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A Project Report On Summer Training at Krishak Bharti Co-Operative Ltd. HAZIRA

Submitted by: Deepak Sharma Anish Nair Zaid Patel Kevin Varsani Tandel Gracee Submitted to: Radha Vyas Jueela Mankar Namrata Khilochiya Hiren Patel

Exam Nos. 85 46 70 101 93

Vivekanand College for BBA, Surat Academic Year-2006-07

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ACKNOWLEGMENT
Sharing our experience is one of the biggest honors, which every one cannot experience. To share our experience at KRIBHCO as management student is a matter grate honor and pride. We are grateful to KRIBHCO for letting us to do this project. We express our gratitude to Mr. Sunil jain (P&A Manager) Mr.Sampat (store department), Mr. Thomas T.S. (F & A Deptt), Mr. M.N Patel (H.R.D Deptt) .We are really thankful to employees of KRIBHCO who have been guiding us in this path Step by step and have made our path really simple to get through .we will use this experience through out our career and will make our future bright. So once again we thank all of them. In regard to this programmed, we would like to acknowledge our gratitude and Thanks to coordinator, Vivekanand College for B.B.A Veer Narmad South Gujarat University for catering us the opportunity of training. We also forward our special thanks to director sir Mr.vipul joshi and faculty member Mrs. Radha Vyas, Mrs. Jueela mankar for guiding us in training Programme. The valuable suggestion of our faculty member during the course our Project work and giving us inspiration to achieve our goal. The shape that project has been taken is due to our faculty members help, judicious guideline and encouragement. And three most precious part of our life, our parents who have showered their love and support which can be never repaid in any form but can be commemorated without them this achievement could not have been achieved.

Nair Anish

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SR. No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

PARTICULAR

PAGE No.

INTRODUCTION OF KRIBHCO GROWTH OF FERTILIZER INDUSTRY ORGANIZATIONAL STRUCTURE OF KRIBHCO QUALITY POLICY HUMAN RESOURCE DEPARTMENT MARKETING DEPARTMENT PRODUCTION DEPARTMENT MATERIAL DEPARTMENT PURCHASE DEPARTMENT STORES DEPARTMENT FINANCE DEPARTMENT FUTURE PLANS SWOT ANALYSIS RECOMMENDATION BIBLIOGRAPHY

4 6 13 14 15 46 66 83 86 91 110 134 135 137 138

INTRODUCTION OF KRIBHCO

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Krishak Bharti Co-operative Limited

KRIBHCO the worlds premier fertilizer producing co-operative has an outstanding track record to its credit in all spheres of its act ivies. Since 17th April 1980 as a national level co-operative society promoted by Government of India authorized to manufacturing and distribution of fertilizers. Chemical fertilizer and allied farm imputes KRIBHCO imbibed the co-operative philosophy fulfilling its commitment to strengthening and promoting the cause of agriculture development and cooperative movements in the country. Krishak Bharti co-operative limited popularly known as KRIBHCO has been registered as national level co-operative society under the provision of the multistate co-operative societies act, 1984. TheKRIBHCO hazira unit is located around 15 kms, west of Surat and lies on the north of river Tapti. An all weather road from Surat to hazira connects the plant site with the city. The cannel belonging to irrigation department is running on the plant site and is feeding water from ukai. A railway feeder line apporx. 55 kms. Long has connected the site with Bombay Ahmedabad main line. KRIBHCO multiunit co-operative societies were promoted jointly by IFFCO and the agricultural co-operative all over the country.

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KRIBHCO PLANT AT HAZIRA Plant is based on Natural Gas from BOMBAY HIGH SOUTH BASSEIN. The society massive Ammonia, Urea complex is situated at HAZIRA near SURAT in GUJARAT. KRIBHCO plant is one of the largest and most modern fertilizer compels in the co-operative sector in the world. It has two phases on UREA plants consisting of two streams of 1100 MTPP with an annual capacity to produce 14.52lakh.MT of urea equipment to 6.68 lakhs MT interns of nutrient nitrogen. KRIBHCO aims to fulfill the ever-growing fertilizer needs of the country. The HAZIRA project with project zero date of 31st March, 1985. The estimated project cost was Rs.957.71 crore However, the final project cost was Rs.885 crore resulting in hot saving at Rs. 72.71 crore.

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Growth of Fertilizer Industry

According to Fertilizer Association of India One of the most significant achievement of the post Independence period of our Country has been the ability to achieve self-sufficiency in food grain production. This achievement is due to the rapid growth and improvement of Fertilizer industry. The Fertilizer industry is growing at the rate of 4% for the last 10 years and has been contributing a significant part of G.D.P.The growth and importance of Fertilizer industry in India can be divided in to three distinct phases, these are given below. 1. Pro Green Revolution Period: This period is described in 1952-1953 era where increased growth of food grains took place however this increased production in food grains took place due to increased irrigation methods. In this phase the land under agriculture was made more, during this period about 80% of the country's population was involved in Agriculture either directly or indirectly. During this period the fertilizer's which were manufactured were Super Phosphate & Ammonium Sulphate. 2. Green Revolution Period: During this phase Government stated the programme aimed at making our country self sufficient in Food Products. This was the period between the years 1959-1960. This plan laid the emphasis on production of High Yielding Varieties. To make this plan a success there was a high need to make soil fertile by providing it with nutrients like Phosphorus, Nitrogen and Potassium.During this phase Fertilizer industry tried to play a vital role, became one of the most important part of our economy. 3. The Post Green Revolution Period: The world's population along with Indian population has kept on growing at an alarming rate; the fertilizer companies all over India are trying to expand their scale of operations in order to increase the production rate. The current demand of fertilizers in India is 18 million tones.

-71. Public Sector The Fertilizer And Chemicals Travancore Ltd. (FACT) Hindustan Fertilizer Corporation Ltd. (HFC) Madras Fertilizer Ltd. (MFL) Hindustan Copper Ltd. (HCL) Naively Lignite Corporation Ltd. (NLC) Pyrites, Phosphates And Chemicals Ltd. (PPCL) Rashtriya Chemicals And Fertilizers Ltd. (RCFL)

2. Co-Operative Sector There are only two fertilizer manufacturing societies in Co-operative sector. Indian Farmers Fertilizers Co-Operative Ltd. (IFFCO) Krishak Bharti Co-Operative Ltd. (KRIBHCO)

3. Private Sector Fertilizer producing company in private sector. Gujarat Narmada Valley Fertilizer Co. Ltd. (GNFC) Hindustan Lever Ltd. (HLL) Hari Fertilizer ICI India Ltd. Indo Gulf Fertilizers & Chemicals Corporation Ltd. Mangalore Chemicals & Fertilizers Ltd. (MCFL) Southern Petro Chemicals Industries Corporations Ltd. Nagarjuna Fertilizer & Chemical Ltd. (NFCL) Shri Ram Fertilizer & Chemicals Ltd. Tuticorian Alkali Chemicals & Fertilizer Ltd. Zuari Agro Chemicals Ltd. Bindali Agro Chemicals Ltd. Chambal Fertilizer & Petrochemical Corporations Ltd. (DEPCL) Gujarat State Fertilizer Company (GSFC)

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MEMBERSHIP: Kribhco Membership

6200 6000 5800 5600 5400 5200 5000 4800 4600 6044 5624 5188 5732 5790

2000-01

2001-02

2002-03 Years

2003-04

2004-05

A cooperative thrives on the trust of, its members. Membership of KRIBHCO is open to government of India, national state and district and village level cooperative society. At the initial stage, way back in June, 1981 the total membership in KRIBHCO was only 221 cooperative societies which rose significantly to 6044 cooperative societies as on march 31,2005 as against 5790 as on march 31 2004. Phenomenal progress made by the society becomes a testimony to the ever-increasing membership over the years. The total paid up share capital as on March 31, 2005 was rs.39, 354.15 lakh as against rs.49, 170.72lakh in the previous year. During the current financial year, the society has refunded share capital of rs.9700 lakh to IFFCO and government of India respectively .the state wise membership with share capital contribution as on March 31, 2005 vis--vis march 31 2004.

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OBJECTIVES: -

a) To undertake the activities for he rural upliftment and agriculture development. b) To promote economic interest of its members by undertaking manufacturing of chemical fertilizer & allied product. In furtherance of these objectives KRIBHCO may undertake one or more of the following activities: (I) To undertake production processing, manufacture, sale distribution, marketing, import export and to otherwise deal in agriculture production requisites. (II) To set up storage units for storing fertilizer and other goods by itself or in collaboration with other agency. (III) To act as warehousing agency under the warehousing act and own go downs or hire go downs for the storage of fertilizers and other goods.

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AWARDS: The excellence performance of the society has brought a number of laurels from various organizations .The awards received during year were as follows: KRIBHCO receives gold star award of Excellence from Institute of Economic studies for its overall excellent performance. KRIBHCO receives the Rajshabha Award from Honble Minister of Chemical and Fertilizers for 2002-03, 2003-04 and 2004-05. KRIBHCO was awarded First Prize for Production, Promotion and marketing of Bio Fertilizers for the year 2004-05 on 1st December 05 by FAI.

MILE STONES: (I) Project zero Date (III) Project completion (IV) Plan completion (V) Commercial production (VI)Percent capacity utilization (VII) Plant ready of production (VIII) Gas available by ONGC (IX) Trial production Ammonia Urea (stream 11/31) (I) (II) : : : : : : : : : 31/03/1981 5/02/1982 31/03/1985 26/11/1985 1/3/1986 Urea 99% Ammonia95% January/September 1985 PHASE 1 & PHASE 2 18-9-85 14-11-85 26-11-85 31-12-85 Ammonia (stream 21/41) (X) ISO certificate 6-11-85 30-11-85 13-12-85 01-12-85 PHASE 1 & PHASE 2 (II) Foundation stone laid by Smt. Indira Gandhi

KRIBHCO plant ISO 9001-2000 KRIBHCO plant ISO 14001

(III) KRIBHCO Mktg office

- 11 ISO 9001-2000

DEPARTMENT AND MANPOWERS AT KRIBHCO

Financing & Accounting Personnel & administration HRD Security Material Medical Mechanical Transportation Fire safety Purchase & store Instrument Electrical & civil Laboratory Production (HEAP Plant) Total Contract labor Total manpower 62 82 09 101 55 32 210 29 45 56 90 101 54 440 1379 1600 2979

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PERFORMANCE HIGHLIGHT:RECORDS 2006-07

Highest monthly urea dispatches from Plant Oct. 06 since inception Earlier Record (Dec. 87) Highest monthly Urea Sales July 06 since inception Earlier Records (June 87) Highest Total Annual Urea Sale 2006-07 since inception Earlier Record (2005-06) Highest Daily Bio Fertilizer Production from Hazira Unit ( 01-14.11.2006) Earlier Record Highest Total Monthly Bio Fertilizer Production Oct 06 Since Inception Earlier Record (Oct 06) Highest Monthly Bio Fertilizer Production from Hazira Unit Nov 06 since Inception Earlier Period Highest Annual Bio-Fertilizer Sales 2006-07 Earlier Record (2005-06) Highest Annual Total Bio Fertilizers Dispatches 2006-07 Earlier Record (2005-06) Highest Annual Bio-Fertilizers dispatch from Hazira Unit 2006-07 Earlier Record (2003-04) Highest Sales Productivity Earlier Record (2005-06) 1.98 Lacs MT 1.94 Lacs MT 4.11 Lacs MT 3.84 Lacs MT 34.6 Lacs MT 28.2 Lacs MT 3000 Kg 2660 Kg 97.5 MT 94.4 MT 80.1 MT 71.8 MT 784.4 MT 714.4 MT 843.3 MT 716.4 MT 638.8 MT 491.4 MT 5388 MT/ EMP 4315 MT/ EMP

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ORGANIZATIONAL CHART OF KRIBHCO

Government of India Ministry of Agriculture Dept. of Fertilizer & Chemical Chairman Board of Directors Managing Director Operational Director

GM (P) GM (Materials) GM (F&A) GM (P&A) GM (Tech.) CM (MS) GM (Maintenance) JGM (P) JGM(Materials) JGM(F&A) JGM (P&A) JGM(Tech.) (Maintenance) CM(P) CM (Materials) (Maintenance) CM(F&A) CM(P&A) CM (Tech.) JGM CM

Purchase Ammonia Urea

Store Power Transportation

Process Project Civil

Laboratory

F&S

Mech. Instrument Elect

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QUALITY POLICY
Management of KRIBHCO, Hazira plant is committed to operate and maintain its fertilizer manufacturing complex through quality assurance, environmental protection and to the satisfaction of customers. KRIBHCO, Hazira plant shall achieve this quality policy through following objectives: 1. Continually upgrading technology to improve plant efficiency & reliability. 2. Maintaining & improving the safety & environmental performance. 3. Improving the skills & knowledge of personnel. 4. Continuously improving the quality Management system.

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HUMAN RESOURCE MANAGEMENT

Human Resource Management is that part of management which is concerned with people at work & their relationship within the organization. The term Human Resource Management refers to the management of personnel in the organization of any company to achieve the predetermined goals. The duty of the

- 16 personnel manager is to look after the personnel department and various functions of the personnel like recruitment, selection, promotion, transfer, etc. In KRIBHCO, there is Personnel & Administration Department to carryout the functions of Human Resource Management. Here, the term Personnel & Administrations refers to the administration of personnel. The objective of this department is as below: (1) To ensure satisfaction to the workers so that they are freely ready to work. (2) To attain maximum individual development. (3) To improve efficiency of the human resources. Realizing that employees are its greatest assets, KRIBHCO from its very inception has been striving to build up a sound & transparent organizational culture to inclusive to sense of belonging among its employees. Personnel & Administration department mainly deal with: Manpower Need Why? Where? How? And When? Recruitment & Establishment functions Performance Appraisal Welfare & other services Loans & Claims Industrial Relations and Other miscellaneous functions.

History of HRD:Efforts since the last 15 years can be divided 3 distinct phases: 1. Foundation (1980 1987) 2. consolidation (1987 1993)

- 17 3. Growth (1993 onwards) This division has been on the basis of the various functions and role that the department had to pay along the line starting right from the time of its introduction as a training department to the present Human Resources Department.

Human Resource Department

KRIBHCO considers its human resources as a the greatest assets. It invests time and money to develop its employees through various HRD mechanisms. Regular in-house training programs sponsorship to outside training institution, brainstorming, problem solving workshops etc. are conducted for employees at all level.

Structure:Chief Manager (N.Bhatta) Senior Manager (D.K Mandal) Manager (H.D Desai) Deputy Manager (P.T Solanki) Sr. Assistant Manager (S.N Purabia) Assistant Manager (M.N Patel) Junior Manager (K.S Mohanan) Average Employee Turnover rate--- NIL Average Employee Absenteeism rate---NIL

HRD Activities:In our endeavor to facilities KRIBHCO employees towards their growth and development the activities have been continuing at reasonable fair pace. An exclusive in-house training program has been designed to upgrade the technical knowledge of our operators.

- 18 Self-awareness and inter personnel relationship play a vital role in brining about a sea change in the functioning of any system comprising human and hence they have been organizing these programs on a continues basis to give exposure to all employees in a planned and phased manner. Technical and non-technical programs. Orientation training programs for new employees.

- 19 Performance appraisal Proper communicatio n In house journals

Mechanism

Training and Development Feedback and counseling Educational opportunities Rewards and encouragement

H R D

Methodology

Induction training on the job training refresher courses Process simulator information Gallery conference room audio visual aids

Orientation program In house training Evaluation and

feedback Facilities

Technical library Lecture hall auditorium

HR planning:HR planning includes estimation of how many qualified people are necessary to carry out the assigned activities, how many people will be available and what if anything, must be done to ensure that personnel supply equals personnel demand at appropriate point in future. It is the foundation for all personnel functions. In KRIBHCO, forecast of manpower is based on expected promotion and retirement. In KRIBHCO, bottom-up approach is used i.e. manager or department head submit their departmental proposal to Establishment Section, which is forwarded to corporate office.

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Objectives of HRD at KRIBHCO: Maximize department contribution to KRIBHCO. To increase KRIBHCO` s foundation through increasing in employees contribution. Provide an opening of self- expression and self-development in congruence with organization. Provide need-based training to all employees of the organization. Plan the right working condition for employees progress. Plan and design appropriate training strategies to build competencies of employees Ensure growth and development for all.

Training and Development:Organizations become dynamic and grow through zeal, caliber and vision of their Human Recourses. KRIBHCO has always considered development of Human Resources as its most important responsibility because this alone ensures the well being and growth of the origination. Training and development activities of society from a part of continuous process in integrating the organizational needs and the needs of individuals, willingness to change for betterment is the pre-requisite for moving towards excellence. Training forms the most important function in the development of the human resources training is giving at there different phases: 1) Individual Phase 2) Management Development Phase 3) Organization Development Phase The adjectives of training program at KRIBHCO have a very wide scope, which is as follows: To minimize the time gap in learning new development. To equip the participants with requisition ability so that they can work with minimum supervision.

- 21 To enable employees to update their knowledge and increase the level of performance on their present job assignment as well as canalize their inherent potential, in order to make him Holistic Person. To foster initiative, self confidence and to overcome manpower obsolescence occurring due to age, temperament, lack of motivation or inability of person to adapt to changes. To impart training to new entrants to enable them to take up their assignment effectively. To create an environment of We feeling and enhance accountability of people.

