FM - IIFCO

A Project Report On “Achieving Carbon Credit by IFFCO” At

Indian Farmers Fertilizers Co-Operative Limited.(IFFCO).

(Kalol Unit) Under the Guidance of (in Company) Mr.D.U.Shah (Account Manager)

Under the Guidance of (College) Mrs.Arpita Vaghela (Faculty)

Institution

Submitted to Gujarat Technological University - Ahmedabad Prepared By Hetal M. Kaswala MBA 2nd sem Seat No.:-13947

Academic year 2009-10

1

Company Certificate

2

K. K. Parekh Institute of Management Student – Amreli Dr. Jivraj Mehta Vidhya Vihar Campus Lathi road – Amreli Ph: (02792) 223509 fax: (02792) 223509 E-mail: [email protected] Web: kkpimsamreli.com DIRECTOR‟S RECOMMENDATION

TO, The Registrar Gujarat Technological University Ahmedabad

Subject: MBA Summer Training Project Report

Respected Sir,

I am recommending the Summer Training Project entitled- Achieving Carbon Credit prepared by Hetal M. Kaswala at Indian Farmer Fertilizer Cooperative Limited(IFFCO)as the partial fulfillment of the University requirement for the award of MBA degree of Gujarat Technology University –Ahmedabad.

Date: -

Thanking You,

Place: - Amreli

Yours Truly

Director

STUDENT DECLARATION 3

I the undersigned student Hetal M. Kaswala of K. K. Parekh Institute of Management Studies – Amreli M.B.A. II Semester, hereby declare that, the project on Achieving

Carbon Credit by IFFCO is my own work. In the partial fulfillment of Master Degree of Business Administration, I had undergone project work at Indian Farmers Fertilizers Co-operative Limited (Kalol) under the guidance of Mrs. Arpita Vaghela K. K. Parekh Institute of Management

Studies

– Amreli

and submitted

to

Gujarat

Technological University, Ahmedabad.

This project work is my original work and has not been submitted to any where earlier

I also declare that all the information collected from the various secondary sources has been duly acknowledged in this project report.

De:

27/07/2010

Place:

Amreli

Hetal m. kaswala

4

I also declare h all the information collected from the various secondary sources h been duly acknowledged in this project report.

PREFACE ―Knowledge and human power are synonyms‖, once said the great philosopher Francis Bacon. However based on the experience within today‘s global markets, he would probably say, ―The ability to capture, communicate & leverage knowledge to solve problems is human power‖. This raises the question how exactly one can best capture, communicate & leverage knowledge, especially within world of system engineering.

The tryst for knowledge and power led me to two years M.B.A. degree course as part of this long-term investment. This course not only enabled me to focus firmly on the current trend but also helped to focus on future changes. As a part of this M.B.A. degree, students have to undergo a project, which is designed keeping the prerogative and preferences of industry in mind. This particular project allows a student to implement what I have learned within the four walls of classroom. It is here that the caliber of student is tested to find his flexibility for rigorous tasks assigned to him in future. This report that I am submitting intends to highlight my versatility in sustaining the pulls and pressure of day to day professional life and put to perspective the facts that I am capable enough to deliver whenever a challenge is thrown to me.

This report is divided in two parts. The first part gives the basic information about the project, the industry and the company. The second part consists of Research Analysis and Conclusion on the basis of particular Research Process. At the end I have provided a short list of the

5

reference books and the sites that provided useful information during the project.

Date: 27/07/2010 Place:

Amreli

He. kaswala

Acknowledgement No endeavor is complete without acknowledging those who have helped to make this project a success. As such I would like to thank all those who have helped me to complete this project.

I am obliged with the Gujarat Technological University, Ahmadabad for granting me the golden opportunity to work as a trainee. I would also like to express my gratitude to K.K.Parekh Institute of Management Studies, Amreli.

I, Indebted to Indian Farmers Fertilizers Co-Operative Limited.(IFFCO).

I would also like to thank Mr. Bharat shah(Training Manager) for his active involvement in my research work, his enthusiasm in reviewing my research, and for giving me valuable insights. Your patience and support is greatly appreciated.

This study could not have been successful without the valuable input of the clients of the Indian Farmers Fertilizers Co-Operative Limited.(IFFCO).

Date: 27/07/2010 6

Place:

Amreli

Hetal m. kaswala

Executive Summary The

Indian

Fertilizer

Cooperative

Limited

(IFFCO)

established in 1967 is the largest chemical fertilizer manufacture in Asia.IFFCO has established IFFCO foundation in 2003 under Indian Trust Act as an independent institution in the form of a public Trust. Beside promoting and strengthening cooperative development, the foundation is expected to enhance capacities and capabilities of human resource, technical and business competence of IFFCO constituents and others by being a development partner with government, national and international agencies and renowned NGOs and to encourage effective participation of cooperative in national and international economic, trade, culture and other spheres.

The focus of foundation‘s programmed is on agriculture and rural development, welfare of farming communities, specially women, incomegenerating opportunities for artisans, folk artists, small entrepreneurs, food , nutrition and live hood securing and protection of environment and ecology mainly through the institutions of cooperative and NGOs. The foundation hereby invites all scholars, scientists, researcher, technicians, planners, field and social workers to submit their innovative ideas, concepts, projects and programmers [in English or Hindi]. The details which may be submitted in the following format will be assessed by a group of specialists and those found innovative and viable would be taken up basis:………

7

for implementation on a pilot

I. Project Title II. Perceived objective III. Target Group IV. Plan of Implementation V. Resources needed VI. Expected social and economic benefits to the target group VII. Whether the project was submitted or implemented elsewhere VIII. 8-10 neatly typed pages with illustration , if any, on A4 size paper, IX. A 2-page executive summary of the proposal X. Full name, address, phone numbers, present and past occupations…

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Kalol Unit

“SERVICE TO FARMERS” 9

INDEX Sr.no

Particular

Page no.

1

Industry profile

3

1.1 Introduction about fertilizers industries

4

Company Profile

5

2.1 History of Kalol unit

7

2.2 Eye view of the company

10

2.3 Vision & Mission

12

2.4 Fire & Safety

15

2.5 Organization Structure

16

2.6Company Associations

17

2.7 company Competitors

18

2.8 Board of Directors

19

2.9 Plant Location

20

2.10 Performance Highlights 2009-10

21

2.11 Major Achievement

22

Study of four functional area

33

3.1 Marketing Department

34

3.2 Human Resources Department

43

3.3 Production & Operation Department

53

3.4 Finance Department

60

Research methodology

67

4.1 Introduction

68

4.2 Define the problem

68

4.3 Objective of the study

71

4.4 Rational of the study

71

2

3

4

10

4.5 Limitations of the study

72

4.6 Variables & Hypothesis formulation

72

4.7 Data collection

73

4.8 Data Analysis & interpretation

81

Finding

83

conclusion

84

Bibliography

85

Appendix

86

11

12

Introduction about Fertilizer Industries In India there are many Fertilizer industries. That means each number of Industries has a great numbers of competitors. And from that IFFCO is one of the best Fertilizer industries. It had faced a large problem during Establishment because of large number of compotators. It has many branches in India like KALOL, KANDALA, PHULPUR, AONALA, ORISSA. Almost all fertilizer industries were producing Urea, ammonia, etc……..

Name of companies in fertilizer industries are as below:Chambal fertilizer and chemicals Ltd. New Delhi National fertilizer Ltd. Noida Chemicals fertilizer Ltd. Banglore. Hindalco Industries Ltd. Mumbai Indian potashLtd. New Delhi Indian farmer‘s fertilizer coop.Ltd. Brahmaputra Valley fertilizer cooperative Ltd. Namrup. Indo Gulf Fertilizer and chemical Ltd. Vadodara Deepak fertilizer and petrochemiacals crop. Pune. Godavari fertilizer & chemicals Ltd. Orissa GNFC Ltd. Bharuch Gujarat State fertilizer and chemical LTD. Vadodara

Bio-fertilizers are capable of fixing atmospheric nitrogen when suitable crops are inoculated with them. Bio-fertilizers are low cost, effective, environmental friendly and renewable source of plant nutrients and their management is necessary for maintain soil health for sustainable agriculture. The bacterial organisms present in the biofertiliser either fix atmospheric nitrogen or Solubilising insoluble forms of soil phosphate. The range of nitrogen fixed per ha/year varies from crop to crop; it is 80-85 kg for cowpea, 50-60 kg groundnut, 60-80 kg for soybean and 50-55 kg for moonbeam...

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BIO FERTILISERS A Bio fertilizer unit was established at cooperative Rural Development Trust, Phulpur (Uttar Pradesh) in 1996-97 other at Kalol (Gujarat) in 2003-04 with an annual capacity of 75 MT and 165 MT respectively of different cultures such as Rhizobium, Azotobacter, PSM, Azospirillium, and Acetobacter

Phosphate

Solubilising

Micro Rhizobium: - it is the most important

Organism: - Several soil bacteria and nitrogen-fixing

organism.

It

lives

fungi posses the ability to bring symbiotically in the root nodules of insoluble forms by secreting organic leguminous plants through nitrogen to acids. They can be applied to and the crop; nitrogen fixed by legumerecommended for all crops.

