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LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
Internship Report
Submitted By
Shahzad Javed
Roll No.
M06MBA033
Submission Date
22/09/2008
Hailey College of Banking & Finance University of the Punjab, Lahore. INTERNSHIP REPORT
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LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
INTERNSHIP REPORT
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LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
Executive Summery Allahdin is a rapidly growing Group of Companies. It started its business in 1994. The main focus of activities encompasses areas of agrochemicals, seeds & fertilizers. The group is one of the biggest agrochemical products manufacturer and seller in the country. Lyallpur Chemicals & Fertilizers (Private) Limited was incorporated on June 04, 1958 as a public limited company under the companies act, 1913. Since incorporation the company was a subsidiary of National Fertilizer Corporation of Pakistan (Private) Limited. In February 2007 it has been taken over by Al-hamd Chemicals (Private) Limited through privatization commission. The company is principally engaged in the business of manufacturing Single Super Phosphate (SSP), Zink Sulphate and Sulphuric Acid. The manufacturing unit is situated at Lahore Road, Jaranwala and registered office of the company is situated at Suit number 18, 3rd Floor, Shane Arcade, New Garden Town, Lahore. The status of the company has been changed from non listed “Public Limited” to “Private Limited” in this financial year 2007-08. The turnover for the year ending 30th June 2008 is Rs. 845 million (including Subsidy of RS. 325 M) and equity Rs. 503.130 million including revaluation surplus.
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LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
Production Capacity Products
Rated Plant Capacity
Sulphuric Acid
46,000 M. Tons per annum
Single Super Phosphate (P & G)) - 18% P2O5
85,000 M. Tons per annum
Zinc Sulphate (21% Zinc)
1,500 M. Tons per annum
Major Suppliers Rock Phosphate---Imported from Egypt and Jordon (El-Waha For Trade Co). Sulphur--- Purchased from Pak Arb Refinery (PARKO) and Oil & Gas Development Co Limited. Zink Ash---Purchased from International Industries Limited.
Marketing Objectives • • •
Experience an increase in new customers who are turned into long-term customers. Maintain positive, steady growth each month in market development. Generate brand equity at the Farmer's Market as well as within the commercial traders market.
Target Market Their target market is the farmer, who has harvesting area in province Punjab.
Sales Target 2007.8 Sales Advance Booking
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72,439 Tons 68,705 Tons
2008-09 90,000 Tons 108,000 Tons
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LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
CONTENTS Particulars
Page No.
Group Introduction
………………………………………………… 01
Management Philosophy
…………………………………… … 03
Mission Statement
………………………………………………04
Vision Statement
…………………………………………….. 04
Group and its Associates
……… …………………………..05
Warble Chemicals (Pvt) Limited
……………………………………05
Welcon Chemicals (Pvt) Limited
……………………………….06
…………………………………………….07
Weal-Ag. Corporation
…………………………………………08
Agri Village International Nasco (Pvt) Limited
………………………………………………08
Al-Hamd Chemicals (Pvt) Limited
…………………………………..09
Lyallpur Chemicals & Fertilizers (Pvt) Limited Hi-Warble Pharmaceuticals (Pvt) Limited
………………………10
……………………………………10
Welcon International Nasco Industries
…………………..09
………………………………………………11
Farm Fertilizers (Pvt) Limited
……………………………………..11
Lyallpur Chemicals & Fertilizers (Private) Limited Introduction
……………………………………………………12
Management Philosophy Core Values Mission Statement
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…….12
…………………………………14
…………………………………………………14 …………………………………………..15
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LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
Particulars
Vision Statement
Page No.
……………………………………………. 15
Company Information
…………………………………..16
Hierarchical Structure
……………………………………….19
List of Share Holders
…………………………………………20
Capital Holdings
……………………………………….20
Manufacturing and Trading Products of Company
…...…21
Manufacturing Products
……………………………………21
Input Ratios of Manufacturing Products
……………………………………21 ………………………….22
Production Capacity
Percentage of each manufacturing product in the total production
………..22
Major Suppliers
……………………………………………..22
Trading Products
………………………………………23
Productions Process
………………………….24
Process Block Diagram Of Sulphuric Acid (H2so4) Plant ……….24 Process Block Diagram Of Single Super Phosphate (SSP) Plant .25 Process Block Diagram Of Zinc Sulphate Plant
…………….26
Rock Acid Reaction For Manufacturing of SSP
…………27
Human Resource Department Introduction The Purpose of HRM
. . . . . . . .…………………28 …………………………………28 …………………………….28
Structure of the Human Resource Department Objectives of Human Resource Department Organizational Objective Personal objective
Recruitment and Selection INTERNSHIP REPORT
………….29 …………….30
……………………………30 …………………………………30
…………………………….31 6
LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
Particulars
Page No.
Selection Procedure
……………………………….31
Role of HRD in Recruitment Process ……………………………31 Procedure of Joining the Company Recruitment Process
………………………….31
…………………………………….32
Internal Job Posting
……………………………….32
Self Nomination
………………………………32
Nomination by Employees Supervisor External Job Posting
…………………………….33 ………………………………………….33
Advertising
Employment Agencies
……………………………………………….34
The Hiring Procedure
…………………………………….34
Call for application Preliminary interview Applications blank Check of References Psychological test Intelligence test Mechanical Aptitude test Clerical Aptitude Test Interest Test
Employment interview Approval by the supervisor Physical examinations INTERNSHIP REPORT
…………………………………33 ……………………………….34
Casual Applications Leasing
…………33
………………………………………..34 ………………………………….35 …………………………………………35 ……………………………………….36 …………………………………….36 …………………………………………….36 …………………………………….37 ……………………………………….37 ……………………………………………37
………………………………….37 ………………………….38 ………………………………..38 7
LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
Particulars
Page No.
Training Needs Assessments
…………………… 41 …………………………41
Organization analysis
……………………………41
Operation analysis
……………………….41
Individual Analysis
Operative Training
………………………………….41 ...……………………41
On the Job Training
……..42
Off the Job Training
…………………..42
Workers Training Program
…………………………..42
Special Courses Selling and Technical skills training program
Evaluating Training Programs
……….43
…….43
Reaction
………………………………43
Learning
……………………………….43
Behavior
……………………………………………….44
Results
……………………………………………………44
Management and Career Development Evaluation of HRD Performance Salary Administration
………………44 ………………….45
……………………………..45
Promotions
……………………………………….46
Demotions
……………………………………..47
Commission and Salaries
………………………..47
System of Communication
…………………………48
Negotiating With Union INTERNSHIP REPORT
…………………………..48 8
LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
Particulars
Page No.
WOT Analysis of HR Department
………………………..49
Conclusion
…………………………….50
Suggestions
……………………………………….50
Sales and Marketing Products
Situational Analysis
…………………………….51 ……………………………………..51
…………………………..52
Market Summary
………………………………….52
Seasonal Variation
…………………………………..52
Market Potential
…………………………………….53
Marketing Strategy
…………………………………….54
Marketing Objectives
……………………………….54
Financial Objectives
………………………………..54
Target Market Positioning Marketing Mix Product Place Promotion Price Sales Forecast
…………………………………..54 ………………………………………….54 ………………………………………54 …………………………………………54 …………………………….55 ……………………………….55 …………………………………………55 ………………………………………….56
Sale During 2007-08
………………………………….57
Sale During 2008-09
…………………………………57
Sales Target Sales Incentive
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……………………………………..57 …………………………….59
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LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
Particulars
Page No.
Controls SWOT Analysis
…………………………60 …………………………………61
Financial Statement Analysis
……………..62
Classification of Accounting Ratios
……………….62
Financial Statements Analysis of Accounting Ratios
……………………………..66 ………………..68
Review Report With respect to Investors and Creditors
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…86
LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
Purpose of Study
The basic purpose of this report writing is: •
To analyze Lyallpur Chemicals & Fertilizers (Pvt) Limited from financial prospective.
•
To know how different operations are carried out in Lyallpur Chemicals & Fertilizers (Pvt) Limited.
•
To bridge the gap between theory and practice.
Scope of Study In a limited time and limited available data I was not able to cover every aspect of the organization. However this report covers inception of Lyallpur Chemicals & Fertilizers (Pvt) Limited, vision and mission statement, different products offered by the company, SWOT analysis of Lyallpur Chemicals & Fertilizers (Pvt) Limited, Problems, Recommendations and in the end conclusion.
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LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
Methodology of Study For completion of this report the fountain head of information and knowledge was
Primary Data The primary data is collected through following means: •
Discussions with staff
•
Through personal observation
Secondary Data Secondary data is collected through following means: •
Through consulting documents
•
Annual reports.
•
Internet
•
Books
•
Journals
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LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
Acknowledgment
I have no words to express my deepest sense of gratitude and thanks to Almighty Allah (The Compassionate & the Merciful) who enabled me to complete this report. I appreciate deep appreciation and gratitude to Lyallpur Chemicals & Fertilizers (Pvt) Limited staff Specially Mr. Ahmad Jamal and other staff for their valuable suggestions and kind cooperation. I am grateful to the Hailey College of banking and finance & my respected teachers who gave me an opportunity to enhance my capabilities. This was very much helpful for me because, I have learnt a lot by applying theoretical knowledge in practical field. I am also grateful to all the employees of Lyallpur Chemicals & Fertilizers (Pvt) Limited who guide me. The behavior of all the department supervisors was very good and they gave a lot of time to guide me. At the end, I would like to thank to my parents who always guided, supported & directed me to the right ways that enabled me to reach this stage.
Thanks to all! Shahzad Javed M06MBA033
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LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
Allahdin Group of Companies Allahdin is a rapidly growing Group of Companies. It started its business in 1994. The main focus of activities encompasses areas of agrochemicals, seeds & fertilizers. The group is one of the biggest agrochemical products manufacturer and seller in the country. They say, “We have played vital role in breaking the monopoly of the multinational giants and have brought down the prices of agrochemicals in the country through indigenous production and competitive selling”. Allah Din Group of Companies has developed an integrated network of marketing facilities and a team of agricultural graduates across the country, who are expert in the field of latest techniques of agricultural production and provide services to the growers in increasing their yield of various crops. The Group has developed the labs equipped with the latest/modern equipments. The Group has maintained its land farms for practical experience of agricultural production research & development. The results of experience are disseminated to the farmers. Allah Din Group has now entered into fertilizer manufacturing industry after purchasing Lyallpur Chemicals and Fertilizers (pvt) Limited, from privatization Commission of Pakistan. Presently with the high level of commitment, hard working and better business strategies Allahdin Group of Companies is the largest importer of pesticides in Pakistan. Allahdin Group of Companies is not only distributing pesticides and fertilizers through their own distribution network but is also supplying a complete range of pesticides and SSP (Single Super Phosphate) fertilizers to the farmer and dealers. Allahdin Group Of Companies as group with strong presence in all pesticide segments seized the opportunity to maintain position as a leader of agricultural business. The prime objective of Allahdin group is to INTERNSHIP REPORT
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LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
optimize the technical assistance in a bid to provide the high quality product, prepared at the most modern manufacturing facility. Allahdin group says, “Our employees pay explicit attention to values, they believe values are not hard like structure rather they are well passionate on compromising and proud to be part of a dynamic team. We grow with people and it draws from life, to redraw life, to meet the challenge of a changing world it challenges everyone to go beyond what they think that they are capable of doing to constantly redefine. The people who work with us don’t just accept future they are helping it to create it. They believe that sow is act and you reaping a habit. People on operational level are not just to implement the strategic plans but they feel and are regarded as a team thus our employees work like a team”. The agro chemical division of Allahdin group of companies handles the imports, manufacturing and sale of about 1/4th share of total business of the country which is around Rs.2 – 3 billion and this volume is compatible with their competitor M/S Ali Akber Group of Companies. It means that 50% market share is covered by both the biggest groups. The rest 50% is covered by multinational and other companies of the sector. During next year group plans to expand the business of agro chemicals by 25- 35% both in imports & manufacturing.