Identification of Training Needs:A committee has been constituted at Head Office for identification and assessment of training needs of each employee posted at HO/ CMO/ SMOs. On the basis of specific recommendation of Head of departments, employees the committee would nominate employees for various seminar / Training Programs / Conferences etc, either in India or abroad to meet the development needs.

Training Program:HRD Department at KRIBHCO is conducting various programs for two categories of persons. 1) Non-Employees 2) Employees of KRIBHCO

1. Non-Employees:HRD Department of KRIBHCO is dealing with training apprentices under Apprentice Act, 1926 for the categories such as ITI and Diploma, Graduate Engineers and Science Graduate in the following Trades: i. Fitter

- 22 ii. Turner iii. Machinist iv. Wireman v. Electrician vi. Tool and Dye vii. viii. ix. x. mechanic Draughtsman Electronics Computer Applications

Vocational Training Programs:This is also another training program conducted by HRD Department. This is normally organized for students coming for practical training in industrial organization that is a part of their academic curriculum. Training is provided to student of different course like MLW, MHRD, BBA, MBA, DCA, M.SC and Engineering Graduate during their vacation. During this training they are exposed to the activities of various departments and the practical work. They also called apprentices for 1 year from (BOAT). They pay stipend of Rs. 3600/- to every apprentices per month

Employee:To sustain the healthy work culture and maximize the utilization of human potential in achieving organizational objectives, KRIBHCO management has been giving continuous thrust on the following HRD sub-system.

In-house training:After the identification of the training needs of employee and keeping in view the requirement of the society, the in-house training program are organized.

- 23 In such training programs, faculties are drawn from within the organization and from outside also. The infrastructure facilities for in-house training at Hazira plant include: I. An qualification with a capacity for 500 persons. II. Two air-condition lecture hales to accommodate 50 persons each. III. Full fledged library.

Induction training:New appointees are imparted Induction training covering KRIBHCO` s aim objective and achievement, work culture, office. Normally internal faculty is drawn for such training. New appointees are put on the job only after necessary induction training. Similarly, special programs are being designed and the employees who have been provided to officer category from the workmen category in the recent past.

Training scheme:S1. No. 01. 02. 03. Discipline Engg. Management Services-I Engg. Subordinate Service-II Mgt. Services Qualification Engg. Graduate Engg. Dip. Holders Training Max. age Design. On limit limit absorption 1 yr 25 yrs. Asst. Engr. 2 yrs. 23 yrs. Opts/ Tech To be inducted as J.M in Gr. G2 J.M in Gr. H

04.

05. 06.

MBAs from IIMs Ahmedabad, Bangalore, Calcutta, Lucknow Pers. & IR PG Dip. Business Mgr 1 yr. with specialization in Pers/ IR from XLRI, Jamshedpur Agri. Graduate B.Sc. Agri. With 1st class 1 yr. trainee Commercial MBA with 55 marks other 2 yrs. Subordinate than IIMs/ XLRI Service

24 yrs.

25 yrs. 25 yrs.

Field Rep. Asstt. Gr-1

- 24 07. Admn. Subordinate Service Master Degree in Social 2 yrs. work with Min 55 marks/ PG Dip. In PM/ IR/ Social Welfare/ DSW/ LSW/ DLL from recognized Institution Jr. Commercial Graduate 1 yr. Service 25 yrs. Asstt. Gr-1

08.

25 yrs.

Clerk

Personnel & Administration:Personnel Department is that part of management, which is concerned with people at work 7 their relationship within the organization. The term personnel management refers to the management of personnel in the organization of any company to achieve the predetermined goals. The duty of the personnel manager is to look after the personnel department and various functions of the personnel like recruitment, selection, promotion, transfer, etc. As there is so much important of the heart in the human being so much as there is also importance of person in any organization. Person working in the organization are considered as the blood and heart of the organization. The success of unit mainly depends upon the personnel function in any organization. As in the organization there must be maintain good relation between personnel of different department. Personnel manager plays very important role between employers and employees. The objective of this department is as below: 1) To ensure satisfaction to the workers so that they are freely ready to work. 2) To attain maximum individual development. 3) To improve efficiency of the human resources. Personnel & Administration department is divided into two major departments. 1) Personnel Department 2) Administration Department The personnel department is further sub divided into four sub-division: a) b) c) Recruitment and Establishment cell Tine office and Wage & Salary Administration cell Industrial Relations cell

- 25 d) Contract cell

The Administration Department look after the following matters: a) Canteen b) Transportation c) Township d) Horticulture e) Guest house/ temple/ garden maintenance etc

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Structure of P&A department:-

Operational director Executive director General Manager/ Joint general manager

Sr.Manager (P &A deptt.

Manager (P &A Deptt.) Estate

Manager (P &A Deptt.) Personnel

Sr.Manager (P & A Deptt.)

Estate, legal recruitment, time office

Industrial relation, welfare Administration

Manager (P &A Deptt.) Time office

Manager (P & Legal)

Sr.Manager (P & Legal) HAEP

Manager (P &A Deptt.) Welfare

Sr.Manager (P &A Deptt.) Administration

Grade system in KRIBHCO plant site HAZIRA

- 27 A B C D E F F1 G G1 G2 H Managing Director Director [Operations/ Marketing/ finance] senior general manager/ General Manager Joint general manager / Chief Manager senior manager/ CMO Manager Deputy Manager/ senior M.O. Sr. Assistant manager/ Sr. area manager/ Sr. engineer/ foreman Assistant manager/ Engineer/ Assistant foreman Assistant Engineer/ Assistant manager Joint manager/ P.S.

B1 Executive Director

Function of Personnel & Administration Department

TIME OFFICE LOANS & CLAMS ESTABLISHMENT TRAINING & DEVELOPMENT PLANT HORTICULTURE FURNITURE BUDGET INTERNAL AUDIT BUDGET & INTERNAL AUDIT, VIGILANCE MATTERS RURAL DVELOPMENT PUBLIC RELATIPON : Time office Management, Attendance & Leave, Wage Administration, Leaves travel Concession, Marketing Bus Coupons. : HBL, Conveyance Loan, Salary Advance, Medical Bills, Accident Insurance Claims. : Recruitment, Placement, Confirmation, Appraisal Report, DPC, Personnel Records, Employment Returns, Data Bank. : Nominating In-House/Outside raining, Learning Group, Vocational Trainees. : Horticulture work in KRIBHCO & HAEP Plants

: Procurement & Maintenance of office furniture & Equipment, Physical Verification of Furniture. : Preparation of Budget and matters related to it, Internal Audit coordination & replies, Vigilance matters. : RURAL Development, Release of Advertisement & Processing of Bills, Publishing of KRIBHCO DARPAN/ Kribhco Today Publicity/ Liaison with Press, Photography & Videography, Periodicals & Newspapers. HOUSE KEEPING & : House keeping and upkeep of Administrative DESPATCH Block, Dispatch Section, Courier Service, Attendant Service to various Sections. INDUSTRIAL RELATIONS : Industrial Relation, Union & Association matters, Collective Bargaining, Management of Industrial canteen, Review of Personnel policies, Wage Revision matters, Incentive payment, Sport &

- 28 Games, Cooperative Stores, Unit Level Class, Management of Class, Management of Schools, Welfare matters. OF : Office Language Implementation : Management of Guest House-I & GH-II, training Hostel, Procurement of liveries, Gift & complimentary, local Purchase, Department Imp rest, Printing of Stationary & Visiting Cards etc. : Hiring of Cars/ uses, staff Cars/ Buses, excursion trips, Rail/Air Booking, Duplication Section. : Township Horticulture, Maintenance of Public Building, House-keeping of Township House, Community Hall, Ladies Club, Celebration of Festivals, Township House & Shop Allotment, Hospital & security Administration, Fish culture, Horticulture of township : Compliance of labour laws & contract Labour [R&A] Act, Verification & Witnessing Disbursement of Wages to Contract Labour, Matters related to HAIA, SUDA& Payment Legal Cases, Disciplinary matters.

IMPLEMENTATION HINDI GUEST HOUSE LIVERIES LOCAL PURCHSE LAN PRINTING OF STATIONERY TRANSPORTATION ESTABLISHMENT

CONTRACT CELL LEGAL CELL

PF & TERMINAL : DBF & terminal Benefits, Joint Management BENEFITS JMC Council, Post Retirement Medical Assistance, Pf trust, Suggestion Scheme. COMPUTERIZATION : LAN Implementation in P&A Department, NODAL OFFOCER computerization & other matters related to Computer. HAEP ADMINISTRATION : Day to Day Administration matters of HAEP HOSPITAL : Day to Day Administration matters of Hospital ADMINISTRATION

RECRUITMENT & ESTABHLISHMENT

- 29 Organizations are dynamic, organic ongoing systems consisting of many individual. A successful management focuses on the individual and then attempts to relate the individual to the group and different groups to the organization. Individuals join organization to fulfill their goal and aspirations within the framework of the organization. It is one of the major functions of management to convert the goals and aspirations of the individuals into the goals of the organization. KRIBHCO in the formative stages inherited miles and practices from IFFCO. Subsequently, need was felt to streamline and standardized the existing practices and to evolve R&P guidelines for KRIBHCO. In line with the above, R&P guideline were formed and revised from time to time. There are only guideline for the management and do not contain the detailed procedure to implement the same. Salient feature of the guidelines are given below:

General:Vacant position in organization chart shall not automatically be treated as operative to be filled by recruitment or promotion. The positions shown in the chart are estimated, keeping in view current and future requirement and are to be operated only when it becomes necessary to operate them with the approval of competent authority. Recruitment from outside agencies shall be made when , in the opinion of the management suitable persons are not available within the organization. Recruitment from outside may also be done in case of addition requirements of manpower, due to expansion of the organization.

Recruitment:All existing employees of KRIBHCO shall be considered for promotion or direct recruitment. Only for the next higher grade, departmental candidates may apply against open advertisement provided they have completed one years of service in the immediate lower grade and the applicant otherwise meets the specification prescribed for the posts except age limitation.

Sources of Recruitment:Vacant positions are filled up through internal or external sources of recruitment.

- 30 Internal Sources of Recruitment: 1. Promotion 2. Lateral Transfers 3. Amongst Trainees/ Apprentices External Sources of Recruitment 1. Open Advertisement 2. Employment Exchange 3. Campus Interview 4. On deputation from Government/ Other organization 5. On contract for specific period All recruitment to H1 grade and below is done on local unit basis. For G2 grade and above, it is done at all India basis. For grade D and above, as per the selection post and management specification.

Recruitment Procedure:The stage wise details of Recruitment are as under: 1. 2. 3. 4. Surat. (Mandvi and Songadh if required) as per the specification (copy enclosed) 5. 6. basis. 7. Recruitment & promotion for posts in grade D and above are concerned these will be treated as Selection Posts and Management shall follow such specifications as may be required form time to time. 8. Scrutiny of applications received and preparation of lists of eligible candidates. A list of rejected candidates with reasons also to be prepared. A separate list of Gen/ OBC/ SC/ ST. 9. Taking approval for engaging outside agency to conduct the written test if required. Recruitment regarding H grade and below grades on local unit basis. Recruitment regarding G2 grade and above grades shall be made on All India Recruitment from the concerned Department. Availability of Vacancy as per Organization Chart. Approval of Competent Authority to fill the post. Advertisement in the Newspapers/ local Employment Exchanges such as

- 31 -

SELECTION
Selection Procedure The stages wise details of selection are as under: 1. Screening of applications of eligible candidates. 2. issue of Call Letters for the written test to the eligible candidates enclosed) 3. Arranging payment of TA to SC/ST candidates through Accounts Department sending therewith a list such candidates. TA from enclosed) 4. Supervision at the Centre of test. Valuation of test papers and preparation of merit list. 5. Final lists of candidates for personal interview to be prepared. Concession for SC/S candidates in the written test. 6. Constitution of Selection Committee Approval from the Competent Authority. Communication to the Chairman of the Committee for fixing dates for Personal Interview. 7. Issue of call letters for Personal Interview along with Bio-data from. Preparation of Bio-data of the selected candidates for submission to the Committee Members. 8. Verification of Original Certificates along with one set of photocopy of the certificates of the candidates attending the personal interview and preparation of their attendance list. 9. Making physical arrangements for the interview. Preparation of interview proceedings on the sane day. Obtaining approval from the Competent Authority for the selection. 10. Issue of Offer of Appointment to the selected candidates along with Medical Examination Form and Character Verification form giving 15 days time for joining. Receipt of Acceptance copy from the selected. 11. On joining verification of the original certificates, medical examination form, No objection certificate form the previous Employer. 12. Preparation of Joining Report. Copy enclose) copy

- 32 13. Allotment of Personal Number. Nomination forms such as Kribhco Group Personal Accident cum Death Assurance scheme, PF form etc. to be filled by the candidates. 14. Information regarding candidates joining to be Accounts Department, Time Office, Security Department, Administration Department, Hospital, Estate Department, HPRD etc. 15. Probation period : Six months 16. Before confirmation Performance Appraisal Form to be sent tom the concerned department about the candidates performance. Preparation and issue of confirmation letters separately for workmen categories and officer categories. 17. Release of Annual Increment 1st January and 1st July. 18. 3 months for newly appointed employee up to H1 6 months for newly appointed employee H to D

INCREMENT
Employees shall be entitled to annual increment in accordance with the increment rates specified in various pay scales. The first increment shall be awarded to KRIBHCO employees on initial appointment subject to satisfactory completion of probation period in the following manner:

- 33 -

FOR EMPLOYEES JOINING BETWEEN

a) 1st January to 30th June b) 1st July to 31st December

DATE OF INCREMENT
1st January 1st July

In case of promotion to the next higher grade, the date of increment of an employee arrived at on his initial appointment in KRIBHCO shall remain unaltered throughout his service career in KRIBHCO unless otherwise specifically ordered by the Management to take care of the anomaly in pay fixation and Leave Without Pay/ Absence from Duty. If an employee remain absent from duty on account of leave Without Pay, Unauthorized Absence, the date of award of next annual increment shall be postponed by the corresponding period for which he remained on LWP/ unauthorized absence.

PROMOTION
Promotion means an improvement in pay, prestige, position and responsibilities of an employee within organization. In KRIBHCO, promotion is based on seniority cum merit basis. The Establishment Section prepares the Eligibility List of employees for promotion twice in a year on May 0 and November o1 of each year. Up to H/ H1 grade, promotion are done at plant level by constituting committee which conducts personal interview to assess the suitability of the candidate.

- 34 1. Preparation of list of eligible employees for promotion as per R&B Guidelines. 2. Annual Appraisal report of eligible employees to be got filled by the concerned officers. 3. Competent Authoritys approval for constitution of the Department Promotion. 4. Bio-data of the eligible for constitution of the Department promotion Committee. 5. Bio-data of the eligible employees to be prepared for the DPC. 6. Communication to the Chairman of the committee for fixing the date of DPC. Communication to the employees for attending the DPC. 7. Making physical arrangements to the interview. 8. Preparation of selection proceedings. 9. Approval of the competent authority to be obtained for the selection proceedings. 10. Vigilance clearance to be obtained giving the promotion order. 11. Promotion ordered. For promotion of G grade and above, Establishment Section put before the Committee the Bio-data of eligible employee, annual appraisal report with rating and signature of each member of the committee and forwards it to Managing Directors approval.

PERFORMANCE APPRAISAL SYSTEM

Performance Appraisal is the process through which an individual employees behavior and performance over a fixed time period is measured and evaluated. It is systematic and objective way of finding the relative worth or ability of an employee in performing the task. It helps to identify those who are performing their tasks well form those who are not and also indicates the reasons for such performance.

Use of Appraisal System

- 35 It provides information of paramount importance/ assistance in making decisions such as promotion, additional charge etc. As such, through the system, ability of an individual can be recognized. Every employee wants to know how he is performing on the job and what his superiors feel about his performance. Performance appraisal plays a very important role to meet this requirement of the employee through feed-back system. The system helps considering employees suitability for different types of assignments, transfer and placement. Appraisals Report written objectively can reduce grievances and develop better relationship. Keeping in view its various uses in relation to the development needs of the employees, the Appraisal System of KRIBHCO is being revised and developed from time to time. The main features of the existing system are as under:

General Instruction for filling up Appraisal Forms

1. To be filled up with a high sense of responsibility. 2. Objective is not fault finding but of identifying the strengths, weaknesses and potential of the employee. 3. Not to fill up hurriedly but with due dare and attention. 4. Although performance appraisal is an annual exercise, the Appraising Authorities are to review the performance periodically and take corrective steps. 5. To depict true picture of the appraiser. 6. Assessment to be confined to the period of report only. 7. Some posts of the same rank may be more exacting than others. The degree of stress and strains are to be borne in mind while appraising. 8. After completion of appraisal report, Appraising officer may discuss the same with appraiser highlighting his strengths and weaknesses. This may be done in the presence or Reviewing Officer, if he is in station at the same location. 9. Report to be filled up annually April to March). 10. Appraisal is to be made only if the employee has worked for more than three months during the appraisal period. In case, where an employee has worked under two Appraising Offices during one has worked for more period during the year.

