A Project Report on Iffco

A PROJECT REPORT ON IFFCO INDIAN FARMERS FERTILISER COOPERATIVE LTD KANDLA

(A DIVISION OF NIS SPARTA LTD.A RELIANCE ANIL DHIRUBHAI AMBANI GROUP CO.)

SUBMITTED TO : NIS ACADAMY

SUBMITTED BY : MANEESH KUMAR

TABLE OF CONTENTS Acknowledgement……………………………………………… Preface…………………………………………………………… INTRODUCTION • ORIGIN OF IFFCO • INDIAN FARMER SUCCESS STORY (i)

IFFCO IN BRIEF

(ii)

SHARE CAPITAL

(iii)

KANDLA UNIT

MARKETING PERFORMANCE • MARKEING CHENNAL • DISTRIBUTION & WAREHOUSING • MARKETING TERRITORIES OF IFFCO • SALES PERFORMANCE • SALES DURING KHARIF SEASON • SALES DURING RABI SEASON FINANCIAL PERFORMANCE

 TURNOVER

SERVICE TO FARMERS  COOPERATIVE RURAL DEVELOPMENT TRUST (CORDET)  ACTIVITIES OF CORDET MAJOR AWARDS RECEIVED VISION ---2010  BROAD VISION OF THE SOCIETY  INVESTMENT FOR CAPACITY INCREASE  US$ 1.5 Billion INVESTMENT IN POWER PROJECT  US$ 0.6 Billion INVESTMENT IN SEZ  IFFCO PLANTS  IFFCO SUBSIDIARIES  IFFCO ASSOCIATES  IFFCO ASSOCIATES  CUMULATIVE ACHIEVEMENTS CONCLUSION SUGGESTION

ACKNOWLEDGEMENT • I would like to express my sincere gratitude and thanks to all who in some way or the other helped and guided me in the due course of the completion of this project work. It was indeed impossible for me to accomplish to this task without the timely accelerating encouragement and exuberant support .it will be unfair to mention the name of those who directly or indirectly helped me to make it a success. •

It goes beyond words to express my special thanks to Mr. MITESH PATEL , who despite of her busy schedule for providing information which I required for my project.

• Thanks all of you • Your sincerely • MANESH KUMAR ST • MBA 1 Year

PREFACE Master of business administration (MBA) one of the most reputed professional courses which includes both the theoretical and practical training as a part of two year curriculum. Progress is the continuous process. It is relative and absolute. We can not stop at certain destination and declare that target has achieved. The Industrial visit programs are designed to give the manager of the future, a feel of the corporate happening and work culture. These real life situations are entirely different from the simulation exercise enacted in an artificial environment in side of classroom. And it is precisely because of this reason that this industry visit is a bridge between the institute and the organization. Industrial visit programs made me to understand how theoretical knowledge will be applied in practical field. It exactly in this context that I was privileged enough to join IFFCO,KANDLA. On 20,FEB, 2009, as a Industrial Visit. This is a cooperative society of FERTILIZER and it is known not only in professional management, but also in enlightened and progressive approach towards employee welfare and betterment of society. I have collected all the relevant information through this visit.

INTRODUCTION ORIGIN OF IFFCO  Till mid sixties cooperatives in India had no production facility despite marketing nearly 70% of fertilisers.

 IFFCO was established as the farmers’ own initiative in Cooperative Sector on 3rd Nov. 1967 with the proposed plants at Kalol & Kandla.

 With the enactment of Multi State Co-operative Societies Act 2002, the Society is deemed to be registered as a Multi State Co-operative Society. The Society is fully owned by Cooperatives.

. IFFCO : Indian Farmers' Success Story During mid- sixties the Co-operative sector in India was responsible for distribution of 70 per cent of fertilisers consumed in the country. This Sector had adequate infrastructure to distribute fertilisers but had no production facilities of its own and hence dependent on public/private Sectors for supplies. To overcome this lacuna and to bridge the demand supply gap in the country, a new cooperative society was conceived to specifically cater to the requirements of farmers. It was an unique venture in which the farmers of the country through their own Cooperative Societies created this new institution to safeguard their interests. The number of co-operative societies associated with IFFCO have risen from 57 in 1967 to 38, 155 at present. Indian Farmers Fertiliser Co-operative Limited (IFFCO) was registered on November 3, 1967 as a Multi-unit Cooperative Society. On the enactment of the Multistate Cooperative Societies act 1984 & 2002, the Society is deemed to be registered as a Multistate Cooperative Society. The Society is primarily engaged in production and distribution of fertilisers. The byelaws of the Society provide a broad frame work for the activities of IFFCO as a Cooperative Society. IFFCO commissioned an ammonia - urea complex at Kalol and the NPK/DAP plant at Kandla both in the state of Gujarat in 1975. Another ammonia - urea complex was set up at Phulpur in the state of Uttar Pradesh in 1981. The ammonia - urea unit at Aonla was commissioned in 1988. In 1993, IFFCO had drawn up a major expansion