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LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
Management Philosophy
“We are committed to ensuring the safe and plentiful harvest of tomorrow. A global population grows and society became so industrialize, it demands more food from less land, plants, to meet these changing needs, ALLAHDIN GROUP is dedicated discovering and developing innovative solutions for sustainable agriculture, applying advanced potential through effective crop protection. As we believe in protecting and improving the quality of human life, we are strongly committed to develop and manufacture cost-effective pesticide products.”
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LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
Mission Statement “Our mission is to improve our Group’s self-image & sense of community together with its perception and standing in the community at large with that believe that Agri Village is as different and distinct from competitors and other companies”.
Vision Statement “Our vision is to achieve a sustained increase in corporate sector with the interests of our stockholders, Business Partners, Customers, Employees and the whole pesticide sector”.
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LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
The Group and its Associates i)- Warble Chemicals (Pvt) Limited Warble Chemicals (Pvt) Limited is one of the main pesticide company of Allahdin Group which came into existence in 1997 with the high level of commitment, hard working and better business strategies. Warble Chemicals (Pvt) Ltd is now one of the largest importers of pesticides in Pakistan. Warble is not only distributing pesticides through his own distribution network but is also supplying a complete range of pesticides to a number of local companies. The objectives behind the establishment were to feed small distribution houses in the local market. Through this business, unit objective is to give products to small companies and small multinationals, like ICI, Niche Men etc. Warble is the first in the pesticide sector to start the formulation facility at Multan (Heart of Cotton Belt) comprises of high tech formulation plant, filling lines and packaging facilities with annual capacity 4 million litters. Warble is equipped with all pre-requisites for meeting the future challenges successfully. Warble (Pvt) Limited has Agri-Graduates and a high number of professionally qualified persons in Sales, marketing, Production, finance & administration. Warble Chemical is fully committed to provide effective & economical solutions to Pakistani farmers. They are offering a complete product range of insecticides, fungicides and herbicides to their distributors and farmers for each crop.
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LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
The import of Rs. 849 million & turnover for the year ending 30th June 2008 is Rs. 1021.176 million and equity Rs. 239.473 million. Haji Atta-ur-Rehman
Chief Exec.
Mrs. Ghazala Asmat
Director
Mr. M. Saeed Qureshi
Director
Ch. Iftikhar Nazir
Director
ii)- Welcon Chemicals (Pvt) Limited Welcon Chemicals (Pvt) Limited is one of the largest pesticide company in Pakistan. This is incorporated in December 1994 and has 95 qualified staff and experience filed staff. They said we are one of the most leading Agri Business house in Pakistan. In other word you can say that we are one of the biggest importer and leading distributors, having own formulation plant, high tech quality control lab with complete product range. The objective of the company is to provide quality and competitive priced products from imports to the technical advisory services for its end users and small distribution houses. Welcon Chemicals (Pvt) Limited with strong presence in all pesticide segments are seizing the opportunity to maintain our position as one of the leaders in Agro-Business. Its team is consisting of highly professional and skilled. Welcon is operating countrywide and providing services to the end users, through eight regional and sixty zonal and area offices. The imports of Rs. 600 million and turnover for the year ending 30th June 2008 is Rs. 787.093 million and with the equity Rs. 108.250 million. Ch. Iftikhar Nazir
Chief Exec.
Ch. Zia-ur-Rehman
Director
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LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
iii)- Weal-Ag. Corporation Weal-Ag is the Pakistan's leading generic manufacturer and distributor of crop protection products. The group ranks amongst the Pakistan's largest manufacturers of crop protection chemicals, with a wide range of advanced, environmentally friendly products. Weal-Ag Corporation is mainly in business of developing, manufacturing and distributing pesticides. In conformity with the demands of current market, it is equipped with sophisticated instruments. It has become a sole producer. Since its establishment it has developed into an integrated group. The introduction of Weal-Ag, highly profitable and highly marketable products has brought to its attention. Meanwhile, it has emphasized the importance to collaboration with the research institutions. The entity is dealing with the import and marketing of agrochemicals besides, seeds and fertilizers, also marketed through a chain of retail outlets in the area. The entity enjoys good credibility for sales of quality products on reasonable rates. The turnover for the year ending 30th June 2008 is Rs. 73.146 million and equity Rs. 8.423 million. Ch. Iftikhar Nazir
Partner
Haji Atta-ur-Rehman
Partner
Mrs. Ghazala Asmat
Partner
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LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
iv)- Agri Village International It is dealing with multifarious activities of various grower’s friendly supplies & services pertaining to pesticides, seeds & fertilizers. The turnover for the year ending 30th June 2008 is Rs. 5.456 million and equity Rs. 47.103 million. Ch. Zia-ur-Rehman
Partner
Mrs. Abida Atta
Partner
Mr. Waqas Siddique
Partner
v)- Nasco (Pvt) Limited NASCO (Pvt) Limited is a conglomerate having diversified business interests in the area of Pet Bottling in Allahdin Group of Companies. NASCO (Pvt) Limited is the leading player in the Pet Bottling Production creating value for Allahdin group requirements at all levels. NASCO (Pvt) Limited pet bottling plant has great value in pesticide sector. Nasco Pet bottle plant started its work in March 2004 and its main emphasize is to fulfill the requirements of bottles of pesticide market. Nasco team is consisting of highly professional and skilled .With the help of competent employees group is able to produce the different type and different size of pesticide pet bottles according to the demands of the customer/consumer. Nasco said, “We are the one who are manufacturing the different kinds of bottles for our different companies like Welcon Chemicals, Warble Chemicals, Weal-Ag Corporation and other pesticides companies according to their limits. we are also producing the different types of Caps, Stoppers and Mearing Cup that are going to be produced from the Moulding Machine and they really provides the boosting support to enhance the financial profit of the Allahdin group.
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LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
The turnover for the year ending 30th June 2008 is Rs. 11.544 million and equity Rs. 6.456 million. Ch. Zia-ur-Rehman
Chief Exec.
Haji Atta-ur-Rehman
Director
Ch. Iftikhar Nazir
Director
vi)- Al-Hamd Chemicals (Pvt) Limited It deals in marketing of Fertilizer in the country. It started its business in February 2008 with paid up capital of Rs. 150.000 million. It is expected that the turn over for next year would be around Rs. 800.000 millions. Ch. Iftikhar Nazir
Chief Exec.
Ch. Zia-ur-Rehman
Director
vii)-Lyallpur Chemicals & Fertilizers (Pvt) Limited The unit Lyallpur Chemicals and Fertilizers (Pvt) Limited is situated at Jaranwala Distt. Faisalabad, has been purchased from National Fertilizers Corporation of Pakistan Limited (NFC) through Privatization Commission of Pakistan. The entity is dealing in production of single super phosphate, sulphuric acid and zink sulphate. The turnover for the year ending 30th June 2008 is Rs. 845 million (including Subsidy of RS. 325 M) and equity Rs. 503.130 million including revaluation surplus. Ch. Iftikhar Nazir
Chief Exec.
Ch. Zia-ur-Rehman
Director
Hafiz Khalil-ur-Rehman
Director
Mrs. Ghazala Asmat
Director
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LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
Allah Din Group of Companies have purchased the unit through open bidding from PC / NFC. M/S Al-Hamd Chemicals (Pvt) Limited was the highest bidder, however the PC advised to match the reserve price and finally the bid was approved by the Federal Government. PRICE OF LC&FL PAID TO PC Rs. Millions Bid price
280.200
50 % Shares of GHS/VSS Total
7.136 287.336
For LC&FL the imports of raw materials for next year may be around Rs.330 Million.
viii)- Hi-Warble Pharmaceuticals (Pvt) Limited The Company has started its business of pharmaceutical products and trying to introduce the medicines in the country (which is presently being imported and sold by others at higher prices) that would provide relief to the common man through reduced pricing of medicines. The turnover for the year ending 30th June 2008 is Rs. 27.758 million and equity is minus Rs. 20.540 million. Ch. Iftikhar Nazir
Chief Exec.
Haji Atta-ur-Rehman
Director
Mr. M. Siddique
Director
Mr. Waqas Siddique
Director
ix)- Welcon International This is altogether different activity of the group. By this, the group has launched into the export services, initially of carpets. The export of other items is being envisaged. The
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LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
exports for the year ending 30th June 2008 is Rs. 92.069 million and equity Rs. 52.862 million. The export for next year may be around Rs. 300 million. Ch. Iftikhar Nazir
Sole Proprietor
x)- Nasco Industries This is a cotton ginning unit , initially the ginning activity is being carried out, however the further process of oil expelling has been envisaged and planned during coming cotton season. The turnover for the year ending 30th June 2008 is Rs. 8.525 million and equity Rs. 27.424 million. Haji Atta-ur-Rehman
Partner
Ch. Zia-ur-Rehman
Partner
Ch. Khalil-ur-Rehman
Partner
xi)- Farm Fertilizers (Pvt) Limited Newly constituted company for expansion in sale of Fertilizer products. This company is also qualified bidder for purchase of Hazara Phosphate Fertilizers Ltd. Haripur, NWFP from NFC through Privatization Commission. Its paid up capital is initially Rs. 0.500 million only. No business operation carried out upto March 2007. However on response from PC the raising of funds for purchase of HPFL shall be arranged through equity viza-viz from banks/DFIs. Haji Nazir Ahmed
Chief Exec.
Miss Zara Iftikhar
Director
Mrs. Abida Atta
Director
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LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
Lyallpur Chemicals & Fertilizers (Private) Limited Introduction Lyallpur Chemicals & Fertilizers (Private) Limited was incorporated on June 04, 1958 as a public limited company under the companies act, 1913. Since incorporation the company was a subsidiary of National Fertilizer Corporation of Pakistan (Private) Limited. Lyallpur Chemicals & Fertilizers Limited was initially established with 50 Tons/day capacity of Sulphuric Acid manufacturing and Single Super Phosphate (Powder) manufacturing plant having rated capacity of 36000 Metric Tons per year. Subsequently, another Sulphuric Acid unit of 50 Tons/day capacity was installed in August, 1975 and rated capacity of Single Super Phosphate (Powder) unit increased to 72,000 Metric Tons per annum. The plants of Lyallpur Chemicals & Fertilizers Limited were closed down in July, 1996 due to uneconomical operation when subsidy on import of raw material (Rock Phosphate) was withdrawn by the Government of Pakistan. Later, the plants were rehabilitated at a cost of Rs. 21.981 million and restarted in May, 1999. A Zinc Sulphate Plant of 5 Metric Tons/day capacity was also started in Lyallpur Chemicals & Fertilizers Limited Jaranwala site and put into operation in March, 2001. However in February 2007 it has been taken over by Al-hamd Chemicals (Private) Limited through privatization commission. The company is principally engaged in the business of manufacturing Single Super Phosphate (SSP), Zink Sulphate and Sulphuric Acid. The manufacturing unit is situated at Lahore Road, Jaranwala and registered office of the company is situated at Suit number 18, 3rd Floor, Shane Arcade, New Garden INTERNSHIP REPORT
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LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
Town, Lahore. The status of the company has been changed from non listed “Public Limited” to “Private Limited” in this financial year 2007-08. Total area including factory area & housing colony is 67 Acres.
Price of Lyallpur Chemicals & Fertilizers (Private) Limited Paid to Privatization Commission Rs. Millions Bid price 50 % Shares of GHS/VSS Total
280.200 7.136 287.336
The turnover for the year ending 30th June 2008 is Rs. 845 million (including Subsidy of RS. 325 M) and equity Rs. 503.130 million including revaluation surplus. For LC&FL the imports of raw materials for next year may be around Rs.500 Million.