Performance Appraisal Procedure:

- 36 a. The instructions provided in the appraisal form have to be carefully gone through by the rating of the employee should be done annually at any time. The first page of the appraisal format is to be filled by the Personnel Department and passed on to the Appraisal officer by 1st week of April who will give his rating by 10th April and send it to the Reviewing officer and from him to the Accepting officer. The Accepting officer after recording his observation on the appraisal of the employee will send the report to personnel Department latest by the end of April. b. Individual appraiser bearing unmanned that the rater will be rated eventually. c. In case of disagreement among the Appraising and Reviewing Officer, the Accepting Officer should hold discussion with all of them and finalize rating. d. In case performance of employee is Below Average, same shall be communicating by personnel department after appraisal is accepted by competent authority.

WAGE & SALARY ADMINISTRATION

Wage & Salary Administration refers to the establishment and implementation of sound policies and practices of employee compensation. Generally, the remuneration paid to the workers known as wage while the payment made to office staff known as salary. Wage is the remuneration paid for service of labour in production, skilled and unskilled person or employer, worker technicians. Salary refers to the monthly paid to clerical administrative and professional employees. A sound wage & salary administration tries to achieve these objectives: a) For employees: Employees are paid according to requirement of their job. This eliminates inequalities. The changes of favoritism are greatly minimized.

- 37 Employees morale & motivation are increased because wage program can be explained & based upon facts. b) To Employer: A wage & salary Administration reduces the likelihood of friction & It enhances an employees morale & motivation because grievance over wage inequities. adequate and fairly administered wage are basic to his wants and needs. It attracts qualified employees ensuring an adequate payment for all the jobs. The information about employees, presentation and absence provided by the tine keeping system is directly linked with computer section. Then after pay slip is preferred with the Master-Date. Finally after all additions and deductions, pay is paid to the employees. The productivity linked bonus and incentive schemes also introduced by the KRIBHCO. The employees of KRIBHCO have been paid bonus linked with productivity i.e. annual capacity utilization of the plant and materials. In KRIBHCO calculation of wage and salary is done by establishment section in Finance & Account Department. In this section, wage and salary is calculated on computers. It is the responsibility of personnel department which has to handle wages and salary distribution together with account department. Salary are payable on the last but on working day of every month. In this organization for the wage and salary administration, first prepared the Master-Date under the personnel department. In this Master-Date there are various column like grade, employee number, pay scale, code, P.P. Account, number, name, basic-pay, living-pay, house rent, over-time pay, medical allowance and other facilities rate etc.

Demotion:Demotion in any organization is very rare. The same is the case in KRIBHCO. Demotion in the company occurs only in case of major indiscipline. This action is taken after much inspection of the fault made. A special committee is formed for the inspection of the whole matter and then finally a report in generated whether the employee is found guilty or innocent. It even involves legal and police formalities

- 38 many times. Provisions of this indiscipline are available under certified standing order. Some of the Major Indiscipline is as follows: 1. Breach or habitual breach of the provisions provided in the service rules framed or instructions or orders issued by the management from time to time and in force. 2. Insubordination or refusal to obey. 3. Violation of any condition or term contract or employment. 4. Any big loss suffered by the company due to any employees disregard of operation or carelessness in operation or maintenance. 5. Acting in a manner prejudicial to the interest or reputation of the organization. 6. International non-submission/ late submission of immovable property return in the manner prescribe rules of complete account of movable or immovable properties acquired by the employee or concealment of any material fact relating to acquisition of such properties.

JOB DISCRIPTION:It is an important document. Job analyst prepares a statement of fact in a prescribed blank called, Job Description, which is basically descriptive in nature. Job Description is very important for a new employee to know under whom he has to work, what is his designation etc. In KRIBHCO Job Description contains following: 1. Proper Job Title 2. Job Summary. 3. Job Location. 4. Duties & Responsibilities on the job. 5. Nature of supervision. 6. Machine tools and materials. 7. Relation to other jobs. 8. Working conditions to the job etc.

- 39 -

JOB SPECIFICATION:All employees posted at Plant, Corporate Office, Central Marketing Office and Field Marketing Offices are governed by the Rules and Procedures laid down under the service Rules for employees of KRIBHCO.

Discipline & conduct:1. An employee shall, at all times, conduct himself soberly and temperately and show proper respect and civility to his superior and persons having any official dealings with KROBHCO. 2. An employee shall serve honestly and faithfully and shall use his utmost endeavors to promote the interest of the organization. 3. All employees shall be full time employees of KRIBHCO and will devote themselves exclusively to the duties assigned to them from time to time when required to do. 4. During the period of employment with Kribhco, no employee shall hold any office of profit outside the organization or engage himself in any other service, business and trade. 5. No employee shall take with him for his own personal use, any photograph, sketches, etc. regarding any business or activity of the organization, building, plant process, work etc. 6. No employee shall use organizations name or properties etc. for his personal use or benefits. 7. An employee shall keep himself up to date with the knowledge, skill, information, ability etc.

WELFARE MEASURES IN KRIBHCO:-

- 40 Considering to the Statutory Provisions KRIBHCO provides following welfare measures:The Factories Act, 1984, is one of the Act, which enumerates a good number of welfare measures to be provided by and employer of the factory. KRIBHCO provides following welfare measures under Factories Act:1. Cleanliness: KRIBHCO keeps clean both outside and inside factory areas. Housekeeping both in Plant and Townships is given due importance and proper attention. Even KRIBHCO won Prizes under good housekeeping many times. Plant premises and Houses in Township are painted or co lour washed periodically. 2. Disposal of Wasted& effluents effective arrangements are being made in KRIBHCO for proper disposal of wastes & effluents both in plant & Township. 3. Ventilation and Temperature: Proper actions are being taken for adequate ventilation in work place and temperature is maintained for comfort and prevents injury to health. 4. Dust & Fume: Proper attention is given to prevent harmfulness of dust & fumes, which is injurious or offensive to the workers employed in factory premises. 5. As regard to artificial humidification, overcrowding, lighting, drinking water, latrines and urinals, spittoons, proper actions are taken to provide the aforesaid facilities for proper working of employees inside the Plant. 6. Safety measures are strictly adhered to provide the safety and security while working tin the plant. 7. Washing facilities, sitting facilities are provided wherever required. 8. First Aid Counter is maintained so as to be readily accessible during all working hours with First Aid Boxes which contains prescribed items and sufficient numbers of Boxes are provided in different locations. First Aid Counter is also providing inside the Factory premises round the clock in order to meet any eventuality while working in case of any employee. 9. Industrial Canteen is provided with subsidized eatables with an objective to provide balanced and clean food. The industrial Canteen also used by workers as a Lunch Room during working hours.

- 41 10. KRIBHCO has employed Welfare Office who is in charge of Welfare Services provided by KRIBHCO. He is supervising for proper implementation of welfare activities of KRIBHCO. 11. Working Hours, Compensatory Off, Interval for Rest, Spread over, Night Shift and Prohibition of Overlapping Shift, Extra Wage for Overtime as provided under the Factories Act, 1948 are implemented in true spirit in KRIBHCO. 12. As regard to annual leave with wages, wages during leave period, payment of wages in advance is also implemented in KRIBHCO as per the provision of Factories Act. 13. Safety and Occupational Health Surveys are done annually to provide proper safety inside the factory premises and to diagnose any occupational disease and providing treatment for its cure. Surveys are also conducted to prevent occupational health hazards.

WELFARE FACILITIES IN KRIBHCO:(I) Housing:Townships facility to the extend of 99% of requirement of employees is provided by KRIBHCO. KRIBHCO provided semi furnished accommodation with proper housekeeping, security arrangements, repair and maintenance of houses in Township, cable connection, electrical maintenance in the township for its employees. Park facilities with equipments for playing of children, sitting arrangement in the garden, lawn maintenance, plantation and maintenance of trees, maintenance of flower plants for beautification are also being provided. Shopping canters in the township are provided to cater to the need and requirement of residents of the township. Post Office, Bank and PCO facility are provided in the township. Township of KRIBHCO, in overall provides facilities for modern life. (II) Educational Facilities:KRIBHCO has provided two schools namely Sunflower School in Gujarati Medium and Central School in Hindi / English medium. Theses two school

- 42 are situated inside the township and are having facilities up to 12 th standard. Both preprimary and pre-nursery educational facilities are also provided in township. Apart from this, KRIBHCO provides transport facilities and arrangement for the children of township to avail educational facilities available outside township i.e. in Surat city or in other nearby areas. Coaching classes and Entrance examination preparatory classes are also run by KRIBHCO provides grants to Officers Club and Staff Club to maintain Library and Reading Room in the township. Officers Club and Staff Club arrange Computer-learning classes. (III) Medical Facilities:KRIBHCO provides free medical facilities to its employees, their spouses, dependent members of his family, be eligible for reimbursement of: 1. Fees paid by him to an authorized medical attendant for consultation whether at is cleaning or at he employees residence. 2. Fees paid for injection, dressing or minor surgery, 3. Fees paid for X-ray and pathological test etc. 4. Expenses of treatment for chronic or any specialized treatment or incase of hospitalization, at actual. 5. Reimbursement of medical expenses for routine treatment Rs. 4500/- per annum (2250/- for Township Residents) In addition to above KRIBHCO is having its own hospital having both inpatient and outpatient facility. Specialists from Reputed hospitals / practitioner visit KRIBHCO visit KRIBHCO Hospital for Township Residents. In case of specialized and chronic diseases cases are referred from KRIBHCO hospital to Empanelled Doctor/Hospital in Surat or outside Surat.

(IV) Recreational Facilities: KRIBHCO provides following recreational facilities:(a) Outdoor game facilities are provided like Cricket, Football, Volleyball,

Lawn tennis and swimming. Coaching camps are conducted for these games during summer vacations and sports and games meet are organized in regular

- 43 intervals. Even State level and National level facilities are organized for such games. (b) (c) (d) (e) (f) (g) Annual Athletic meets are organized for employees and their dependant KRIBHCO contributes grant for KRIBHCO Officers Club and KRIBHCO Badminton courts are provided in both the above clubs. Club organizes Cable TV connections are provided in each house of the township free Marketing Bus facilities for employees and their dependant family Celebration of Republic Day, Independence Day, May Day, Holi, family members. Staff Club situated in township. various cultural and sports & games activities for their members. of cost. member are provided at subsidized cost. Gujarati New Year is being celebrated with much fanfare and cultural programmes. (V) Other welfare Facilities:a. Employees Cooperative Society is there which is managing distribution of Milk, LPG Gas, dealership, Provision Stores and credit facilities. b. Ashirvad Old age home for Township residents. c. Workers Education Scheme is prevalent in KRIBHCO.

Employees Relations
The Employee relations in KRIBHCO have been very cordial. The work culture in KRIBHCO is of belongingness wherein there is a sense of caring, security and participation by all. This has been possible only because of better understanding amongst. Management and Employees Representatives. The well trained and motivated strength of 2600 employees are organized and represented through single Union and Association having 100% internal leadership and maintaining independent character, not affiliated with any Central Trade Union Organizations. It had always preferred to resolve all employees

- 44 relations since inception. Annual elections are conducted in a democratic manner and intra union group has ever emerged. Management has also given a thrust on employees welfare schemes which include a self contained township having facilities like Health Care Center., two Schools, Clubs, Bank, Post Office, Shopping Center, Cable TC Network, Games and Sports activities, Cultural activities etc. On the job working conditions and off jobs welfare facilities have raised the moral and belongingness of KRIBCO employees, which is reflected by the statistics of less then 1% employees turnover in past 16 years. It is however unfortunate that KRIBHCO, in spite of its consistently good performance, professional management, experienced manpower and harmonious industrial relations has not been able to diversify for the last several years. KRIBHCO would therefore be looking forward to receiving valuable assistance from the Government of India and other agencies for clearing the KRIBHCO s project proposals on fast track basis.

Time office
Time is considered as money. so we have to the value of money is equal to value of time. Time keeping in big organization is very essential function. Therefore it is necessary to adopt sound system in order to save & avoid dispute regarding attendance. KRIBHCO is enough sensitive towards optimum use of time. It has as separate time office concerned with security department. Ti is situated at the main gate of company. The office runs for 24 hours and dealing with pub services. The chief time keeper (Jr. Mgr-P&A) supervises the work of time office, under him there are the four assistant to carry out the daily system maintenance of Attendance Register for staff category, overtime, Leave Management, etc. Main function of Time Office: Control Daily Attendance Leave Management Issue of punching card/ Attendance card to employee

- 45 Maintain all types of record of employees as per requirement of Gujarat Factory Rules/ standing order Act. Maintenance of over time Administration of shift and claim of shift allowance Maintain the record of absent ,Leave without pay, CL, EL and Leave encashment Distribution of canteen coupons

- 46 -

Marketing department

Introduction: Marketing is the process of planning & executing the conception, pricing, promotion and distribution of ideas, goods and services to create exchanges that satisfy individual and organization goals. In simple sense marketing is concerned with selling. But now a days the concept has enlarged its meaning. We know that a product is provided with the aim of sale. Marketing management covers marketing research, new product development and so many other important functions. The important responsibilities of the marketing departments are: Volume sales: - total production to be sold in each season.

- 47 Price realization: - selling price at level to the consumer (farmer) at MRP. Cost of marketing: - discounts, credit, distribution expenses, traveling and communication &warehousing expenses, advertising& sales promotion expenses, etc should be minimal. In KRIBHCO marketing management has the task of regulation of level, liming and character of demand in a way that will help the organization to achieve its objectives. The aims of producer totally depend on marketing, without marketing not a single unit can run. KRIBHCO marketing philosophy aims not to sell fertilizer but to help farmers by education them the modern farming technology and the use of fertilizer for optimum crop out. KRIBHCO sold urea mainly through co-operative societies. KRIBHCO has been making celebrate arrangements for dispatch of urea from plant site to various destinations as per requirement by optimum use of rail & road. In KRIBHCO marketing is done by head office at Delhi. KRIBHCO has nationwide marketing network and has covered all major stated in the countries. Presently it is operating in the Uttar Pradesh, Himachal Pradesh, Delhi, Madhya Pradesh, Maharastra, Karnataka, Tamilnadu, Punjab, Haryana, Gujarat, Rajasthan, Andhra Pradesh, West Bengal and Bihar. (Chart) &marketing act ivies. KRIBHCO Head offices

Central marketing offices

co-operatives offices

State mkting offices

state mkting offices

state mkting offices

Area mkting offices

Area mkting offices

Area mkting offices

- 48 -

Field representative

field representative

field representative

Marketing Activities: 1. Farmers Benefits programmes. 2. Sanket Haran bima yojana. 3. Marketing of BVFCL urea, 4. ISO 90001-2000 5. Seed multiplication programme 6. Gramin vikas trust. (Rural Development Trust)

Product mix: KRIBHCO, manufacturing nitrogenous fertilizer and allied product viz. urea, Ammonia, Bio-fertilizer, 30 mega watt power plant operation & maintained of heavy water plant of department of atomic energy, But KRIBHCO is having urea as its main product. They use Ammonia as raw material &main input of urea& sale the excess production to other non-fertilizer industries.

Product mix of KRIBHCO

- 49 -

Urea

Bio-fertilizer

Seeds -Wheat

I Azotobacter II Azospirillum III Rhizobium IV phosphorus solubilising Miro-organism (P S M)

-Paddy -Pulses 1. gram 2. pea 3. arthan 4. Urd 5. lentils 6. moog - oil- seeds 1. mustand 2. soyabean 3. castors

Features of products: Urea: 1 Urea is colorless odorless white crystalline chemical substance. Generally in the form of crystals. Urea is soluble in water, alcohols and liquid ammonia when heated under vacuum. It sublimes at around 120 Deg.c- 130 Deg.c temperatures. At 160 Deg.c it decomposes to ammonia and carbon dioxide. Urea in the fact is the diamide of carbonic acid with a chemical representation: NH2CONH2.

- 50 2 The principle field of application of urea is for agriculture purpose as a nitrogenous fertilizer. Fertilizer grade urea is generally marketed in the form of prills due of its free flowing characteristics. A certain quantity of urea is also used for mixed fertilizer like NP or NPK of different grades. A part from its use as a nitrogenous fertilizer urea is a also used for purpose of animal feed as a protein supplement in some of the advance countries. 3 Another important application of urea is for the manufacture of thermosetting etc. further urea is also used for manufacture of several other chemicals and pharmaceuticals etc.