programme of all the four plants under overall aegis of IFFCO VISION 2000 . The expansion projects at Aonla, Kalol, Phulpur and Kandla have been completed on schedule. Thus all the projects conceived as part of Vision 2000 have been realised without time or cost overruns. All the production units of IFFCO have established a reputation for excellence and quality. A new growth path has been chalked out to realise newer dreams and greater heights through Vision 2010 which is presently under implementation. As part of the new vision, IFFCO has acquired fertiliser unit at Paradeep in Orissa in September 2005. As a result of these expansion projects and acuisition, IFFCO's annual capacity has been increased to 3.69 million tonnes of Urea and NPK/DAP equivalent to 1.71 million tonnes of P2O5. IFFCO has made strategic investments in several joint ventures. Godavari Fertilisers and Chemicals Ltd (GFCL) & Indian Potash Ltd (IPL) in India, Industries Chimiques du Senegal (ICS) in Senegal and Oman India Fertiliser Company (OMIFCO) in Oman are important fertiliser joint ventures. Indo Egyptian Fertiliser Co (IEFC) in Egypt is under implementation. As part of strategic diversification, IFFCO has entered into several key sectors. IFFCO-Tokio General Insurance Ltd (ITGI) is a foray into general insurance sector. Through ITGI, IFFCO has formulated new services of benefit to farmers. 'Sankat Haran Bima Yojana' provides free insurance cover to farmers along with each bag of IFFCO fertiliser purchased. To take the benefits of emerging concepts like agricultural commodity trading, IFFCO has taken equity in National Commodity and Derivative Exchange (NCDEX) and National Collateral Management Services Ltd (NCMSL). IFFCO Chattisgarh Power Ltd (ICPL) which is

under implementation is yet another foray to move into core area of power. IFFCO is also behind several other companies with the sole intention of benefitting farmers. The distribution of IFFCO's fertiliser is undertaken through over 38155 co-operative societies. The entire activities of Distribution, Sales and Promotion are coordinated by Marketing Central Office (MKCO) at New Delhi assisted by the Marketing offices in the field. In addition, essential agro-inputs for crop production are made available to the farmers through a chain of 158 Farmers Service Centre (FSC). IFFCO has promoted several institutions and organisations to work for the welfare of farmers, strengthening cooperative movement, improve Indian agriculture. Indian Farm Forestry Development Cooperative Ltd (IFFDC), Cooperative Rural Development Trust (CORDET), IFFCO Foundation, Kisan Sewa Trust belong to this category. An ambitious project 'ICT Initiatives for Farmers and Cooperatives' is launched to promote e-culture in rural India. IFFCO obsessively nurtures its relations with farmers and undertakes a large number of agricultural extension activities for their benefit every year. At IFFCO, the thirst for ever improving the services to farmers and member co-operatives is insatiable, commitment to quality is insurmountable and harnessing of mother earths' bounty to drive hunger away from India in an ecologically sustainable manner is the prime mission. All that IFFCO cherishes in exchange is an everlasting smile on the face of Indian Farmer who form the moving spirit behind this mision. IFFCO, to day, is a leading player in India's fertiliser

industry and is making substantial contribution to the efforts of Indian Government to increase foodgrain production in the country.

IFFCO - IN BRIEF •

Largest producer of fertilisers in the country

•

No. of Plant Locations : Five

•

Installed Annual Capacity (‘000 MT) 

UREA

- 4242.2



NPK/DAP

- 4335.4



TOTAL ‘N’

- 2628.2



TOTAL ‘P2O5’

- 1712.8

Only Fertiliser Institution in the country to produce 68.47 lakh MT of fertilisers and 93.24 lakh MT of sales during 2007-08



Contributed about 20% to the total ‘N’ and 25% to the total “P2O5” produced in the country during the year 2007-08



Fertilisers marketed through 39564 Cooperative Societies and 158 Farmers Service Centres



Service to the Farmers through a variety of programmes



SHARE CAPITAL Authorized Share Capital : 1000.00 Subscribed and : 423.93 Paid up Capital (All Share Capital wholly owned by Cooperatives only)

