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INTERNSHIP REPORT ON PAKARAB FERTILIZER LTD.
2013
Institute of Management
Sciences BZU Multan
Noman Akram Ansari
MBE-11-06
Khanewal Rd, Multan Pakarab Fertilizer Factory
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Dedication
I dedicate this report to my parents who conveyed love and respect for education,
to my teachers who taught the skills and knowledge to accomplish all my
educational tasks with confidence and ease, and especially to people who believed
in me when I did not; and for always being a support and strength.
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Acknowledgement
I have taken efforts in this project. However, it would not have been
possible without the kind support and help of many individuals and the
organization. I would like to extend my sincere thanks to all of them.
I am highly indebted to Mr. Mohsin Raza H. Hashmi for their guidance
and constant supervision as well as for providing necessary information
regarding the project & also for their support in completing the project.
I would like to express my gratitude towards my parents & members of
Pakarab Fertilizers Ltd. (Fatima Group) for their kind co-operation and
encouragement which help me in completion of this project.
I would like to express my special gratitude and thanks to industry
persons for giving me such attention and time.
My thanks and appreciations also go to people who have willinglyhelped me out with their abilities.
Noman Akram Ansari
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Executive Summary
Pakistan is a developing country, economy dominated by agriculture. Pakistan's principal natural
resources are arable land and water. About 25% of Pakistan's total land area is under cultivation
and is watered by one of the largest irrigation systems in the world. The most agricultural
province is Punjab where wheat and cotton are the most grown. Some people also have mango
orchards but due to some problems like weather, they're not found in a big range. Fertilizers are
used to improve the quality of food, growth, production of the crop. It is an important factor that
is involved in the farming and cultivation. There are numbers of companies running in Pakistan
proving quality fertilizers for such purpose. Pakarab Fertilizer is one of these companies which
are currently owned by Fatima Group and Arif Habib Group.
The company was taken over by the current management through the process of privatization in
2005.
Pakarab is playing a vital role in providing farmers with quality fertilizer. Pakarab Fertilizer is
committed to playing a substantial role in the promotion of balanced application of fertilizers and
the sustainable development of Pakistan. The Directors of Fatima Fertilizer comprise of
energetic, highly qualified and experienced professionals. The Directors have past experience of
managing large industrial units and commercial businesses. The key management is directly
responsible for managing the day-to-day operations (and profitability) of Pakarab Fertilizers
Limited.
Pakarab Fertilizers Limited plans to revamp and expand its existing fertilizer manufacturing
capacity by making an investment of approximately PKR 22.000 billion. In this respect, Pakarab
Fertilizers plans to increase its Ammonia plant production capacity by 138,000 tons per year
from its current production of 316,800 metric tons per year.
This internship report covers all important aspects of Pakarab Fertilizers; product range,
production facilities, financial situation, PFLs contribution for minimizing the environmental
pollution, ethics followed by the company and values & behavior being practiced at PFL. But the
main focus of the report is on Marketing Department at Pakarab Fertilizer and its sub
departments; i.e. distribution department, sales department and warehouses.
Final compilation of the report is done by adding SWOT analysis of the company which
includes; Strengths of PFL that gives it an advantage over others, Weaknesses (or Limitations)
that place the company at a disadvantage relative to others, Opportunities which are the external
chances to improve performance (e.g. make greater profits) in the business environment and
Threats which are external elements in the environment that could cause trouble for the business.
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A brief critical analysis is also added to the report which includes a careful evaluation of what
company is lacking in its day-to-day business. Final addition to the report is the conclusion along
with few recommendations.