Kribhco urea production and sales Year 2000-01 2001-02 2002-03 2003-04 2004-05 Production (Lack MT) Sales (Lack MT) 16.31 15.72 16.94 17.21 16.03 16.38 17.73 18.37 18.06 17.37

K r ib h c o U r e a P r o d u c tio n a n d S a le s 1 8 .5 18 1 7 .5 17 1 6 .5 MT 16 1 5 .5 15 1 4 .5 14

L ack

2 0 0 0 -0 12 0 0 1 -0 22 0 0 2 -0 32 0 0 3 -0 42 0 0 4 -0 5 Y e ars
P ro d u c t io n (L a c k M T)le s (L a c k M T) Sa

- 51 -

Bio-fertilizer: 1. Azotobacter: Azotobacter Bio-fertilizer contains billions of Azotobacter Chrococcum species of bacteria and is very useful microbial inoculants for nitrogen mobilization. Te microorganisms of Azotobacter live in the rhino share of root system of the plant. They consume organic carbon present in the soil and fix atmospheric nitrogen. Azotobacters are free-living microorganisms, which are active nitrogen fixers. They contain an enzyme known as nitrogenous which converts/fixes atmospheric nitrogen in to ammonia. This ammonia is excreted by the microorganisms in to the soil, which is consumed by the plant for protein synthesis. Azotobacter chrococcum has a potential of fixing 50kg of nitrogen per hectare. 2. Azospirillum:Azospirillum Bio-fertilizer contains billions of Azosirillum Brasilense species of bacteria and is very useful microbial inoculants for nitrogen mobilization. The microorganisms of Azospirillum are associative in nature i.e. the are present I the rhizophere and rizoplane of the plants they use nutrients and source of energy from the root exudation and fix atmospheric nitrogen. Azospirillum are associative microorganisms, which are active nitrogen fixers. They contain an enzyme known as nitrogenous which converts/fixes atmospheric nitrogen in the ammonia and the plants use this ammonia. Azospirillum brasilense has a potential of fixing 20-40kg of nitrogen per hector. 3. Rhizobium: Rhizobium variety of Bio-fertilizer contains billions of Rhizobium species of bacteria. These bacteria form nodules on the roots of leguminous crops. Rhizobium is symbiotic in the nature, while other verities such as Azotobacter, P.S.M and Azospirillum are free living. Rhizobium is crop specific unlike Azotobacter, P.S.M, and Azospirillum, which can be used for all crops. The leguminous seeds when treated with Rhizobium, the roots hairs are attacked by Rhizobium during germination and give rise to the formation of nodules. This nodule contains billions of bacteria and seats of nitrogen fixation. Grater the number of nodules formed on the roots, grater is the quality of nitrogen fixed. Rhizobium has potential of fixing nitrogen varying from

- 52 50kgs to 200kgs nitrogen per hectare depending upon the variety of leguminous crops. 4. Phosphorus solubilising micro-organism (P.S.M):P.S.M variety of Bio-fertilizer contains billions of phosphate solubilsing microorganisms, which are capable of solubilising insoluble phosphate already available in the soil. Of the total phosphatic fertilizers applied to the crops, only a meager quantity of 25% is available to the plants in soluble forms, while rest of the phosphates get fixed in the soil in the form of insoluble phosphates, such as aluminum phosphate, iron phosphate, tri calcium phosphate etc. these phosphates get accumulated in soil and remain unused under normal soil conditions .the phosphate solubilising micro-organisms are free living and present in the rhizophere of the root system of the plant. Phosphate solublising microorganisms haves potential of solubilising about 40kg phosphorus p205 per hectare.

Kribhco bio-fertilizer production and sales

Year 200001 200102 200203 200304 200405

Production (MT) 384 389 296 603 560

sales(MT ) 354 373 351 516 611

- 53 -

Kribhco Bio-fertilizer Production and sales

700 600 500 400 300 200 100 0

2000-01

2001-02

2002-03 Years

2003-04

2004-05

Production (MT)

sales(MT)

Kribhco ammonia production 200001 9.63 200102 9.9 200203 9.92 200304 11.17 200405 10.92
Kribhco Ammonia Production
11.5 11 10.5 10 9.5 9 8.5 2000-01 2001-02 2002-03 Ye a rs 2003-04 2004-05

Kribhco seeds production and sales Year Production (Lack Qtls) Sales (Lack Qtls) 200001 1.04 0.76 200102 0.84 1.1

- 54 200203 200304 200405

1.08 1.21 1.54

1.06 1.11 1.49

Kribhco Seeds Production and Sales

2 1.5 1 0.5 0 2000-01 2001-02 2002-03 Yea rs Production (Lack Qtls) Sales (Lack Qtls) 2003-04 2004-05

Product planning: Product planning is the process to plan for marketing a particular product or product line of the company in a particular industrial or geographical market. General Manager of production is consulting with G.M of marketing considering following factors: 1. Capacity of plant 2. Availability of raw material 3. Demand in the marketing 4. Environmental factors 5. Activities of competitors 6. Availability of stock in a country 7. Availability of storage and warehouses 8. E.S.C allocation given by Agri-minister like rain prigation, cropping pattern etc.

- 55 Depending up on the above factors first yearly target is desired &month wise target is also decided.

Market segmentation: Kribhcos market is all over the India &segmented according to: I. Geographical area II. Proportion of shares held by co-operatives society (I) Geographical area: In case of geographical market segmentation, the market is segmented zone wise, district wise, and village wise. KRIBHCO has 7 state wise offices. Each state is headed by state marketing manager comes area offices consisting of area officer and area agronomist. Under each area office there are officer who area assigned one village co-operative society. The order are first place by farmers at village level which are in turn forward to district level and to state level officers, who convey information to marketing general manager at the office. (II) Proportion of shares held by co-operative society: Here the market is segmented in terms of the number of share membership. It implies there are more numbers of share membership in that region, large consumers are found. This type of segmentation is done by KRIBHCO to reach their market-oriented goal.

Distribution channel: KRIBHCO handles its distribution of fertilizer by making division situated at Delhi. KRIBHCO channel its product through co-operative distribution network. According to the essential commodities Act, the government regulates the distributions of fertilizer. The department of fertilizer guides the management of KRIBHCO for the distribution of urea. Products, which are produced at Hazira, are not

- 56 dispatched directly to the customers. It involves distribution channel, KRIBHCO has develop for distribution of urea. Channel of Distribution

Through IFFCO

State level co-operative District level co-operative Taluka level co-operative Block level co-operative Village level co-operative Farmers

Being in the co-operative sectors, the society has been marketing its product only through co-operative and institutional agencies. Besides providing its products to Apex level co-operative federation/ institutions in most of states, it has also been supplying its product grass-roof-level societies in the states of Uttar Pradesh, Andhra Pradesh, Rajasthan, and the focal points in Punjab, apart from Krishak Bharti sewa kendras (KBSKS). The direct supplies to primary Agriculture cooperative societies (PACs)/ focal points not any only helps in timely availability, and increase in fertilizer consumption, but also provides maximum benefits to the societies for making the financially strong. During the year under review, the society was given an allocation under ECA in almost al the major states in the country. The society marketed its product in t5he states of Uttar Pradesh, Uttranchal, Punjab, Himachal Pradesh Karnataka, Tamil nadu, Bihar and west Bengal. The society sold 98% of its ECA allocation against the national average of 92%.

- 57 -

Mode of Distribution: Proper planning and close monitoring enabled the society to dispatch it urea as per ECA allocation from plant site to various destinations by optimal use of rail and road mix.

1. Railway: - major part of fertilizer almost 79% is transported through railway line
to the states like Maharastra, Madhya Pradesh, Punjab, Haryana and Uttar Pradesh.

2. Roadways: - the dispatch of fertilizer through roadway is limited to the

state like Gujarat, Rajasthan, Madhya Pradesh, and many other states

Road 19% Rail 81%

Rail

Road

is round around 21%.

Pricing policies: Profit of company mainly depends upon cost of production and price of the products manufactured. KRIBHCO as a manufacturer of fertilizer has very limited role to play in declaring the prices of fertilizer as the price of fertilizer is decided by the government under the Essential Commodities Act (ECA). When pricing of the fertilizer is regulated by government following points are taken into consideration: 1. Cost of production 2. Transportation cost 3. Profit margin

- 58 4. Taxation rate Although the fertilizer manufacturing cost is high, the prices are fixed by Govt. in the form of subsidy to the manufacturer.

Details of competitors
KRIBHCO generally dose not face any stiff competition as the government decides the major parts of its marketing activities. Chemicals and fertilizer ministry of India decides the ratio of sales of fertilizer and chemical in the industry. Generally competition exists in free trade. Some of the competitors of KRIBHCO are: Sr. no 1 2 3 4 5 6 7 8 9 Name GNFC GSFC IFFCO RCF NFL HFC FCL Nagarjuna Chambal

Gujarat Narmada Fertilizer Corporation Gujarat State Fertilizer Corporation Indian farmer Fertilizer Corporation Rashtriya Chemical Fertilizer National fertilizer Ltd Hindustan Fertilizer Corporation Fertilizer Corporation of India -

Generic Level of Competitors: Agricultural minister of India supplies fertilizers, farming equipment, loans and many other facilities to Indian farmer at discounted prices in order to benefit and develop farmer. Thus it also provides rebate to the fertilizer producing companies. Generic level competition exists in terms rebates given to different companies in the industry. These rebates are given specially to make the product affordable for the farmers. Competition even exists in terms of benefits that the fertilizer companies provide farmers in order to sell their product. It acts as a sales promotion activity.

- 59 Competition exists in the mode of supply i.e. through road or rail, those supplying through roads are faster in their transportation and hence deliver the product in shorter period as compared to railway. Finally and most importantly the competition exists in terms of quality of product. KRIBHCO maintains the best quality and hence is a leader in fertilizer industry.

Sales promotions: In modern world there is very strict competition so for stand in the market, strongly sales promotion program is very important. The main aim of sales promotion is to increase the sales and increase the number of customer. KRIBHCO s promotional Programs are carried to farmers field through technically qualified and trained field force under the highly qualified agronomists and managers the major promotional activities consists of the following. 1. Block Demonstration 2. Co-operative conference 3. Krishak Bharti Seva Kendra 4. Crop seminars 5. RGB Members visits 6. Farmer benefits programs. 1. Block Demonstration:In these demonstrations, latest agricultural production technology was demonstrated visa-a visa local practice. The review demonstration were organized on different crops on approximately 100 hectares of land and a large number of farmers visited this plots various other field Programme like farmers meetings etc were organized at the site of these demonstration. Block demonstration was conducted in the state of U.P, M.P, Haryana, Punjab & Gujarat. 2. Co-operative Conference:All the product of KRIBHCO marketed by the co-operative societies, so their mangers and salesmen are trained on better business, fertilizer and other agro- input storage, soil testing etc. A group of 100 participants is trained in each co-operative conference sufficient quality of crop folders and other technical material, provided to each participant for further distribution to farmers through cooperative societies.

- 60 3. Krishak Bharti Seva Kendra The society has established 10 Kendra in the state Haryana and Punjab. These are successfully in operation and through these centers a package of inputs and services is being provided to farmers right at their doorsteps. The society is already in process of establishing 27 more seva Kendras in state of U.P, M.P, Rajasthan, Punjab, and Maharastra. 4. Crops seminars The society organized one crop seminar with collaboration of IIFCO in state of Maharastra. In the seminar, experts I the field of agriculture were invited for expressing their view points. 5. RGB members visit Representative General Body (RGB) delegates are the representatives of Kribhco member society. They act as KRIBHCO spokesperson art various platforms throughout the country. It is in the interest of KRIBHCO to provide maximum information about its programmes to its members. Short study visit of 13 days duration in each term are arranged for these RGB members at Hazira plant or other project site. Advertisement Consumer is the king in the modern market. Without consumer the task of business is incomplete. So consumer must know about the product of company. Now a day, advertisement is the best way to introduce the product to consumer. KRIBHCOs advertising mainly depends upon its customer & their customers are farmers and they are mostly illiterate. So, media gives advertisement in regional language, but in present time farmers are also develop so advertising strategy also taken into consideration. Company gives its advertisement in local newspapers also like Gujarat samachar, loksata, and jansatta, sandesh etc T.V; Radio magazines are also taken as a media for these purpose. Different language like Hindi, Punjabi, Marathi and Gujarati over various stations of all over India radio. For the popularity of KRIBHCO large no. Of holdings & roadside boards are installed on highway, bus pan ness, wall paintings and glow sing at airports have also been installed for above purposes.

- 61 Advertisements have been realized from time to time in the dealing newspapers, and other periodical, special supplements were brought in English, Hindi and regional languages.

Market research
Marketing research is the problem analysis. It learning more about consumers, dealers about marketing mix, preference, quality, and packaging etc are important in marketing research. Marketing research is a continuous process for survived the market or competition it includes product analysis, market analysis, distribution analysis, and competition analysis. Marketing research includes a manufacturer or producer to know what the consumer want, in how much quantity they want, how many of them want particular commodity, how it could be made available and how other customers can be attracted by the producer or dealer. Thus it is an precious tool in decision making based on scientific investigation and analysis of marketing problem. KRIBHCO has separate marketing research department whose basic function is to keep all the primary and secondary data of agriculture and fertilizers. This department keeps all information about the units, production, storage, stocks and sales of the producers and given to the ministry of agriculture. This department keeps in touch with all the state offices and feeds the top management about the position of the company. This department also keeps information about the demanding various regions, helps the distribution department to sent the material where they are prospect of selling it. It also record stock in warehouses and realization of money for materials. Taxes applicable on sales activity:Taxes payable by KRIBHCO being a cooperative Ltd. Is very few and in a small amount. As it provided the farmers with the urea at discounted prices, it is tax-free. A company buying any of KRIBHCO s products for the preparation of

- 62 fertilizers gets it tax-free and if for some other purpose like chemicals or catalysts then it is taxable. Some of the taxes applicable as per conditions are a follows. 1. state sales tax: - this differs and varies from one state to another 2. Central sales tax: - CST is applicable centrally and equally to all the states. 3. Octroi: - this tax is decided by the panchayats of different villages and talukas. Hence is varies from village to village. 4. Freight: - freight is paid according to ECA. 5. Excise: - there is no excise duty applicable on KRIBHCO selling its product directly or indirectly to farmers. But if the same is sold to company for the preparation of some chemical or other than fertilizer then excise duty is applicable.

Forecasting sales plan

Forecasting sales plan is very important activity for marketing a product. And most important part of forecasting the sales plan is to forecast the demand of the product. Before forecasting demand KRIBHCO finds it necessary for the field officer to gain knowledge about: 1. what is the basic product: he should acquire perfect knowledge about the product that includes all its parts, spares, raw material utilized, an over view about the processing of the product and all necessary details. The basic product is urea. 2. Who is the basic customer: field officer should also try to collect information about the basic customer of the product, potentiality of the customer, market from where the customer generally buys his product, etc. the basic customer is farmer Now after knowing the product and customer, officer proceeds with forecasting the demand.

- 63 1. He now tries to know the agriculture land: it is most important to know the land on which the farmer is going to use the urea. This would help in promoting sales by understanding the customer well. 2. He tries to know the cropping pattern of that land and the one that the farmer would adopt. Moreover he also studies the better opportunities or patterns that are more profitable to the farmer. Even know as which drop needs what amount of urea. This would again help in increasing the volume of sales. 3. At this stage he should try knowing the agriculture situations of the village, here he should take care of both the agricultural facilities like the tube wells, canals, farming equipment, tractors, equipments for harvesting, etc. and geographical conditions like the amount of rain and heat, moisture content and fertility of soil, type of land i.e. a plateau or a flat one, etc. 4. Officer should try to gather information about the previous consumptions made by the farmers of the same village, he tries to educate the farmers and there by teaching them about the various benefits of using urea and hence ultimately increase the sales volume. 5. He should try to study competitors performance in the last few years and thus by making a comparison can remove the drawbacks in their promotional activities and even if required then even in quality. Through all the above steps the required information for forecasting the sales can be achieved. Hence company leads to an approximate figure of sales that helps in calculating various other expenses and incomes of the company for the coming accounting year.

Sales procedures:
The sales procedure of the company is followed by its sales promotion activities. Generally they conduct the promotional activities and then the actual sales procedure starts. 1. Educating farmers, generally a farmers meeting is conducted in any village with approximately 400 to 500 farmers. Generally the meeting is conducted through a mediator who may be mukhiya, secretary of a cooperative, or someone who can convince farmers to attend the meeting. Preliminary stage

- 64 includes giving general knowledge about the general farming process and harvesting. They are educated about how fertilizers can really help in producing good and high quality yield of crops. in the secondary stage, the farmers are asked about their process of farming and thus are suggested with corrective measures. They are even given tips for more productive farming. This would help them to get good and more fertile crop. 2. Demonstrations are made for the acknowledging the farmers about the productive use of urea and other fertilizers. They also show the new and productive ways of farming. This would help in creating new buyers. And thus, it would promote the product. 3. Field day is also conducted and all the farmers and villagers are invited to participate in this field day. It gives them opportunity to learn practically by participating in the field. Highest participation is expected to be taken. 4. District cooperative conference is held. All secretaries, presidents, chairmen, are called upon to attend this meeting. During the meeting an expert called from the ministry of agriculture explains them all details about the product i.e. urea. They are given details about the distribution, selling, prices, rebates, taxes, and all necessary information related the product. Report generated by marketing department: Demand forecast. Supply forecast Sales plan. Weekly, fortnightly, monthly, quarterly, half yearly and annually generated marketing reports. Sales promotion reports generated in different time periods.

- 65 -

- 66 -

Production Department
Production is the process by which, raw materials and other inputs are converted into finished products. It involves many functions such as manufacturing process, product and process design, plant layout, inventory control, plant maintenance, etc. KRIBHCO has the Production Department in the Plant Premises and it works in harmony with the Marketing Department and Transportation Department as well as all other departments. It also includes Stores and Purchase Department which take care of all the materials used in the production process.

Introduction to Plant
The KIBHCO Hazira Plant in two phases produces a total of 1.45 million tones of Urea per annum. The main plants consists of two Ammonia plants, each of 1350 MTD capacity and four Urea streams of 1100 MTD capacity. Another necessary supporting facility include Raw material storage, water pretreatment plant, D.M water plant, Steam & power generation plant, plant-air & inert gas plant, ETP, urea storage & product handling plant. The Hazira plant consists of Urea Complex, Ammonia Complex and Offsite Plants which includes supporting facilities.