GROWTH IN NUMBER OF MEMBER SOCIETIES

(As on 31st March) 35072 25528

26960

28134

1980-81

1986-87

37381

39564

30200

57 1967-68

1974-75

FERTILISER PRODUCTION

1992-93

1998-99

2004-05

2007-08

1037 Lakh MT

FERTILISER SALE

1126 Lakh MT

CUMULATIVE PRODUCTION TILL DATE TURNOVER

Rs. 92005 Crore

PROFIT BEFORE TAX

Rs. 6445 Crore

PROFIT AFTER TAX CONTRIBUTION TO EXCHEQUER

Rs. 4994 Crore Rs.5103 Crore

UNIT

PRODUCT

PRODUCTION

KALOL

UREA

139

PHULPUR - I

UREA

142

PHULPUR - II

UREA

89

AONLA – I

UREA

165

AONLA – II

UREA

98

TOTAL

UREA

633

KANDLA

NPK

235

DAP

155

PARADEEP

NP DAP

TOTAL

NPK/DAP

TOTAL

FERTS.

6 10 406 1039

NUTRIENTS ‘N’

345

‘P2O5’

147

KANDLA UNIT YEAR OF COMMISSIONING INVESTMENT

: 1975

: Rs. 24.26 Crore

YEAR OF FIRST EXPANSION : 1981 INVESTMENT

: Rs. 28.60 Crore

YEAR OF SECOND EXPANSION: 1999 INVESTMENT PRODUCT P2O5

‘N’

: Rs. 205.30 Crore

CAPACITY TPA 9,10,000

3,51,540

TECHNOLOGY FOUR STREAMS (A,B,C & D) BASED ON TVA SLURRY GRANULATION PROCESS. TWO STREAMS (E & F) BASED ON AZF PIPE REACTOR TECHNOLOGY.

TOTAL FERTILISER PRODUCTION

57.01

2003-04

61.54

2004-05

64.35

2005-06

(Lakh MT) 68.47 70.12

2006-07

2007-08

Urea NPK/DAP

40

43.35 36.89 32.18

30

23.43

20

36.89

19.74

4.16

8.81

21.91

24.15

16.00 8.81

8.81

8.81

8.81

4.16 De c. '9 6 Au g. '9 7 De c. '9 7 Au g. '9 9 Ap r.' 01 Ap r.' 02 Ap r.' 04 O ct .'0 5

4.16

Ja n. '7 5 Ap r.' 75 M ar .'8 1 Se p. '8 1

0

3.96

8.91

Ju l.' 88

10

43.35

24.91

16.17 8.91

36.89 36.89

32.18

42.42

M ay '0 8

50

GROWTH IN PRODUCTION CAPACITIES (Lakh MT)

STREAM DAYS ACHIEVED

UNIT

PLANT

KANDLA

TRAIN

A

TRAIN

B

MARKETING TERRITORIES OF

TRAIN

C

TRAIN D TRAIN

E

MARKETING CHANNELS Distribution of fertilisers mainly through the Cooperative System: State level Apex Cooperative Marketing Federation acts as wholesaler

 

Direct supplies to Societies in some States



IFFCO-NCDC Cooperative Societies Small quantities to institutional agencies like Agro Industries Corporation etc

 

158 IFFCO Farmers Service Centres

DISTRIBUTION & WAREHOUSING TRANSPORTATION Both by Rail (88%) and Road (12%) WAREHOUSING Federations & Cooperative Godowns

Central Warehousing Corporation (CWC) and State Warehousing Corporation (SWC)

MARKETING TERRITORIES OF IFFCO

MARKETING MARKETING CENTRAL CENTRAL OFFICE OFFICE NORTH CENTRAL ZONE NORTH (LUCKNOW) CENTRAL ZONE (LUCKNOW)

NORTH ZONE NORTH ZONE (CHANDIGARH) (CHANDIGARH)

SOUTH ZONE SOUTH ZONE (BANGALORE) (BANGALORE)

WEST ZONE WEST ZONE (BHOPAL) (BHOPAL)

EAST ZONE EAST ZONE (KOLKATA) (KOLKATA)

UP,BIHAR UP,BIHAR JHARKHAND, JHARKHAND, UTTARANCHA UTTARANCHA L L

PUN, HAR, PUN, HAR, RAJ, J&K, RAJ, J&K, HP HP

AP, TN, KAR, AP, TN, KAR, KERALA KERALA

GUJ, MP, GUJ, MP, MAH, MAH, CHHATTISGAR CHHATTISGAR H H

ASSAM, ASSAM, ORISSA, ORISSA, W.B. W.B.

