Scrap/Empty cylinder Inspected by Name Authorise d by Returne d by Received by Kardex Posted P.S.L. Posted by Certified by
Designatio n
No. Deptt.
Job/ order
Exp. code
department
See.
S. no.
1 2 3 4 Please use one voucher for max. Hash Total four items Preferable same group Authorised by Name Received Issued Kardex by by posted by Checked by MGR/Sr. J.S.O./ S.O. MGR(S) P.S.L. Posting
Designatio n
AONLA UNIT
STORES RECEIPT VOUCHER
SRV NUMBER DATE CRR NUMBER SRV PREPARED:
CRR Date
RECD Date
Freight From: DEPT CODE: Truck/Trailer/Wagon Paid DEPT Name FARIDABAD DESCRIPTION Unit No Qty. Po: Challan: Received: Accepted: Rejected:
DIS/REJ No.
PO SNo
Card balance
No
PO No.& Date
IFPH
Inter unit trans. IFFCO PHULPUR UNIT GR/RR No. Date:, Transporter S.No. DESCRIPTION PO SNo Freight From: Paid TRK/WGN
CRR Date
RECD Date
PHULPUR
Value
Inspection remarks
PO SNo
No
Accepted: Rejected:
DIS/REJ No.
DESPATCH ADVICE
KER ENGG. WORKS RAMPUR ROAD, BAREILLY S.NO 1 2 3 4 CASE MARK DIMENSIONS& TOTAL NO PKG DESCRIPTION 2RE-69 NO) ROUND
C.B.GUNJ. BAREILLY
QUANTITY RAR(5
REMARKS FOR MACHINING -DO-DO-DODESPATCH THROUGH: DOOR DELIVERY RR/GR NO: GATE PASS: FREIGHT
NET WT.
PKD.BY
PREP. BY
SR. MANAGER
THE AFORESAID ITEMS HAVE BEEN RECEIVED IN GOOD ORDER & CONDITION
131 IIMT MANAGEMENT COLLEGE MEERUT
4) INDENTOR 5) G.M.APP./W.O.FILE
REJECTION/DISCREPENCY REPORT
REF:
DATED:
M/S AB SALES & SERVICES 365, HARRIS GANJ KANPUR FAX: CRR NUMBER: SUB: OUR P.O. NO:4410/1294/WS0137//071125 YOUR REF/INVOICE/BILL.CHALLAN NO. 10/SP/TAX/08 RR/LR NUMBER: GR 8319469 Transpoter: SOUTH EASTERN ROADWAYS BOMBAY Dear Sir, DATE: DATE:
Please refer to the supply of materials against your invoice/Challan No. as mentioned above. On opening the case/s and checking the contents the following discrepencies have been observed. S.No Material Description Desp. 1. 2. The packing case/s was/were received in sound/broken condition. Received Excess Short Rejected Unit QUANTITY Remarks
Cost of damage if any_____________________________________________ Payment Terms: yours faithfully, For INDIAN FARMERS FERTILISER COOP.LTD.
Location
INDIAN FARMERS FERTILISER COOPERATIVE LIMITED Aonla Unit, P.O. IFFCO Township, Bareilly TENDER ENQUIRY MPR No 080380 Enquiry No: 6000/672/UT0044/IE/080308(*) This Enquiry is due on 14/07/2008 Desired Delivery: 4 Weeks
Enquiry Type Single Stage Dear Sir, Please submit your Sealed Quotation, with earliest delivery, as per terms and conditions and specification given below and enclosed herewith. S.No. 1 Item Code Description DC Liquid Chlorine 99% pure as per IS code 646/1988(latest version) in IFFCO.
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Quantity 220
Unit MT
PERFORMANCE BANK GUARANTEE: The seller on award of P.O./W.O., shall furnish a Performance Bank Guarantee equivalent to 5% of the P.O. value in our Performa enclosed. This bank guarantee shall be issued by any State Bank of India and its associates. Nationalised/ Scheduled Commercial Bank/ Cooperative Bank who are members of IFFCOs consortium of Banks (Except other cooperative and Gramin Banks) having branch in India and be valid to cover the guarantee period with a claim period of further six months.
INDIAN FARMERS FERTILISER COOPERATIVE LIMITED PURCHASE ORDER Thru Courier M/s : JASUBHAI ENGINEERING PVT. Order No.