Production Performance Ammonia Year Qty 1995-1996 1996-1997 1997-1998 1998-1999 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 (in lac MT) 10.50 9.86 10.80 9.39 9.47 9.63 9.90 9.92 11.17 10.92 Urea Year 1995-1996 1996-1997 1997-1998 1998-1999 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 Qty (in lac MT) 17.22 15.40 17.72 15.17 15.57 16.31 16.94 16.03 17.73 18.06

- 67 Under the overall national planning for utilization of natural Gas/associated gas located in Bombay high and south bassein in the west coast of Bombay and gigantic program for new generation of fertilizer units was envisaged for implementation. The Hazira fertilizer complex was conceived in early 1978 and Krishak Bharti cooperative Ltd. (KRIBHCO) was formed jointly by IFFCO and government of India and about 490 cooperative societies to own and operate the projects with an investment of about Rs.950 corers. KRIBHCO started functioning as another largest cooperative society from November1980. it was planned to install two ammonia plants of capacity 1350 tone per day each (Reassessed to 1520 MTPD each from 1.4.2000) and four urea plants of capacity 1100 tone per day each (Reassessed to 1310 MTPD each from 1.4.2000). The consultants for the Ammonia plants are M/s. Kellogg supported by M/s. fact engineering and design organization (FEDO) as subcontractor. The consultants for the urea plants are M/s. snamprogetti, Italy and M/s. project & development Ltd. (PDIL) as co-consultant. The consultants for steam generation plant, power plant and other offsite facilities are M/s. Development consultants Pvt. Ltd. (DCPL). The zero date for the project was 31 st march, 1981. Trail production of Ammonia and urea plants started in November 85. Date of commercial production was 1.3.1986. Forecast production plan: Based on their availability of raw material, based on their yearly shut down & based on their any unfortunate shut down, they generally fixed or forecast their target f production department. Major modification:1. Purge gas recovery plant was commissioned in July 89 (date of stabilized commercial production) resulting in additional Ammonia production of 115 MT/day and savings in specific energy consumption by 0.1333 MMKcal /MT Ammonia. 2. Ammonia plant optimizer was commissioned in November92 and March93 in unit-I and unit-II respectively resulting in energy saving of 0.616% (avg. of plants).

- 68 -

3. Ammonia converter retrofit was completed in Ammonia unit-II and Ammonia unit-I in Dec 93 and March95 respectively. The GTR of unit-I was done in April95. This modification resulted in increase in Ammonia concentration of converter output from 14.5% to 19.5%. As a result the average energy saving of about 0.258 MMKcal/MT of ammonia has been obtained. 4. Urea-21 CO2 compressor revamped in may2000 by changing the rotors, impellers and diaphragms for all 3 casings. Intercoolers and separators of the 2nd and 3rd stages also replaced for higher load operations. This has reduced power consumption in CO2 compressor by 1478 KW. 5. The scheme for modernization of urea plants was implemented after survey and audit by M/s snamprogetti to improve the energy efficiency and urea product quality. The scheme involved installation of MP pre-decomposer and vacuum pre-concentrator with dedicated vacuum system. The scheme was implemented in Jun 2001. This has resulted decrease in steam consumption of 132 of urea.

- 69 -

Organizational chart of production department Operations Directors

G.M Production Technical

G.M Maintenance

G.M P&A

G.M F&A

G.M

Chief Manager Ammonia

Chief Manager Urea

Chief Manager Power / Offsite / HAEP

Sr. Manager Ammonia I Manager

Sr. Manager Ammonia II Manager Dy. Mgr. / Sr.Engr./Engr. Ch. Optr. / Sr. Optr. / Optr.

Dy. Mgr. / Sr.Engr./Engr. Ch. Optr. / Sr. Optr. / Optr.

- 70 -

Information regarding process route for each plant / product

Name of plants/product 1. Name &sources of Raw material Ammonia natural gas from Bombay Ammonia & CO2 high/south bassein after Sweetening, LPG extraction And c2-c3 extraction (at IPCL Gandhar from Jun 2002) Through M/S GAIL. urea

2. Name & sources of Utilities: Steam (*) Electricity power Backup from Water Internal generation with Backup from SGP from captive power Plant with backup from G.E.B Through canal from kakrapar weir (**)

I) name of process II) Plant designer

steam reforming of N.G MW Kellogg Co. USA

Ammonia stripping snamprogetti Italy.

(*) Steam generation boilers were converted on dual fuel (Natural gas & natural gas liquid) (**) in view of Gujarat irrigation departments notice for stopping the supply of water through canal from April92, an alternate source of water supply i.e. supply through pipeline from kakrapar weir is also installed.

Ammonia Urea Bio-fertilizer

Plant-1 1520 MTPD 1310 MTPD - -

Plant-2 3040 MTPD 5240 MTPD 250 MTPA

- 71 (Per annum)

PLANT DETAIL:-

Plant Layout

- 72 -

Ammonia Plant Layout:Natural Gas DeSulphurisation

Steam

Primary Reformer

Secondary Reformer
(N2)

HT&LT Shift Conversion

Ammonia Synthesis

Syn Gas Compressor

Unconverted Syn gas

Methanation

CO2 absorption

Ammonia Chilling

Ammonia Separation Excess NH3 to Storage Ammonia

CO2 Stripping

CO2

UREA PLANT

Urea Plant layout:-

CO2

CO2 Compressor

- 73 -

Liquid Ammonia

Ammonia pump

Ejector

Urea Reactor Stripper M.P Decomposer L.P Decomposer Vaccum Section

M.P Absorber

Carbomate Condenser M.P Condenser L.P Condenser Waste Water Recovery Section

Prilling Tower Waste Water Urea to Silos Bagging

Process description Ammonia plant

1. Main section

- 74 The steam reforming Ammonia process involves the following basic steps: I. II. III. IV. V. VI. VII. Desulphurization Steam reforming Shift conversion Carbon Dioxide removal Methanation Ammonia synthesis Refrigeration system

I. Desulphurization a) The purpose of desulphurization is to remove sulphur from the natural gas. Sulphur is poisonous for the catalyst used in Ammonia plant and hence its removal is essential. b) Desulphurization is accomplished in reactor by sending natural gas mixed with a small quantity of hydrogen (from make up gas) at a temp. Of 395 c over bed of comox (cobalt and molybdenum) catalyst and two beds of zinc oxide catalyst. c) The chemical reactions involved are: RSH+H2 = H2S + RH (COMOX bed) H2S + ZnO= ZnS + H20 (zinc oxide bed) d) Thus over a period of time the entire amount of zinc oxide catalyst will get converted to zinc sulphide and a new catalyst has to be charged. e) The sulphur content of natural gas is thus reduced from 10 ppm to less than 0.25 ppm. II. Steam reforming a) The steam reforming of hydrocarbon feedback to syn gas production is carried out in two catalyst reactions stages. The first stage, called primary reforming, produces a partially reformed gas containing approximately 10 % by vol. Of methane (dry basis) and in the secondary reformer this gas is further processed to achieve to methane content desirable for syn gas production approximately 0.3% by vol. (dry basis). b) Desulphurised natural gas is mixed with steam in the ratio of 3.45: 1 and the mixed gas is then heated in the convection section of primary reformer

- 75 to a temperature of 460c before entering the catalyst tubes (containing Nickel catalyst) in the radiant section of the primary reformer. c) Hydrocarbons in the natural gas (methane above 90% ethane, propane, butane etc.) react with steam to give hydrogen, carbon monoxide, carbon dioxide according to the following reactions: CH4+H2O =CO+3H2 Endothermic (heat require) CH4+2H2O =CO+4H2 d) Since these reactions are endothermic, the heat required is supplied by burning a mixture of natural gas and purge gas from the synthesis loop in a series of burners installed at the roof and walls of the radiant section. e) The outlet gases from the primary reformer with a methane content of about 10% in enter the secondary reformer at a temperature of 800 c. f) In the secondary reformer these gases are mixed with the stochiometric quantity of air (sources of nitrogen), which supplies oxygen for the combustion of partially reformed gas. g) The combustion heat utilized to complete the reforming reaction over the nickel catalyst bed in the secondary reformer. Thus the methane content of the gases is reduced to 0.3 % and the temperature increased to about 985 c.

III. Shift Conversion a) Carbon Monoxide is converted into carbon dioxide in two-section i.e. HT shift conversion and LT shift conversion. b) The gases coming out of the secondary reformer at a temperature of about 985 c are cooled in Waste Heat Boiler (which produce most of the steam require for the Ammonia plant) and enter high temperature shift converter at a temperature of 350c. In the presence of iron chromia catalyst carbon monoxide reacts with the steam to form carbon dioxide and the hydrogen according to the following reaction. CO+H2O = CO2+H2 Exothermic (Heat liberated). c) The reaction being exothermic, the temperature of the gases increases to 405c. The gases are cooled to 203c to generate high-pressure steam in

- 76 a waste heat boiler, to heat the methanator feed and preheat boiler fed water in separate heat exchanger. The gases are then introduced in low temperature shift converter containing and copper zinc catalyst. The same reaction as about takes place and about 99.7%of carbon monoxide is converted to carbon dioxide. d) Two different reactors and temperature levels are used to take maximum advantage of higher reaction rate at higher temperature and higher conversion at lower temperature. IV. Carbon Dioxide Removal a) Carbon Dioxide, the raw materials for urea is removed in this section and sends to the urea plant. b) The gases leaving L.T. shift converter at around 221c are cooled to 94c and the unreacted steam is condensed and removed. c) The process use for removal of carbon dioxide is low heat Ben field process with the following features: Absorption is accomplished in two stages with lean, semi lean Ben field solutions consisting of potassium carbonate and diethanolamine as the main absorbent and vanadium pent oxide as a corrosion inhibitor. The gases leaving absorber at the temperature of about 70c contain a maximum of 0.1%carbon dioxide on dry basis. Rich Benfield solution from the bottom of the absorber at a pressure of about 28kg/cm2 is sent to the top of CO2 striper through hydraulic turbines which are coupled to semi lean solution pumps their by reducing the power consumption for semi lean solution pump drivers. Rich Ben field solution is flashed of at stripper top thus yielding a pure CO2 product. As in the case of absorber, the stripper design is also based on operation in two stages. In the upper section, rich Ben field solution is partially stripped of the dissolved CO2 by up flowing vapor and a major portion of semi lean solution is withdrawn from the middle point of the stripper and is pumped to the middle of absorber.

- 77 The balance of semi lean solution comes down to the bottom of stripper and the further stripped by the up flowing vapors processed in solution regenerator. The lean solution withdrawn from the bottom of stripper is cooled and pumped back to the top of absorber.

IV. Methanation a) The gases leaving CO2 absorber contains traces of carbon

monoxide and carbon dioxide which are highly poisonous to synthesis catalyst in amm converter and hence these are converted to methane in methanator in the presence of Nickel catalyst at a temperature 285 to 305c. b) The reaction that occurs is : CO + 3H2 = CH4 + H2O Exothermic CO2 + 4H2 = CH4 + 2H2O Exothermic At exit of methanator pure synthesis gas containing N2 and H2 in the ratio of 1:3 has a CO+CO2 contain of less than 1 PPM VI. Ammonia Synthesis The synthesis gas containing nitrogen and hydrogen in the volumetric ratio of 1:3 is compressed in a turbine driven centrifugal compressor from 28.5 kg/cm2 to 185kg/cm2. The compressed gas is preheated by heat exchange with converter effluent and is passed over iron oxide catalyst where about 17% ammonia is formed. The unconverted gases are mixed with make up synthesis gas and after removal of ammonia product are recycled over the ammonia converter containing the iron oxide catalyst. The ammonia formed in this section is chilled and separated.

VIII. Refrigeration System a) A four-stage ammonia refrigeration system provides

refrigeration for ammonia condensation in the synthesis loop and the ammonia vapors generated in the ammonia storage tank due to normal heat leak.

- 78 b) The refrigeration compressor consist of two cases centrifugal

compressor with inter coolers, a refrigerant condenser, a refrigerant receiver and four flash drums. c) The refrigeration system is designed to deliver the ammonia product as liquid at 33c. This temperature is chosen because it permits the storage of liquid ammonia at atmospheric pressure.

- 79 -

PROCESS DESCRIPTION
1. Main Sections i. The production of urea by ammonia stripping process involved ii. Synthesis Purification and Recirculation Concentration and Prilling the following steps.

The stripping process for production of urea is based on Henrys

laws. According to this law the concentration of component in the solution while in equilibrium with the vapor phase is directly proportional to the partial pressure of that component in the vapor phase. The increase in partial pressure of ammonia over the ammonium carbonate solution reduces the partial pressure of carbon dioxide and hence ammonium carbonate solution decomposes to increase the partial pressure of carbon dioxide in vapor phase to approach equilibrium concentration. 2. Synthesis Urea is produced by synthesis of liquid ammonia and gaseous carbon dioxide at a temperature of about 190deg. C and pressure of 160kg/cm2. 2NH4 + CO2 = NH2 COO NH4 Exothermic (Heat Liberated) Ammonium Carbamate NH2 COO NH4 = NH2 CO NH2 +H2O (Slightly Endothermic)

- 80 Urea iii. Liquid Ammonia from ammonia plant is pressurized to 240

kg/cm2 and is used as a driving fluid in the Carbamate ejector for recycling the unconverted ammonium Carbamate into the synthesis reactor. Carbon dioxide is also compressed to synthesis pressure in a centrifugal compressor and fed to synthesis reactor. iv. In the synthesis reactor ammonia and carbon dioxide react to form ammonium Carbamate, urea and water as shown above. Although the first reaction is spontaneous and complete, the conversion of ammonia carbonate to urea is only partial (about60%) thus leaving unconverted ammonium Carbamate, urea and water at the reactor outlet. v. The effluents from the reactors enter the stripper, which operates at the same pressure as the reactors. Here the ammonia stripping process achieves the decomposition of ammonium Carbamate into ammonia and carbon dioxide and the heat of decomposition is supplied by steam. vi. The overhead gases (ammonia, carbon dioxide and water vapor) from stripper are condensed in the weak Carbamate solution in the Carbamate condenser at synthesis pressure. The heat of condensation is utilized to produce low-pressure steam in the sell side of the condenser. The Carbamate solution so formed is recycled to the synthesis reactor through Carbamate ejector.

3. Purification and Recirculation vii. The purification of urea and further circulation of unconverted

ammonium Carbamate take place in two stages operating at 16kg/cm2 and 4.5kg/cm2 respectively. viii. Each stage consists of a decomposer where further decomposition take place on account of pressure reduction, a separator where the gases and urea solution are separated and condenser where gases are dissolved in the weaker Carbamate solution from the subsequent stage.

- 81 ix. The society has also installed pre-concentrator and pre-

decomposer to reduce the energy consumption and to reduce the vacuum load. x. The concentration of urea is thus increased to about 80% and almost the entire quantity of converted ammonia and carbon dioxide is recycled back. 4. Concentration and Prilling xi. The urea solution is further concentrated to 99.75% in two

vacuum concentrators operating at 0.3kg/cm2 abs and 0.03kg/cm2 abs pressure. The concentrated urea solution is pumped to the top of Prilling tower from where it is sprayed in to the Prilling tower through a Prilling bucket. The drops of urea encounter by cold airflow and get solidified in to prills. The urea prills are sent to the bagging plant or at urea silo by belt conveyors.

- 82 -

MATERIAL DEPARTMENT

PURCHASE

STORES

RECE IPT SECTION SECTION

CUSTODY SECTION

DISPOSAL

Spare Section

Scrap Section

Material Handling

Transportation Thus, customers are the aim of any business. The most important task of any business unit or organization is to fulfil customers needs by providing them product or service on right time, price and place. Customer satisfaction is the success of any organization. For that material should be, reach on it is desired Place on right time and this is possible only by any Transportation facility. Transportation is link between customer & organization. Transportation is a most important function of any organization. In KRIBHCO, Transportation alone accounts approximately 80% of the total marketing cost. Hence, it requires utmost attention, careful planning and judicious

- 83 approach in finalization of transport contracts. In order to bring down the marketing expanses, KRIBHCO is transporting its products (urea) by rail and road. Rail dispatches on an average contributes 75% while road dispatches are 25% of the total urea produced and dispatched from plant. The Road Transportation from plant is presently undertaken for the states of Gujarat, Maharastra, and M.P & Rajasthan. These states fall in economy zone where road transportation is cheaper as compared to rail. Dispatch instructions (DIs) are given only to such destinations where transportation by road is comparatively cheaper than rail. Hence, annual contracts for road transportation for above states are performed. The cheapest transportation mode is selected for dispatching the material to the respective places. The production of the plant is more than 100%. For commercial sale the price is Rs.7200 per metric ton, and for agricultural purposes its Rs.4800 which is subsidized and sales tax free rate. There are 2 Silos where the materials can be stocked for 1 month. In Gujarat on average, an everyday 80-ton is dispatched. The economic zones are Maharastra, MP, and Rajasthan, which touch the boundary of Gujarat. The documentation should reach the consignee before the consignment reaches the consignee. The document which is of prior importance is RR (railway receipt-railway), BL (bill of lading-Ship), AB (Airway bill-Air), and LR (Lorry receipt-Road). The product is sold at fixes rate throughout India. There are two types of transportation subsidy and the other one is gives by FICC. Government fixes the retention price, which is cost of production given by the government. The production is controlled according to FCO standards that are fertilizer control order. ZUAVARI AGROCHEMICAL (BIRLA GROUP) At KRIBHCO, distribution of the material is performed by Transportation Department. 70% of total transportation is done by Rail & 30% are by Road. KRIBHCO have their own jetty but mostly their market is domestic so sea transportation is not so useful for them. No materials are dispatched from ship. So, we can say that the transportation at KRIBHCO; Transportation at KRIBHCO

- 84 -

70% Rail

30% Road

Thus, transportation Department does many functions but the main functions of this department are following Preliminary Transportation Linked between Production, Marketing & Finance Direct Selling of excisable product. Maintenance of Track, Station, Wagons etc.