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LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
MANAGEMENT PHILOSOPHY
“We are committed to ensuring the safe and plentiful harvest of tomorrow. A global population grows and society became so industrialize, it demands more food from less land, plants, to meet these changing needs, Lyallpur Chemicals & Fertilizers (Private) Limited is dedicated discovering and developing innovative solutions for sustainable agriculture, applying advanced potential through effective crop protection. As we believe in protecting and improving the quality of human life, we are strongly committed to develop and manufacture cost-effective fertilizers products.”
CORE VALUES
“At Lyallpur Chemicals & Fertilizers (Pvt) Limited we comprehend our core values to be the most significant factor leading to the existence and growth of this prestigious organization. How we accomplish our mission is as vital as the mission itself. Thus these values are not only on paper and pen but lounge deep in the heart of each individual working or associated with Lyallpur Chemicals & Fertilizers (Pvt) Limited.”
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LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
MISSION STATEMENT
“Our mission is to improve the quality of life by manufacturing the fertilizer products. We will achieve it by reducing the cost of fertilizer products while striving hard to maintain high quality”.
VISION STATEMENT
“Our vision is to be the National wide leader in providing fertilizer products and combined solutions for pesticide sector”.
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LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
COMPANY INFORMATION Board of Directors Chairman
Ch. Iftakhar Nazir
Chief Executive
Ch. Iftakhar Nazir
Directors
Ch. Zia-ur-Rehman Hafiz Khalil-ur-Rehman Mrs. Ghazala Asmat
Company Secretary
Muhammad Ashraf Zia
Chief Financial Officer
Mr. Faisal Khalid
Audit Committee Chairman
Mr. Ahmad Jamal
Members
Haji Bashir Ahmad Mrs. Naziran Begum
Head of Internal Audit and Secretary
Mr. Muhammad Tariq
Auditors
M/S Anjum Asim Shahid Rehman Chartered Accountants
Legal Advisor
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Mr. Sahibzada Muhammad Arif
LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
Bankers Emirates Global Islamic Bank (Y-Block, DHA, Lahore) The Bank of Punjab (New Garden Town, Lahore) Askari Commercial Bank Limited (Main Boulevard, Gulburg III, Lahore) Faysal Bank Limited (MM Aalim Road, Gulberg III, Lahore)
Habib Bank Limited (Jaranwala Branch, Jaranwala) Muslim Commercial Bank Limited (New Garden Town, Lahore) Saudi Pak Commercial Bank Limited (Gulburg III, Lahore)
Saudi Pak Industrial and Agricultral Iinvestment Co. (Pvt) Limited (Gulburg III, Lahore)
Standard Chartered (New Garden Town, Lahore) National Bank of Pakistan (New Garden Town, Lahore) INTERNSHIP REPORT
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LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
United Bank Limited (New Garden Town, Lahore) Registered Office
Suit #18, 3rd Floor, Shan Arcade, New Garden Town, Lahore, Pakistan.
Factory
Mauza Chak No. 128/GB, Lahore Road, Jaranwala, Dist. Faisalabad.
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LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
Hierarical Structure of Lyallpur Chemicals & Fertilizers (Pvt) Limited
Ch. Iftakhar Nazir (Chairman)
Ch. Zia-ur-Rehman
Hafiz Khalil-ur-Rehman
Mrs. Ghazala Asmat
(Director)
(Director)
(Director)
M. Afzal Choudhry
Zafar Iqbal
M. Ashraf Zia
(MD Production)
(Business Manager)
(GM. Finance & Accounts)
M. Javed Opal (Sr.Manager Maintenace)
Mukhtar Ahmed
Talib Hussain (Manager Finance)
M. Idrees (Manager Accounts)
(Sr.Manager Production)
M. Faisal Bajwa (Manager Accounts)
Rao Amir Sharif
Abdul Salam
(Manger Marketting)
(HR Manager)
Tanveer Abid Irfan Javed (Marketting Officer)
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Imran Saeed (Marketting Officer)
(Admin Officer)
LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
List of Share Holders Name
S/O , W/O
1 Al-Hamd Chemicals
NA
(Pvt) Ltd.
Address
Occupat
NTN
CNIC
Shares
Suit No.3
ion Limited
25816
Reg. No.
Held 999,996
3rd Floor, Shan
Co
70
0053057
Arcade New Garden Town 2 Ch. Iftikhar Nazir
Haji Nazir
Lahore 154-L Model
3 Ch. Zia-ur-Rehman
Ahmed Haji Nazir
Town Lahore H#18, St# 1
list Industria
Ahmed
Block # 3
list
Industria
09885
35202-
1
96-0 13232
9177226-9 36101-
1
62-2
5222868-3
22464
36101-
52-2
1270197-7
10079
35202-
68-8
1441328-8
Jehanian Distt. 4 Hafiz Khalil-urRehman
Haji Nazir
Khanewal H#18, St# 1
Industria
Ahmed
Block # 3
list
1
Jehanian Distt. 5 Mrs. Ghazala Asmat
Ch.
Khanewal 154-L Model
House
Iftikhar
Town Lahore
wife
1
Nazir 1,000,000
Capital Holdings Associates (Al-hamd) Directors Financial Institutions General Public Others Total
99.9996% 0.0004 % % % % 100 %
Manufacturing and Trading Products of Company Manufacturing Products INTERNSHIP REPORT
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LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
1. Single Super Phosphate (SSP) Fertilizer •
Manufactured in the form of Powder and Granular
•
Use in preparation of land before cultivation
•
Cheaper than other fertilizers
•
Alternate of DAP Fertilizers
•
More beneficial than DAP fertilizers
2. Sulphuric Acid •
Known as king of chemicals
•
Mostly in-house use
•
Use in production of SSP and Zink Sulphate
3. Zink Sulphate
Input Ratios of Manufacturing Products 1. Single Super Phosphate 1 Metric Ton SSP = 68 % Rock Phosphate + 36 % Sulphuric Acid ( Extra amount is wastage )
2. Sulphuric Acid 1 Metric Ton Sulphuric Acid = 35 % Sulpher + Water
3. Zink Sulphate 1 Metric Ton Zink Sulphate = 35 % Zink Ash + Sulphuric Acid
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LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
Production Capacity Products
Rated Plant Capacity
Sulphuric Acid
46,000 M. Tons per annum
Single Super Phosphate (P & G)) - 18% P2O5
85,000 M. Tons per annum
Zinc Sulphate (21% Zinc)
1,500 M. Tons per annum
The Management is making efforts to enhance the production capacity of fertilizer from 85,000 Metric Tons to 240,000 Metric Tons.
Percentage of each manufacturing product in the total production Single Super Phosphate
90%
Sulphuric Acid
07 %
Zink Sulphate
03 %
Major Suppliers 1. Rock Phosphate---Imported from Egypt and Jordon (El-Waha For Trade Co). 2. Sulphur--- Purchased from Pak Arb Refinery (PARKO) and Oil & Gas Development Co Limited. 3. Zink Ash---Purchased from International Industries Limited.
Trading Products
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LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
There is not any trading product of Lyallpur Chemicals & Fertilizers (Pvt) Limited. In fact Lyallpur Chemicals & Fertilizers (Pvt) Limited is a manufacturing concern and its holding company Al-Hamd Chemicals (Pvt) Limited is trading concern.
SU L P H U R ST O R E
S U L P H U R1 3 4oC M EL TI N G PI T S
750~ 8 5 0o C FUR NA C E
4 6 0o C B O IL E R
HO T GA S F IL T E R
1 7 0o C S t a ck A C ID A C ID 5 5o C 7 5o CA B S O R P T I 3O0N0o C 4 3 0o C PR E SO 3 ST O R A G E C IR C U L A T IO N TO W ER H EA T ER C ON V ER T O R TA N K S PU M P
AI R
ACI D E XPO R T PU M P Fi ll l in g P o in t
T o S S P & Z4 n S O
P la n t s PRODUCTIONS PROCESS
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D R Y IN G TO W ER
A IR B LO W ER
LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
Process Block Diagram Of Sulphuric Acid (H2so4) Plant
RO CK SH EDS
BU CK ET E LE VAT O R
G R IN D IN G M IL L
C U R IN G SHED
M A IN B E L T CO N VEYO R
M E T A L L IC CO N VEYO R
F IN E R O C K HOPPER
DEN
P IO D O M ETER
M IX E R
F O R BAG G I N G & L O AD I N G A C ID W AT E R D IL U T IO N U N IT SU L PH U R I C ACI D
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D IL U T E A C ID TANK
D IL U T E A C ID PUM P
LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
Process Block Diagram Of Single Super Phosphate (SSP) Plant
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LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
Process Block Diagram Of Zinc Sulphate Plant
Z IN C A SH
SU L PH U R I C ACI D W AT E R 4 5oC REACTORS
o
S E T T L IN3 G5 C TAN KS MUD
P A C K IN G & S E A L IN G M A C H IN E
B U LK STO RE
C E N T R IF U G E M A C H IN E
o
F I L T E R 3 0C PRESS MUD
C R Y S T A L5 I0oC Z A T IO N EVA PO R ATO R P IT
ST ACK I N G & D E SPAT CH
Rock Acid Reaction For Manufacturing of SSP
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M O TH E R L IQ U O R P IT
STEAM
BUCK ET E LE V A T O R
LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
Phosphoric Acid (Free Acid) Rock + Acid
Calcium Mono Phosphate Calcium Di Phosphate Calcium Sulphate Tri Calcium Phosphate (Rock)
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LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
HUMAN RESOURCE DEPARTMENT Introduction In Lyallpur Chemicals & Fertilizers (Pvt) Limited Human Resource department is helping people and organization to reach their goals. Along the way, the department is facing many challenges arising from the demands of the employees, the organization, and society. The domestic and international environments are particularly turbulent because of the growing diversity of the workforce and the globalization of businesses. Challenges also result from ever-changing laws, especially laws that address the need for equal employment opportunity. Within these constraints, the human resource department is contributing in the organization's "bottom line" in ways that are both ethical and socially responsible.
The Purpose of HRM The purpose of human resource management in Lyallpur is to improve the productive contribution of people to the organization in ways that are strategically, ethically, and socially responsible.
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LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
Structure of the Human Resource Department
Manager Human Resource & Administration
Deputy Manager HR
Assistant Manager HR
Secratery
Objectives of Human Resource Department INTERNSHIP REPORT
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Deputy Manager Admin
Administration Officer
Computer Operator
LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
Managers and HR departments achieve their purpose by meeting objectives. Objectives are benchmarks against which actions are evaluated. Sometimes they are carefully thought out and expressed in writing. More often objectives are not formally though out and expressed in writing. The main objectives of Human Resource Management are not only to reflect the intention of senior management, they also must balance challenges from the organization, the HR function, society, and the people who are affected. Failure to do so can harm the firm's performance, profits, and even survival. These challenges spotlight some objectives that are:
Organizational Objective To recognize that HR management exists to contribute to organizational effectiveness. Even when a formal HR department is created to help managers, the managers remain responsible for employee performance. The HR department exists to help managers achieve the objectives of the organization. HR management is not an end in itself; it is only a means of assisting managers with their human resource issues.
Personal objective To assist employees in achieving their personal goals, at least insofar as those goals enhance the individual's contribution to the organization. The personal objectives of employees must be met if workers are to be maintained, retained, and motivated. Otherwise, employee performance and satisfaction may decline and employees may leave the organization Not every HR decision can meet these organizational, functional, societal, and personal objectives every time. Trade-offs do occur. But some serve objectives are a check on decisions. The more these objectives are met by the department's actions, the larger its INTERNSHIP REPORT
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LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
contribution will be to the organization's bottom line and the employee's needs. Moreover, by keeping these objectives in mind, HR specialists can see the reasons behind many of the department's activities.