Add: 803-4, Chiranjiv Towers, Nehru Your Quot: place Our Enq No: City: New Delhi Pin: 110019 Delivery E-mail: Dely Pd. Code: JASU Consignee: Test Copy Destination: Dear Sir, Please arrange to supply the following as per your quotation referred above subject to conditions mentioned herein and enclosed herewith. S.No Description Quantity Unit Rate Amount
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P& F Charges : P&F Charges @ 2.00% extra Excise Duty 14.42% Sales Tax : Extra as applicable against form C : Extra as applicable against documentary evidence present rate is @
Class: Stock, capital, D.C., Supply, Ordinary, Proprietory, Domestic, Single stage Indentor: ADMN SECTION Suggested Vendor Ctegory: Godrej & Boyce Mfg. Co. Lucknow. MPR Description: Procurement of official furniture for the year-2008
Brief Justification: Office furniture are required for different section/deptt. Last Pos/WOs Ref Nos: Last Pos/WOs total value: S.No Item code Material decription DC DC DC Unit Quantity required Inventory Value Stk-oth.unit/ levels last 3yr consumption
1 2 3
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------SIGN
STORE KEEPER
STORE
STORE OFFICER
SWOT ANALYSIS
Strength
1 Fertilizer is the basic raw material for agriculture production. No Govt. can dare to make policies which are not conducive to the farmers. 2 Demand of fertilizer is more in the country than the production capacity therefore whatever is produced will be sold.
138 IIMT MANAGEMENT COLLEGE MEERUT
3 Government ensures the availability of raw material (NG/NAPHTHA) at reasonable price as it has at subsidy on fertilizer is subsidize product. 4 IFFCO is a co operative organization and selling its product through co- operative channel. There are only to organization IFFCO & KRIBCO. it means not much competition in the channel. 5 all plants are of latest technology of art and are in healthy condition.
Weakness
1 As per by law of the company it can fallows the co- operative channel only for sale of its product. In case demand fall short in the channel company end up with higher stock inventory. 2 Price of the product cannot be raised and government pay the subsidies as per its calculation of fertilizers cost.
Opportunity
1 IFFCO can cut on cost by reducing energy consumption for per MT of urea, thereby enhancing its profitability. IFFCO has taken up energy saving project in all its five ammonia plants at the cost of Rs 410 core. 2 IFFCO can also reduce its fixed cost per MT of urea by enchasing its production capacity & thereby increase in production and profitability. IFFCO has taken up capacity enhancement project for all its ammonia & urea plants. 3 IFFCO also taken up power project at Chhattisgarh. 4 IFFCO has also contributed 25% equity in Oman India fertilizers company (OMIFCO).
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5 IFFCO is also perusing a multiproduct kisan SEZ at NELLORE in A.P. 6 IFFCO has also entered into a long term of take and supply agreement with International Holdings of AUSTRALIA for supplying rock phosphate material supply NPK/DAP fertilizers plants. to insure raw
Threats
1 NG supply in the country is not sufficient to meet present country requirement, however NG in liquid from is imported from various Gulf countries and regasified at Petronet in GUJRAT to meet demand of fertilizers units. If supplies of NG suffer due to an region, it will be reflected in production of IFFCO. 2 Naphtha is also imported Gulf countries. Its rates are not stable in the international market & it availability is also affected by its international demand. 3 Rock phosphate is also imported to produce NPK/DAP at IFFCOs Kandla & Paradeep Units. Supply of ROCK Phosphate is also a threat to the production NPK/DAP. It rate are not stable in the international market.
Analysis
With the finding of NG at KG basin of RIL most of requirement of fertilizers units will be meet for the countries on resources and dependability on the import will be reduce
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there by ensuring the raw material supply to the fertilizer units at reasonable price. Further IFFCO has made long term agreement for procurement of ROCK phosphate with various countries to overcome it major threats of raw materials for the production of NPK/DAP. Therefore it can be said that IFFCO is on sound footing to protect it stability and enhance it profitability by cutting on cost and increasing production in years to come
Strategies
1 IFFCO is doing its best to conserve energy & keeps it consumption at lowest label 2 Enhance its production by enhancing the capacity of the exiting plants & constructing new plants. 3 reducing cost by low energy consumption & increasing production to enhance it profitability. 4Ensure supply of raw material by entering into agreement nationally or international with the suppliers. 5 IFFCO also care for farmer and the community. This commitment is reflected in many ways, on a day- to-day bases. IFFCO believes in the welfare of society. It has embarked on many Corporate Social Responsibility(CSR) Project. These projects cover education ,community development, environment & health. a) IFFCO has installed CDR plants to reduce discharge of flue gases in the atmosphere. b) IFFCO has adopted 439 villages, with special emphasis on agriculture and better for management, thus empowering many lives.