Purchase Department
Purchasing is one of the basic functions of Inventory Management and forms a major part of it. W hat to buy, when to buy, where it buy, how much to buy, how much to pay and how much to stock are the fundamental of the Inventory control. It also involves creative functions such as development of new resources, introducing new materials and sources in the undertaking etc. It needs considerable expertise not only negotiating but also in the techniques of competition and studying of economic trends in respect of materials to be purchased in large quantity. Every rupee saved by the good purchasing goes directly in to the profit for the simple reason is that it is not spent at all.

Objectives of Purchasing: The objective of Inventory purchasing can be enumerated as follows:

- 85 -

o To Maintain Continuity of production, o To contribute to the competitiveness of the end product, o To contribute towards higher productivity, o To buy for the best ultimate value not necessarily at the lowest initial price, o To contribute towards standardization, variety reduction and value analysis programs, o To increase profits through effectiveness in purchase contract.
The scope of purchase in KRIBHCO includes the following ,

o Capital items, like plant and machinery, office equipment, furniture and fixtures etc. o Raw materials and semi finished goods. o Consumable items like tools, oils and lubricants, office stationery etc. o Spare parts. o Items for repairing and maintaining the capital items. o Contract / agreement for clearing, handling, loading and transportation of incoming
/ outgoing materials.

o Rate contractors for procurement of casual lab ours and for maintenance of plant
and township buildings.

o Contract for construction of civil, structural, mechanical, electrical, instrumentation,

insulation and painting etc.

o Contracts for hiring of vehicles. o Contract for running of canteen / guesthouse. o Rate contracts for procurement of laboratory, glass wares/chemicals etc.
Existing Purchase Procedure in KRIBHCO To study the existing purchase system, the purchase procedure followed by the purchase department have been analyzed and evaluated on the basis of observation and discussions with concerned personnel of KRIBHCO is as follows:

1. Responsibilities of the purchase functions are, The purchase department issues the material manager purchase orders/ contract after the approval of the competent authority. The purchase function in other offices (like head office at NEW DELHI and its various branch offices) is headed by the single officer designated

- 86 for that purpose. The indenters from various departments are issuing inquiries, inviting bids, entering into correspondence or negotiation with vendors / contractors. All requisition for purpose is duly processed in accordance with procedure laid down, which is forwarded to purchase department for necessary action.

2. Registration / Selection of Suitable Vender: Purchase department is responsible for developing a list of approved vendors for various types of materials and service as per procedure. An advertisement is issued in all the leading news papers inviting applications in the prescribed Performa for registration of suppliers and contractors for listing out of various types of purchase and service that are likely to be made during the next three to five years. The application received are scrutinized by a committee consisting of a representative from technical, finance and purchase department nominated by General Manager and ascertained the resources, capacity and quality of workmanship of the vendor. The committee also calls the vendors and contractors for personnel discussion and clarifies the applications and obtains such other information as may be considered necessary by the committee. The list of approved vendors and contractors as to be up dated at least every five years by issuing a press advertisement.

3. Requisition to Purchase: The indenters from various departments are raising a requisition called the Material Purchase Requisition (MPR) for purchase in the prescribed Performa. It should be ensured that the requisition for purchase is completed in all respect with regard to. (a) (b) (c) (d) (e) (f) (g) Description of the material / equipment / scope of work. Material of construction / specification. Temperature / pressure / standard if anywhere applicable. Quality and chit of measurement. Date when delivery of material / service is required. Estimated value and budget head. W hether item is a stock item / non - stock item and fast moving / slow moving. The requisition for purchase of stock items is raised by the stores department after the quality in stock-.has reached the re-order level as determined for the respective items. Such

- 87 requisition amongst other-particular also indicates the minimum, maximum and reorder level, the date on which last supply was received and average consumption per month since last purchase. The requisition for purchase of non-stock items is invariably routed through the stores department which indorses on the requisition the availability / non-availability. In case item is available the quantity thereof is indicated on the purchase requisition and the quality to be purchased is adjusted by the materials manager in consultation with the indenter. All requisitions for purchase of materials or for award of work is raised by respective departments. The department manager ensures the following particulars in the purchase requisitions. (a) (b) (c) (d) The budget provisions. The amount utilized up to the previous requisition. The estimated value of the present requisition and The balance available under the budged head after booking the present requisition. The requisition is submitted to the competent authority for approval of purchase after filling the above information. After the approval of requisition, the same is passed on to the purchase department for inviting bids.

4. Purchase Function after Receipt of MPR: To enter requisition in indent register, the requisitions are checked for specification, quality, code numbers, budget heads etc. This number is entered on all the four copies of indent, one copy is for action by purchase department, second copy is sent to Finance department, third copy is returned to indenter, and fourth copy is retained in the purchase department's master file. 5. Floating Inquiries: Purchase department issue inquires to approved vendor or press advertisement depending upon value of purchase which is followed as per the following guideline.

Estimated value of purchase Minimum of vendors to Minimum No. of bids order / work order/contract whom inquiry to be issued to be obtained.

- 88 5 Exceeding Rs 20 ,00,000/` All suppliers on the approved list UptoRs.20,00,000/3 3

This has been prescribed by the KRIBHCO so that a healthy competition amongst bidder to procure materials at the most economical price. Quotation Comparison Statement: At this stage a statement called Quotation Comparison Statement (QCS) is prepared by the purchase department. Then after the bids lowest in value is rated in the QCS as lowest (L1), second lowest (L2), Third lowest (L3), etc. The purchase department sends the QCS to the indenters and tender committee for review and recommendations.

6. Purchase Order / Work Order: The recommendation of the tender committee is routed though the finance department to enable them to record the value of commitment in the budget records confirms availability of funds under the approved budget and also record financial concurrence. As soon as the recommendation of tender committee is approved by competent authority, the purchase department issues purchase/work order to the recommended successful bidder. The purchase the plant/stores. On receipt of materials at plant site/stores, the stores department will fill up the store receipt voucher and arrange the inspection from the inspection department or indenters, as the case may be necessary. 7. Terms & Conditions: The existing purchase procedure gives fair chances of competition to all the vendors. It leaves no room for malpractice of favoritism of employee. In time of urgency of requirement, necessary deviations are approved by competent authority so as to avoid stoppage of work. The procedure is based on democratic way of working. Good suggestions to improve department is responsible for following up of the purchase

order/contracts with vendors and transporters until the material is reached and accepted at

- 89 efficiency are always considered. Various annual rate contract, running contracts are entered for regular consumable items, like oil and lubricants, stationary, chemicals, medicines, printing job etc. This is reducing the repetitive job times and money of company.

STORE DEPARTMENT

OBJECTIVE:
To render materials service to the organization by receiving, issuing the materials, preserving the materials which in custody, disposing the scrap/surplus materials.

- 90 -

FUNCTION:
To receive all types (i.e. stock & non stock) materials, to arrange inspection of materials. To keep materials safe custody, issue of the materials to user department. To initiate action for procurement of stock items, custody & issue to user departments. Disposal of non-moving items/surplus items & scraps. Raising indent for hiring services of contractor for material handling, transportation, grass cutting etc.

STORE DEPARTMENT IS ALSO DIVIDED INTO THREE SECTIONS:

RECEIPT SECTION CUSTODY SECTION DISPOSALSECTION

- 91 The stores have about 64663 Nos. of items out of which about 1800 items are stock items. Stores initiate the procurement action of stock items. The store is spread over in 02 lakhs sq. Mtr. Of space out of which 12000 sq. Mtr. Is covered area. Normal working hours of stores is general shift hours. However, in case of shut down, emergency service of stores is made available as by the user departments.

RECEIPT SECTION
Main Function of section;

To arrange copies of purchase order/work order and amendments thereof for ready reference.

Receiving of materials checking and arranging for inspection. Documentation SRV (Store Receipt Voucher) Handling over of accepted materials to custody section Accounting / segregation of rejected material. Follow up with handling contractor and transporter. Processing bills for services availed. Assisting for dispatch of equipment and machinery. Maintaining of Imp rest and cash purchase activity. Declaring consignment to the under writer for insurance cover. Reply of various work related queries / to provide required information to other department.

TIPS FOR PROPER FUNCTIONING OF RECEIPT SECTION; While receiving the material goods are being received

- 92 Door delivery basis directly from the supplier Through registered post parcel / V.P.P. Through courier Through transporter directly Through bank

A. CHALLAN / INVOICE NAME OF SUPPLIER (ABC & CO.) CHALLAN NO. DATE ORDER NO. & DATE QTY./UNIT UNIT PRICE VALUE

NAME OF BUYER (KRIBHCO) S. NO. ITEM CODE /DESCRIPTION

Other details like T.C. / G.C. / W.C. / payment terms & other conditions SIGNATURE OF RECEIVER SIGNATURE OF SUPPLIER

POINTS TO BE TAKEN CARE PO NO. Description Quantity weight / nos. /measurement TC/WC/GC & other documents as per PO. Sign. Of supplier Condition of goods

A. CLEARING OF CONSIGNMENT FROM TRANSPORTERS / COURIER RR /LR /PWB /GR NAME OF TRANSPORTER R.R. NO. DATE

- 93 CONSIGNEE COPY / DESTINATION COPY / CONSIGNOR COPY / EXTRA DELIVERY CONDITIONS: NAME OF CONSIGNOR (SUPPLIER) & ADDRESS NAME OF CONSIGNEE (BUYER) & ADDRESS BOOKING PLACE PACKAGES DESCRIPTION DELIVERY PLACE WEIGHT MR PAYMENT DETAILS INSTRUCTION TO PAY/PAID/ TO BE BILLED

INSURANCE DETAILS: RECEIVED BY SIGN. OF CONSIGNOR SIGN. OF BOOKING PERSON

OTHER CONDITION ON OVERLEAF POINTS TO BE TAKEN INTO CARE Invoice / challan PO NO. Description of material Quantity weight /nos. / measurement TC /WC/GC & other documents as per PO. Sign. Of supplier Condition of goods

CUSTODY SECTION
Main function of section; 1. Codifying all the items with 9+1 digit code structure. 2. Receiving & posting of accepted materials against SRV and storing at proper location 3. Preservation of material during storage period.

- 94 4. Stock Verification reconciliation of stock with management approval. 5. Issue of material to the User dept. / Contractor as and when required. 6. Maintenance of records and accounting for each transaction. 7. Verification of Material statement for the material issued against various work orders 8. Reservation of stock for various schemes 9. Accounting of Loaned material. 10. Preparation of MPRs for stock controlled items. 11. Review and fixing of stock level for stock control items. 12. Direct receipt of bulk materials like steel/ oil/ cement and stock items gases to avoid double handling. 13. House keeping of the entire covered area under stores 14. Receipt of materials through ISRV from dept /contractors

STORES FLOW DIAGRAM

RECEIVING MATERIAL FROM VENDORS & OTHER UNITS. PROV. INSURANCE CLAIMS, OCTROI FORMALITIES RETURN OF REJECTED MATERIALS TO VENDORS & DESPATCH OF MATERIALS FOR REPAIR J FORM FOR CONTRACT OF MATERIALS HANDLING & TRANSPORTATION TO PURCHASE DEPARTMENT

- 95 -

RECEIPT SECTION
RETURN OF MATERIAL THROUGH SRV

INSPECTION OF MATERIALS SRV ACCEPTED MATERIALS

MPR FOR STOCK ITEM TO PURCHASE

CUSTODY SECTION

ISSUE OF MATLS.TO
USER DEPTT. PRESERVATION OF MATERIALS

SCRAP FROM PLANT

HANDLING OVER SURPLUS MATERIALS FOR DISPOSAL TO

DISPOSAL SECTION

DEL. OF MATERIALS SOLD TO SUCCESSFUL BIDDERS

(THROUGH MSTC)

PROCEDURE FOR RECEIVING THE ACCEPTED MATERIAL IN CUSTODY SECTION

A) The materials are received in custody section through two sources mainly. From receipt section through SRV and; From user dept through ISRV (Material once drawn from stores and not consumed can be returned to custody till it is further required for consumption).

- 96 -

1) If the material is received through SRV, i) SRV for receipt of accepted material will be checked for special remarks for storage condition (if any) & taken into custody. ii) The appropriate location for the material will be selected/arranged. iii) The material will be shifted to the selected place of its storage. iv) The material will be stock charged i.e. taken into account by posting in compute 2) If material is received through ISRV, i) SIV reference no. & date (when this material was drawn). ii) Reasons of return. iii) % Value of material indicated by user or not. iv) If it is repaired & returned to stores. v) Condition of material. B) Quantity mentioned in ISRV is checked with quantity received by stores.

PROCEDURE FOR RECONCILIATION OF INVENTORY STATUS

It is a system for identifying the unwanted inventory and the deviation in physical stocks for reconciliation of the stock and maintaining the accuracy in management reporting system for inventory status.

- 97 All items in stocks are to be physically verified once in a year so that necessary adjustments can be made in stocks after obtaining necessary approvals from competent authority. PROCEDURE

Every item will be verified under perpetual type of inventory verification system once in a year. The finance or their representative of nominated hired agency will prepare the group wise list of the items. On hand quantity against the individual item will be noted with their respective location. The physical stock is then verified with the representative of stores dept. The deviation will be checked, scrutinized and sorted out. The final list of unsettled item with deviation in quantity will be prepared. Management approval for write-off / write on the stock is obtained. Stock is adjusted through a voucher- SAV

PROCEDURE FOR MATERIAL ISSUE

Issue of material to user dept for its end use / consumption in plant /outside plant like township against authorized issue vouchers. Issue of material to contractors against work orders / contracts against authorized issue voucher.
Materials are issued within the specified time period i.e. 9.00 AM to 12.00 noon. In case of emergency, materials can be issued depending upon the merit of the case.

Materials are issued against SIV format signed by authorized persons. SIV will be checked. Indication for type of transaction will be checked on SIV Quantity on hand and location of the item will be noted on the SIV for respective item. Quantity to be issued is decided based on type of material required.

- 98 If required materials is stock item, then quantity issued is depending on stock available & may be even less than demand quantity to maintain service level for various other user dept If required material is non-stock item, it can be issued full (i.e. equal to demanded quantity). If required material is material is from reserved material category, then it can be issued to maximum quantity kept reserved for that particular dept. Material will be issued for the decided quantity-obtaining signature & name of the drawer for its physical receipt.

Quantity issued for the item will be posted to update the stock position.

DISPOSAL SECTION
The various function of disposal section; To receive surplus material, scrap, unserviceable stores. It is ensured that scrap materials are properly located / stored for fetching good price. Coordinating activities of declaring items as surplus / obsolete, fixing of reserve price for their disposal and obtaining management approval for their final disposal. Initiating appropriate disposal action through press tender /limited tender, public auction or through a Govt.agency (MSTC) hired for disposal on Kribhco behalf. Arrangement with Govt.Agency for their services in disposing off materials. PURPOSE To describe the steps involving in handling, storage & disposing off these type of items to only such customers who are authorized by pollution control boards so that money blocked in such types of items can be realized as soon as possible & at the same time to protect the environment.

- 99 -

PROCEDURE: 1) Disposable material will be received from following sources; a) Used / spent catalyst from plants. b) Used / spent oil from plants. 2) Hazardous waste will be made to stock charge in disposable category. 3) This type of waste is stored in a designated area for this purpose. This is hard paved area separated from area where other disposable materials are stored. 4) All the three items of hazardous waste are stored at separate location in the hazardous waste area & board are displayed indicating the name of hazardous waste 5) All the other steps for disposal as defined in the same except that before issuing the sale order permission from pollution control board is sought through Lab. Dept, to dispose off to a particular customer who is having valid certificate from pollution control board for receiving, storing, handling & disposing of hazardous waste. 6) In case of disposal of hazardous waste through MSTC, the procedure will be followed as given. Also pollution control boards permission will be sought as mentioned above-5

PROCEDURE FOR DISPOSAL OF SURPLUS ITEMS AND SCRAP (NON HAZARDOUS)

PURPOSE; To describe the steps involved in disposing off the items so that money blocked in such types of items can be realized as soon as possible. PROCEDURE;

- 100 1) Disposable material will be received from following sources; a) Surplus inventory from custody section. b) Obsolete / scrap / waste from various user deptts. In the format. 2) A committee is constituted for the review either of its alternate use or suggesting the disposal action with appropriate reserve price. 3) Approval will be obtained for the competent authority for disposal. 4) Consolidated list of disposable items shall be prepared & forwarded to METAL SCRAP TRADE CORPORATION, vadodara.(agency appointed for disposal of Kribhco materials) 5) M/s.MSTC will invite the tenders on Kribhco behalf as per their laid down procedure. Our representative shall attend the tender opening at M/S. MSTC. M/S. MSTC will prepare the QCS and recommend the vendor to whom disposal to be made for Kribhcos approval we shall study the proposal and if in order will get necessary approval from competent authority for disposal of item. It shall be communicated to M/S.MSTC who will issued sale order / delivery order as per their procedures. 6) M/S. MSTC will forward a copy of sale order / delivery order in the format 7) Remittance of sale proceeds will be done by M/S MSTC only after receipt of such remittance, physical delivery of material would be made. 8) On execution / or completion of sale order statement of accounts will be forwarded by stores to accounts for final settlement of vendors account 9) Closure of sale order 10) In certain cases disposal may be done by Kribhco itself. All the steps mentioned above will be followed except the M/S MSTC will not involve in such transaction.