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Table of Contents
Introduction to Fatima Group ___________________________________________________09
Vision & Mission ____________________________________________________________10
Business Areas (Fatima Group) _________________________________________________11
Introduction to Pakarab Fertilizers Limited ________________________________________14
Vision & Mission_____________________________________________________________15
Board of directors and Management Team_________________________________________ 16
Products and Services _________________________________________________________17
Industrial Solutions ___________________________________________________________21
Production Facility ___________________________________________________________22
Competitors and Industry Status _________________________________________________26
Marketing Department at PFL and Its Functions ____________________________________29
Business Ethics ______________________________________________________________30
Product Quality ______________________________________________________________33
Marketing Areas _____________________________________________________________34
Business Associate (BA) / Customer _____________________________________________37
Sales Operations _____________________________________________________________39
Marketing Allowance _________________________________________________________45
Sales on Secured Credit _______________________________________________________48
Retirement of the Bank Guarantee _______________________________________________ 52
Warehouses _________________________________________________________________ 54
Sales (Warehouse) ____________________________________________________________62
Safety Standards for Warehouses ________________________________________________ 68
Safety Standards for All Employees ______________________________________________70
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Security Precautions __________________________________________________________74
Social Responsibility _________________________________________________________ 77
Policy Statement of Ethics and Business Practices __________________________________ 79
Values &Behaviors __________________________________________________________ 81
PEST Analysis ______________________________________________________________ 83
RATIO Analysis _____________________________________________________________84
SWOT Analysis..107
Critical Analysis ... ... 112
Conclusion & Recommendations ... . 11515
References ... . 118
Annexes ... ... 119
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Introduction to Fatima Group
Fatima Group was established in 1936 with trading of commodities and gradually entered into
the manufacturing of various products. The Group has a success story spread over seven decades,
expanding its horizon from trading to manufacturing. Today, the Group is engaged in trading of
commodities, manufacturing of fertilizers, textiles, sugar, mining and energy.
Remaining true to its founding principle of striving for excellence, the Group combined the
vision of an entrepreneur, the knowledge of experts, the commitment and business expertise of
three generations to develop its core strengths, vision and mission. With the commitment and
effort of its employees, professional management and vision of its sponsors, the Group has
achieved the standing of being the most progressive and fast growing conglomerate in Pakistan.
The Group has made exceptional progress in the last two decades and diversified into
manufacturing of sugar and fertilizers. The Group has a distinction of being the largest exporter
of molasses and importer of di-ammonium phosphate (DAP).
In its endeavor to reduce dependency on imports, the Group is engaged in the quarry of rock
phosphate which is used as production input in phosphate fertilizers.
The Group's future plans and growth matrix are strategically designed for further portfolio
diversification in the energy sector, focusing on green energy.
The commitment to corporate social responsibility at Fatima Group is evident in a wide variety
of areas including the quality and safety of products, environmental, health and safety initiatives,
ethical manufacturing programs, philanthropy initiatives, community relations, human resources,
corporate governance and the code of conduct. Fatima Group assures that all its businesses are
managed in compliance with business ethics as defined through its policies.
Realizing its responsibilities as a good corporate citizen, the Group contributes substantially to
the economic development of Pakistan through taxation, exports and by with over 10,000 people
associated with our business operations, in various capacities.
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Vision & Mission
Vision:
To be a dynamic business group, building robust businesses that excel at serving their customers
and stakeholders through exceptional products and services in industries and markets that
support progression and economic growth at community, society and country level.
Mission:
create continuous value for our customers and consumers, inspiring confidence and respectthrough the highest levels of product quality and service.
To provide employees a work environment that's enabling and inclusive and where innovation
and entrepreneurship are a way of life and where people work in an ethical and safe business,
based on the principle merits and equal opportunity.
To be a responsible corporate citizen, complying with all aspects of Corporate
Governance and the full spectrum of Corporate Social Responsibility.
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Business Areas (Fatima Group)
The diversified operations are carried out from the following Group companies:
Fatima Fertilizer Company Limited
The Fatima Fertilizer Company Limited was incorporated on December 24, 2003, as a joint
venture between two major business groups in Pakistan namely, Fatima Group and Arif Habib
Group.
The fertilizer complex is a fully integrated production facility, capable of producing two
intermediate products, i.e., Ammonia and Nitric Acid and four final products which are Urea,
Calcium Ammonium Nitrate (CAN),Nitro Phosphate(NP) and Nitrogen Phosphorous Potassium
(NPK) at Sadiqabad, Rahim Yar Khan.