c) ITGI in collaboration with IFFCO has introduce for farmer a Sankat Haran Bima yojana . Under this policy farmer are provided insurance against accident with the purchase of a 50 kilogram bag of IFFCO fertilizer. This policy has helped over 7000 people since its inception in sep. 2001 d) IFFCO has initiated several promotional projects to provide greater opportunities to the farmer by organizing field day, farmers meetings, sales point personal tanning, crop seminars, special agriculture campaigns to effect transfer of modern farming trends. Besides, Kits containing seeds, fertilizers, bio-fertilizes and agrochemicals along with book lets-literature were distribute to the farmers. The aim enhancing crop productivity and thus improving lives This has brought the farmer community nearer to IFFCO & IFFCO product as popular brand which ultimately raised demand IFFCO product.
Financial ratio analysis groups the ratios into categories which tell us about different facets of a company's finances and operations. An overview of some of the categories of ratios is given below.
1.
Leverage Ratios which show the extent that debt is used in a company's capital structure. Liquidity Ratios which give a picture of a company's short term financial situation or solvency.
2.
3.
Operational Ratios which use turnover measures to show how efficient a company is in its operations and use of assets. Profitability Ratios which use margin analysis and show the return on sales and capital employed.
4.
5.
Solvency Ratios which give a picture of a company's ability to generate cashflow and pay it financial obligations.
Ratios are always expressed as a decimal value, such as 0.10, or the equivalent percent value, such as 10%. Financial ratios allow for comparisons
between companies between industries between different time periods for one company between a single company and its industry average
relationship between net profits to sales as 1: 4. As Pure Number /Times - The same can also be expressed in an alternatively way such as the sale is 4 times of the net profit or profit is 1/4th of the sales
1) Inventory Turnover- This ratio indicates the number of times the inventory is
rotated during the relevant accounting period. This ratio is also called as stock turnover ratio or stock velocity. This ratio is calculated to consider the adequacy of the quantum of capital and its justification for investing in stock or Inventory. Inventory turnover is used to measure the efficiency of sales. Inventory turnover is the number of times obtained by dividing turnover by inventory.
Particular
2007-08
2008-09
145
Interpretation:- It is revealed from above table that the stock turnover has been
increased to 19.02 times in the year 2008-09 as compared to 7.71 times in the year 2007-08. It shows better control over inventory and efficiency in sales. Since IFFCO is in the business of fertiliser manufacturing and in this sector a huge investment in plant and machinery is required. Keeping in view the investment in Plant & machinery in this sector for which number of spares and stores items are required to be maintained for upkeep of the plant, the above Inventory Turnover ratio is reasonable. However, IFFCO should efficiently use various inventory management tools to control the stock levels like ABC analysis, monitoring of stock levels i.e. ROL, EOQ, Min-Level, Max-Level system of verification of inventory etc.
20 18 16 14 12 10 8 6 4 2 0
2007- 200808 09
Inventory Turnover Ratio
2)
Working Capital Turnover- This ratio establishes the relationship between the
turnover (sales) and the working capital. It indicates the number of times a unit invested in the working capital produces sale. In other words, this ratio indicates whether the working capital has been effectively utilized or not in effecting sales. Net
147 IIMT MANAGEMENT COLLEGE MEERUT
Current Assets are also known as working capital instead of total current assets is being compared with the sales. This ratio indicates the velocity of the utilization of net working capital. It indicates the number of times the working capital is turned over in the course of a year. This ratio is calculated as follows-
Working Capital = Current Assets Current Liabilities For the Year 2007-08 = 5775.74 1371.57 = 4404.17 For the Year 2008-09 = 7672.99 3182.89 = 4490.10
Interpretation: -.The higher the ratio, the better it is. However, a very high ratio
indicates overtrading- the working capital being not adequate for the scale of operations. In the above table both turnover and working capital are increasing. It appears from the above calculation that Working Capital Turnover ratio has been increased to 7.33 times in the year 2008-09 as compared to 2.76 times for year 200708. It shows a better utilization of working funds in the business. Hence IFFCO is using its working capital in a better way.