Rhizobium association would also leave

residual

nitrogen

for

the

succeeding crops. The beneficiary crops are groundnut, soybean, Red gram, green gram, and black gram, Lentil, Cowpea, Bengal-gram, and Fodder legumes.

Azotobacter: - It is non-symbiotic

Acetobacter: - It is a

nitrogen fixing bacteria recommended symbiotic bacterium capable of fixing for non-leguminous crops like paddy, atmospheric nitrogen by living within Wheat,

Millets,

Cotton,

Tomato, the sugar plant. They are found in all

Cabbage, Mustard, Safflower, and parts of plant of plant body. It is Sunflower. The Azotobacter performs suitable for sugarcane cultivation. well if the soil organic matter content is high..

14

15

History of Kalol unit Indian Farmers fertilizer Cooperative Ltd. Was established on 3rd November, 1967 under multi state co-operative society Registration act. But at Kalol & Kandala it established in the year 1972.

Kalol unit - the oldest unit of IFFCO is located at 26 km from Ahmadabad on

the Ahmadabad Mehasana highway. The Unit started

commercial production in April, 1975 in an area covering 96 hectares. The original project cost that was spends is RS. 71.23 Corers and project cost for the expansion of KEP was RS. 149.71 Corers. That is its Industry License No. L/18(1)/1. its Annual license capacity of Urea plant (tpa); 396.000(Original plant),544.500 (with Expansion).Its D.G.T.D. factory No.DW-302001.On 2306-1972 they started a construction work at Kalol. Mechanical completion of Ammonia is on 15-03-1974 and of Urea on 15-10-1974. Commercial Production of both Ammonia and Urea is started on the same date that is 3103-1975. Production of Dry Ice on March 1978. And production of Liquid CO2 is on 01-04-1998. Dedication of Kalol plant by the then prime Minister Late Smt. Indira Gandhi is on 08-11-1974.

The unit consists of plants to produce 910 t/d ammonia based on MW Kellogg USA natural gas steam reforming process and 1200 t/d urea based on Stamicarbon‘s CO2 stripping process. Urea feed stocks i.e. ammonia and CO2 are supplied from ammonia plant. Capacity of ammonia plant at IFFCO Kalol was updated from 910 tpd to 1100 tpd in August, 1997 with installation of Pre-reformer unit using naphtha as feed stock. R-LNG which is the main feedstock is presently supplied by GSPCL. The fuels natural gas (NG) and associated gas (AG) are supplied by ONGC/GAIL from nearby gas wells and LSHS & Naphtha are from ONGC. Water is supplied by GIDC from 15 bore wells around the Unit. The unit also has plants to produce 6 tpd Dry Ice and 12 tpd Liquid CO2 along with necessary offsite facilities.

16

And also commercial production of KEP is on 31-08-1997. on 02-08-1998 there was a dedication of KEP to farmers by Shri L.K.Advani,the then Union Home Minister of India.

 Till mid sixties cooperative in India had no production facility despite marketing nearly 70% of fertilizers.  IFFCO was established as the farmers‘ own initiative in cooperative sector on 3rd Nov. 1967 with the proposed plants at Kalol & Kandala.  With the enactment of multi State co-operative society Act 2002, the society is deemed to be registered as a Multi State co-operative society. The society is fully owned by Cooperatives...

On 12-09-2003 zero date of Energy Saving Project ( ESP) was started. And in that part-1 of that ESP work is completed on Sept. 2005, and part-2 is going on.

Commitment to Better Environment & Quality Management and

information about some certificate of IFFCO Kalol unit is below:-

ISO-9002 Certification of Approval by BVQI

10-08-1996

ISO-9002 Re-Certification

07-08-1999

ISO-14001 Certificate of Approval by BVQI

20-09-2000

ISO-14001 Certificate of Approval for Township-(Kasturinagar) by 26-05-2001 BVQI ISO-9001: 2000 Re-Certificate

14-08-2002

ISO-14001 Recertification for factory

09-10-2003

ISO-14001 Recertification for Township-(Kasturinagar)

13-07-2004

17

State

Gujarat, Inia

Eye View of the company IFFCO Kalol Unit Gandhingar Product / Service

Fertilizer (Urea)

Company Profile

Fertilizer Company

Establishment Year

1973

Firm type

Organization

Nature of Business

Manufacture

Level To Expand

National

Contact Information Web site

Visit Web Site

Contact person

A M KANCHANI

Designation

MANAGER (MECH.)

Phone (office)

079-23282338

Phone (Resi.)

079-27643471

Mobile

09898505554

Fax

079-23286021

Address

Po..Kasturinagar Dist. Gandhingar North Gujarat (India)

18

State Capital

Gandhi Nagar, is about 18 Km from the plant site.

Distance from New

912 Km

Delhi Distance from Mumbai

514 Km

Nearest Airport

Ahemdabad (About 25 Km. away from Plant)

Railway Station

Kalol (7 Km from the plant)

Road

Ahemdabad (25 Km from the plant) On Ahmedabad-Mehsana State Highway (SH)

Area under Plant

96 Hectares

Area under Township

22 Hectares

Temperature ( o C )

45 (Maximum) in summer to 4 (Minimum) in winter.

Rainfall (mm)

742

Longitude

72-31-40

Latitude

23-12-3

Address

Indian Farmers Fertilizer Cooperative Limited KALOL, (P.O.) Kasturi Nagar, Gandhi Nagar, PIN 382423 (Gujarat), INDIA.

Phones

91-2764-223256,91-2764-223258,91-2764-223272, 91-2764-223273, 91-2764-220202, 91-2764-220209, 91-2764-221056, 91-2764-221165, 91-2764-220604

FAX

: 91-79-23286020/21/22/23/24

19

VISION 2010 To augment the incremental incomes of farmers by helping them to increase their crop productivity through balanced use of energy efficient fertilizers; maintain the environmental health; and to make cooperative

societies

economically

and

democratically

strong

for

professionalized services to the farming community to ensure an empowered rural India.

VISION 2015 IFFCO successfully implemented its earlier Corporate Plans namely ―VISION 2000‖, ―MISSION 2005‖ and ‗VISION 2010‘ which resulted into becoming one of the largest producer and marketer of Chemical Fertilizers by expansion of IFFCO‘s existing units, setting up joint venture companies overseas and diversification into new sectors. IFFCO has now visualized a comprehensive Plan entitled ‗VISION-2015‘having objectives of :-

� Production of fertilizers through expansion of existing units � Setting up of additional fertilizer production facilities in India and

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Abroad through joint ventures � Diversification into other profitable sectors � strengthening raw material sourcing through Strategic joint ventures � Formulation of Strategic Alliances through IFFCO consortium

TARGETS UNDER VISION - 2015

Area of Operation

Projected Target

Production of fertilizers

15 Million Tonne

Sale of Fertilizers

15 Million Tonne

Turnover

USD 6500 Million

Net worth

USD 1700 Million

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Major salient features of „Vision-2015‟ Become Global Leader in Fertilizers Production to cater to Food Security needs of the Nation.  Maximize synergies of core business through downstream value additions and Forward/Backward integration.  Enhance presence in International markets through strategic joint ventures and Synergistic Acquisitions.  Promote Integrated Nutrient Management to improve efficiency of fertilizer use and to promote location specific research an efficient fertilizer practices.  Bring sustainability and strategies to prevent climate changes by reducing Energy consumption, Improving Resources management and promoting Renewable Energy sources.  Help

Cooperative

Societies

to

become

economically

strong,

professionally managed and to equip Farming community with advanced agricultural practices for improved productivity to ensure empowered Rural India.  Achieve Fertilizers Production/Marketing target of 15 million Tonne per annum with an annual turnover of Rs. 30,000 crore.

MISSION

 To provide to farmers high quality fertilizers in right time and in adequate quantities with an objective to increase crop productivity.  To make plants energy efficient and continually review various schemes to conserve energy.  Commitment to health, safety, environment and forestry development to enrich the quality of community life.  Commitment to social responsibilities for a strong social fabric.

22

 To institutionalize core values and create a culture of team building, empowerment and innovation which would help in incremental growth of employees and enable achievement of strategic objectives.  Foster a culture of trust, openness and mutual concern to make working a stimulating and challenging experience for stakeholders.  Building a value driven organization with an improved and responsive customer focus. A true commitment to transparency, accountability and integrity in principle and practice.

 To acquire, assimilate and adopt reliable, efficient and cost effective technologies.  Sourcing raw materials for production of phosphates fertilizers at economical cost by entering into Joint Ventures outside India.

 To ensure growth in core and non-core sectors.  A true cooperative society committed for fostering cooperative movement in the country. Emerging as dynamic organization, focusing on strategic strengths, seizing opportunities for generating and building upon past success, enhancing earnings to maximize the shareholders‘ value.

23

Fire & Safety

Fire in industry causes colossal losses every year over the world, in developed countries, such losses are quite high. Such losses are in form of destruction of raw material, finished product, plant equipment, and less of lives. Business these high potentials, the industrial fire losses are causing serious set back to individual business, loss of national wealth and a very serious set back to the development planning of a country. Fire is oxidation of burning MIT in the presence of O2.