The Complex has a 56MW captive power plant in addition to off-sites and utilities. The Complex
has been allocated 110 MMCFD of gas from the dedicated Mari Gas fields.
Pakarab Fertilizers Limited
For the last 38 years, Pakarab Fertilizers Limited has been the only fertilizer company in
Pakistan producing compound fertilizers, Calcium Ammonium Nitrate (CAN) and Nitro
Phosphate (NP). The Plant also produces Urea. Pakarab Fertilizers was acquired through a
privatization process of the Government of Pakistan in 2005.
Reliance Weaving Mills Limited
Reliance Weaving Mills Ltd (the Company) was founded by late Mr. Mukhtaar Ahmed Sheikh
more than two decades ago and is headquartered in Multan (Pakistan). The Company obtained
certificate of Commencement of Business on 14 May, 1990. Initially it has started its production
as weaving unit but later it also involved in manufacturing of yarn. At present the Company is a
high profile set-up in the textile export industry of Pakistan having two weaving units consisting
of 295 looms with fully equipped state-of-the-art computerized back process comprising of
warping and sizing machines and two spinning units comprising 35,520 spindles to cater the
international market and to achieve the highest point of quality control. The Company has carveda niche for itself in the textile industry. Having diversified into various types of yarn and fabrics,
the Company has been setting in standards, quality and caters to diverse markets across the
globe.
Major activities of the Company include manufacturing and export of cotton and synthetic yarn,
manufacture and export of woven and processed fabrics. The Company supplies its products to
the residential and contract customers in the Pakistan, United States of America, Europe, Middle
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East, Far East, China and other Asian Countries to gratify the bulk requirements with an
assurance of unblemished goods and timely delivery of the ordered goods to its customers. The
Company is in the best position to cater the bulk requirements with an assurance of flawless
finish and timely delivery of the ordered goods to its customers.
Fatima Sugar Mills Limited
The company was incorporated as a Public United Company In 1988 and certificate of
commencement of business was granted in 1989. The project was financed by ICP-Led
consortium consisting of NBF ABL, MCB, UBL and HBL. Initially the sponsors of the company
injected a capital of Rs. 128.459 million and subsequently it was enhanced to Rs. 720.478
million at different intervals.
The company is recognized in the local and international market as a fine quality producer of
white refined sugar & molasses and also holds a substantial share in the local market. Thecompany is also engaged in the export of white refined sugar and molasses and is contributing to
the national economy in the form of foreign exchange.
Reliance Commodities (Private) Limited
A Fatima Group Company, Reliance Commodities (Pvt) Ltd. was incorporated in Pakistan in
1996. The company is a leading commercial exporter/importer of different commodities (i.e.
export of molasses and import of sugar & fertilizers). The company is the winner of 27th, 28th,
29th, 30th, 32nd & 33rd FPCCI Best Export Performance Trophy for Molasses.
The company belongs to a conglomerate group, which is operating fertilizer plants under the
name of Pakarab Fertilizers Limited & Fatima Fertilizers Company Limited as well as sugar &
textile industries. The directors of the company have good market reputation and sound financial
worth.
Fatima Energy Limited
Due to the energy crisis in the country, the government is looking towards the private sector to
overcome these acute shortages. In views of this crisis, Fatima Energy has been incorporated and
plans are underway to install a 100 MW power generation plant. During crushing season,
electricity will be generated processing byproduct (bagasse) from its sugar manufacturing
activities at Fatima Sugar Mills Limited. Bagasse, a biomass, is a source of renewable energy.
During off-season, coal will be used for power generation.
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Introduction to Pakarab Fertilizers Limited
Pakarab Fertilizers Limited was established as a result of protocol concluded and signed on
November 15, 1972 by the Government of Pakistan to further strengthen and develop fraternal
ties between Islamic Republic of Pakistan and State of Abu Dhabi.