SALES PERFORMANCE (Lakh MT)

COMPLEX

UREA

37.02

38.95

36.7 27.94

54.29

52.41

50.13

31.82

33.69

23.52

2003-04

2004-05

2005-06

2006-07

2007-08

SALES DURING KHARIF SEASON

(Lakh MT)

PRODUCT

2003

UREA

17.6

NP

-

NPK 10:26:26

0.9

NPK 12:32:16

2.2

SALES DURING RABI SEASON (Lakh MT)

PRODUCT

200

UREA

19.

NP

-

NPK 10:26:26

1.

NPK 12:32:16

4.

FINANCIAL PERFORMANCE (Rs. Crore)

2003TURNOVER

6090.0

PROFIT BEFORE TAX

512.7

INCOME TAX

183.0

PROFIT AFTER TAX

329.6

SHARE CAPITAL

461.9

RESERVES AND SURPLUS

2647.6

TURNOVER (Rs. Crore)

12163 9943

10330

7397 6090

2003-04

2004-05

2005-06

2006-07

2007-08

SERVICE TO FARMERS Agricultural Extension and fertiliser use promotion programmes are an integral part of the marketing activity. Programmes are conducted at Area/State/Zonal offices under the guidance of agricultural scientists. Programmes undertaken are : Balanced Fertilisation programmes Adoption of villages for all round socio-economic development Farmers visit to various agricultural institutes and research farms Farmers’ Meetings, Field Days and Crop Seminars Static/Mobile Soil Testing Laboratories with Audiovisual aids

COOPERATIVE RURAL DEVELOPMENT TRUST (CORDET) PROMOTED BY IFFCO LOCATIONS KALOL (GUJARAT)  PHULPUR (U.P.)  KANDLA (GUJARAT) ACTIVITIES OF CORDET

Farmers’ Training Soil Testing Bio Fertiliser Production Demonstration Farming Seed Multiplication

IFFCO’s MPLS VPN Airtel VPN

BSNL VPN

Remote offices

VSAT

VSAT

VSAT

PIX 506 Kandla LAN

Kalol

VSAT

Aonla

VSAT

Phulpaur

Saket office

Internet

Network & Security Setup PIX 506

Airtel

Spectra net- 1 Spectra net- 2

Router

Paradeep LAN

Gig0/2

IPS In Inline Mode

External Switch

PIX Firewall in HA Mode

ASA Firewall

Internal Switch SO & AO Mktg offices

Core L3 Switch MPLS CLOUD

LAN

600 Connections 91 Direct on MPLS and 509 MPLS VPN Client

User Zone Core Router In GLBP Mode

Checkpoint Firewall on Alteon

Chandigrah 3560 L3 Switch Servers

Lucknow Bhopal

Banglore Kolkata VSAT Connectivity to Zonal Offices

Gig0/1

Servers

Call Manager VMS, ACS, Checkpoint Security servers

MAJOR AWARDS RECEIVED Seven Awards for Best Overall Performance from FAI Two Awards for Industrial Safety from GOI Award for Technical Innovation from FAI Two Raj Bhasha Shields for promoting Hindi Four Awards for Safety from National Safety Council, Chicago, one Award from Gujarat Safety Council and Certificate of “Lowest Disability Injury Index” Indo German Greentech Environment Excellence Award National Safety Award (Runner up) Two National Energy Conservation Award and Letter of Appreciation from Govt. of Gujarat Vishwakarma Rashtriya Puraskar to three employees from Govt. of India

VISION ---2010 BROAD VISION OF THE SOCIETY ⇒To augment the incremental income of farmers by helping them to increase their crop productivity through balanced use of energy efficient fertilisers ⇒To maintain the environmental health ⇒To make cooperative societies economically and democratically strong for professionalised services to the farming community to ensure an empowered rural India. ⇒The Society has embarked upon another growth plan titled “VISION 2010” to achieve annual turnover of Rs. 15,000 crore (USD 3750 Million) by the year 2010. ⇒Society is exploring avenues for diversification into other profitable business areas, apart from fertiliser sector, for sustained growth and adequate return to member shareholders. ⇒Vision 2010 would mainly focus on farmer oriented schemes and strengthening of cooperative infrastructure. ⇒Broadly identified business activities under the “VISION 2010“ are :-

⇒

Installation of Ammonia/Urea plants including acquisition of fertiliser units

⇒Generation of Power ⇒Production and Marketing of micro-nutrients, seeds, biofertilisers, pesticides etc. ⇒Value addition to agri-products and marketing ⇒Banking and Financial Services ⇒Information Technology and IT enabled services ⇒Establishments of Retail Chain in urban and semi-urban locations INVESTMENT FOR CAPACITY INCREASE IFFCO has envisaged a major expansion/diversification plan to invest USD 1 Billion to ramp up the Domestic Fertiliser Production Capacity, Acquisition of Plants, Joint Ventures in foreign countries and Energy Reduction Measures in existing Units: ►Energy Saving Project (ESP) has been implemented in all Ammonia and Urea Plants at Kalol, Phulpur and Aonla units with total investment of Rs. 412 Crore (USD 103 Million).