Causes of Fire:

Electrical equipment Smoking Friction Foreign object or tramp material Open flames Heaters (gas & oil fined), air heaters cause fire. Overtaking Failure to provide substantial space shield Failure to provide a secure base Torches Welding and cutting Spontaneous ignition Poor house keeping Explosive atmosphere

Fire Prevention:

Detailed guidelines and are of practices are available on this topic. However to reduce the losses to both life and properties study of the following aspect during planning stage is necessary.

24

Proper spacing, layout of buildings, plant, warehouses, storage facilities etc. Proper road approaches, which would adequate access to emergency vehicles. Proper process design which would take care of temperature and pressure controls, effective cooling system provision of relief values, automatic purging with inert gases etc. Proper process equipment, which can bear stress and strain under varied process condition and an atmospheric condition. Providing adequate fire resistance to all elements of structure in consideration to the fire load. Providing effective fire detection system.

The above mentioned measure not only helps in keeping the losses to the minimum but reduce the possibility of major fire accidents of catastrophes.

25

Organization Structure

26

IFFCO Associates

 IFFCO-Tokio General Insurance Company Ltd.  Oman India Fertiliser Company S.A.O.C.  Jordan India Fertiliser Company L.L.C  IFFCO Chhattisgarh Power Ltd.  IFFCO Kisan Sanchar Ltd.  IFFCO Kisan SEZ Ltd.  Industries Chimiques Du Senegal  Kisan International Trading, FZE  National Commodity & Derivatives Exchange Ltd.  National Collateral Management Services Ltd.  Indian Potash Limited.  IFFCO Kisan Bazar Ltd.  Indian Farm Forestry Development Cooperative Ltd.  IFFCO Foundation  Cooperative Rural Development Trust  IFFCO Kisan Sewa TRUST  GrowMax Agri Corp.

 Aria Chemicals (Orissa) Ltd.

27

COMPETITORS IFFCO has a very large number of competitors in India. Some name of there competitors are as below..:-

Chambal fertilizer and chemicals Ltd. New Delhi National fertilizer Ltd. Noida Chemicals fertilizer Ltd. Banglore. Hindalco Industries Ltd. Mumbai Indian potashLtd. New Delhi Indian farmers fertilizer coop.Ltd. Brahmaputra Valley fertilizer cooperative Ltd. Namrup. Indo Gulf Fertilizer and chemical Ltd. Vadodara Deepak fertilizer and petrochemiacals crop. Pune. Godavari fertilizer & chemicals Ltd. Orissa GNFC Ltd. Bharuch Gujarat State fertilizer and chemical LTD. Vadodara Shriam Fertilizer & Chemicals, New Delhi. Rashtriya fertilizer & Chemicals Ltd. Mumbai. MMTC Ltd. Mumbai.. Tata Chemicals Ltd. Mumbai. Paradeep Phosphates Ltd. Bhuneswar Madras Fertiliser Ltd. Chennai. Fertilisers & Chemicals Travancore Ltd. Hyderabad. Rama Phosphates Ltd. Mumbai Coromandel Fertiliser Ltd. Secunderabad Krishak Bharati Cooperative Ltd. Noida Dharmsi Morarji Chemicals Company Ltd. Mumbai Nagarjuna fertilizer & Chemicals, Ltd Hyderabad

28

BOARD OF DIRECTOR

Chairman

Vice-Chairman

Surinder Kumar Jakhar

N.P. Patel

Managing Director

Marketing Director

Dr.U.S.Awasthi

Arabinda Roy

Directors Prem Chandra Munshi

R.K. Meena

Raj Kumar Tripathi

K. Srinivasa Gowda

Tryambakrao G. Sirsath

Harminder Singh Jassi

Dr. B.S. Vishwanathan

Simachal Padhy

Vithalbhai H. Radadia

Ankushrao R. Tope

Pramod Kumar Singh

Ravindra Pratap Singh

Kartick Chandra Sarkar

Ramakant Bhargava

Ram Chandra Singh Pradhan Balvinder Singh Nakai Sheesh Pal Singh

Umesh Tripathi

A.Praveen Reddy

G.M.Dhanajaya

Anil Malik

Ramakant Bhargaya

29

Registered Office IFFCO Sadan,C-1, District Centre Saket Place, New Delhi-110017 Bankers  Indian Overseas Bank  State Bank of India  Bank of Baroda  Standard Chartered Bank  The Maharashtra State Cooperative Bank Ltd.  The West Bengal State Cooperative Bank Ltd.  Madhya Pradesh State Cooperative Bank Ltd  The Karnataka State Cooperative Bank Ltd.  The Punjab State Cooperative Bank Ltd.  The Hongkong and Shanghai Banking Cooperation Ltd.  ICICI Bank Ltd.  IDBI Bank Ltd.  HDFC Bank Ltd.  Punjab National Bank. 30

Auditors M/S. S.K. Mehta & Co., Charteded Accountants 2682, Gai No. 2, Beadan Pura Ajmal Khan Road Market Karol Bagh New Delhi 110005

M/S, S.C. Vasudeva & Co., Chartered Accounts B-41, Panchasheel Enclave New Delhi 110017

M/S. Arun Singh & Co., Chartered Accounts F-7, Lajpat Nagar 3 New Delhi 110024

M/S. J.C. Bhalla & Co., Chartered Accountants B-5, Sector-6 NOIDA 201301

M/S. Rajnish Associates Chartered Accounts 92 & 87, Defence Colony Flyover Market New Delhi 110024

31

Company’s main units across the country Kalol Unit:Ammonia-Urea Complex commissioned in 1975 Production Capacity Ammonia - 0.36 million TPA Urea - 0.55 million TPA

Paradeep Unit:DAP/NPK: 2 Million Tons/Year Sulphuric Acid: 7000 TPD Phosphoric Acid: 2650 TPD

Kandala Unit:NPK/DAP Complex commissioned in 1975 Production Capacity NPK/DAP: 2.42 million MTPA In P2O5 terms: 0.910 million MTPA

Anola Unit:Ammonia-Urea Complex commissioned in 1988 Re-assessed Production Capacity Ammonia - 1.003 million TPA Urea - 1.730 million TPA

Phulpur Unit:Ammonia-Urea Complex commissioned in 1981 Re-assessed Production Capacity Ammonia - 0.824 million TPA Urea - 1.416 million TPA 32

Directors‟ Report Dear Cooperators, With immense sense of pride and satisfaction, I place before you the 42nd Annual Report of your society for year 2009-10. This has been surpassed and new milestones created, the society has won several prestigious awards. I, therefore, feel honored to be a part of this illustrious organization and present before you its performance and accounts for 200910. As you all are awere,the Nutrient based subsidy scheme, for phosphate and Potosi fertilizers, was recently introduced by the Govt. of India. And made effective from April1, 2010. This decision of the Govt. will encourage balanced nutrients usage, improved soil conditions, higher productivity and introduction of increased formulation of crop specific and nutrient fortified fertilizer. This will make the Indian fertilizer industries strong and resist to cope with Global challenges lead to providing direct subsidy to farmers. It is matter of great honors that the chairman of your society has been elected for the second time on the global board of international cooperative alliance(ICA). Further , your society has received the ―Dot Coop Global Award for Cooperative Excellence‖ in recognitions of its efforts for providing services to its cooperative members. Friends, in the year 2009-10 your society has shown commendable performance in all the spheres of its function, surpassing its own previous best record in the areas of production, sales, transportation, specific energy consumption and over all performance. With

the

commitment

and

dedication

of

over

professional team, It is certain that your society will continue to strive harder to surpass its own records in order to emerge as a Global Leader in the Production and marketing of fertilizers with out compromising on the motto of ―Service To Farmers‖.. On behalf of all the members, I take this opportunity to Congratulate Dr.Awasthi and his entire team for their exemplary performance. 33

Auditors‟ Report We have audited the Attachmate balance sheet of Indian Farmers Fertilizer Cooperative Ltd.(Multi state Cooperative society) as at 31st march 2010 and Profit & loss A/C for the year ended on that date Annexed thereto and cash flow statement for the year on the date. These Financial Statement are the responsibility of the society‘s management. Our responsibility is to express and opinion on this Financial Statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, of thstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principals used and significant estimates made by the Management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

We report that: (A) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit.

(B) In our opinion, proper books of account as specified in the Multi State Cooperative Societies Rules, 2002 have been kept by the Society so far as appears from our examination of the books and proper returns adequate for the purpose of our audit

have been received from

adequate for the purpose of our audit have been received from the branches not visited by us.