Inventory Management
The dictionary meaning of the word Inventory means stock of goods. In the financial terms, Inventory means the value of raw materials, consumables spares, work in process, finished goods, and scrap in which company funds have been invested.

- 101 It can also be identified that Inventory are those goods which are placed, stored and used for day to day functioning of the organization. Thus Inventory can be defined as an ideal resource of any kind having an economic value.

TYPES OF INVENTORIES
Inventories can be classified in terms of its different uses, which will enable one to appreciate the peculiarities and problems in its uses. Secondly the differentiation based on uses of inventories will enable one to adopt control techniques to suit the needs. Inventories are classified according to uses and point of entry in the alteration is as follows: o Raw Material o Stores, Spares and Consumables o Work in Process Goods and o Finished Goods

Raw Materials:

Raw materials are those basic input materials that are converted into finished product through manufacturing process. The importance of raw materials can be easily visualized when any break in its supply will keep the production lines idle. There are two important factors, which determine the size of raw materials Inventory. o Consumption rate; o Importance of item.

- 102 Under the head of the raw material maintained in KRIBHCO is Carbon Dioxide and Ammonia which are obtained from the Natural Gas.

Stores and Consumables: o Consumables: There are the materials which act as catalysis in the production
process and are not directly found in the output. This enables the production process to function smoothly. In KRIBHCO, various chemicals like HCL, NaOH, K2CO3, DEA, V2O5, H2SO4, Alum, Ferrous Sulphate, etc., fall under this category. It requires different treatment of Inventory control than raw material.

o Spares: Spares form an importance class of inventories by themselves. Their

consumption pattern defers from that of raw materials, consumables and finished goods, consequently the stocking polices are different necessitating special methods for solving their peculiar Inventory problems. KRIBHCO is having a huge store of specialty spare parts which can not be usually available in short time. To avoid break down in plant due to fault in spare parts, the KRIBHCO is maintaining huge stock of spare parts, from a small circuit board and bearing to a large engines, since the time of its commence.

o Work-in-Process Goods: They represent products that need more work before
they become finished products for sale. Work-in-process goods acts as a buffers within the manufacturing sub-system, which may consist of group of machines and assembly lines, i.e. work centers. The raw material passes through the work center for final production. Since KRIBHCO producing using continues process plant, it having very less work-in-process inventory.

o Finished Goods: Finished Goods is the final or stable products which act as a
buffer between the production department and marketing department. The level of inventory depends on the production and behavior of the market. Normally these inventories are controlled by the Marketing Department. Urea is the final product of KRIBHCO. KRIBHCO have two silos each capacity of 45,000 MT for storing Urea. The Inventory Control includes controlling while purchasing through implement proper purchasing policy and a good system of warehousing. This includes controlling

- 103 through controlling inventory ordering costs, carrying costs, capital costs, storage space costs, risk costs, etc. Let us understand purchase procedure of KRIBHCO.

CLASSIFICATION OF INVENTORY:
The universal problem can be solved taking in to consideration its important aspects. Similarly, in Inventory Management classification is meant for solving the Inventory control problem from its important angle. The inventories having huge amount of use in the organization has to be controlled very strictly and low amount of use should be kept low control. The importance can be due to the cost; its criticality, its availability and its consumption. EXISTING CLASSIFICATION SYSTEM: The existing classification system is based on its use, i.e. inventories classified as stock items and non-stock items. The list and amounts of stock and non stock items is described in Annexure-

The existing system keeps strict control on the item that are of recurring nature. It takes in to consideration only the amount use of quantity not in value. While for non-stock item low control is being kept. This system has following shortcomings. The classification gives importance to only those items, which are of recurring natures. It excludes from the control point of view the items that are high value in stock. It considers the quantity used not the money value of the material used. Control kept on stock items a give equal weight age to all items, which neglects the benefit of selective control technique.

- 104 Considering the practical use of classification techniques, two important methods are suggested as follow. (1) ABC classification and (2) VED classification

ABC CLASSIFICATION:
ABC classification is a basic analytical Management tools which enables top Management to direct their effort where the result will be maximum. This technique properly knocks as ALWAYS BETTER CONTROL has universal application in many areas of human endeavor. The technique tries to analyze the distribution of any characteristic by money value of importance in orders to determine its priority. In materials Management, this technique has been applied in areas needing selective control. Such as Inventory critically of items, obsolesce. Stock purchases order, receipt of materials, inspection, storekeeper and billing verification. ADVANTAGES OF ABC CLASSIFICATION: This approach helps the material manager to exercise selective control and focus his attention only on a few items. When he is dealing with lakhs of store items. ABC analysis has to be reported to equal extension to A, B and C items will not worth while and would be very expensive. Concentrating on all items it is likely to have diffused effect irrespective of the priorities. It provides a sound basis on which to allocate funds and time of personnel with respect to their importance of the individual items.

TECHNIQUES OF ABC CLASSIFICATION: The techniques of classifying the items into A, B and C categories as described in the following steps:

- 105 (1) Classify the items of inventories, determining the expected use in units and the price per unit for each item. (2) Determining the total value of each item by multiplying the expected units by its units price. (3) Rank the items in accordance with the total value, giving first rank to the item with highest total value and so on. (4) Compute the ratios (percentage) of number of units of each item to total units of all items and the ratio to total of each item to total value of all items. (5) Combine items on the basis of their relative value to form three categories A, B and C.

PURPOSE OF ABC CLASSIFICATION The object of carrying out ABC classification is to develop policy guidelines for selective control. Normally, once A, B, C classification has been done the following broad policy guidelines can be established in respect of each category.

EXHIBIT 1.1 Sr.No. 1. 2. 3. 4. 5. 6. A-ITEMS Very strict control No safety stock Frequent ordering B-ITEMS Moderate control Low safety stock or Once in four months C-ITEMS Low control High safety stock Bulk ordering once in six months Quarterly control reports Follow up and expediting exceptional cases value Minimum value analysis

weekly deliveries Weekly control Monthly reports statements Maximum follow up and Periodic follow up expediting Strict value analysis Moderate analysis

- 106 7. 8. As many sources as Two or more reliable Two reliable sources for possible for each item sources Accounts forecast in Estimate material planning 9. Minimization obsolete of based each items on Rough estimate for

past data on present planning plan waste Quarterly control over Annual and surplus and obsolete surplus items Group posting Decentralized purchasing Minimum clerical efforts reviews and over

obsolete

surplus(review every 15 items 10. 11. 12. 13. days) Individual posting Small group posting Central purchasing and Combination storage Maximum efforts purchasing to Moderate

reduce lead time Must be handled senior officers

by Can be handled by Can be fully delegated middle Management

GRAPHICAL REPRESENTATION OF ABC ANALYSIS

100 90 80 70 60 50 40 30 20 10 0 0 10 20 30 40 50 60 70 80 90 100
Percentage of Cost

- 107 -

VED CLASSIFICATION
The VED classification is applicable largely to spare parts. Stocking of spare parts will be based on strategies different from those for raw materials, because their consumption pattern is different, while the consumption of raw materials depends directly on the market demand on production the demand for spare parts depends on the performance of the plant and machinery. Therefore, the method of classification designed for one type of Inventory will not be compatible for selective control of another type of Inventory to over come this draw back the VED classification is used. Spares are classified as vital, essential desirable. This implies that V classes of spares have to be stocked adequately to ensure the operation of the pant, because by definition the non-availability of vital spares can cause havoc and stop the wheels of the organization. Some risk can be taken in the case of E class of spares. Stocking of desirable spares can be even done if the lead-time for their procurement is law. It is essential that this classification be done by technical department or by those in charge of the maintenance of the plant. This classification will be very useful to KRIBHCO if it is implemented. Moreover, ABC and VED classification can be a combined advantage, in order to control the stocking of spare parts. The control action for the class AV, BE, CD, etc are given in exhibit No. 2.1

EXHIBIT NO 2.1 CLASSE S A Items B Items C Items Constant control & Moderate stock regular follow up Moderate stock High Stocks Moderate stock Moderate stock Nil stock Very low stock Low stock V ITEM E ITEM D ITEM

- 108 -

- 109 -

Introduction of Finance Department

Finance is the blood of the business. Finance Management is that managerial activity which is concerned with the planning and controlling of the firms financial resources. Finance management is the most important activity of the firm and it means that the firm secures capital, if needs and employees it. Finance management is mainly concerned with raising fund in the suitable manner using the funds as profitably as possible, planning future operations and controlling current performances and future developments through financial accounting, cost accounting, budgeting and other functions. The Finance and Accounts Department of KRIBHCO plant is located in the Administration Building, which is situated outside the Plant factory gate. The Finance & Accounts (F & A) Department is a service department and its name

- 110 function is to co-ordinate the financial activities at Plant Site. The F & A department maintain the records as required under various statute and get the same audited by Statutory Auditors under the functional supervision and guidance of KRIBHCO COOPERATE OFFICE at NOIDA. Various Sections The F & A department have various Sections as detailed below. SEC. CODE 1701 SEC. NAME INSURANCE & EXCISE DESCRIPTION To review the insurance policies of the societies in terms of adequacy of insurance cover and premium paid, renewals of policies in time, loading of claims and following-up for their settlement with underwriter. To maintain constant liaison with the excise authorities and with societies consultant regarding day to day matters related to the central excise and hearing of ammonia tank wagons to outsides parties.

1702

L/C SECTION

To maintain all letters of credit open by the

society for importing of materials and services, realizing payments as per the terms of the L/C, Liaison with banks and parties regarding matters relating to L/C and maintaining proper accounting records. Payments to bill of urea bagging and handling contractor and other small value contractor pertaining to urea and bio-fertilizer transportation after certification by production department and maintenance of necessary accounting records. Payment for supplier of the empty bags and to maintain all related accounting transactions. Preparation of annual capital and revenue budgets and monitoring of commitments and expenditure and generation of periodical reports. Payments to contractor for various work orders issued other then product handling and transportation contractors and to keep all accounting records. Payments towards misc. Works of petty nature

1703

PRODUCT HANDLING DEPARTMENT

1704 1705

EMPTY UREA BAGS SUPPLIES BUDGET

1706

CONTRACT PAYMENT SECTION MISC. PAYMENTS TOWNSHIP LICENCE FEE RECEIPTS

1707 1708

Recovery

of

license

fee,

electricity

- 111 charges, water charges etc. Payments towards various PO issued by materials department and to keep all relevant accounting records Payments towards transportation of urea by road and, matters related with railway for railway siding, to maintain all related records and transfer of all the transportation charges including. Accounting for sale of ammonia, industrial urea, nitrogen to keep relevant accounting reports. Submission of returns as prescribed by GST act, 1969 and CST act, payment to wards sales tax on transfer of sales/stock of urea sales, ammonia, scrap sales, follow-up of pending matters and assessment etc. Release payment towards all employees related matters like salary/wages, loans and advances etc., payments to out sides hospital /doctors, security of HBL & conveyance loans etc., and to maintain personal records.

1709 1710

PURCHASE BILL SECTION TRANSPORTATION

1711 1712

SALE OF AMMONIA INDUSTRIAL UREA & NITROGEN SALES TAX

1713

ESTABLISHMENT

1714

INVENTORY

Valuation

of inventory, generation of various reports related with inventory, booking of various revenue expenses as well as capitalization of inventories issued on monthly basis. Review and concurrence of disposal proposals.

1715

BOOKS

1716

1717 1718 1719

of books of accounts like general ledger, journal, cash book and bank book, preparation of trial balance on monthly basis, quarterly annual reports, and coordination of internal audit / statutory audit. To release payments to GAIL, GEB, HPCL, ONGC, etc. O & M OF HAEP PLANT To deal with operation & maintenance contract for running and maintenance of HAEP plant and to keep all relevant accounting records. SCRAP SALES Receipt of payment towards sale of scrap and to maintain related accounting records. PO CONCURRENCE Scrutiny of proposals received from material department for procurement of material and to accord finance concurrence. WO CONCURRENCE Scrutiny of proposals received from various departments for procurement of services for running, maintenance and up

Maintenance

- 112 gradation of the plant.

Financial Planning
Planning is the design of a desired future state of an entity and of the effective way of bringing it about. Also it involves the determination of the future causes or action for accomplishing the objective of the enterprise. Financial planning is essentially concerned with economical

procurement & profitable use of funds. It is used for determined by realistic investment decisions. Financial planning should estimate the resources that will be required to carry out the operation of the firm and determine how for these resources can be generated by the firm itself and how far they will have to be attained externally. KRIBHCO has a fixed policy for financial planning and it depends upon the requirements of the fund whichever they use. Then a report is prepared by the finance manager including total requirements. He collects the information and prepares the report and submits it to the Managing Director.

Capitalization
Capitalization means total capital of the firm that introduced in business to carryout commercial activity. Capitalization concerns with the decision regarding the total requirements of long term funds of the firms. Capitalization means total amount of companys capital or total of its capital stock. In KRIBHCO, the shares are very high and it has large amount of reserves and surplus. FINANCING PATTERN Original Rs. Cr EQUITY US$ million Rs. Cr

Final US$ million

- 113 Government of India Cooperative Societies IFFCO Sub Total LOAN Government of India 342.70 Internal Generation IDBI & Other FInst. Sub Total 15 129 486.70 201.82 8.83 75.97 286.62 342.50 ---102.50 445 201.71 ---60.36 262.07 344 22 105 471 202.59 12.96 61.84 277.39 328 20 97 445 193.17 11.78 57.13 262.08

IFFCO 22%

Cooperative Societies 4% Government of India 74%

Government of India

Cooperative Societies

IFFCO

FINANCIAL ACHIEVEMENT FROM BEGINNING (RS. IN CORERS) NET PROFIT: YEAR 1986-1987 1987-1988 1988-1989 1989-1990 1990-1991 Before tax 45.06 126.80 85.75 91.51 94.65 Prov. For Income tax After tax 45.06 126.80 85.75 91.51 94.65

- 114 1991-1992 1992-1993 1993-1994 1994-1995 1995-1996 1996-1997 1997-1998 1998-1999 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 158.04 227.78 183.86 292.89 286.95 328.48 447.96 390.40 79.85 210.10 248.29 40 220.45 186.43 60.00 82.20 72.00 95.50 85.00 99.50 148.35 129.27 24.00 77.00 60.97 5.77 66.81 45.33 98.04 145.58 111.86 197.39 201.95 229.38 299.61 261.13 55.85 138.10 187.32 34.23 153.64 141.10

The following is the graphical representation of profit before and after tax:

DIVIDEND PAID TO SHARE-HOLDERS: (Govt. India, IFFCO, Other Society) Year 1986-87 1987-88 1988-89 1989-90 1990-91 1991-92 Amount(Rs. in Crores) 13.84 26.86 26.77 26.81 26.83 35.82 Dividend % 3 6 6 6 6 8

- 115 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 36.13 36.29 36.48 50.39 59.78 83.36 85.31 57.87 58.56 97.92 34.39 88.33 74.50 8 8 8 11 13 18 18 12 12 20.06 8 20 15

The following is the graphical representation of dividend paid:

CAPITAL BUDGET
The other major budget is capital budget. The formation of capital budget is on the same pattern and follows same procedure as revenue budget. It is important to understand distinction between capital and revenue expenditure. It benefits of an expenditure are expected to accrue for long time; the expenditure is of capital nature. Any expenditure whose benefit expires within the

- 116 accounting year or expenditure that merely seeks to maintain the business or keep assets in good working condition is revenue expenditure. On face of it, this distinction seems easy, but many of times it becomes quite complicated to differentiate between these two expenditures. Capital budget involves the planning to acquire worth while projects, together with the timings of the estimated cost and cash flows of each project. Such projects require large some of funds and have long term implications for the firm. Capital budgets are difficult to prepare because estimate of the cash flows over a long period have to be made which involve a greater degree of uncertainty. The capital budgets are generally prepared separately from the operating budgets. In many companies, there is a committee separate from the budget committee. To appropriate funds for capital investment projects. In the capital budgeting, the profitability of each project has to be carefully evaluated. Various techniques can be used to determine the profitableness biases and capable of clearly indicating whether the project should be accepted or not. CAPITAL BUDGET PROCESS BUDGET SUBMITTED TO DEPERTMENTS

MS DEPARTMENT

HEAD OFFICE

MANAGING DIRECTOR

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BOARD OF DIRECTORS

REVENUE BUDGET A letter duly signed by Chief Manager (F&A) is sent to all departments asking them to submit the likely requirements of the year, before specific date (mostly last day of November). They will also have to send the justification with adequate proof for the sum they demand. Concerned department while submitting their proposals will also submit the report containing details of expenditure done under the same head last year. From all the information thus available, a preliminary budget formation takes place. Subsequently discussions are held at various levels to check the validity of the budget so formed and finally after passing through all checks it is presented before the Board of Directors for final approval. The above written procedure is not as simple as it seems and takes 4-5 months. The concerned department also has to ensure that it neither asks for too much or too less amount for in first case it would be questionable for excess amount lying unutilized, whereas in later case they would not be given any additional amount to purchase in excess of budget. REVENUE BUDGET PROCESS BUDGET SUBMITTED TO DEPERTMENT

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FINANCE & ASSETS DEPARTMENT

BOARD OF DIRECTORS GENERAL MANAGER F&A MANAGING DIRECTOR HEAD OFFICE

Working Capital Management

Management of Working Capital refers to the management of current assets as well as current liabilities. It mainly deals with managing the short term finance, negotiating favorable credit terms, controlling the movement of cash, administering account receivable, and monitoring the investment in inventories. Also it is changing with the change in current assets and current liabilities. We can get the amount of working capital of KRIBHCO from the following data of the year. Current Assets 193,647.03 - Current Liabilities - 29,678.63 = Working Capital = 163,968.4

Working Capital Management involves a good deal of time in managing Inventories, Receivables and Cash and Bank Management. Managing Inventory Inventories are the stock of the Raw Materials, Work in Progress goods and finished goods along with a stock of component that make up the product. Inventory represents a large number of invested capitals. Therefore proper control of

- 119 inventory is an important function of management. The inventory build up should be in consistence with the requirements of production. To control the inventory level, the items are earlier divided into two categories, Slow-Moving and Non-Moving. As far as KRIBHCO is concerned, the Inventory of the same has been increased to a steady rate; the reason of the same is that KRIBHCO is effectively controlling Inventory. Managing Receivables: Since the selling goods on credit is the most prominent force of the modern business. The firm adopts this method of selling goods to protect itself from the competitors and to attract a favorable terms. When the firm sells goods or services on deferred payment basis it is said that firm has granted trade credit to customers. The trade credit involves an element of risk therefore it is most important to keep an eye on it through sound Credit Policy and monitoring and controlling the account receivables. Managing Cash Cash, the most liquid asset, is of vital importance to the daily operations of business firms. Crucial for the solvency of the business, it is referred as the Life Blood of a Business Firm. AS KRIBHCO is a big and prosperous concern, the daily transactions are carried out very carefully through the Cash Budgeting and applying modern techniques like prompt billing, expeditious collection of cheques, control of payables, etc. with a good reporting system.