A Memorandum of Understanding was concluded between Pakistan Industrial Development
Corporation (PIDC) and Abu Dhabi National Oil Company Limited (ADNOC) on March 7,
1973. A participation agreement emerged on November 1, 1973 to establish a joint venture for
the expansion and modernization of the old Natural Gas Fertilizer Factory (NGFF) at Multan.
The Company was incorporated on November 12, 1973. Subsequently, PIDC assigned 52% of its
shares to National Fertilizer Corporation (NFC) of Pakistan and ADNOC assigned 48% of its
shares to International Petroleum Investment Company, with a paid-up capital of
PKR743.061 million.
Under the privatization policy of Government of Pakistan, Pakarab Fertilizers Limited was
privatized on July 14, 2005 at a cost of Rs.14.125 billion. It was acquired by a consortium of
Fatima Group and Arif Habib Group.
Under the new management, Pakarab Fertilizers Limited has undergone extensive modernization
and new improved processes have been introduced to maximize the output while minimizing the
negative impacts on the environment. For this a Clean Development Mechanism (CDM) plant
was installed, which is the first project of this kind in Pakistan. Basic aim of this project is the
abatement of N2O and NOX emissions from the stack gases of Nitric Acid plant. The reductionof green house effect of these gases shows the new management's commitment towards a
cleaner environment.
Pakarab Fertilizers Limited is located at Khanewal Road, Multan. The site area comprises 302
acres, which includes area for the factory and the housing colony with all amenities including
medical centre, school, management and staff clubs for recreation of employees and their
families, etc.
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Vision & Mission
Vision:
To be a world class manufacturer of fertilizer and ancillary products, with a focus on safety,
quality and positive contribution to national economic growth and development. We will care for
the environment and the communities we work in while continuing to create shareholders' value.
Mission:
To be the preferred fertilizer company for farmers, business associates and suppliers by
providing quality products and services.
To provide employees with an exciting, enabling and supportive environment to excel in, be
innovative, entrepreneurial in an ethical and safe working place based on meritocracy and equal
opportunity.
To be a responsible corporate citizen with a concern for the environment and the communities
we deal with.
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Board of Directors
Arif Habib Chairman
Fawad Ahmed Mukhtaar Chief Executive OfficerFazal Ahmed Sheikh DirectorAbdus Samad DirectorNasim Beg DirectorMuhammad Kashif DirectorRehman Naseem Director
Management Team of Pakarab Fertilizers
Muhammad Abad Khan Advisor to CEOMuhammad Zahir Director Marketing
Ahsen-ud-Din Director Technology Division
Mr. Farrukh Iqbal Qureshi General Manager Manufacturing, PFL
Arif Hamid Dar Chief Financial Officer, PFL
Ausaf A. Qureshi Company Secretary
Iftikhar Mahmood Baig Head of Business Development
Javed Akbar Head of Procurement
Shahid Saeed Head of Information Technology
Haroon Waheed Head of Human ResourceBrig (R) Muhammad Ali Asif Sirhindi General Manager Administrative ServicesMuhammad Saleem Zafar General Manager Projects
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Products and Services
Fertilizers:
Fertilizers restore soil fertility by supplying nutrients to the soil. These nutrients are utilized by
crops for their growth and development. Without the addition of fertilizers, crop yield would be
significantly reduced as our soils are deficient in major nutrients, like, N, P & K. Mineral
fertilizers are used to increase the nutrient concentration of the soil and these minerals can be
quickly absorbed and used by the crops.
Crops require sixteen (16) different types of mineral nutrients during their growth and these
nutrients are supplied by the soil and mineral fertilizers. Plant nutrients are classified into three
categories.
1. The three primary macronutrients: nitrogen (N), phosphorus (P), and potassium (K).
2. The three secondary macronutrients: calcium (Ca), sulphur (S), magnesium (Mg).
3. The micronutrients or trace minerals: boron (B), chlorine (Cl), manganese (Mn), iron (Fe),
zinc (Zn), copper (Cu), molybdenum (Mo) and selenium
Pakarab Fertilizers Limited produces Calcium Ammonium Nitrate (CAN), Nitro Phosphate (NP)
and Urea and has a monopoly in the production of CAN and NP.