34

(C) The accounts of the Muscat Branch at Oman, Which have been audited by the auditors other than the society‘s auditors and the financial statement as received from the Muscat Branch have been incorporated in the financial statements as audited by us, in accordance with the accounting policies of the society. (D) The financial statements i.e the ?Balance sheet, Profit &

Loss

Account and Cash Flow Statement dealt with by this report are in agreement with the books of account after considering the audited financial Statement received from Foreign Branch of the Society. (E) In our opinion and to the best of our information and according to the explanations given to us and as shown by the books of account of the society, the said accounts. Read together with Notes given in schedule 20 and Significant Accounting policies, forming part of the Accounts, give a true and fair view in conformity with the accounting principles generally accepted in India:

I. In the case of Balance sheet, of the state of affairs of the society as at 31st March, 2010. II. In the case of profit & loss Account, of the Profit of the society for the year ended on that date: and

III. In the case of cash flow Statements, of the cash Flow of the Society for the year ended on the date……

35

PERFORMANCE HIGHLIGHTS OF 2009-10 Highest Production of Fertilizers

81.98 lakh MT

(Previous Best 71.68 lakh MT in 2008-09)

Highest Production of Urea

43.24 lakh MT

(Previous Best 40.68 lakh MT in 2008-09)

Highest Production of NP/NPK/DAP

38.74 lakh MT

(Previous Best 32.26 lakh MT in 2006-07)

Highest Sales of Fertilizers

118.27 lakh MT

(Previous Best 112.58 lakh MT in ‘08- 09)

Highest Sale of Urea

63.35 lakh MT

(Previous Best 58.69 lakh MT in 2008-09)

Highest Sales of NP/NPK/DAP

54.92 lakh MT

(Previous Best 53.89 lakh MT in 2008-09)

Profit before Tax

Rs 567.28 Crore

(Best PBT Rs. 807.09 crore in 2002-03)

Profit after Tax

Rs. 401.10 Crore

(Best PAT Rs. 557.2 crore in 2002-03)

Total Turnover

Rs. 16809 Crore

(Previous Best Rs 32,933 crore in 08-09)

Plant Productivity

1608 MT/Employee

(Best 1669 MT/Employee in 2005-06) Highest Marketing Productivity

7885 MT/Employee

( Best 7397 MT/Employee in 08-09) 36

Major Awards Received  Prestigious Economic Times Acer and Intel Smart Workplace Award in the Manufacturing and Industrial Segment  ―Best Content Service‖ as well as the ―Best Project Management‖ in respect of IFFCO Kisan Sanchar Limited (IKSL) at the World Communications Award held at London  Institute of Chartered Accountants of India (ICAI) Award for Excellence in Financial Reporting for IFFCO‘s Annual report and accounts for the year 2007-08  Best cooperative Society Award from Public relations Society of India (PRSI) at its Golden Jubilee Ceremony in Mauritius  IFFCO has been ranked 1st in Sales Turnover and 2nd in terms of Net worth and Profitability amongst unlisted enterprises by Economic Time Intelligence Group for the year 2007-08  IFFCO has also got Prestigious CIO 100 Award by International Data group (IDGI India) the world‘s leading Technology Media Event and Research Group  Best managed Workforce Award for the year 2004 from Hewitt Associates and CNBC TV-18  Two Awards for Highly Commendable Accounts  National HRD Award from National HRD Network for outstanding contribution in HR Development  IFFCO Annual Report bagged the third prize , instituted by Public Relation Society of India (PRSI)  FAI Golden Jubilee Award on ‗‘ Transfer of improved Farm Technology‘‘

 1st prize for Best Corporate Film from NCUI  There awards for Best Display in FAI Exhibitions  IFFCO Corporate film was adjudged the best by Public Relation Society of India (PRSI)  IFFCO has bagged FAI ‗‘ Best Video Film Award 2006-07‘ for film on ‗‘Water Harvesting‘‘ 37

Kalol Unit

Name of Awards Times National Energy Conservation Award 3 FAI Award for ―Best Overall Performance‖ & ―Technical Innovation‖

8

Productivity Council Award 1 Indo-German Greentech Environment 1 National Safety Council Award 8 Gujarat State Safety Council Award 20 Gujarat Horticultural Awards 6 Vishwakarma Rashtriya Puraskar 2

38

Commitment to Better Environment & Quality Management  All IFFCO Units and townships have attractive landscape surrounded by thousands of trees.

 IFFCO is committed to improve safety, health and environment in and around our plants in line with international norms.

 Kalol, Phulpur, Aonla and Kandla Units hold ISO-14001 Certificate for Environment Management System.

 Kalol, Phulpur and Aonla Units have received ISO-9001 for Quality Management.

39

Marketing Department

Human Resource Department

Study for Functional Area

Finance Department

40

Production & Operation Department

41

MARKETING Introduction: ―Marketing is both buying and selling activities‖

Marketing starts before the production and it also works after the sale of the product. Marketing in this competitive world plays a very important role because without it no one can imagine or predict about the product demand and its supply for managing business activities very perfectly and for attaining the organizational goal marketing is very important. Marketing department of any organization plays a very crucial role and it requires highly skilled and extra ordinary mind.

Men have unlimited and repetitive wants in nature. To satisfy these wants products are to be produced and exchanged. When the word „Exchange‟ comes, the word „Marketing‟ automatically comes into the point. Exchange is the most important and powerful function in marketing. Marketing may be explained as a business function entrusted with creation and satisfaction of customers to achieve the aim of business.

For managerial definition, marketing has often been described as, “The Art of selling products.” But People are surprised when they hear that the important part of marketing is not selling! Selling is only the tip of marketing iceberg. Peter Drucker, a leading management theorist, puts it this way:

“There will always, one can assume, be need for some selling. But the aim of marketing is to make selling superfluous. The aim of Marketing is to know and understand the customer so well that the product or service fits him and sells itself. Ideally, marketing should

42

result in a customer who is ready to buy. All that should be needed them is to make the product or service available.” IFFCO‟s Marketing set up at present comprises 5 zonal offices, 17 state marketing offices and 62 area offices. Each area office covers four of five districts. Each area has eight to ten field officer attached to it. They are posted at district and taluka level towns. At present, there are about 463 field officers. The total numbers of personnel in marketing division are 1749.

MARKETING MIX OF IFFCO When marketing their products firms need to create a successful mix of:

PEOPLE

PROCESS

 Product:

Marketing starts before the production it plans for the future requirement and according to that the communication with the supplier is made and order placed for the production, and with the help of supply chain receiving & inspection of raw material is done.

43

The main supplier of IFFCO Kandla unit are outside India and for placing of an order and getting the delivery of raw material it requires more time so, H.O. of IFFCO taking information from its marketing department regarding the future requirements of the product and according to the information they place the order and communicate with the supplier.

Price:Price is also one of the factor which plays important role in the profitability of the company In IFFCO the product selling price is decided by the central government and the difference between the total cost of production and selling price is paid by the government in the form of the subsidy.

The selling price of the IFFCO Kandla plants products are (per tonne Rs.) NPK Grade –I (10:26:26)

15,048

Grade-II (12:32:16)

15,086

(18:46:00)

17,237

DAP MAP

9,350

Place:In IFFCO the final product is transported through railway and by road. The total transportation of IFFCO is made by  Railway 88%  Road 12%

Promotion:Fertilizer promotion is one of the important components in fertilizer marketing. The objective is to create awareness about fertilizer and provide technical information o improved agricultural practices and fertilizer use so as to increase productivity and fertilizer use efficiency. IFFCO has adopted a policy of multimedia oriented publicity strategy to popularize its products and services among the farming community. Outdoor publicity tools including wall paintings, posters, technical

44

literature, bus panels, and participation in fairs and exhibitions carrying the message of IFFCO were also adopted. Some promotional activities of IFFCO are as follow: Advertisement in doordarshan, media and press. Fairs and exhibitions. Technical lecture. Hoarding and road side Sign Boards. Crop films. MARKETING CHANNELS Distribution of fertilizers mainly through the Cooperative System  State level Apex Cooperative Marketing Federation acts as wholesaler  Direct supplies to Societies in some States  IFFCO-NCDC Cooperative Society  Small

quantities to

institutional

agencies like

Agro

Industries

Corporation etc 158 IFFCO Farmers Service Centers

MARKETING TERRITORIES OF IFFCO

Marketing Central Office

North Central Zone Lucknow

North Zone Chandigarh

South Zone Banglore

West Zone Bhopal

East Zone Kalkota

UP.Bihar Jharkhan Uttaranchal

PUN,HAR, RAJ,J&K, HP

AP,TN, KAR, KERALA

GUJ,MP, MAH, CHATGARH

ASSAM, ORISSA, W.B.

45

DISTRIBUTION & WAREHOUSING TRANSPORTATION  Both by Rail (90%) and Road (10%)

 WAREHOUSING  Federations & Cooperative Godowns Central Warehousing Corporation (CWC) and  State Warehousing Corporation (SWC)

Distribution Network

IFFCO distributes its fertilizers in 29 States/UTs in the country through the cooperative system. Cooperative structure differs from State to State, and societies at each level (district/taluka/village) perform different functions in different States. IFFCO‘s fertilizers are sold through a network of more than 39,500 cooperative societies in different States. Nearly 62 per cent of the material was sold directly to the Societies whereas 29 per cent was routed through Federations. As a matter of policy, IFFCO is canalizing its entire fertilizer production and imports through cooperative network. In case, the Cooperatives are not able to absorb the quantities offered by IFFCO, other institutional channels are utilized for distribution. The fertilizers are also sold through Farmers Service Centers run by IFFCO.