Recruitment and Selection Selection Procedure Recruitment is the process of searching for prospective employees and stimulating them to apply for jobs in the organization.
Role of HRD in Recruitment Process Human resource department of Lyallpur is responsible for designing the selection system and managing its everyday operation. In Lyallpur Chemicals & Fertilizers (Pvt) Limited human resource mangers in cooperation with other managers largely set the overall strategy, they are likely to be influential in deciding, e.g., whether the department should focus on choosing people who are best qualified for current vacancies of for those who have the greatest long term potential. The personnel managers also decide how the guidelines for equal employment opportunities met and whether the company needs outside legal assistance in formulating its affirmative action plan.
Procedure of Joining the Company
On joining the Company the following formalities must be completed:
The documents listed below shall be forwarded immediately to Human Resource Department for completion of their record.
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LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
i)
Duplicate copy of appointment letter duly signed by the employee in acceptance of the terms and conditions embodied therein.
ii)
Four copies of recent passport size photograph.
iii)
Photocopies of all academic certificate especially metric certificate.
iv)
Photocopies of testimonials from previous employers.
v)
Fitness certificate.
vi)
Photocopy of CNIC
vii)
Clearance letter from previous employer.
Recruitment Process In general the sources of recruitment can be classified into two types:
i). Internal Job Posting Filling a job opening from within the firm has the advantages of stimulating preparation for possible transfer, or promotion and increasing the general level of morale. Self Nomination Human Resource office publishes a monthly newsletter that list the Lyallpur's job posting program to different routes to nomination for a job, self nomination and nomination by an employee supervisor. Positions available the announcements carry information about the nature of the position and the qualification needed, and any employee whose interested bid on the job that is enter the competition for it. Nomination by Employees Supervisor INTERNSHIP REPORT
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LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
Informal communications among managers lead to discourage that best candidates for a job is already working in a different section of the firm. Despite some minor problems, most employees were pleased that an internal job posting program was established. Most successful nominees were happy with their new assignments and unsuccessful nominees identified needed skills and gained a more realistic idea of additional training or experience required for careers alternatives.
ii). External Job Posting Lyallpur Chemicals & Fertilisers (Pvt) Limited also go to external sources for positions whose specification can not beam by present personnel. Lyallpur uses following outside sources: 1). Advertising Advertisements are placed in various newspapers. More information about the company and jobs specifications are included in the ad to present some self-screening. 2). Employment Agencies Additional screening is affected through the utilization of private employment agencies. The agency has specialized in various types of workers and job e.g. sales office, execution or engineer. 3). Casual Applications Unsolicited applications both at the gate and through the email constitute a much used source of personnel.
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LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
4). Leasing To adjust short term function in personnel needs. The possibility of leasing by the hour or day is considered. Lyallpur is not only obtains well trained and selective personnel but avoids any obligation in pension, and other fringe benefits. .
The Hiring Procedure In the hiring procedure, Lyallpur is considering the following steps to discover significant information about an applicant: 1.
Call for application
2.
Preliminary interview
3.
Applications blank
4.
Check of References
5.
Psychological test
6.
Employment interview
7.
Approval by the supervisor
8.
Physical examinations
9.
Introduction or orientation
1). Call for Application First of all, an ad is given in the newspaper for the vacancy.
2). Preliminary Interview In this step, the more obvious facts and impressions are of the type generally obtained in an initial interview. Appearance and facility in appear are quickly evaluated. Applicants are often asked why they are applying for a job with Lyallpur. An idea of education and
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LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
experience is obtained by asking for the last grade finished in school and the names of jobs previously performed.
3). Application Blank The application form is a sheet or small, booklet with blanks to be filled in by the applicants. Its purpose is to supply organization with basic information about the candidate's back ground: education work experience, previous salary, and so forth. In Lyallpur factual information is to be obtained by means of an application blank. Weighted application form is established and used with caution. It is used for two prime objectives:
i). Lyallpur has established the selection of more stable employees to decrease labor turnover. They have discovered and utilized the particular data that devote stability facts relating to home ownership, marital status, age, sex etc. ii). Lyallpur has also established job proficiency as the major objective and have correlated biographical items with production records. The application blank is continuously updated. The entire blank is restudied and reweighted every 1 year at the minimum.
4). Check of References The purposes of the reference check are to obtain information about past behavior of applicants and to verify the accuracy of information given not he application blank. Lyallpur uses combination of letters and telephone calls, as a method of checking.
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LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
Reference includes only: 1)
Dates of employment
2)
Job title
3)
Absentee record
4)
Promotions and demotions
5)
Compensation
6)
Stated reason for termination.
5). Psychological Test In Lyallpur, clericals jobs are subjected to the greatest amount of testing, applicants for unskilled hourly jobs are tested least. The factors measured are usually of the psychological type, such as ability to reason, capacity for learning, temperament and specific aptitude.
Types of Psychological Tests: Following types of tests are being used in Lyallpur to identify talents. i). Intelligence test These tests concentrate on a person's abilities with worlds numbers logical reasoning and spatial relationships. This type of test is used for managerial posts. ii). Mechanical Aptitude test Lyallpur uses mechanical aptitude tests. Inventions are asked which fall into the general area of understanding area of under standing mechanical relationships. Some questions
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LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
relate to knowledge of tools and equipment. This type of test is suitable for technical posts. iii). Clerical Aptitude Test This test deal with questions concerning office vocabulary, automatic, spelling and detail checking. This type of test is used for clerical posts, such as computer operator. iv). Interest Test Lyallpur realizes that a person who is interested in a job or task will do much better than one who is uninterested. The applicant is asked whether he likes, dislikes or is indifferent to many examples of school subjects, occupations, amusement, and peculiarities of people and particular of activities.
6). Employment Interview Interviewing is probably the most widely used single method of selection. Lyallpur shapes interviewer behavior is to establish a specific system for conducting the employment interview. Lyallpur considers following things to set up such a system: 1). To know what to look for in applicant focus only those knowledge, skills, abilities and other characteristics (KSAOs) necessary for the job. 2). Develop interview questions that are strictly based on the job analysis results, use "open-ended" questions and use questions relevant to the individual's ability to perform, motivation to do a good job.
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LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
3). Conduct the interview in a relaxed physical setting. Begin by putting the applicant at ease with simple questions and general information about the organization and the position being filled. 4). To evaluate applicants, develop a form containing a list of KSAOs weighted for overall importance to the job.
7). Approval by the Supervisor After the employment interview the immediate supervisor approves the candidates. The candidate's recruitment is confirmed after probationary period.
8). Physical Examination The physical examination step found in most business. Physical examination includes matching of an applicant's physical capabilities to job requirements to a simple check of general physical appearance and well being. In having the physical examination procedure Lyallpur has at least three basic objectives that are: 1). In first, it serves to ascertain the applicant physical capabilities e.g. can the applicant work standing up. 2). The second objective of examination is to protect the company against unwarranted claims under worker's compensation laws or against lawsuits for damages. If a record of a new employee’s physical condition at the time of entry does not exit, a claim could possibly be filed for injuries greater than were incurred after starting to work.
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LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
3). Third objective of physical examination is to prevent communicable diseases from entering the organization.
Training and Development Orienting and Training Employees In Lyallpur both human resource directors and other managers play critical role in the development of orientation programs. Human resource managers have assumed leadership in developing such programs.
Orientation of New Employees After the selection of successful employees the first step in their introduction to company policies, practices and benefits is an orientation program. In 2007 an orientation programme was conducted by the management after taking over NFC. The main objective of that programme was to get familiarize with the organization culture of both old and new employees. The Orientation program in Lyallpur is completed in three phases: The first phase is usually conducted by the staff personnel unit. Subjects covered include products of the company, employee benefits, salary schedules, safety, probationary period, timed recording and absence, holidays equal employment opportunity programs, packing and the grievance procedure. The second phase of most organized induction program is performed by the immediate supervisor. The inductee is introduced to fellow employees, given a tour of the department, and informed about such details as locker and rest rooms, supply procedures, hours of work overtime, call in procedures, rest and lunch periods, and lunching facilities. INTERNSHIP REPORT
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LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
The complete in action program will provide for phase three follow up some week later. The interview, conducted by either the supervisor or a personnel specialist is concerned with: 1). Employee satisfaction with the job and organization. 2). Supervisor satisfaction with the employees. Dissatisfactions may be cleared up by explanations or actual transfers to a different job. In any event, the interest in the employee evidenced by the more act of having a followup interview will help to increase the level of employee satisfaction. After the employee has been received, selected and inducted, he or she must next be developed to better fit the job and the organization. No one is a perfect fit at the time of hiring, and some training and education must take place. Lyallpur is a cultural organization in which importance has been given to training. The management consider the training as an "Investment in their Asset". They believed that planed development programs will returns values to the organization interims of increased productivity, high reined morale, reduced costs and greater organizational stability and flexibility to adapt to changing external requirements. Lyallpur management is initially interested in training and educational programs in order to promote employment and utilize the talents of its citizens.
Training Needs Assessments In Lyallpur there are three level of analysis for determining the needs of training: 1). Organization analysis INTERNSHIP REPORT
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LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
Focus on identifying where within the organization training is needed. 2). Operation analysis Attempt to identify the content of training, what an employee must do to perform competently. 3). Individual Analysis Determines how well each employee is performing the task that make up his or her job. At this level, training needs may be defined in terms of a simple equation. Desired performance - Actual Performance = Training need
Operative Training The development of operative calls for specific, increased in skills and knowledge to perform a particular job. In Lyallpur there are primarily two basic methods in use:
1). On the Job Training Since most jobs in Lyallpur can be learned in a relatively short period of time, this method is most widely used. It has the advantage of strongly motivating the trainee to learn since it is not located in the artificial situation of a classroom. The fact that the success of the system depends almost entirely upon the immediate supervisor, the trainer, means that the personnel unit has a major responsibility for making a good, effective reaches out of every supervisor.
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LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
Major types of on the job training implemented in Lyallpur is Apprenticeship programme which include both class room instructions as well as on the job training. This type of training is given to the new inductees and usually two years long.
2). Off the Job Training There are three methods used in Lyallpur for Off the Job training:
i). Workers Training Program During the first quarter of 2008, a worker's training program was organized by fertilizer division of Allahdin Group. This was a part of on the job training. This program was inaugurated by Manager Human Resource of Lyallpur. The main agenda of the program was to explore the hidden talent of their worker and to make them cognizant of their own potentials. Manager HR, the divisional head, and his team conducted the program in a very interesting and entertaining manner with the help of IQ testing riddles and different games. High degree of enthusiasm was observed among the participating workers.
ii). Special Courses The second system of operating training classified some educational courses rather than training.
iii). Selling and Technical skills training program This is another strange experience for all participants after the budget and strategy session. This program was hold day and night from 25-04-2008 to 27-04-2008 at BZU, INTERNSHIP REPORT
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Multan. The objective of the program was to convert their sales staff into technical sales staff.
Evaluating Training Programs Training must be evaluated by systematically documenting the outcome of the training in terms of how trainees actually behave back on their job and the relevance of the trainees behavior to the objectives of the organization. To assess the utility or value of training, in Lyallpur management seek ensures to four questions. 1.
Did change occur?
2.
Is the change due to training?
3.
Is the change positively related to the achievement of organizational goals?
4.
Will similar change occur with new participants in the same training programs?
In evaluating training programs, measures of change fall into four categories: Reaction How do participants feel about the training program? Learning To what extent have trainees learned what was taught? Behavior What on the job changes in behavior occur because of attendance at the training program? INTERNSHIP REPORT
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Results In what extent have cost related behaviour outcomes or quality improvement, turn over or accident reduction (productivity) resulted from the training?