8 7 6 5 4 3 2 1 0
2007- 200808 09
3)
Current Ratio- The ratio of current assets to current liability is called current
ratio. This ratio is an indicator of the firms commitment to meet its short-term liabilities. Current assets include cash and other assets convertible into cash during the operating cycle of the business. Current liabilities means liabilities payable within a years time. An ideal current ratio is 2:1.The ratio of 2 is considered as a safe margin of solvency. A very high current ratio would indicate the less efficient use of funds while a poor current ratio indicates lack of liquidity and shortage of working capital.
Current Ratio = Current Assets Current Liabilities (Rs. in crore) Particular Current Assets Current Liabilities Current Ratio 2007-08 5775.74 1371.57 4.21:1 2008-09 7672.99 3182.89 2.41:1
Interpretation: - As a general rule, the ideal current ratio is 2:1 and we can see that
the current ratio for the two previous years is above ideal ratio. In the year 2008-09, the current ratio is moving closer to the ideal one indicating sound utilization of funds. So we can say that the liquidity position of the concert is sound and it is able to meet its short term debts and obligations.
current ratio
2007- 200808 09
Current Ratio
4) Cash Ratio- This ratio measures the relationship between cash in hand and
current assets. A very high cash ratio indicates major items of current assets & may be a poor indicator of profitability because cash by itself does not earn any profit. Ideally the proportion should be kept as low as possible. But some amount of cash for daily requirements of the firm should be kept.
Cash Ratio =
Interpretation:-
Form the above it can be seen that cash ratio is appropriate from year to year. It shows that the concern is efficiently using and monitoring cash for day to day transactions.
0.04 0.035 0.03 0.025 0.02 0.015 0.01 0.005 0 cash ratio
2007- 200808 09
Cash Ratio
5) Solvency Ratio- This ratio highlights upon the long-term solvency of the concern
and this ratio shows the relationship between the total assets and total liabilities of the concern. This ratio is obtained by dividing total assets by total liabilities. Total assets include fixed assets and current assets. Total liabilities include both long term and short-term liabilities.
Solvency Ratio-
Interpretation:-
From the above it can be seen that the concern is having a sound position. Its total assets are 1.24 times of its total liabilities in the year 2008-09; therefore the solvency position is good i.e. the firm has the ability to pay off its long term liabilities.
154 IIMT MANAGEMENT COLLEGE MEERUT
1.45 1.4 1.35 1.3 1.25 1.2 1.15 2007- 200808 09 solvency Ratio
Solvency Ratio
6) Stock to Current Assets Ratio- This ratio expresses the relationship between
Stock and Current Assets. It denotes how much proportion of current assets is in the form of stock .
Stock
Current Assets (Rs. in crore) Particular Stock Current Assets Stock to Current Assets 2007-08 1577.10 5775.74 0.27:1 2008-09 1731.36 7672.99 0.23:1
Interpretation: The above calculation shows that stock to current asset ratio is
decreasing. Thus it is not a bad situation because a company always wants to retain stock according to the requirement. It does not want to over-invest in stock. Every company prefer money in liquid form rather than over-investment.
0.27 0.26 0.25 0.24 0.23 0.22 0.21 2007- 200808 09 Stock to current assets
7) Raw Material Turnover Ratio- The raw material turnover ratio represents the
relationship between raw material consumed and average stock of raw material. Here average stock of raw material is the average of opening stock of raw material and closing stock of raw material. Or Opening stock of raw material + closing stock of r.m. Average stock of raw material = 2
(Rs. in crore) Year Raw material consumed Avg. stock of raw material Raw Material Turnover 2007-08 6646.44 751.04 8.85:1 2008-09 13997.22 891.39 15.70:1
2007- 200808 09
Interpretation: In the above table the turnover is 12162.82 for the year 2007-08 and
32933.30 for the year 2008-09. Shareholders fund is increasing by 270.21 crores. As a result the owned capital turnover has increased drastically by 5.02 times. It clearly shows that the company is earning profit.