1. Nitrophos (NP)
For farmers, choosing the right fertilizer for their soil is very important. In Pakistan, the soils are
calcareous, have high pH and are alkaline in nature. Nitrophos (NP) being highly acidic is the
most suitable fertilizer for these soil types.
Products
Nitrophos (NP)
22% Nitrogen - 20% Phosphorus (P2O5)
Also contains 9~10% Calcium
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Properties
Nitrophos (NP) is a granulated fertilizer in which each grain has equal amounts of
Phosphorus (P) 20% & Nitrogen (N) 22%. In addition to this, NP being a highly acidic product
with a pH of 3.5, is the most suitable fertilizer for soils that have a high pH and are alkaline innature.
Effect
The balanced combination of Nitrogen & Phosphorus is ideal for plant growth and development.
It contains dual Nitrogen (Nitrate: readily available to the plants and Ammonical: available after
its conversion to nitrate through the process of nitrification). Consistent and longer use of NP
also improves soil health.
Application
Nitrophos (NP) can be applied universally on all types of soils, but is more effective where the
soils have high pH and are alkaline in nature. In many crops it could be effectively applied at
planting and at early growth stages of the crops. Each grain has equal amounts of N &P, hence
the nutrients are equally distributed throughout the field.
2. Calcium Ammonium Nitrate (CAN)
In farming, the efficient supply of nutrients to the plants, with a low level of losses, is of greatimportance. This applies primarily to nitrogen, which has a direct influence on crop growth and
development. Due to its special properties, the supplies of nutrients are quick and for a longer
time.
Products
Calcium Ammonium Nitrate (CAN)
26% N (Dual Nitrogen) - 13% Nitrate and 13% Ammonical
Other than Nitrogen, it supplies additional 5 elements required for plan growth:
Potassium - 0.9%
Calcium - 10%
Magnesium - 0.05%
Sulphur - 0.4%
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Copper - 0.001%
Properties
Calcium ammonium nitrate (CAN) is a granulated nitrogenous fertilizer that supplies nitrogen to
plants in a balanced and secure manner. The combination of ammonium nitrogen and nitrate
nitrogen makes CAN a special product with neutral chemistry (pH). The excellent granulation
and specific surface coating has very good spreading properties.
Effect
The composition of readily available nitrate nitrogen and reserved N (nitrate available after its
conversion from ammonium nitrogen) is optimal for providing all crops with targeted nutrition.
The nitrate nitrogen that is available immediately after the application and absorbed in water is
taken up directly by the plant and nutrient losses are almost eliminated. CAN is a hygroscopic
product and needs very low moisture to be absorbed by the plants. It is equally effective in water
stressed areas where soil has low moisture. Furthermore Calcium and Sulfur available in CAN is
also helpful in soil reclamation.
Application
Calcium Ammonium Nitrate (CAN) can be applied universally and is suitable for all crops, all
seasons, soils and locations. The main components nitrate and ammonium are present in an ideal
ratio and make CAN an affordable fertilizer for healthy plant growth in agriculture and
horticulture. It is suitable for multiple methods of application; by drill, broadcast or through
fertigation.
3. Urea
Urea is widely used in the agriculture sector both as a fertilizer and animal feed additive,
which makes the production of urea considerably high in comparison to other fertilizers in the
country.
Products
Urea - 46% Nitrogen
Properties
Urea releases nitrogen into soil which is thereafter taken up in by the plants. Once applied to the
soil, urea undergoes vital transformations and breaks up into ammonium form and this total
process is dependent on soil moisture. As soon as urea dissolves in the soil, it forms around it a
zoning layer of high pH and ammonia concentration turning the soil to be acidic and toxic at the
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same level. Urea is available as prills that are crystalline white and highly resistant to moisture
and thus facilitate long time storage as well.