46

Farmers Service Centers

IFFCO operates its own 158 Farmers Service Centers (FSCs) spread over 10 States. Apart from supply of fertilizers, seeds, agro-chemicals etc. under one roof, these Centers also serve as the contact point for providing technical know-how to the farmers. programmes

such

as

FSCs also organized need based promotional

farmers

meetings,

soil

test

campaigns

and

demonstrations etc. in the villages around FSCs with a view to disseminate the message of balanced and efficient use of fertilizers. Literature on package of good practices for various crops, balanced use of fertilizers, soil testing etc. was distributed to the farmers in local languages through these FSCs.

Product Channels: As matter of policy, IFFCO is channelising its entire fertilizer production and imports through the cooperative network in case cooperatives are not able to absorb the quantities offered by the IFFCO, others institutional channels are involved. Small quantity is also sold through 158 farmer service centre owned and operative by IFFCO.

Cooperative societies:

IFFCO sale its fertilizers through a network of more than 38,155 cooperative societies in different states of its marketing territory. These

societies are well scattered, covering almost all the villages in the 47

country and are the backbone of the cooperative systems. Nearly 62% of the societies are getting fertilizers directly from the IFFCO where as 29% are getting through state federations. Public relation & Publicity:

In the era of globalization, IFFCO adopted an effective multi-pronged publicity strategy to further popularize its products and services among farming community. Outdoor publicity tools like wall paintings, posters, tractor trolley paintings, bus panels, technical literature conveying IFFCO‘s message were extensively deployed to project the image of the organization. A new look has been given to IFFCO‘s Farmers Services Centres.

IFFCO participated in various exhibitions/fairs all over the country by putting up attractive and impressive stalls, which brought laurels to the society. The society received wide, elaborate and exclusive coverage in print and electronic media, all India radio, Doordarshan and other channels .

48

IFFCO‘s annual calendar for the year 2008, which is dedicated to the 150 th year of 1st freedom struggle of India, received wide appreciation. House journal ‗IFFCO NEWS‘, which is a forum for sharing news, views and ideas focusing on employees‘ contribution/participation in the society‘s activities and future plans, also received wide appreciation. IFFCO‘s corporate film has bagged best documentary film award instituted by National Cooperative Union of India.

Sale of Fertilizer Material

(Lakh MT) Material

2009-10

2008-09

UREA -Own

43.22

40.71

20.13

17.98

SUB TOTAL

63.35

58.69

NP/NPK

27.94*

24.47

DAP/MAP -Own

11.14**

6.88

15.84

22.58

SUB TOTAL

26.98

29.42

TOTAL(NPK/DAP)

54.92

53.89

TOTAL(UREA+NP/NPK+DAP)

118.27

112.58

-Imported

-Imported

*Includes sales of 174.0 MT Imported NPK 19:19:19, 100% water soluble fertilizer **Includes sales of 385.6 MT of Urea Phosphate (17:44:00), 100% water soluble fertilizer produced at Kandla Unit.

49

Sales performance During the year, IFFCO achieved the Highest-ever Sales of 118.27 Lakh tones of fertilizer material compared to the previous year‘s recorded sale of 112.58 Lakh Tonne, representing an increase of about 5%. Higher sales could be achieved primarily due to effective planning, proper logistics management combined with timely supply and distribution, and intensive marketing strategy adopted by the society at all levels. Urea sales during 2009-10 were 63.35 Lakh Tonne as compared to 58.69 Lakh tones achieved during 2008-09, representing an increase of 7.9%. NP/NPK/DAP sales during 2009-10 were slightly higher by about 1.9% at 54.92 Lakh tones as against 53.89 Lakh tones in 2008-09.

50

51

What is Human Resource??? With a view to create an ambience of excellence in every sphere of organizational activities and enable employees to realize their potential to the fullest sharpening of skill and harnessing of expertise, a number of initiatives have been taken up during the year. The key people challenges related to skill sets were identified as work force productivity, employee engagement and driving performance across all levels. A series of structural training modules customized to the need of the society have been embarked during the year. The thrust has been on functional and managerial programmers for middle and senior management to hone the Leadership skills of managers.

An Employee Engagement Survey was conducted by the society to know the perception of employee towards their organization. The overall score was encouraging. Which indicated that 87% employee are highly engaged and satisfied. In order to bring performance orientation among the employees, the society has laid the groundwork for introducing robust performance management mechanism, which will be based on key responsibility, key performance areas and key performance indicators, values, managerial

and

cross-functional

competencies

as

well

as

potential

competencies.

Industrial Relation The directors wish to place on record their appreciation for the contribution made by the employees at all levels in ensuring un interrupted high level of performance in production, dispatch and marketing of fertilizer. During the year also, as in the past, industrial relations remained extremely cordial and harmonious, with the result the society‘s growth remain extremely good. It is a meter of pride that various joint ventures and subsidiaries have 52

come into existence and progressing with the corporation of the employees. The productivity at the plant level has increased from 1376 MT to 1608 MT and the sales of fertilizer from 7397 MT to 7885 MT per head in comparison to the last year 2008-09.

Industrial safety Your society continuous to accord the highest the priority to industrial safety. Training and education is continuously imparted to all concerned to create and enhance safety awareness.

Facilities provided for employees  Safety Shower and Eye Weather  Tagging System  Public address system  Internet system  Walky-talky system  Colony facilities  Education to child of employees  Club & swimming facilities  Medical facilities  Canteen facilities  Performance appraisal  Awards & promotion  Take feedback

53

 P & A Department:

Time Office

Guest House

Medical

Hindi

Security

P&A

Public Relation

Legal

Personnel

Estate

Admin.

Welfare

ABSENTEEISM:Absenteeism is the total man shift lost because of absences as a percentage of the total number of man shift schedule to work.

Absenteeism is a serious problem for a management because involves heavy additional expenses. Reserve studies one kept in readiness to take place of the Absenteeism, failing which overload cost of idle equipment has to be faced.

54

REASONS FOR ABSENTEEISM:-

Various studies on the micro level in India have been undertaken to find out the cause which have contribution to a high percentage of Absenteeism IFFCO the Absenteeism ratio is hardly 5% the reason for such Absenteeism are stated as under

Reason for absenteeism

Personal causes Community or social causes.

In-plant causes Boredom, general sickness. Illness due to working condition.

Blood donation.

Family sickness.

Family planning Disharmony with foreman.

Attain marriage. Going home town

Social work. Going out station. Accident inside the plant. Visit to foreign city.

Picnic Night Shift. Relative

Religious 55

EMPLOYEE TURNOVER:-

Employee Turnover refers to the process of employees leaving an organization and requiring to the replaced. High turnover increased cost on recruitment, selection, training and difficulties in teamwork and employee morale.

The actions that will help in minimization of employee turnover are letter hiring practices orientation training, working conditions, remuneration and benefits, and opportunities for advancement.

In IFFCO Kandla, the employee turnover is hardly 0.5%.....

Recruitment ―Recruitment is the process of finding of attractive capable applicants for the employment the process begins when new recruits are sought and ends when their application submitted‖

In IFFCO Kandla unit H2 & above grade employees recruitment procedure is directly based on centralized recruitment and the procedure of it is done by the IFFCO Head office Delhi.

Advantages of Centralizing Recruitment  Strengthens employment brand  Facilitates applying strategic priorities  Reduces duplication of HR activities  Reduces cost of new HR technologies  Builds teams of HR experts  Provides better measurement of HR performance  Allows for sharing of applicant pools

56

Sources of Recruitment

Internal Recruitment:1. Promotion By giving the promotion to the existing employee by evaluating his skills, knowledge, ability, performance, employment report and after taking tests the promotion is giving and the vacant place are filled. The promotion decision and procedure are directly handled by the IFFCO Head office and as per current rules and promotion policy of the IFFCO employee is eligible to get promotion after 4 years of services.

2. Transfer By giving transfer to the existing employee from one unit to the other unit as per the requirement of the particular unit and with the assent or by the decision of the management the manpower requirement is fulfilled.

3. Demotion By placing an employee from his current level of employment to the lower level of employment and by that way the employees requirement are fulfilled but mostly this gives negative impact on the employee that‘s why this source is not adopted by the IFFCO.