9 8 7 6 5 4 3 2 1 0
2007- 200808 09
9) Profit Before Tax To Sales- The ratio expresses the relationship between Profit
Before Tax and turnover.
Profit Before Tax to Sales- Profit Before Tax *100 Turnover (Rs. in crore) Particular Profit before Tax Turnover P.B.T. to Sales 2007-08 380.52 12162.82 0.03 % 2008-09 441.95 32933.30 0.01 %
Interpretation: Inspite of the fact that profit before tax is increasing from the year
2007-08, profit before tax to sales ratio is decreasing by 0.02 %. It is due to increase in turnover tremendously.
0.03 0.025 0.02 0.015 0.01 0.005 0 2007- 200808 09 P.B.T to Sales
P.B.T. to Sales
Capital Turnover-=
Capital Employed = Net Fixed Assets + Working Capital For the Year 2007-08 = 5169.79 + 4404.17 = 9573.96 For the Year 2008-09 = 5256.82 + 4490.10 = 9746.92
Interpretation :-
From the above it is clear that Capital Turnover ratio has been reduced by 0.08 times from the year 2007-08 in the year 2008-09. It shows over investment in Total assets as compared to the corresponding sales made by the concern.
1.04 1.02 1 0.98 0.96 0.94 0.92 2007-08 2008-09 Capital Turnover
Capital Turnover
ANNEXURE
INVENTORIES
As at 31-03-2009 As at 31-03-2008
Inventories (including goods-in-transit Rs. 637.56 crore) Previous year Rs. 277.63 crore) Raw material Stores and spares Loose tools Chemical and catalysts Packing materials Construction materials Stock-in-process(Including intermediary products) Finished goods: Traded products 319.08
IIMT MANAGEMENT COLLEGE MEERUT
59.56
168
130.26
449.34 1731.36
114.68
174.24 1577.10
BALANCE SHEET
SOURCES OF FUNDS Shareholders Funds: Share Capital Reserves and Surplus Loan Funds: Secured Loans Unsecured Loans Deferred Tax Liability( net) Total APPLICATION OF FUNDS Fixed assets: Gross block Less: accumulated depreciation Net block Capital work-in-progress Investments Current assets, Loan and Advances: Inventories Sundry debtors
5256.82 7552.95
5169.79 1416.73
Cash and bank balances Loan and advances Less: Current liabilities & provisions: Current Liabilities Provisions Net Current Assets Miscellaneous Expenditure(to the extent not written off) TOTAL
(Rs in crore
Year ended 31/03/2008 Income from operations Turnover Sales Subsidy on fertilisers Other revenue Increase/(Decrease) in stocks 5968.47 6194.35
Less: cost of operations Consumption of raw materials, stores etc. Raw materials 6646.44 Stores and spares 96.26 Chemicals and catalysts 38.22 Packaging materials 170.43 Power, fuel and water 756.48 7707.83 Less: stock transfer for self 118.81 consumption Purchase of products for resale Employees remuneration and benefits Manufacturing, administration and distribution expenses Interest Depriciaton / amortisation Prior period adjustment (net) Deferred revenue expenditure written off(VRS Expenses) Profit before tax Provision for taxation: current tax Fringe benefit tax Deferred tax Earlier years Profit after tax Profit transferred to: Capital repatriation fund Contribution towards Approved Donations(Under IT Act 1961) NET PROFIT AS PER MULTI STATE COOP. SOCIETIES ACT,2002 61.80 6.50 56.14 (1.51)
959.49 389.37 410.93 (3.00) 3.86 11000.86 380.52 92.80 8.02 7.93 (26.81) 0.47 1.00
81.94 360.01
0.46 MEERUT
257.13
1.47 358.54
Financial Ratios Operating profit to sales (%) Profit before tax to sales(%) Return on capital employed(%) Profit before tax to net worth(%) Profit after tax to net worth(%) Fixed assets turnover(times) Working capital turnover(times) Inventory of finished goods Inventory of raw material & packing material Sundry debtors Current ratio Quick ratio Debt equity ratio No. of employees Sales per employee(Rs.crore)
200809 6.50 1.34 3.12 11.16 9.09 6.32 7.41 0.12 0.74 0.67 2.41:1 1.87:1 3.23:1 6757 4.87
200708 7.67 3.13 3.50 10.31 6.99 2.54 2.62 1.50 1.25 0.78 4.21:1 3.06:1 1.84:1 6743 1.80
200607 6.69 2.43 2.53 6.90 4.81 2.20 2.50 1.48 1.01 0.90 5.06:1 3.15:1 1.78:1 6826 1.51