Management and Career Development Management and employee development programmes are "those organization sponsored programmes aimed at educating supervisory and supervisory employees above and beyond the technical requirements of their job". Human relations, "decision making" and the executive’s role" are examples of courses included in management development. The HRD of Lyallpur is mainly responsible for providing information about what seminars are available outside and also develop budgets and plans for sending managers to outside seminars but the final decision of attending the seminar is to be made by immediate supervision of the managers involved. The commonly used training methods in ICI are: 1.
Lecture / Discussion
2.
Films / Videotapes
3.
Case Study
4.
Management Games
5.
Behavior Modeling.
Evaluation of HRD Performance
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LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
HRD of Lyallpur is working very well. Such as planning, managing people, resulting people, its objectives and its mission, guiding principle are very good and helping in overall organization. Managers of HRD are expected to organize and to be accountable for the work of other people. In this process, managers act as employers as such they create and sustain the employment relationships of their organizations.
Salary Administration Salaries of Sales Force 1). Fixed Salary Fixed salary is given to helpers and apprentice salesmen/managers during their first six months of training period.
2). Fixed Salary and Commission All the salesman who have passed the test and the managers who have completed six months training are paid according to this plan.
Employees Services Bonus After the completion of two years of service, salesmen and helpers are entitled to bonus (if any) to be paid at the end of each year.
Provident Fund
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LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
After completion of one year's service, a Manager will be entitled to become the member of Provident Fund. a). The Manager will deposit every month 6% of his actual pay to his PF. b). After five years of continuous contribution by the manager, he will be entitled for 100% of company's contribution.
Annual Leaves An employee after completion of one year of service will be entitled to the following leaves: a).
Casual Leaves
10 days with pay
b).
Sick Leaves
14 days with pay
c).
Privilege Leaves
10 days with pay
Promotions The manager on transfer from one station to another will be entitled to the following allowances: a).
Actual transport fare for him and his family.
b).
One day daily allowance for himself.
c).
Average salary for the period in between handing over and taking over of the charge.
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Demotions An employee may be demoted on showing bad performance. Not only the low level employees but the managers are also demoted if the required targets are not achieved in repeated year.
Commission and Salaries The administration department deals with the salaries, commissions and other fixed benefits of the employees. In this way, Lyallpur has its own system of evaluating the salary and commission for individual employees in the organization. The basic salaries of the employees of Lyallpur is very low, however, a good package of salaries come into existence after adding the house allowance, conveyance allowance and commission. Schedule of salaries and commission is as under: Personnel of grade "1" gets
2000/- Rs.(B.P)
Personnel of grade "2" gets
2800/- Rs.(B.P)
Personnel of grade "3" gets
4600/- Rs.(B.P)
The above employees get more in form of a percentage share in net profit. Salaries of managers are also varies work wise ranging from 430/- Rs. to 3150/- Rs. They enjoy, too, the commission ranging from .09% to 3% of the net profit.
System of Communication
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LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
Formally defined a Company structure is the system of communication and authority that links people and groups together to accomplish tasks that serve the organizational purpose. Structure can be described in the form of an organization chart. Lyallpur 's organizational chart shows that it has functional structure.
Negotiating With Union Labor Union do alter the work environment. The personnel department is deeply involved with decisions that effect compensation, work hours and other terms and conditions of employment to ensure uniformity of treatment. In Lyallpur one labor union member is granted the status of collecting bargaining agent (CBA). Management wants effective work performance through good relationship with CBA. The union is only for rank and file workers. Union management meetings are held every month. At the end of the year, Annual meeting is held with the employees. A reasonable agreement is reached which is workable for both the management and the work force. Management always wants to provide a conducive and congenial work environment for the work force.
SWOT Analysis of HR Department INTERNSHIP REPORT
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LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
Strengths •
Qualified management
•
Recruitment procedure
•
Training methods
•
Computer literacy programs
•
Compensation and benefits packages
•
Handsome salary package for professionals
Weakness •
Time consuming recruitment procedure
•
Inter-department relations
•
Union disputes
•
Communication system
Opportunities •
Availability of professionals
•
Agricultural specialists
Threats •
Labor disputes
•
Political references
•
Price competition
•
Strong competitors
Conclusion INTERNSHIP REPORT
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LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
Training process in Lyallpur leads to improved profitability, enhances job knowledge and skills, helps employees to identify and understand organizational goals, improves labor management relations and increases information by reducing communication gap at all levels of the organization. Thus training in Lyallpur develops certain skills among the employees, such as effective problem solving, handling stress, frustration and conflict, improved communication skills and sense of growth and learning. These skills are required because ICI has a diverse product range.
Suggestions In the light of my research following recommendations are suggested. •
Lyallpur should have to launch employee awareness training programme through off the job training. These programmes must clearly define company goals and bring about awareness of corporate culture of Lyallpur amongst the less educated employees.
•
They should have to train their employees according to the macro-environment of the country.
•
It is also suggested that Lyallpur should have to hire professional trainers to distinct their employees from their rivals.
Sales and Marketing INTERNSHIP REPORT
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LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
Al-Hamd Chemicals (Pvt) Limited Al-Hamd Chemicals (Pvt) Limited is subsidy of Allahdin Group of Companies and it is holding and trading company of Lyallpur Chemicals & Fertilizers (Pvt) Limited. Its core undertaking is to benefit the farmer‘s worth through prosperity & fruitful land. HFC founded in late 2006. HFC is a leading manufacture & distributor of Single Super Phosphate (SSP) and have a solid vision to get more share in SSP market as well as in fertilizers sector of Pakistan.
Products Super Kisan Single Super Phosphate (Powder & Granular) is the major product for marketing. It contains; • P2O5 18% • Gypsum 46% • K2O, Magnesium & Zinc Agronomic Aspects of SSP Why SSP is better than DAP for Pakistani Soil? • • • • • • •
Nutrients Contents & Low PH SSP Being Highly Acidic in Nature (PH-2) Due to Availability of Gypsum (46 %) Combination of SSP & Urea, SSP & CAN SSP for the Reclamation of Saline, Alkali Soils It Softens the Soil SSP Changes the Orchard Soil Alkalinity
SSP is more beneficial for all crops, especially for root crops like: • • • • • • •
Potato Sugar beet Sweet Potato Carrot Turnips Radish Onion & Garlic
Situational Analysis INTERNSHIP REPORT
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Market Summary Fertilizer is one of the key inputs to agricultural production. Balanced usage of fertilizer helps in increasing crop yield from 30 to 60 percent in different regions of the country. Almost the entire available soil in the country is nutrient deficient. To overcome the problem of nutrient deficiency, use of fertilizer has become vital for achieving the agricultural production. However, the main impediment in exploring the full potential of the soil has remained below par due to imbalances in fertilizer usage specially, in terms of over application of nitrogenous fertilizer compared to phosphatic fertilizer. Realizing the importance of balanced nutrition, the prices of 50 Kg bag of these fertilizers were reduced by Rs 250 for encouraging a more balanced use of key fertilizers (nitrogenious, phosphatic, potassic fertilizers) in 2006. Following the steep increases in international prices of phosphatic and potassic fertilizers, the Government in July 2007, further increased the relief in price from Rs 400 to Rs 470 per bag. The domestic production of fertilizers during the year 2007-08 remains near to 6.24 million Metric Tons. Provisional figures shows that total nutrients off take during fiscal year 2007-08 was 3,577 thousands tons depicting a decrease of 2.6 % over year 2006-07. Nitrogen offtake increased by 10.4 %, whereas phosphate and potash decreased by 36.0 & 38.10 per cent respectively. The high prices of phosphatic and potassic fertilizers altered the ratio in favor of nitrogen which negatively effective our crop productivity. Increased international prices of phosphatic and potash fertilizers overshadowed the subsidy effect and eventually off take could not increase and remained at almost last year’s level.
Seasonal Variation Rabi:
October-November
Kharif:
April-May
There are two seasons of crops in Pakistan Rabi & Kharif. Rabi refers to the crops for which seeds are sown in October-November and harvested in April-May, whereas, kharif seeds are sown in April-May and harvested in October-November. Urea is needed in the middle of these crops, therefore, in the months that fall between sowing and harvesting urea off take increases. Phosphate fertilizers are mainly used at the time of sowing the seeds. As for as the production of fertilizer in kharif & Rabi is concerned it is more or less independent. However, in terms of consumption Rabi needs a lot of fertilizer as major crops of Pakistan (Wheat and Sugarcane) grow in Rabi season and weather conditions are more suitable to use fertilizer due to minimum rainfall. In the Kharif season only cotton is grown and that does not require much fertilizer as compared to other crops. INTERNSHIP REPORT
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Market Potential World demand for phosphate fertilizers in 2007 grew by 3.8%, pressuring the industry to operate at high rates during the whole year. Production of raw materials, intermediates and processed phosphate fertilizers rose to near record levels, while input costs continued to expand, notably in the case of sulphur and ammonia. World production of phosphate rock rose by 2.7% to 172.1 Metric Tons, of which China contributed one-third. Global trade of phosphate rock increased by 6% over 2006, after registering two years of decline; strong deliveries were reported into Europe, North America and Latin America. World phosphoric acid capacity in 2007 decreased to 43.2 Mt, but would rebound to 45 Metric Tons P2O5 in 2008 with new projects in China and Morocco. In 2008, growth in demand would match that in supply, keeping the current balance tight. World production of processed phosphates (MAP, DAP, SSP and TSP) grew by 5% over 2006, to 25.2 Mt P2O5. The global trade of MAP and DAP in 2007 rose moderately to 8.4 Mt P2O5. A decrease in DAP volumes was more than offset by an increase in MAP exports. In Pakistan, off take of phosphatic fertilizers decreased by 36.0% in 2007-08. Provisional figures indicate that total nutrient off take during year 2007-08 was 3,577 thousands tons showing a decrease 2.6 per cent. Nitrogen off take was 2,923 thousands tons against 2,649 tons of year 2006-07 with increase of 10.40 %. Contrary to this phosphate and potash off take decreased by 36.0% & 38.10% respectively as compared to previous year. In product terms, urea off take increased by 19.30% while of DAP decreased by 34.10%. The decrease in overall nutrient off take was mainly due to decrease in phosphate & potash off take. (‘000 Tons) Nutrient Season
Nitrogen
Phosphate
Potash
Total Nutrient
2006-07
2,649
979
43
3,671
2007-08
2,923
627
27
3,577
Marketing Strategy
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Al-Hamd Chemicals (Pvt) Limited, objective is to provide the quality fertilizer. We exist to attract and maintain customers. When we adhere to this maximum, everything else will fall into place. Our services will exceed the expectations of our customers. Marketing Objectives • • •
Experience an increase in new customers who are turned into long-term customers. Maintain positive, steady growth each month in market development. Generate brand equity at the Farmer's Market as well as within the commercial traders market.
Financial Objectives • •
Reduce the distribution cost by selling the product within 150 Km radius. To create GOODWILL of the Company.
Target Market Their target market is the farmer, who has harvesting area in province Punjab. This thing does not matter that how much he/she has. Positioning Al-Hamd Chemicals (Pvt) Ltd., will position itself as: • • •
Reliable Business Partners Quality Manufacturer True Professionals
Marketing Mix HFC’s marketing mix is comprised of the following approaches to product, place, promotion, and price: Product Super Kisan Single Super Phosphate (Powder & Granular), is packed in 50 Kg bag which has printed in two colors.
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Place Consumers are able to purchase Super Kissan Single Super Phosphate from available company’s authorized fertilizer dealers. If customer wants to buy product direct from the company than its essential to purchase minimum two hundred bags in one transaction. Promotion The main objective of the promotion is to flow of information to farmer. The challenge here is to communicate how our product adds value to farmer’s expected yield. Word of mouth has a critical position in this target market. A mixture of print media advertisement and outdoors will be used to increase the visibility of our product. Price Price of SSP (P&G) is linked with international market because major raw material is imported from off shore. Pricing of SSP (P&G) is charged for 50 Kg bag on delivered basis. Costumer may purchase two hundred or more than two hundred bags in one transaction. Trade discounts would be available for dealers or retailers with reference to market situation.