External Sources of Recruitment:  Advertisement in News paper  Advertisement through Internet  Campus Placement  Contract Labour  Government agency  Recruitment agency

IFFCO uses mainly these all are the external sources of recruitment for fulfill the need of man power in the organization 57

Selection

The selection process of IFFCO is

1. Application blank/application form (Back ground Information) a. Identifying information b. Information regarding experience c. Information regarding education d. Expected salaries and allowances e. Information regarding community activities 2. Receipt and scrutiny of application 3. Selection test a. Aptitude test b. Personality test 4. Sending of call letters to appropriate candidate who obtained good marks in the selection test. 5. Preliminary interview a. Final interview Judge an applicants qualifications and characteristics

To give an applicant essential facts about the job and the company

58

To given information regarding rules & regulations of the company of the employment. b. Checking of references c. Physical or medical examination d. Approval by appropriate authority e. Placement & Offer letter

Vigilance/Legal/IR section  Compliance of various labour laws by IFFCO  Ensure compliance of labour laws by contractors  Ensure compliances of PF by contractors  Ensure minimum wages to contractor labors  Passing running/final bills of contractors  Attending labour/Ind./Civil high courts  To deal with conciliation cases  Preparation of written statements  To deal with arbitration matters

59

Vigilance

During the year under report, Vigilance Department of IFFCO continued its sustained functioning with great zeal and dedication on proactive and preventive vigilance rather than punitive vigilance since IFFCO strongly believes in ―Prevention is better than Cure‖. The Society adopted various steps to curb corruption and to raise awareness amongst employees for taking initiatives for improvement in the systems and procedures for redressal of grievances. This year also the Society voluntarily organized ―Vigilance Awareness Week – 2007‖ at its Corporate Office, Saket, New Delhi. Dr. Awasthi reiterated that IFFCO has been following the path of merit and righteousness, and constant fight against corrupt practices would make the system free from corruption.

During the year, interactions were organized between vigilance functionaries and the line managers on regular basis at plant levels with a view to understand the role of vigilance and to educate them on the policies, guidelines and procedures of the Society. A Vigilance Workshop was also organized for Senior Officers which focus on Service Rules, Purchase Procedures and Power of Officers and to create an environment of ethical growth in the Society.

60

61

Production Since its inception, the units have cumulatively produces 1190.91 Lakh MT fertilizer material comprising 714.94 Lakh MT Urea and 475.97 Lakh MT NPK/DAP up to the period ending March 31 st 2010. During the year 2009-10, the unit surpassed all pervious production records by producing the highest ever 81.98 Lakh MT of fertilizer consisting of the highest ever 43.24 Lakh MT Urea and also the highest ever 38.74 Lakh MT NP/NPK/DAP. The previous best production level was 71.68 Lakh MT of fertilizer during the year 2008-09.

thus, the society has produce and

additional 10.40 Lakh MT of fertilizer during 2009-2010 as compared to the last year, registering an increase in production by 14.5%. Urea units have produce the highest ever 43.24 Lakh MT as compared to 40.68 Lakh MT in the pervious year, achieving an overall capacity utilization of 101.9%.

Products of IFFCO UREA: IFFCO‘s Urea is not merely a source of 46% of nutrient nitrogen for crops, but it is an integral part of millions of farmers in India. A bag of IFFCO‘s urea is a constant source of confidence and is a trusted companion for Indian farmer. When farmers buy IFFCO‘s products Urea, they know that what they get is not just a product but a complete package of services, ably supported by a dedicated team of qualified personnel. More importantly, they are aware that it is their own urea, produced and supplied by a cooperative society owned by them. About Urea…. Urea is the most important nitrogenous fertilizers in the country because of its high N content (46%N). besides its use in the crops, it is used as a cattie feed supplement to replace a part of protein requirements. It has also numerous industrial use notably for production of plastics. 62

Specification of Urea as per fertilizer control order 1. Moisture % by weight, maximum 1.0 2. Total N% by weight(on dry basis)minimum 46.0 3. Biuret % by weight ,maximum 1.5 4. Particle size 90 % of the material shall pass through 2.8 mm IS sieve and not less than 80% by weight shall be retained on 1 mm IS sieve.

If Urea is applied to bare soil surface significant quantities of ammonia may be lost by volatilization because of its rapid hydrolysis to ammonium carbonate. The hydrolysis of UERA can be altered by the use of several compound called ureas‘ inhibitors. Theses inhibitors inactivate the enzyme and thereby prevent the rapid hydrolysis of urea when it is added to soil. The rapid hydrolysis of urea in soils is also responsible for ammonia injury to seedlings if large quantities of this material placed with or too close to the seed. Proper placement of fertilizer urea with respect to seed can eliminate this difficulty.

About NPK/DAP As far Indian farmers is concerned, IFFCO‘s NPK/DAP is not just a source of crucial nutrients N, P,K for the crops, but is an integral part of his/her quest for nurturing mother earth. The bountiful crop that results from this care is an enough reason for the graceful bags of IFFCO NPK/DPK bags to be an integral part of the farmers family. The two grades of NPK produced by IFFCO, 10:26:26 and 12:32:16, indicating the content of N, P, K Proportion, are

Carbon dioxide Air LNG/AG/Naphtha

Steam

Ammonia Plant 1100 MTPD

Ammonia 63

Urea Plant 1650 MTPD

Urea

CUMULATIVE PRODUCTION TILL DATE (As on 31st March 2010)

In Lakh MT) UNIT

PRODUCT

PRODUCTION

KALOL

UREA

150.35

PHULPUR – I

UREA

155.44

PHULPUR - II

UREA

106.92

AONLA - I

UREA

184.44

AONLA - II

UREA

117.79

TOTAL

UREA

714.94

NPK

266.87

DAP

164.68

NP

25.72

DAP

18.80

TOTAL

NPK/DAP

476.07

TOTAL

FERTS.

1191.01

KANDLA

PARADEEP

NUTRIENTS „N‟

394.56

„P2O5‟

168.40

64

GROWTH IN PRODUCTION CAPACITIES (000 MT) As on Date Jan.‘75

UREA -

NPK/DAP

Total Ferts

415.6

415.6

Apr.‘75

396.0

415.6

811.6

Mar.‘81

891.0

415.6

1306.6

Sep.‘81

891.0

881.3

1772.3

Jul.‘88

1617.0

881.3

2498.3

Dec.‘96

2343.0

881.3

3224.3

Aug.‘97

2491.5

881.3

3372.8

Dec.‘97

3217.5

881.3

4098.8

Aug.‘99

3217.5

1600.1

4817.6

Apr.‘01

3689.4

1973.6

5663.0

Apr.‘02

3689.4

2191.1

5880.5

Apr.‘04

3689.4

2415.4

6104.8

Oct.‘05

3689.4

4335.4

8024.8

Dec ‘08

4242.2

4335.4

8577.6

. (In Lakh MT)

50 45 40 35 30 25 20 15 10

Ja n ' A 75 pr . M '75 ar . Se '81 p. '8 Ju 1 l. D '88 ec . A '96 ug . D '97 ec . A '97 ug . A '99 pr . A '01 pr . A '02 pr .' O 04 ct . D '05 ce .'0 8

5 0

65

Urea NPK/DAP

Information and Communication Technology Major ICT Activities  Wide Area Network (WAN) up to Area Office level with Corporate Server at Delhi.  Virtual Private Network (VPN) connecting all Offices of IFFCO.  IP Telephones available up to Area Office. Many phones have video facility.  Video conferencing extensively used nationally and internationally Among first Corporate to successfully implement e-procurement based on Public Key Infrastructure, Digital Certificate under legal framework of IT ACT 2000.  Integrated Corporate enterprise wide Applications in all Areas like HR, Finance,

Marketing,

Transportation,

Materials,

Maintenance,

Production etc.  Benefit of Pre-audit annual accounts by 1st week of April every year for the last five years.  Server consolidated at Head Office and disaster recovery system set up at Kalol.  All Software developed by in-house expertise, often consulted

by

other organizations.  HRMS, an in-house developed ERP, having 25 applications for better Corporate Governance and internal workflow.  Intranet applications on Rules & Procedures, News, Weather, Crop growing periods, Notice Board, Technical Papers, Telephone, Blood Group, Software Project Monitoring Hardware Complaints and Annual Confidential Reports etc.  Multilingual Agri Information Portal to extend benefit of ICT to Cooperatives and farmers. More than 100 touch screen based Kiosks installed in 16 states.  Free Multilingual email facilities to Cooperatives.

 Work flow applications implemented to reduce paper work . 66

ICT ACTIVITIES DURING 2009-2010  Symantec antivirus server has been consolidated and installed on all the machines across the clients country for protection against virus attacks.  MIS Portal, Materials Management System, Plant Maintenance Management System, Water Management System, Product Dispatch System etc. have been further upgraded.  Biometrics Attendance Recording System has been Introduced in Paradeep and Aonla Units.  IFFCO has also provided software support to ITGI, ICPL, IKSL, IKSEZ and OMIFCO.

67

68

Introduction Hoagland says:-

―Financial management is concerned with such

matters as now a business corporation raises its finance and how it makes use of it.‖ Finance Management is nothing but overall management concerns with raising of funds in most economic and suitable manner, using the fund as profitably as possible, Planning for future operation, controlling the current performance and future development with through financial accounting concerned with procurement of fund and effective utilization of fund. All the activates in IFFCO are concurred under financial system. All the decision related to raise of fund, use of fund, etc. are decided by finance manager in head office, Delhi. All the payment and receipt is made through INDIAN OVERSEAS BANK.

Accounting Policies:The company follows the accrual method of accounting. The company has follows the entire applicable accounting standards made mandatory by the institute of Chartered accounts of India.