►Capacity Enhancement Project (CEP) implemented at Phulpur and Aonla units in May’08. ►A State-of-the-Art phosphoric acid plant in Egypt (IEFC) alongwith EL Nasr Mining company (ENMC), Egypt with a project cost of USD 325 million having an installed capacity of 0.5 Million MTPA of P2O5. IFFCO’s equity in IEFC is 76% and ENMC’s equity is 24%. ►Another Phos. Acid Plant (JIFCO) with Jordan Phosphatic Mines Co. Ltd. (JPMC) with project cost of USD 580 Million having capacity of 1500 MT per day. IFFCO holding is 52%. ► Acquired NPK/DAP Plant of 2 Million MTPA at Paradeep alongwith Phosphoric Acid and Sulphuric Acid at a cost of USD 505 Million in October 2005. US$ 1.5 Billion INVESTMENT IN POWER PROJECT 1320 MW Power Project at Chhattisgarh. IFFCO Chhattisgarh Power Ltd. with Chhattisgarh State Electricity Board (CSEB) incorporated on 25.01.2006 . Salient features of the Project : Total estimated project cost USD 1.5 billion

Equity participation by IFFCO (74%) and CSEB (26%) Scheduled commissioning of first unit of 500/660 MV in 2011 Low tarrif electricity to farmers of Chhattisgarh Active participation of Government in the land, coal, water and infrastructure fronts US$ 0.6 Billion INVESTMENT IN SEZ IFFCO has laid foundation stone for IFFCO KISAN SEZ at Nellore, India, on March 21, 2008. Special features are :  Estimated investment of USD 600 Million  Closed to Krishnapatnam Port  Farmer Friendly infrastructure planned  Provision for Food Processing Zone  Secondary and Tertiary Industries under consideration

IFFCO PLANTS

C o m m is P la n ts L o c a t io n in K a lo l

G u ja r a t

1975

K a n d la G u ja r a t

1975

IFFCO SUBSIDIARIES IFFCO TOKIO GENERAL INSURANCE COMPANY LTD. INDO EGYPTIAN FERTILIZERS COMPANY, SAE JORDAN INDIA FERTILIZER COMPANY LLC IFFCO CHHATTISGARH POWER LTD. KISAN INTERNATIONAL TRADING FZE IFFCO TOKIO INSURANCE SERVICES LTD. IFFCO KISAN BAZAR LTD. IFFCO KISAN SANCHAR LTD. IFFCO KISAN SEZ LTD. INDIAN FARM FORESTRY DEVELOPMENT COOP. LTD

IFFCO ASSOCIATES INDUSTRIES CHIMIQUES DU SENEGAL OMAN INDIA FERTILIZER COMPANY S.A.O.C. INDIAN POTASH LTD. NATIONAL COMMODITY & DERIVATIVES EXCHANGE LTD. NATIONAL COLLATERAL MANAGEMENT SERVICES LTD. COOPERATIVE RURAL DEVELOPMENT TRUST KISAN SEWA TRUST IFFCO FOUNDATION LEGEND INTERNATIONAL HOLDINGS INC.

CUMULATIVE ACHIEVEMENTS FERTILISER PRODUCTION

104 Million MT

FERTILISER SALE

113 Million MT

TURNOVER

USD 22841 Million

PROFIT BEFORE TAX

USD 1600 Million

PROFIT AFTER TAX

USD 1240 Million

CONTRIBUTION TO EXCHEQUER

USD 1267 Million

CONCLUSION ⇒

IFFCO, to day, is a leading player in India's fertiliser industry and is making substantial contribution to the efforts of Indian Government to increase food grain production in the country.

⇒At IFFCO, the thirst for ever improving the services to farmers and member co-operatives is insatiable, commitment to quality is insurmountable and harnessing of mother earths' bounty to drive hunger away from India in an ecologically sustainable manner is the prime mission. All that IFFCO cherishes in exchange is an everlasting smile on the face of Indian Farmer who form the moving spirit behind this mission.

SUGGESTION ⇒Increase canteen facilities for the employee. ⇒

IFFCO has four production plants but these plants are not sufficient for production. So increase the numbers of plant.