Sales Forecast INTERNSHIP REPORT
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Sale During 2007-08 Sale of SSP (P&G) during last financial year 2007-08 was 1,448,772 bags or 72,439 Tons. They got an advance booking of 68705 Tons during last financial year. In 2007-08 they have supplied 3734 Tons pending product of 2006 and at the end of this year they have clutched forward 5,000 Tons to 2008-09.
Product Quantity (Bags)
Month wise Sale During 2007-08 250000 200000 150000 100000 50000 0 Jul-07
Aug-07 Sep-07
Oct-07
Nov-07 Dec-07
Jan-08
Feb-08 Mar-08
Apr-08
May-08 Jun-08
Months
300000 250000 200000 150000 100000 50000
ha w a Ba l N ha ag w ar F a al P is u r a G l ab uj ad ra n Ha wa fiz la ab Ha ad rip u Jh r an Ka g Kh su an r e Kh wa us l ha La b ho La re yy M an a d i Lo d h Ba hr ha a n ud d M in ar d M an u Na ltan nk a Na na ro wa l O Ra Pa k a hi k P ra m at Ya ta rK n h Sa an h Sa iwa r Sh g o l ei dh kh a up u S ra T. ialk T. ot Si ng Ve h ha ri
0
Ba
Product Quantity (Bags)
District Wise Sale
District
Sale During 2008-09 INTERNSHIP REPORT
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LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
During financial year 2008-09 company have to receive 90,000 Tons SSP from production side, Out of this 90000 we have to make supplies of 5000 Tons from previous year pending orders and remaining 85000 Tons will be available to market this year. Company should have to generate 108,000 Tons booking through out the year. After supplies we should have pending of 23,000 Tons. By the end of the year 2008-09 we plan to develop our market in upper Punjab. In this regard we have hired 5 Marketing Officers. To manage the the activities of MOs company have divided the sales areas into 5 territories. Detail of new sales territories is given bellow: Territory 1 Faisalabad Jaranwala Sammundri Momo Kanjan Khurdyanwala
Territory 4
T.T.Singh Gojra Pir Mahal Kamaliya
Hafizabad Jala Pur Bhtyan Sukheki Khanka Dogra
Gujranwala Gujrat Sialkot Narowal Mandi Bhu Din
Territory 2 Territory 5 Sahiwal Chichawatni Harrapa Okara Renala Khurd Depalpur Hujra Shah Muqeem
Pak Pattan Arifwala Malka Hanss Kasur Pattoki Chunia Khudian Khass
Lahore Raiwand Nanka Sb. Sangla Hill Shah Kot
Sheikhupura Dhamke Muridke
Territory 3 Sargodha Sahiwal Bhalwal Khushab
Jhang Chinoot Shorkot
Sales Target 2007.9 Sales Advance Booking
Thousand Tons Territories
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2008-09
72,439 Tons 68,705 Tons
(000) Last Year Sales
90,000 Tons 108,000 Tons
Projected Sales
Per Month
LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
Open Faisalabad Okara Sargodha Gujranwala Lahore
22.0 15.0 18.0 5.0 8.0 5.0
6.0 24.0 26.0 16.0 22.0 14.0
500.0 2000.0 2166.7 1333.3 1833.3 1166.7
Sales During 2007-08 7%
11%
29%
7%
Open Faisalabad Okara Sargodha Gujranwala Lahore
25%
21%
Projected Sales During 2008-09
13%
6% 22%
Open Faisalabad
20%
Okara Sargodha Gujranwala 15%
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24%
Lahore
LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
Last Year VS Projected Sales 30.0
Tons (000)
25.0 20.0 Last Year
15.0
Current Year
10.0 5.0 0.0 Open
Faisalabad
Okara
Sargodha
Gujranwala
Lahore
Territories
Sales Incentive For the motivation purpose of sales & marketing team, a special prize of Rs. 100,000/(One Hundred Thousand Only) is allocated for the winner at the end of the financial year. That winner will be selected by the committee on following grounds: • • • • •
Continuous Target Achievement (Consecutive 8 Months) Liaison with Head Office Expense Management (Vehicle, Entertainment, Fright/Bag etc.) Personal Management (Personality & Vehicle) Market Penetration (Dealers Network, Active Dealers, Market Vision, Competitor Activity Reports)
55% 10% 15% 10% 10%
Sales & Marketing Budget Total sales & marketing cost of 2007-08 was Rs. 29.74 million. Now it should be increased by 35% because transportation cost has increased as compare to last year & it is major proportion of our sales cost. This year company will try to sell product within defined territory radius. Proposed budget to meet the sales & marketing expenses is Rs. 40.00 million minimum. 2007.8 INTERNSHIP REPORT
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2008-09
LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
Distribution Marketing & Others
21.50 M 8.20 M
28.80 M 11.20 M
Total
29.70 M
40.00 M
Controls The purpose of Single Super Phosphate’s marketing plan is to serve as a guide for the organization. The following areas will be monitored to gauge performance: • • •
Customer Satisfaction Revenues Product Performance
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SWOT Analysis Opportunities • • • •
Market Penetration (Capture more market share in terms of number of Customers) Supply chain management (Low cast distribution) Customer support system Dealers Technical Trainings to market our product
• • • • • •
Less number of dealers / high number of investors High price Carriage contractor Product quality Competitor brand image Political factor
• • • • •
Goodwill of parent group Financial background of group Repute of manufacturer (LC&FL) Technocrats Flexibility in meeting market needs
Threats
Strengths
Weaknesses • • • • •
Marketing & Sales Budget Marketing & Sales team Distribution Channels Product line Training & Development of Employees
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Financial Statement Analysis (Accounting Ratios) Financial statements are prepared primarily for decision making. Financial Statements play a dominant role in setting the frame work of managerial decisions but information provided in the financial statements is not analysis and in it self as no meaning full conclusions can be drawn from these statements alone. However, the information provided in the financial statements is of the immense use in making decisions through analysis and interpretation of financial statements. Financial statement analysis is the process of identifying of financial strength and the weakness of the firm by properly establishing a relation ship between the items of the balance sheet and the profit and loss account. There are various methods used in analyzing financial statements such as comparative statements, schedules of changes in working capital, common size percentages, funds analysis and the ratio analysis. The ratio analysis is the most powerful tool of financial analysis.
Meaning and Nature of Accounting Ratios: Ratio simply means one number expressed in terms of another. A ratio is the statistical yard stick by means of which relationship between two or various figures can be compared and measured. The term “Accounting Ratio” is used to describe significant relationship between figures shown on a balance sheet and profit and loss account of a company. Thus accounting ratios show the relationship between accounting data. It may be expressed in the form of percentage, coefficient, proportion and rate. Who is Interested in Financial Analysis of Company? Ratio analysis of a firm’s financial statements is of interest to share holders, creditors and the firm’s own management. Both current and prospective share holders are interested in the firm’s current and future level of risk and return, which directly affect the share price. The firm’s creditors are interested in the short term liquidity of the company and its ability to make interest and principal payments. A secondary concern of creditors is the firm’s profitability: they want assurance that the business is healthy. Management like INTERNSHIP REPORT
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stake holders is concerned with all aspects of the firm’s financial situation, and its attempts to produce financial ratios that will be considered favorable by both owners and creditors. In addition management uses ratios to monitor the firm’s performance from period to period.
Advantages of Ratio Analysis Ratio analysis is very important and age old technique of financial analysis. The followings are some of the advantages of ratio analysis: Simplifies Financial Statements It simplifies the comprehension of financial statements. Ratio tells the whole story of changes in the financial condition of the business. Facilitates Inter Firm Comparison It provides data for inter firm comparison. Ratio highlights the factors associated with the successful and unsuccessful firm. They also reveal strong firms and weak firms, overvalued and under valued firms. Helps in Planning It helps in planning and forecasting. Ratios assist management in its basic function of forecasting, learning, coordination, control and communication. Helps in Investment Decisions It helps in investment decisions in the case of investors and the landing decisions in the case bankers and other financial institution.
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LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
Types of ratio Comparison Ratio analysis is not merely the calculation of a given ratio. More important is the interpretation of the ratio value. Two types of ratio comparison can be made. 1. Time Series Analysis 2. Cross Sectional Analysis
1. Time Series Analysis This analysis is concerned with the evaluation of the firm’s financial performance over time using financial ratio analysis. Comparison of current to past performance, using ratios, enables analyst to asses the firm’s progress.
2. Cross Sectional Analysis Cross sectional analysis involves the comparison of the firm’s financial ratios at the same point in time and involves comparing the firm’s ratios to those of other firms in its industry or to industry averages. Analysts are often interested in how well a firm has performed in relation to other firms in its industry. Frequently a firm will compare its ratios values to those of key competitor or group of competitors that it wishes to emulate. This type of cross sectional analysis called bench marking has become popular.
Classification of Accounting Ratios: Followings are the main ratios which are commonly used by the financial analysts, management of the company, investors, lenders, creditors and other stake holders. There detail definitions and explanations are given in next pages:
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1. Liquidity Ratios •
Current Ratio
•
Acid Test Ratio
2. Profitability Ratios •
Gross Profit Ratio
•
Net Profit Ratio
•
Operating Profit Ratio
•
Cost of Sales to Sales Ratio
•
Return on Equity Capital
•
Return on Share Holder’s Fund
•
Return on Capital Employed
•
Earring Yield Ratio
•
Dividend Yield Ratio
•
Price Earning Ratio
•
Dividend Cover Ratio
3. Activity Ratios •
Stock Turn over Ratio
•
Debtors Turn Over Ratio
•
Creditors Turn Over Ratio
4. Long Term solvency in Leverage Ratios •
Debt to Equity Ratio
•
Debt Service / Interest Coverage Ratio
•
Capital Gearing Ratio
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With Respect to Sales
With Respect to Investment
LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
Financial Statements Lyallpur Chemicals & Fertilizers (Pvt) Limited BALANCE SHEET For The Year Ended On 30 June, 2008 PARTICULARS Paid-up Share Capital
June,2008 Rupees 10,000,000
June,2007 Rupees 10,000,000
Reserves
155,447,497
38,525,609
Surplus On Revaluation Of Property Plant & Equipment Current Liabilities
337,672,834
343,655,202
Creditors, Accrued And Other Liabilities
547,522,761
8,7549,325
Short Term Finance-Secured
134,012,772
118,294,058
2,612,217
1,279,492
1,187,268,081
599,303,686
352,223,188
351,734,414
Capital Work In Progress
4,659,465
7,086,267
Long Term Loans & Deposits
1,051,905
691,405
Stores, Spares & Loose Tools
16,630,640
11,434,852
Stock In Trade
277,277,657
65,993,265
Trade Debtors
6,967,299
2,119,946
Loans & Advances
9,872,607
39,600,888
Trade Deposits & Prepayments
354,905,368
6,845,855
Other Receivables
162,421,973
108,701,145
1,257,979
5,095,649
1,187,333,523
599,303,686
Taxation Total Equity & Liabilities Non Current Assets Property, Plant & Equipment
Current Assets
Cash And Bank Balances Total Assets
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Lyallpur Chemicals & Fertilizers (Pvt) Limited PROFIT AND LOSS ACCOUNT For The Year Ended On 30 June, 2008
PARTICULARS
June, 2008 (Rupees)
June, 2007 (Rupees)
Sales
520,606,760
275,228,803
Add: Subsidy From Government
324,819,020
165,362,900
Net Sales
845,425,780
440,591,703
(651,025,539)
(370,149,436)
Gross Profit
194,400,241
70,442,267
Administration And General Expenses
(56,062,456)
(41,012,142)
2,790,639
4,355,512
Operating Profit
141,128,424
33,785,637
Financial And Other Charges
(27,576,687)
(16,053,692)
Profit For The Year Before Taxation
113,551,737
17,731,945
Taxation
(2,612,217)
(3,814,026)
Profit For The Year After Taxation
110,939,520
13,917,919
Less: Cost of Sales
Other Operating Income
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ANALYSIS OF ACCOUNTING RATIOS Now I will analyze some important factors like liquidity, profitability, long term solvency and activities of firm with the help of ratios which are usually brought under observation by the creditors, investors, management and other stake holders.