Finance department is responsible for the following activities in IFFCO:  Raw material management  Purchase order  Work order  Book section- budget preparation  Pay roll section  Cash & bank  Check approval voucher  Loan  Surprise inspection  Medical facility  Minimum usage of cash transaction  Miscellaneous expense  Fund management 69

Purchase Order As IFFCO is using proprietary nature of material it is purchased from foreign. IFFCO have suppliers of Material from not only in India but also in Denmark, USA, Germany, Japan. Purchase order is main activity of IFFCO that is to be considering in financial system.  Government decides marketing and distribution strategies for fertilizer.  Decision regarding purchase and sale of fertilizer are under control of central government authority.  Price is fixed by government.  IFFCO is not considering direct selling.  Target customer are divided as per region like: Gujarat, Rajasthan, M.P, Maharashtra  Independence department for purchase for raw material.

The process of Vendor‟s selection 1. AVL (Approval Vendors List) 2. Category Divided 3. Inquires about Vendor 4. Reply about Vendor 5. QCS(Quantitative Compare Statements) 6. Selection of Vendor 7. Place an Order

IFFCO use following option for payment  IT (Telegraphic Transfer)  LOC (Letter of Credit)  Site Draft  Advance payment

70

Financial Performance As per its tradition, the society has again exhibited an impressive financial performance in all its major parameters, namely, revenue growth, margins and resources utilization, testifying to the robustness of its corporate strategy of creating multiply drivers of growth in spite of constraints in the availability of raw materials and the inordinate delays in the receipt of large subsidy amounts from Government of India. It was made possible due to higher production, sales volume and improvement in operating efficiencies.

With the efforts of your society, international prices of fertilizer have eased to reasonable levels, which is good from the point of supply strategic plant nutrients to farmers at affordable prices. As a consequence of lowering of international prices of inputs and imported fertilizer and subsidy levels, the sales turnover of the society in value has come down to Rs.16809 Crore during 2009-10 from Rs.32933 Crore in the previous year even though with physical turn over was higher at 118.27 Lakh MT of fertilizer during 2009-10 as against 112.58 Lakh MT in 2008-09. the performance is even more satisfying when viewed in the light of the challenging business environment in the fertilizer industry.

71

FINANCIAL PERFORMANCE

(In Rs. Crore)

2006-07

2007-08

2008-09

2009-10

SALES TURNOVER

10330.11

12162.82

32933.30

16808.57

PROFIT BEFORE TAX

251.25

380.52

441.95

567.28

PROFIT AFTER TAX

175.02

257.59

360.01

401.10

SHARE CAPITAL

422.92

423.93

426.28

426.24

RESERVES AND

3218.92

3264.73

3532.59

3844.26

NETWORTH

3641.84

3688.66

3958.87

4270.50

NET ASSETS

10661.98

10998.49 17303.77

16319.45

740.46

770.57

914.00

892.33

646.16

6638.95

6638.95

SURPLUS

EMPLOYED INVESTMENTS – JVs/

ASSOCIATES/OTHERS

INVESTMENTS –

-

FERTILISER BONDS

72

Balance sheet as at 31st March, 2010 (in crore) PARTICULARS

As at 31.3.2010

As at 31.3.2009

SHARE CAPITAL

426.24

426.28

Reserves and Surplus

3844.26

SOURCES OF FUNDS

SHAREHOLDERS FUNDS

4270.50

3532.59

3958.87

Loans funds Secured loans

5032.93

Unsecured loans

6499.24

7373.18 11532.17

5429.60

12802.78

Deferred tax Liability (net)

516.78

542.12

Total

16319.45

17303.77

Application of funds

Fixed assets Gross block

9100.60

8808.00

Less: accumulated depreciation/

4276.32

3842.16

Net block

4824.28

4965.84

Capital work in progress

333.00

amortization

Investments

5157.28

290.98

7531.28

7552.95

Current assets, Loans & Advance Inventories

1302.25

1731.36

Sundry debtors

68.08

407.23

Cash and bank balance

1075.31

69.63

Loans and advances

3376.87

5464.77

73

5256.82

Total

5822.51

7672.99

Current liabilities

1799.40

2860.18

provisions

392.22

322.71

Less: current Liabilities & provision

Net current assets

3630.89

Miscellaneous expenditure

3182.89

4490.10 3.90

Total

16319.45

74

17303.77

75

4.1 Define the Problem: -----To this study is qualitative in nature which was aimed to find out reasons of questions Why IFFCO is not getting Carbon Credit 2009-10??????

Literature reviewing of Study: -----There is one researcher on the global warming and for that there was one seminar arranged in Washington, DC to know about the Global warming in the world which is most prior matter to solve and reduce the energy consumption by the all-chemical industries…. Which is Making Forest Carbon Markets Work March 6-8, 2009

The first Forest Carbon Finance Summit was held in Washington, DC against the backdrop of active development of U.S. climate change legislation and preparations for inter-session meetings of the United Nations Framework Convention on Climate Change. Summit sessions addressed the conditions under which preserving and enhancing tropical forests could be used to generate compliance credits under national or international climate change regimes, including cap-and-trade systems and a future international climate treaty to be negotiated in Copenhagen, Demark in December of this year. In particular, discussions focused on how supply and demand for forest carbon credits might be created and maintained, the steps needed to address likely risks for investors, how institutional frameworks could be developed to facilitate transactions and what safeguards must be created to address social and environmental considerations.

Participants identified the great need for reducing emissions from deforestation, and the potential for private capital to be mobilized if an 76

appropriate REDD framework were to be established. Participants also identified many areas of uncertainty regarding system design at the international level and within forested countries. Some expressed concern whether the challenges of creating a market for forest-based compliance carbon were too difficult considering challenges of transparency and governance and/or liability in many forest countries. There was broad agreement on the need for follow up work in areas of uncertainty.

Reduced Emissions from Deforestation and Degradation (REDD). Background • Reduced emissions from deforestation and forest degradation (REDD) activities in developing countries could address a major source of greenhouse gas emissions while at the same time paving the way for developing countries to actively take part in international emission reduction efforts without compromising their development needs. • REDD could open up the possibility of a development pathway for resource, rich developing countries that does not rely on destructive environmental exploitation and the conversion of most natural forests to other land uses, i.e. the opportunity to avoid following the deplorable example of industrialized nations. • REDD offers a real opportunity to improve governance in many potential host countries and to reverse a long history of unsuccessful attempts at tackling the complex drivers of deforestation and degradation. Given that most developing countries with a significant REDD income potential score poorly on many governance indicators, promoting good governance is a fundamental precondition for any successful REDD strategy. • Performance based rewards for conserving and sustain ably managing forests would provide a genuine economic alternative to current incentives and could help overcome real and perceived

77

conflicts between urgent short‐ term development needs and long term conservation and sustainability. • Once there are ambitious international emission reduction targets in place, carbon credits from REDD would help to take full advantage of mitigation opportunities across sectors efficiently without distorting the carbon market or risking its environmental integrity. Incorporating a major additional sector with a range of low to high cost abatement options would allow the international community to reach more demanding reduction goals at lower total cost. • Carbon markets can create a transparent incentive system that rewards independently verifiable

emission reductions while

subjecting market

participants to international environmental scrutiny and civil society vigilance. In order to deliver emission reductions effectively and at the necessary scale they need to be driven by ambitious regulatory commitments to combat climate change. • Carbon markets are a very recent policy instrument compared to traditional environment regulation and are still rapidly evolving and maturing. Nevertheless, they can be a clear improvement to the ―baseline‖ conditions of environmental governance, natural resource management and accountability of governmental and private sector actors in many developed and developing countries.

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4.2 Objective of study: ----- To know how much energy consume by the urea process  To know how much carbon credit is given by developed country  To understand how the carbon credit created  To know how much reward or money is given by the developed country against the consumption of energy

Rationale of the study: ---The analysis is help to know about consumption of energy.  The company can know that why they are not getting carbon credit in 2009-10.  The main purpose of the research is to awareness of global warming and Green House effect by the chemicals industries.

Limitation of the study: ---Time limit: The time duration for the research is short, so a census is not possible due to time limit, so I have collected data through secondary sources.

Lack of expertise: This research work is prepared by me, so there is chance of lack of expertise knowledge in the particular field.

Lack of Knowledge: A person has no more information related to carbon credit, so not get accurate results. 79

4.5 Data collection: ----Data is required to make a decision in any business situation. The researcher is faced with one of the most difficult problems of obtaining suitable, accurate and adequate data. Utmost care must be exercised while collecting data because the quality of the research results depends upon the reliability of the data. Statistical investigation requires systematic collection of data, so that all relevant groups are presented in the data.

Data collection has two methods. Which are as under:-

Data collection

Secondary Data

Primary Data

In my research, I used Primary as well as secondary data. The primary data are used via Personal Interview. I interviewed three managers to find out solution of the problem. The names of managers are as under…

1. Mr. D.U.Shah (Account Manager) 2. Mr. Sanket Patel (Account Manager) 3. Mr. G.N.Prasad (Account Manager)

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I organised structured personal interview and try to get answers of my research problem. The type of questions and general analysis of answers are given below.

Que.1 what is Carbon Credit?? ? Carbon credits are new financial commodity representing certified reductions in the emission or accumulation of greenhouse gases in the atmosphere. Greenhouse gases trap heat from the sun and help regulate the temperature of the earth‘s atmosphere. As concentrations of atmospheric greenhouse gases increase due to human activities, global average temperatures may rise - with potentially costly consequences.