200506 6.92 4.85 7.18 13.55 9.60 3.01 4.07 0.74 0.86 0.89 3.49:1 2.37:1 1.42:1 6506 1.77
200405 6.52 6.37 10.58 14.27 9.68 3.57 4.58 0.90 0.79 1.17 2.36:1 1.51:1 2.20:1 5752 1.29
200304 10.86 8.66 11.32 16.49 10.60 2.78 3.58 1.30 0.79 1.50 2.84:1 1.71:1 0.32:1 5977 0.99
200203 8.15 13.26 18.56 24.65 17.02 2.74 4.04 1.88 0.68 1.36 2.62:1 1.51:1 0.33:1 6125 0.99
200102 11.84 7.28 9.32 13.32 11.06 2.18 3.76 1.81 0.77 1.30 2.72:1 1.39:1 0.43:1 6326 0.81
200001 12.34 4.54 5.60 9.12 9.00 2.12 3.53 1.60 0.63 1.20 2.92:1 1.65:1 0.63:1 6405 0.80
199900 13.13 6.91 7.38 13.11 13.11 1.78 3.08 2.51 0.57 1.25 2.93:1 1.47:1 0.78:1 6403 0.71
I had done my project in inventory management & analysis of IFFCO Financial strength by ratio analysis. Further .I have also understand the role of F&A departments at unit level.
Conclusion
Therefore it can be said that IFFCO is on sound footing to protect it stability and enhance it profitability by cutting on cost and increasing production in years to come. Further IFFCO has also taken various other venture like SEZ at NELLORE, Power plant at CHASSIGARDH, IFFCO Tokio General insurance, IFFCO Kisan Sanchar L.T.D., IFFCO has taken Joint Venture out of India i.e. OMIFCO at OMAN, JORDAN India fertilizer company , Industrial Chimiques DU Senegal (ICS)and Kisan International Trading FZE at Dubai. Therefore IFFCO main business is Product & sell fertilizers but it has extends its wings for backward integration& meet the needs of its services Requirement & to serve better to the famer community. It might seem axiomatic that inventory control is efficient as long as inventory level is going down.But the fact is that if inventories are minimized without adequate operations, inventories have been mismanaged rather than controlled efficiently. Thus, the basic objectives of inventory management appear to be conflicting in nature. Inventories should increase or decrease in amount or time as related to sales requirements and production schedules. In most inventories a small proportion of items accounts for a very substantial usage (in terms of monetary value and annual consumption ) and a large proportion of items accounts for a small usage. ABC analysis based on this empirical reality advocates in essence a selective approach to inventory control, which calls for a greater concentration of efforts on inventory items accounting for the bulk of usage value.
Responsibility for control of inventories is of the top management. Though decision in this regard might well be based upon the combined judgement of the production manager, the sales manager and the purchasing manager. This is desired in view of the financial considerations involved in the problem and also because of need for coordinating different kinds of inventories and conflicting view points of different departments. Decisions relating to inventories should be taken by higher authority of the organisation as well as departments. There are some points that may be given as recommendation or a program may be constructed for inventory monitoring and controlling which consists of following elements: Active disposal of goods that is surplus, obsolete and unusable. More effective exercise should be followed of vigilance against imbalance of raw material and work in progress which tends to limit the utility of stocks. To strict adherence to production schedule. To shortening the production cycle. To change in design to maximize use of standard parts and components, which are available off the shelf. To maintain the special pricing to dispose off unusually slow moving items. To make vigorous efforts to expedite completion of unfinished production jobs to get them in to sellable condition.
BIBLIOGRAPHY
Marketing Research
Research Methodolgy - Kothari, C.R.- 2nd Edition Business Environment Cherunilam, Francis- Himalaya Publishing House Industrial Relations Company - Monappa, Arun Tata Mcgrew Hill Publishing
IFFCO Magazine
Website:
www.iffco.nic.in