Ratio Analysis Ratios
2008
2007
Liquidity Ratios Current Ratio ( In : )
1.16
1.21
Acid Test Ratio ( In : ) Profitability Ratios
0.65
0.79
Gross Profit Ratio ( In % )
15.99
22.99
Net Profit Ratio ( In % )
3.16
13.12
Operating Profit Ratio ( In % ) Cost of goods sold to sale Ratio ( In % )
7.67 84.01
16.69 77.01
Return on Equity Capital ( In % )
138.18
1109.40
Return on Share Holder’s Fund ( In % ) Return on Capital Employed ( In % ) Earning per Share ( In Rupees Per Share )
28.68 69.62 13.91
67.05 85.30 110.93
Activity Ratios Stock Turnover Ratio ( In Times ) Stock Turnover Ratio ( In Days )
2.16 169
3.79 96
Solvency Ratios Debt-Equity Ratio ( In Ratio )
4.27
4.13
Debt Service or Interest Coverage Ratio ( In Times )
1.20
4.14
Analysis for Liquidity INTERNSHIP REPORT
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This analysis is also called analysis for short term solvency of short term financial position. Liquidity simply means how quickly a company can convert its current assets into cash to pay off its current obligations in time or when they will become due. The short term creditors of a company like supplier of goods on credit and commercial banks providing short term loans are primarily interested in knowing the company’s ability to meet its current or short term obligations as and when these become due. The short term obligations of a firm can be met only when there are sufficient liquid assets. Therefore, a firm must insure that it does not suffer from lake of liquidity on the capacity to pay its current obligations. If a firm fails to meet such current obligations due to lack of good liquidity position its good will in the market is likely to be affected beyond the repair. It will result in a loss of creditors’ confidence in the firm. Even a very high liquidity is not good for a firm because such a situation represents unnecessarily excessive funds of the firm being tied up in current assets.
Liquidity Ratios These are the most important ratios from the lender’s point of view. These are the ratios which measure the short term solvency or financial position of firm. These ratios are calculated to comment upon the short-term paying capacity of a concern or a firm’s ability to meet its current obligations. The various liquidity ratios are current ratio, liquid ratio and absolute liquid ratio. Their calculations and analysis is given below:
Current Ratio INTERNSHIP REPORT
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Current ratio measures general liquidity and is widely used to make the analysis for a short term financial position or liquidity of a firm. Current ratio is basically a relationship between current assets and current liabilities. This ratio is also known as working capital ratio.
Significance Current ratio is a general and quick measure of liquidity of a firm. It represents the margin of safety to creditors. It is an index of the firm’s financial stability. It is also an index of technical solvency and an index of the strength of working capital. A relatively high current ratio is an indication that the firm is liquid and has the ability to pay its current obligations in time as and when they become due. On the other hand, a relatively low current ratio represents that the liquidity of the company is not good and firm shall not be able to pay its current liabilities. Generally current ratio = 1:1 is considered reliable by the banks which means 1 rupee asset 1 rupee liability.
Current
Current Ratio = Current
Assets Liabilitie s
June 30th 2007
June 30th 2008
=239,791,000 / 207,122,875
=829,333,523 / 684,147,750
= 1.16 : 1
= 1.21 : 1
Interpretation The current ratio of Lyallpur Chemicals & Fertilizers up to 30th June 2007 shows that it has the ability to meet all its obligations in respect of financial debts. But the ratio up to 30th June 2008 is the indication that the company has been in good liquid position since last twelve months as compared to previous financial year. It is an attractive sign for the creditors to keep full confidence in the operations and policies of the Lyallpur. The
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LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
company can easily avail short term borrowing facility from banks and other financial institutions with more reliably than the previous year as its current position is better than the previous year.
Liquid Ratio (Acid Test Ratio) This ratio shows better liquidity than the current ratio as it is a relationship between liquid assets and current liabilities. Liquid assets include all current assets except prepayments and stock because prepayments usually are not converted into cash and stock takes much time to be converted into cash.
Significance The quick ratio is very useful in measuring the liquidity of the firm. It measures the firm’s capacity to pay off current obligations immediately and is a more rigorous test of liquidity then the current ratio. Usually a high liquid ratio is an indication that the firm is liquid and has ability to meet its current liabilities in time and on other hand a low liquidity ratio represents that the firm’s liquidity position is not good. Generally liquid ratio = 0.75:1 is considered reliable by the banks that means Rs. 0.75 liquid asset for Rs. 1 current liability. Liquid
Assets
Acid Test Ratio = Current Liabilitie s Liquid Assets = Current Assets - (Stock + Prepayments)
June 30th 2007
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Liquid Assets = 239,791,600 – (65,993,265 + 39,600,888) = 134,197,447 Acid Test Ratio = 134,197,447 / 207,122,875 = 0.65 : 1 June 30th 2008 Liquid Assets = 829,333,523 – (277,277,657 + 9,872,607) = 542,183,259 Acid Test Ratio = 542,183,259 / 684,147,750 = 0.79 : 1
Interpretation The liquid ratio of Lyallpur Chemicals & Fertilizers is showing its weak liquidity position and its liquid ratio is lower than the requirement in financial year 2007 that is usually observed by the banks and other financial institutions but it is showing little positive trend in financial year 2008. The stake holders especially creditors cannot strongly rely on the company because Lyallpur Chemicals & Fertilizers has lesser liquid assets to pay the short term liabilities in time or when they will become due. The liquidity of the enterprise has been increased from the last year which is indication of the better business operations and policies.
Analysis of Profitability: (profitability Ratios) Profit earning is considered essential for the survival of the business and it is primary motive of any business. A business needs profit not only for its existence but also for expansion and diversification. The investors want adequate return on their investments, creditors want higher security for their interest and loan and so on. A business can discharge its obligations to the various segments of the society only thorough earning profits. Profit is a useful measure of overall efficiency of a business. Profitability ratios INTERNSHIP REPORT
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are measured by the investors and share holders to asses the management in order to assess how efficiently the business operations are being carried out. Profitability is the main base for liquidity as well solvency. Creditors, bankers and financial institutions are interested in profitability ratios since they indicate liquidity of the business to meet interest obligations and regular improved profits to enhance the long term solvency of the business. Owners are interested in profitability to indicate the growth and also the rate of return on their investments. Generally profitability ratios are calculated with respect to sales and with respect to investments. Following ratios are calculated with respect to sales:
Gross Profit Ratio (Gross Profit Margin) Gross Profit ratio is a ratio of Gross Profit to Net Sales expressed as percentage. It expresses the relation ship directly between gross profit and sales and indirectly between cost of goods sold and sales.
Significance Gross profit ratio may indicate to what extend the selling prices of goods per unit may be reduced with incurring losses on operation. It reflects the efficiency with which a firm produces its products. As the gross profit is form by deducting cost of goods sold from net sales, higher the gross profit ratio better it is. There is no standard GP ratio for evaluation. It may vary from business to business. However the gross profit earned should be sufficient to recover all operating expenses and to build up reserves after paying all fixed interest charges and dividends. Gross Pr ofit
G.P Ratio= Net Sales
June 30th 2007 INTERNSHIP REPORT
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×100
June 30th 2008
LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
= (70,442,267 / 440,591,703)*100 = 15.99%
= (194,440,241 / 845,425,780)*100 = 22.99%
Interpretation The gross profit percentage of Lyallpur Chemicals & Fertilizers (Pvt) Limited has been increased from 15.99% to 22.99%. The major reason of this increase are, increase in sales and subsidy from government. This is a positive sign for the company and this indicates Lyallpur is expending its business. There is less proportionally increase in cost of sale as compare to sale. This indicates organization is adopting better purchase and other policies.
Net Profit Ratio This is the ratio of net profit (before tax) to net sales expresses as percentage:
Significance This used to measure the overall profitability and hence it is very useful to proprietors. This ratio is very useful as if the net profit is not sufficient the firm should not be able to achieve a satisfactory return on its investment. This ratio also indicates the firm’s capacity to face adverse economic conditions such as price competition low demand etc. obviously, higher the ratio the better is the profitability.
Net Profit Ratio =
June 30th 2007 = (13,917,919 / 440,591,703)*100 INTERNSHIP REPORT
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Net Pr ofit aftere Taxation Net Sales
×100
June 30th 2008 = (110,939,520 / 845,425,780)*100
LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
= 3.16%
= 13.12%
Interpretation Net profit ratio of the company is increasing from 3.16% to 13.12%. One reason of this increase in NP ratio is the expenses like deprecation, repairs and maintenance and administrative expenses are not proportionately increasing as sale. There is not any pressure on the profit margin of the company, so the company is growing rapidly.
Operating Profit Ratio Operating profit ratio is a relationship between operating profit and net sales. It measures the cost of operations per rupee of sales.
Significance This ratio shows the operational efficiency of the business. Some of the revenues and expenses of a business is result from activities other then the company’s basic business operations. This ratio shows a relationship between revenue earned from customers and expenses incurred in producing this revenue. In effect operating profit ratio measures the profitability of a company’s basic or core business operations and leaves out other types of revenues and expenses are excluded. EBIT
Operating Profit Ratio = Net Sales ×100 June 30th 2007 =(33,785,637 / 440,591,703)*100 = 7.67%
Interpretation
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June 30th 2008 =(141,128,424 / 845,425,780)*100 = 16.69%
LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
It has been observed that profit margins of Lyallpur Chemicals & Fertilizers (Pvt) Limited are increasing as we compare them with the previous years. An operating profit ratio equal to 7.67% to 16.69% is considered very good and this indicates company is raising its profitability to maintain the confidence of the stake holders through better business operations and policies. The core reasons of this increase are increase in sale but less proportionate increase in distribution and administrative expenses.
Cost of goods sold to sales This ratio can be defined as a relationship between cost of sales and sales. It is measured in percentage.
Significance The profits of any company can be increased only through deduction in cost or with increase in sales or a mix of above two. This ratio is important to analyze the cost of sales with respect to sales. It measures the percentage of cost to sales. Higher the ratio is an indication of an increase in cost of the enterprise’s production and direct cost and vice versa. It can be helpful for the management to make better purchasing, production and other direct cost decisions as it related directly sales to the cost of sales.
Cost of Goods sold to sales =
June 30th 2007 =(370,149,436 / 440,591,703)*100 = 84.01%
Interpretation
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Cost of Good Sold ×100 Sales
June 30th 2008 =(651,025,539 / 845,425,780)*100 = 77.01%
LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
The cost of sales of Lyallpur Chemicals & Fertilizers (Pvt) Limited in 2008 has been decreased which increased the GP margin of the company. This shows Lyallpur is cost efficient and this attracts the investors. As the company is running already at low cost so the major reason of this decrease in cost is increase the sales of its products and proportionally less increase in costs.
Profitability Ratios with respect to Investment Following ratios are important to find out the profitability of a company with respect to investment. As investors demand adequate returns to their investments so with the help of these ratios they can realize and analyze about the security and returns of their investments.
Return on Equity Capital In real sense ordinary shareholder are the real owners of the company and they assume highest risk in the company. Preference share holders have a preference over ordinary shareholders in the payment of dividend as well as capital. Preference share holders get a fixed rate of dividend irrespective of the quantum of the company. The rate of dividend varies with the availability of profits in case of ordinary shares only. The ordinary share holders are more interested in the profitability of a company and its performance should be judged on the bases of return of equity capital of the company.