Man-made

greenhouse gases produced from industrial, agricultural, and municipal sources include carbon dioxide, methane, nitrous oxide and several other chemical compounds.

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Terminology Deforestation and degradation are principle subcomponents of international forest carbon, denoting the two forms under which forest carbon stocks can be drawn down and emitted to the atmosphere. The other main

components

are

a

forestation,

reforestation, and forest management which can build forest carbon stocks by removing CO2 from the atmosphere via photosynthesis and carbon storage in biomass and soils. Because international forest carbon is broader in scope than REDD

(reduced

emissions

from

deforestation and degradation)—and because the U.S. policy process, which is the primary focus of this brief, refers to international forest carbon rather than to REDD alone—we will follow that guide and use the terms international forest carbon and forest carbon in this brief, rather than the term REDD used more commonly in the UNFCCC discussions. In many cases, these terms can be used almost interchangeably.

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Que.2 How Carbon Credit Created?? Carbon credits can be created from agricultural, waste management and renewable energy projects that reduce greenhouse gas emissions.

By

implementing

appropriate

practices

and

technologies

according to specific protocols, reductions in greenhouse gas emissions can be monitored, documented, independently verified, and registered to an account (e.g. within the Chicago Climate Exchange or other voluntary greenhouse gas program) as certified, tradable carbon credits.

Now days, the major Problem in Global world is the scare resources of natural gas. In the developing country, the industries of chemicals use more and more natural resources and spread the carbon dioxide in the weather and for that the layer of ozone is broken. So Reduced Emissions from Deforestation and Degradation (REDD).

Que.3 On which bases company get Carbon Credit?? ? Company gets carbon Credit on the bases of Energy

consumption. Kalol unit has produced 560201 MT of urea and 345663 Tonne of ammonia during the year 2006-2007 attaining a capacity utilization of 102.88 % and 95.22 % respectively. The ever lowest specific energy consumption of 5.981 GCal/MT and 8.702 GCal/MT was achieved in the year 2006-07 for Urea and Ammonia production respectively.

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Energy Saving Project IFFCO Kalol Ammonia plant is of early 70‘s Kellogg technology and has limitations in implementing new technologies. Space availability is another major problem. In spite of these constraints Kalol unit is continuously putting efforts to reduce specific energy consumption.

Energy Saving Project (ESP) was one such measure which targeted to reduce specific energy consumption by 0.915 GCal/t of ammonia at an estimated cost of Rs. 125.30 crore. ESP Phase-II was implemented and commissioned in April-May 2006.

There is considerable reduction in Specific Energy Consumption of Ammonia and in turn, Urea as a result of implementation of schemes under ESP.

The reduction trend in Specific Energy Consumption for the last three years is shown below.

Particulars

2004-05

2005-06

2006-07

Sp. energy per of ammonia

9.163

8.967

8.702

Sp. energy per t of Urea

6.347

6.179

5.981

Energy cost (a) (Rs. Lakhs)

35008.76

32692.84

48613.47

Manufacturing cost of Bagged

44594.19

42123.72

58621.68

78.51

77.61

82.93

Urea (b) (Rs. Lakhs)

(a)/(b)*100

84

Specific Energy Consumption: Ammonia 9.5 9.4

energy

9.44

9.3 9.2

9.163

9.1 9

8.967

8.9 8.8 8.7

2004-05

2005-06

2006-07

Specific Energy Consumption: Urea

6.7 6.6

6.587

6.5 6.4

6.347 6.3 6.2

6.179

6.1 6 5.9

85

2004-05

2005-06

2006-07

energy

Energy Policy: At IFFCO Kalol, optimum utilization of energy and the total energy management are the part of corporate mission and IFFCO is fully committed to reduce the specific energy consumption in the production of nitrogenous fertilizer through: •Conducting in-house energy audit and monitoring the energy consumption norms. • Carrying out various minor and major modifications. • Adoption of technological advancement befitting to the old plant. • Development of human resources. • Creating safe, healthy and energy conscious working environment. • Better housekeeping in the plant.

Energy Conservation Achievements • Ever lowest yearly specific energy consumption of 8.967 GCal/ t of Ammonia. • Ever lowest yearly specific energy consumption of 6.179 GCal/ t of Urea. • Ever lowest monthly specific energy consumption of 5.952 GCal/ t of Urea in February-06. • Ever lowest monthly specific energy consumption of 8.728 GCal/ t of Ammonia in February 2006

Que.4 When Company gets Carbon Credit?? ? ? All the plant has worked hard to energy. The composite specific energy consumption for urea plants during 2009-10 came down to the lowest ever 5.832 GCal/MT as against the pervious lowest specific. Energy consumption of 5.907 GCal/MT achieved during 2007-08. IFFCO, for the first time, monetized its CARBON CREDITS by affecting its sale to a Spanish agency for a consideration of Rs.4 crore under the clean 86

development Mechanism (CDM) of the United Nations Framework of Climate change.

Que.5 How much company gets carbon credit at 2007-08??? IFFCO, for the first time, monetized its Carbon Credit by affecting its sale to a Spanish agency for a consideration of Rs. 4 crore under the Clean Development Mechanism (CDM) of the United Nations Framework of climate change during 2007-08.

Que.5 which countries are ready to give the Carbon Credit?? The United States has an opportunity to lead on tropical deforestation through the incorporation of forest carbon activities in domestic climate change policies and involvement in the international climate negotiations. U.S. leadership on forest carbon is likely critical for broad international acceptance and sufficient global funding. A number of countries are currently funding capacity building, and some are considering setting aside a portion of proceeds from their climate programs, but only the U.S. is actively exploring ways to allow international forest carbon credits to trade (like allowances) in a national emissions trading system.20,21 Such leadership would build on the United States government‘s historic interest in tropical forest conservation demonstrated by the long-term efforts by USAID, the U.S. Forest Service, the State Department, and the Department of Treasury to conserve tropical forests.22 Furthermore, California, Illinois, and Wisconsin are already leading the way on forests and climate change by working with governors from Brazil and Indonesia to develop rules and incentives for generating compliance-grade international forest carbon.

87

Que.6 what are the benefits of Carbon Credit?? With the help of carbon credit company get extra ordinary image in the world and get money against this credit and also beneficial for the society. This devil, however, is now turning into a product that helps people, countries, consultants, traders, corporations and even farmers earn billions of rupees. Land use change in the tropics accounts for roughly 17% of GHG emissions, more than the entire global transportation sector.5 The vast majority of these emissions come from deforestation6 (see Figure 1). Focusing mitigation efforts exclusively on fossil fuel emissions will not avoid dangerous levels of climate change; forests must also be included in climate mitigation strategies.7

The secondary data are original data which are colleted first time for the specific purpose.  Secondary data may be available in the form of Published or unpublished sources.  The secondary data can be obtained from journals, reports, government publications, publication of professional and research organizations and so on.  Encyclopedias, textbooks, hand-books, and magazine an newspaper articles, and most newscasts are considered secondary information sources.  Internally, sales analysis summaries and investor annual reports would be examples of secondary sources as they are complied from a Varity of primary sources.

Secondary Data Analysis:-

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The Kalol & Phulpur units achieved the lowest-ever energy consumption. The overall composite specific energy consumption per Tonne of Urea for all the plants during 2009-10 was 5.832 GCal/MT Urea, which is the lowest energy consumption so far.

Year

GCal/MT

2009-10

5.832

2007-08

5.907

Why IFFCO is not getting carbon credit in 2009-2010??? Above table shows the consumption of energy is approximately 1 % less compared to pervious year.

The Kalol & Phulpur units achieved the

lowest-ever energy consumption. The overall composite specific energy consumption per Tonne of Urea for all the plants during 2009-10 was 5.832 GCal/MT Urea, which is the lowest energy consumption so IFFCO is not get Carbon Credit.

89

Finding Now a day all company work their own way but they could not complete their all areas, Some times missing so some way they doing research and finding it.

I find out with the help of my research methodology that my research on the Carbon Credit and IFFCO could not get Carbon Credit at this Year because they could not success in the

energy consumption. And

carbon credit is very useful in terms of financial, social, as well as help in the company development.

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Bibliography Cooper

&

Pamela,

BUSINESS

RESEARCH

METHODS

8th

EDITIONS, Tate McGraw –Hill publishing company limited, New Delhi I.M.Pandey, Financial Management, Vikas Publishing, 9 th edition 2005. Kotler philip, Marketing Management, Pearson Education, 13 th Edition, 2009. Gary Dessler, Biju Varkkey, Human Resources Management, Pearson Education, 11th edition 2008,

Website http://www.ccc.govt.nz http://www.iffco.nic.in

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Appendix Personal Interview tool:Que.1 what is Carbon Credit?? ? ?

Que.2 How Carbon Credit Created??

Que.3 on which bases company get Carbon Credit?? ?

Que.4 When Company gets Carbon Credit?? ? ?

Que.5 how much company gets carbon credit at 2007-08???

Que.6 which countries are ready to give the Carbon Credit?? ?

Que.7 what are the benefits of Carbon Credit??

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