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Ratio Analysis
Financial Analysis is the process of identifying the financial strengths and weakness of the firm by properly establishing relationship between the items of the Balance Sheet and Profit and Loss account. In Financial Analysis a ratio is used or an index or yard sticks for evaluating the financial position and performance of a firm. The relationship between two accounting figure expressed mathematically is known as financial ratio. To measure the Profitability of any firm it is necessary to know the profitability ratios of that firm. The different profitability ratios for KRIBHCO are:

Liquidity Ratios
Liquidity refers to the ability of a firm to meet its obligations in the short run, usually one year. Liquidity ratios are generally based on the relationship between current assets and current liabilities. The important liquidity ratios are: >>Current Ratio Current Ratio is widely used for showing the proportion of current assets to current liabilities. Current Ratio 2004-2005 = Current Assets = = 1,712.05 5.71:1 / Current Liabilities / 299.83

The Current Ratio measures the ability of the firm to meet its current liabilities. Apparently, the higher the current ratio, the greater the shortterm solvency. The general norm for current ratio in India is 1.33:1 and internationally it is 2:1. The KRIBHCO is having a Current Ratio 5.71:1 which is a more than a twice of the standard measure, thus KRIBHCO is in a sound financial position.

- 121 >>Acid-Test Ratio Acid Test Ratio also known as Liquid Ratio and Quick Ratio is a fairly stringent measure of liquidity. It is based on those current assets which are highly liquid. Inventories are excluded from the numerator of this ratio because inventories are deemed to be the least liquid component of current assets as well as excluding bank overdraft from Current Liabilities. Liquid Ratio 2004-2005 = Liquid Assets = = 1565.35 5.22:1 / Liquid Liabilities / 299.83

As the liquid assets are equal to or more than liquid liabilities, the company is in a better position to manage liquid liabilities. As the KRIBHCO is having Liquid Ratio equal to 5.22:1, it is in a sound financial position. >>Debt-Equity Ratio The relationship between borrowed funds and owners capital is popular measure of the long-term financial solvency of the firm. This relationship is shown by debt-equity ratio. This ratio indicates the relative proportions of debts and equity in financing the assets of a firm.

Debt-Equity Ratio 2004-2005

= Outsiders Fund = = 0 0:1

/ Shareholders Fund / 2060.35

As acceptable norm for this ratio is considered to be 2:1 where as capital intensive industries like Fertilizer and Cement a norm of 4:1 is standard. A high ratio shows that the claims of creditors are greater than those of owners and vice versa. A high debt company will likely to get funds borrow on a very restrictive terms and conditions. As KRIBHCO is having Debt-Equity Ratio equals to 0:1, it represents good position if company going to borrow money from financial institutions. But KRIBHCO is not taking advantage of Leverage due to absence of long term debt equity.

Profitability Ratios

- 122 Profit is the engine that drives the business enterprise. Profit is an index of economic progress. Profits are the test of efficiency and a measure of control to the management. It is a measure of the worth of owners investment. There are two types of Profitability ratios. >>Gross Profit Ratio The Gross Profit Ratio shows the relationship between gross profit and sales. Gross Profit Ratio 2004-2005 = Gross Profit = = 185.83 20.10% / Net Sales / 924.22 * *100 * *100

Normally, the Gross Profit Ratio should remain the same from year to year, because cost of sales will normally vary directly and in the same proportion with sales. Higher ratio is better. A ratio is generally of 20% to 30% may be considered good. Therefore, KRIBHCO is doing well as near to standard. >>Net Profit Ratio This ratio is used to measure the overall profitability and hence it is very useful to investors. Net Profit Ratio 2004-2005 = Profit After Tax = = 140.59 15.21 % / Net Sales / 924.22 *100 *100 1 1

This ratio shows the earnings left for company as percentage of net sales. The KRIBHCO is having Net Profit Ratio equals to 15.21% which shows a sound ratio of profitability.

Inventory Turnover Ratios

This ratio shows a relation between sales and inventory. It shows the leg of time an inventory is converted in the sales or realized. Inventory Turnover Ratio = Cost of Goods / Average Inventory

- 123 Sold 2004-2005 = = 1,114.53 8.77 times / 12707.80

The inventory turnover reflects the efficiency of inventory management. The higher the ratio, the more efficient the management of inventories and vice versa. A high inventory turnover may be caused by a low level of inventory which may result in frequent stock outs and loss of sales and customer good will. Through a using of good inventory control technique the KRIBHCO is able to maintain a fairly efficient Inventory Turnover Ratio.

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Accounting policies: -

- 127 1. Basis of preparation:The financial statements of the society are prepared under historical cost basis and in accordance with the generally accepted accounting principles applicable in India and provisions of multi state cooperative societies Act, 2002. 2. Investments: Long term investments are valued at cost. Provision for diminution in the value of such investments is made only if such a decline is, other than temporary, on individual investment basis. 3. Inventory valuations: I. Stores spares & packing materials are valued at weighted average cost. Spares, which are, repaired either departmentally or through outside agencies, are taken into inventory at a nominal cost of Rs.1/- each. Items of stores & spares, which are surplus, slow & Non-moving, are valued at lower of cost or net realizable value based on technical estimates. II. Stock-in-process at the close of the year is valued at lower of cost or net realizable value. III. Finished stocks are valued at lower of cost or net realizable value. IV. Stocks of seeds, chemicals, Dap and damaged good are valued at lower of the cost or net realizable value. V. Tools issued, expect each valuing less than Rs.1,000/- are written off over a period of three years and are stated at depreciated cost. Tools issued each valuing less than Rs.1000/- are written off in year of issue.

4. Assets: Fixed assets are stated are historical cost less accumulated depreciation. 5. Depreciation: Depreciation on fixed assets is charged on straight line methods as follows: I. On the assets added up to March 31, 1991, at the rates derived from the rates provided for the corresponding assets under the income tax rules in

- 128 force at the time of purchase or acquisition of assets. In respect of plant and machinery, they are based on normal rates even where the rules provide for higher rates. II. On the assets added from April 1, 1991, at the rates prescribed under schedule XIV to the companies Act, 1956. III. With effect from April 1, 2001, additions during the year are depreciated on pro-rata basis. Similarly, depreciation on the pro-rata basis is provided on assets sold/discarded during the year. IV. Assets individually costing up to Rs. 5,000/- are fully depreciation in the year of acquisition. V. Leasehold land is amortized over the period of lease. VI. Intangible assets representing computer software is amortized on straight line method over 3 years on pro-rata basis. 6. Retirement Benefits: I. In respect of accruing liability for gratuity, the societys makes contribution to the gratuity fund trust on the basis of advice received from the life insurance corporation of India. The trust has taken a group gratuity policy under cash accumulation scheme from life insurance Corporation of India to cover the gratuity liability. II. Encashment of earned leave and medical leave is being provided for on actuarial basis. III. The society has been depositing provident fund and pension contribution with KRIBHCO employees provident fund trust and provident fund Authorities respectively. 7. Incomes/ Expenditure Accounted for on Cash Basis I. Claims for; a. Shortage/ Damages on movements of fertilizer. b. Under-charges on freight paid to railways. c. Rebate on freight from Railways.] d. Interest on overdue payments. e. Insurance other than transit.

- 129 f. Refund of purchase tax, Sales Tax, Turnover Tax, customs, and Excise and electricity duties excess charged. g. Dispatch money. h. Additional handling remuneration. Penalties and compensation on acceptance/receipt. Disposal of scrap Deductions from subsidy claims by fertilizer industry coordination committee. Subsidy on seeds/Bio-fertilizers 8. Catalyst and Resign:Initial charges of catalysts and resins issued at the time of commissioning of the plant are capitalized. Subsequent replacements are charged to revenue in the year of replacement. 9. Sales:Sales are accounted for on the basis of Released orders issued to customers. Sales in the state of Gujarat are accounted for on dispatch basis and sales through Krishak Bharti Sewa Kendras are accounted for on cash and carry basis. 10. SUBSIDY FROM GOVERNMENT UNDER RETENTION PRICE SCHEME: The subsidy from the Government of India under Retention price scheme as notified from time to time on account of retention price and Equated fright is accounted for as income on the basis of movement of stocks from the factory. Increase/decrease in subsidy on account of changes in the Retention price/equated fright, are accounted for in the Financial Year in which notification for it is issued by Department of Fertilizers. 11. PRIOR PERIOD INCOME/EXPENDITURE: Income/expenditure relating to prior period(s), which does not exceed Rs.5000 in each case, is treated as income/expenditure for the current year. 12. PREPAID EXPENSES: -

- 130 Expenditure up to Rs.5000/- in each case, incurred in advance relating to the following year is accounted for in the year in which the same is incurred. 13. PROJECT EXPENDITURE: The expenses on pre-feasibility study reports, market survey reports, technoeconomic feasibility reports etc. on new projects including joint venture project is allocated to the fixed assets on completion of the projects. Where the projects are proved in fructuous they are charged off in the year in which the decision is taken to scrap the same by competent Authority.

14. CURRENCY TRANSLATION OF FOREIGN BRANCH ACCOUNTS: The accounts of foreign branch are maintained in local currency and in U.S Dollars. The Accounts of foreign branch are merged in head office based on following: i. All the amount transferred in U.S dollars or Omani Rial to the branch, whether for equity investment or for any expenditure, is accounted for based on rupees expenditure incurred by the society. ii. All the money received on account of income/reimbursement of expense in U.S Dollar or Omani Rial through the branch is accounted for based on the exchange rate prevailing on the date of receipt. iii. Bank balances at the year end are being converted into rupees terms based on exchange rate applicable as on the date of balance sheet and differences in U.S Dollar/Rupee Parity worked out is adjusted through and exchange fluctuation account. iv. All the outstanding liabilities/ provision in the books of branch are being converted on the basis of exchange rate prevailing as on the date of balance sheet. 15. TAXATION:Provision for current income tax is made on the basis of assessable income as per Income Tax Act, 1961 Deferred Tax is determined in accordance with Accounting Standard 22 of the Institute of Chartered Accounts on India. Deferred Tax is recognized, on timing differences, being the differences resulting from the

- 131 recognition of items in the financial statements and in estimating its current income tax provision. Deferred Tax assets and liabilities are measured using the Tax rates and the tax laws that have been enacted or substantively enacted on the balance sheet date.

FUTURE PLANS

FUTURE PLANS A joint venture fertilizer project in Oman: Society has invested US$ 80 million as equity in Oman India Fertilizer plant which has achieved commercial production on 14th July 2005. The Project has annual capacity of 16.52 lakhs MT Urea and 2.50 lakhs MT surplus ammonia and has been built at a cost of US$ 969 million. Marketing of Urea produced by this plant has since been commenced by the society.

- 132 Hazira Phase-II Society is in the process of setting up a state of the art mega size ammonia plant of capacity of 1850 MTDP and urea plant of capacity of 3250 MTDP at existing fertilizer complex at Hazira. Existing infrastructure facilities will be utilized resulting in saving of cost. Plant will be based on natural gas and we have energy consumption. Gujarat state energy generation limited (GSEG) Society has diversified to power sector and has invested Rs. 48.75 Crores being 30% equity in Gujarat State Energy Generation Limited, a joint venture company promoted by government of Gujarat, GSEG is operating 156 MW Power Plant at Mora, District Surat Kribhcos Hazira plant is also going to be expanded. The society is also exploring the possibilities to set up a 200 MW liquid fuel based power project at Jhunjhunu, Rajasthan. Society has deposited a development security of Rs.25 lakhs with Rajasthan State Electricity Board (RSEB). Minister of power has given No Objection Certificate (NOC).

Swot Analysis

Strength Kribhco is having Sound financial position. The Management of Kribhco is very professional. Kribhco has larger proportion of reserves and surplus and further it has no debt capital. Kribhco has long standing reputation in the Indian Fertilizer Market. Staff of Kribhco is very co-operative and hard working.

- 133 Kribhco is having skilled employees staff. Good cooperation between employees. Kribhco is having own Training Centre for training of employees as well as apprentice students of different discipline. It is having a full support of the Government of India. Kribhco having strong and wide marketing network towards country. High Production capacity of Kribhco leads to low production cost. Savings in Production cost because Kribhco is having own Nitrogen and Ammonia Plant. Capacity Utilization more than 100%. Still the starting of production, Kribhco plant has no major break down in Plant. Kribhco has extra land and fully developed infrastructure facilities so it can be further developed. Thus, we can say that the position of Kribhco in the Fertilizer Market is Satisfactory. Weaknesses Government interference in the management is more comparatively private units. Due to Governments interference it takes longer time in decision making. So the decisions delayed and thus sometimes bias decision are also taken. Kribhco is having overstaffing. Kribhco is having demotivated employees because of job security and safety. Kribhco is having no debt capital so the advantage leverage can not be taken. Thus, we can say that the Kribhco will must be careful regarding its staff and to government also. Opportunities Investment in Oman Project will raise the profit of Kribhco. Expansion of existing plant at Hazira.

- 134 Look for newer Market with diversified product. Diversifying the business. Threats The price of the Row material, i.e. Natural Gas, is increasing continuously. There is a chance of sharp reduction in Government subsidy in near future. Kribhco is having very little market share. In the era of Free Trade, the import of fertilizers may affect the business of the Kribhco.

Recommendation

After having completed our general training in Krishak Bharti Cooperative Limited, Hazira, we have come to know its working and understand various departments therein. The training makes us able to understand the various aspects of management. After having a detailed study of the various departments of KRIBHCO, we are giving our conclusion.

- 135 By looking at various financial ratio of the KRIBHCO, we are able to conclude that the company is having a sound financial position with a good liquidity but KRIBHCO is not having long-term debt which is necessary for leverage. In other words the KRIBHCO is not using it capacity to raise long term debts. Personnel in the KRIBHCO are treated very well. KRIBHCO is having proper manpower planning and a good policy of Recruitment & Establishment with good training opportunities for its employees as well as for students from different disciplines. It is also running various cultural activities for the total development of its employees. At last, KRIBHCO is having a very low man power turn over ratio from last few years. The company is also having good marketing channels to promote its products. The KRIBHCO is promoting its products through train the farmers, launching campaigns, releasing jingles on Radio, TV, etc. The KRIBHCO is achieving more production capacity than installed. On an average, the KRIBHCO is running on 108 % capacity utilization. It is having a skilled staff to running the plant. The KRIBHCO is also implementing the good Inventory Control Techniques to control the stocks of materials with a good purchasing policy. Finally, KRIBHCO is having a professional management to control all the activities carried out therein. So, we would like to conclude that KRIBHCO is having a bright future to expand and diversify.

Bibliography
1. Kribhco Manual 2. Annual Report of KRIBHCO 3. KRIBHCO at Glance 4. KRIBHCO Pragati 5. Websites http://www.kribhco.org. http://www.kribhcosurat.com

- 136 http://www.google.com