Significance This ratio is more meaning full to equity share holders who are interested to know profits earned by the company and those profits which can be ,made available to pay dividend to them. This ratio directly relates the net profit available for appropriations to the capital
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LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
invested by the share holders. Higher the ratio is higher the return on capital invested in company. Return on Equity=
Net Pr ofit After Tax −Pr eference Equilty Share Capital
June 30th 2007 =(13,917,919 – Nil / 10,000,000)*100 = 138.18%
Dividend
×100
June 30th 2008 =(110,939,520 – Nil / 10,000,000)*100 = 1109.40%
Interpretation The return on equity capital ratio of Lyallpur Chemicals & Fertilizers (Pvt) Limited is a clear cut indication for the investors that the company is managing its capital in a very efficient way and is earring Rs 1109 for each Rs 100 of its capital and company is in position to give better returns to the share holders. The major reason of this huge increase in return on equity is increase in net profit after tax while the equity share capital is same in both the financial year. This is also analysis indication that the operations of the business are carried on in analysis appropriate manners.
Return on Share Holder’s Fund It is a relationship between net profit (After interest and Tax) and shareholder fund expressed in percentage.
Significance This is one of the most important ratios used to measure the overall efficiency of the firm. As the primary objective of business is to maximize its earning. This ratio indicated the extent to which this primary objective of business is being achieved. It is calculated for INTERNSHIP REPORT
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LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
net profit after interest and tax because share holders are interested in the profit which is available for them in respect of dividends. This is better measure then the return on equity capital because it includes not only capital but also the reserves which are maintained for several financial purposes. Inter firm caparison of this ratio determines whether the investment in the firm is attractive or not as investors would like to invest only where the return is higher. Net Pr ofit After Tax
Returns on share holder fund = Share Holder Fund ×100 Share Holder Fund = Capital +Reserves June 30th 2007 =(13,917,919 / 48,525,609)*100
June 30th 2008 =(110,939,520 / 165,447,497)*100
= 28.68%
= 67.05%
Interpretation There is increase in the return from the last year and it is an indication that the operations of business are good and management efficiently employs the share holder’s fund in generating the revenues. The major reason of this increase in return on share holder fund is more proportionate increase in net profit after tax as compare to sale. It is also a better sign for the stock holders that there investments are being utilized to give them better returns.
Return on Capital Employed It is relationship between operating profit and capital employed of the company. There are various methods to calculate the capital employed.
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LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
Significance The return on capital employed is the most important ratio because it answers how well the management has utilized the share holder’s fund and the borrowings which were taken from the creditors. Higher the ratio shows that the management utilized these funds efficiently to earn operating profit. This ratio is calculated with EBIT because investors are interested to know that how the management has utilized the funds and long term borrowings because a business borrows to conduct its operations and to enhance profitability.
Return on capital Employed = Capital
EBIT Employed
× 100
Capital Employed = long term liabilities + share Holder’s Fund June 30th 2007 =(33,785,637 / 48,525,609)*100 = 69.62%
June 30th 2008 =(141,128,424 / 165,447,497)*100 = 85.30%
Interpretation As there is remarkable increase in the ratio which is an indication that the management is using efficiently funds provided by the creditors and shareholders and the reserves of previous profits kept for the financial purposes. There is a suitable return to the capital employed that is 85.30 % which means funds of Rs. 100 are generating profit of Rs. 85.30. This is good sign for the stake holders especially for the investors which are interested in the return of the capital employed.
Earning per Share
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LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
Earning per share is a small variation of return on equity capital and it is calculated by net profit after tax and preference dividend dived by the total number of equity shares. It determines the per share earning in rupees.
Significance High earning per share usually reflects the rate of profitability, performance and dividends and when compare with EPS of similar other companies, it gives a view of comparative earnings or earning power of firm. However high EPS is not an authentic and scientific tool to assume high performance but high EPS is considered high rate of dividends. Earning Per Share =
Earning
After Tax − Pr eference Share Dividend No .Of Ordinary Shares
In the Lyallpur Chemicals & Fertilizers (Pvt) Limited there is no prefers share holder so the formula will be Earning
After Tax Shares
= No .Of Ordinary
June 30th 2007
June 30th 2008
=13,917,919 / 1,000,000
=110,939,520
= Rs. 13.91/Share
= Rs. 110.93/Share
Interpretation Earning per share of Lyallpur Chemicals & Fertilizers (Pvt) Limited. is relative increased from the previous years and is satisfactory for the share holders with respect to their
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LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
return on the shares purchased by them. As this ratio describes the rate of dividend so it can be assumed company is distributing high dividends.
Analysis of Current Assets Movement (Activity Ratios) Activity ratios measure the efficiency or effectiveness with which a firm manages its resources or assets. These ratios are also called turnover ratios because they indicate the speed with which assets are converted or turned over into sales.
Stock Turnover Ratio Every firm has to maintain a certain level of inventory of finished goods so as to be able to meet the requirements of the business. But the level of inventory should neither be too high nor too low. A too high inventory means higher carrying costs and higher risk of stocks becoming obsolete whereas too low inventory may mean the loss of business opportunities. Thus, it is very essential to keep sufficient stocks in business. Inventory turnover ratio, also known as stock turnover, is the relationship between the cost of goods sold during a particular period of time and the cost of average inventory during that period. It is expressed in number of times.
Significance Inventory turnover ratio measures the velocity of conversion of stock into sales. Usually, a high inventory turnover/stock velocity indicates efficient management is required to finance the inventory. A low inventory turnover ratio indicates an inefficient management of inventory. A low inventory turnover implies over-investment in inventories, dull business, poor quality of goods, stock accumulations, accumulation of obsolete and slow moving goods and low profits as compared to total investments.
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LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
Cost Of Goods Sold
Stock Turn over Ratio = Avg . Clo sin g Stock
June 30th 2007
June 30th 2008
=370,149,436 / 171,635,461
=651,025,539 / 171,635,461
= 2.16 times
= 3.79 times Avg Clo sin g Stock
No. of Days (Rotation period) = Cost of Goods Sold ×365
June 30th 2007 =(171,635,461 / 370,149,436)*365 = 169 days
June 30th 2008 =(171,635,461 / 651,025,539)*365 = 96 days
Interpretation The results of the stock turn over ratio show that there is a good management of the inventory because rotation period has been decreased from 169 to 96 days and stock turn over ratio of Lyallpur Chemicals & Fertilizers (Pvt) Limited has been shifted from 2.16 to 3.79 times which means last year stock of the company converted 2.16 times into sale in period of 169 days and in year 2008 it could be converted 3.79 times into sales and the whole process was completed in 96 days. This is very good sign for the company and this shows now company has maintained lower working capital as compared to previous financial year.
Analysis of Solvency (Long Term Financial Position) The long term debtors of a firm include debenture holders, financial institutions providing medium and long term loan. Short term creditors of a firm are primarily interested in knowing the firm’s ability to meet its short term obligations, the debenture INTERNSHIP REPORT
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LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
holders and another long term creditors are primarily interested in knowing the firm’s ability to pay regular interest on long term borrowings, repayment of the principal amount at the maturity and the security of the loan. Accordingly long term solvency ratios indicate the firm’s ability to meet the fixed interest and cost and repayment schedules associated with its long term borrowings. These ratios also used to analyze the capital structure of the company. They indicate the pattern of financing, whether long term requirements have been met out of long term funds or not. Following ratios are generally calculated to test the long term solvency.
Debt-Equity Ratio Debt-to-equality ratio indicates the relationship between the external equities or outsiders funds and the internal equities or shareholders funds. It is also known as “External – internal equity ratio”. It is determined to ascertain soundness of the long term financial policies of the company.
Significance The ratio indicates the proportionate claims of owners and the outside against the firm’s assets. The purpose is to get an idea of the cushion available to outsider on the liquidation of the firm. However, the interpretation of the ratio depends upon the financial and business policy of the company. The owners want to do the business with the maximum of outsider’s funds in order to take lesser risk of their investments and to increase their earnings (per share) by paying a lower fixed rate of interest to outside. The outsiders (creditors) on the other hand, want that shareholders (owners) should invest and risk their share of proportionate investments. Debt Equity Ratio = Total Debts / Share Holder Fund
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LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
June 30th 2007
June 30th 2008
=207,122,875 / 48,525,609
=684,147,750 / 165,447,497
= 1:4.27
= 1:4.13
Interpretation Debt equity ratio of the company is being decreased from the previous year from 1:4.27 to 1:4.13 which is indication that now the company has lesser funds to pay out the long term funds. Debt equity ratio = 1:1 (for Rs.1 of long term debts share holders have Rs.1) is considered satisfactory but the debt equity ratio of the Lyallpur Chemicals & Fertilizers (Pvt) Limited is much above the standard which is sign for the financial institutions that the company is in position to pay back the loans acquired with in time or when they will become due.
Debt Service or Interest Coverage Ratio This ratio relates the fixed interest charges to the income earned by the business. It is also known as interest Coverage Ratio. It indicates whether the business has earned sufficient profits to pay periodically the interest charges.
Significance The interest Coverage Ratio is very important from the lender’s point of view. It indicates the number of times interest is covered by the profits available to pay interest charges. It is an index of the financial strength of an enterprise. A high ratio assures the lender a regular and periodical interest income. But the weakness of the ratio may create some problems to the financial manager in raising funds from debts sources.
Interest Coverage Ratio =
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Net Pr ofit Before Interest & Tax Fixed Interest Ch arg e
LYALLPUR CHEMICALS & FERTILIZERS (PVT) LIMITED
June 30th 2007
June 30th 2008
=17,731,945 / 14,747,127
=113,551,737 / 19,209,717
= 1.20 times
= 4.14 times
Interpretation The results of the interest coverage ratio of Lyallpur Chemicals & Fertilizers (Pvt) Limited for both periods are clear indication of the company’s ability to pay the periodic interest on long term borrowings and especially in year 2008 the company’s profit before tax is 4 times greater than its financial costs. Through the analysis of this solvency ratio the confidence of the bankers and other financial institutions with respect to the credibility will definitely increase and they will feel the repayment of their loaned principal together with interest very safe.
Review Report With respect to Investors and Creditors Performance of financial analysis is of key importance for many stake holders especially for management of the company which needs to analyze the overall operations of the enterprise, investors because they are interested in adequate return of their investment and creditors who are interested in on time repayments of loan and interest. As we go through the ratio analysis of Lyallpur Chemicals & Fertilizers (Pvt) Limited with investor’s point of view so it is found that the company has potential to pay back the relatively better and attractive returns to the investors. Although the company has profit pressures from the last year because the cost of sales has been substantially increased this is mainly subject to rising of fuel prices in year 2008. Secondly company revaluated the useful life of the assets which has substantially increased the depreciation charge. But still the company is paying relatively better returns to the investors. The major reason of increase in return is more than 100% increase in sales. This shows the company is INTERNSHIP REPORT
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expending its business. The analysis of profitability ratios is the depiction that share holders are getting adequate returns. The company’s performance in many aspects paying attractive returns and has better liquidity and solvency position to pay back the loans and the profits to the share holder. If we analyze the liquidity and solvency ratios then it will be clear that the creditors are being paid promptly and company has sufficient funds to pay it liabilities on time or when they will become due. Before sanctioning the loan, the financial institutions analyze the potential of the company to repay the amount of interest together with principal. Lyallpur Chemicals & Fertilizers (Pvt) Limited has potential to meet its all to meet its long term and short term liabilities and obligations. I conclude that the Lyallpur Chemicals & Fertilizers (Pvt) Limited has potential and attraction for both the parties i.e. it can pay its liabilities in time and it can also give the adequate returns to the investors. Investment of the investors and financing by the creditors both are secured.
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