Effect
Urea has the highest nitrogen content, equal to 46 percent. This percentage is much higher than
other nitrogenous fertilizers available in the market. The nutrient composition rendered by urea
enhances the productivity of the soil and enriches its nutrient constituency. Providing each
plant with relevant element needed, urea sustains plant life.
Application
Urea can be applied in various form, it can be spread in bulk alone or can also be mixed with
other fertilizers before application. When urea is applied on acidic soils of higher pH i.e above
7.5, it should be incorporated into the soil as soon as possible. Urea is high moisture absorbent
therefore it should be stored in sealed and well enclosed bags.
4. Crop Seasons of Pakistan
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Industrial Solutions
As a leading fertilizer manufacturer, Pakarab Fertilizers Limited has a strong production base for
Carbon Dioxide.
Carbon Dioxide
Carbon Dioxide is a colorless, odorless, incombustible gas, formed during respiration,
combustion, and organic decomposition. CO2 is used in food refrigeration, carbonated
beverages, fire extinguishers, and aerosols.
The CO2 plant at Pakarab Fertilizers Limited is equipped with the state of art technology on-
line analyzing system, having Total Hydrocarbon, Total Sulfur, Total Moisture & Total Oxygen
analyzers with latest infrastructure installation of vacuum insulated tanks & ambient
vaporizers at customer sites to meet their needs to satisfaction.
There are various applications of CO2 which range from the use in Beverages, Manufacturing of
Urea, Fire Extinguishers, and Dry Ice and as Food Perseveres. PEPSI COLA and COCA COLA
are also the customers of Pakarab Fertilizers for CO2.
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Production Facility
Pakarab is one of Pakistan's foremost chemical companies that process natural minerals and
nitrogen into vital products for farmers and industrial customers. The main product is fertilizers,
while industrial uses are also an important segment.
1. Ammonia PlantBased on Kellogg process, steam reforming of the natural gas, the plant commenced production
in November 1978. The plant had capacity of 910 MTPD, which was enhanced by 50 MTPD
through addition of Purge Gas Recovery Unit in April, 1986.
The plant is designed to operate 330-days per annum (initially 320-days/annum prior to capacity
increase). Present energy consumption at the plant is 9.6 G.Cal /MT of Ammonia (excluding
non-productive gas), which was 9.464 G.Cal /MT of Ammonia during guarantee period.
2. Nitric Acid Plant
There are two units (three lines) of Nitric Acid production. The old line has a capacity of 180
MTPD of 60% Nitric Acid strength. This line commenced production in 1963. Other two lines
have a capacity of 600 MTPD of 60% Nitric Acid. These two lines commenced production in
December, 1978.
The old line was modified in 1986 when an additional Absorption Tower was added, which
resulted in increase of Nitric Acid concentration to 60% strength and reduced pollution level i.e.NOx Emission from 4000-6000 mg/cubic meter to 800 mg/cubic meter. The plant is operated as
and when required.
The two new lines have on stream factor of 330 days (originally 320 days). The old line
consumes 0.310 MT Ammonia/ton Nitric Acid (100% basis) while the new lines consume 0.290
MT Ammonia/ton of Nitric Acid (100% basis). Thus old unit of Nitric Acid consumes higher
energy. Approximately 40% of total Ammonia produced is used to produce Nitric Acid.
3. Urea Plant
A new Urea unit of 280 MTPD capacity commenced production in April, 1986 based on
Snam Progetti design. Old Urea unit, Evaporation unit and Prilling Tower were retained.
The new plant has 330 operating days/annum. Urea unit is a trouble free unit. It has the highest
production efficiency. The highest production achieved was 387 MTPD against design of 280
MTPD (38.2% higher). Last year a production capacity of 101,754 MT of Urea as compared to
design of 92,420 MT/annum and was 10.12% higher despite gas supply disruption due to load
shedding (+ 13,619 M. Tons).
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4. Nitro Phosphate Plant
The process was based on license from Stem carbon, Holland, while detailed Engineering was
made by Uhde, Germany. The plant was designed to produce 229.4 MTPD of P2O5 or 1,015
MTPD of Nitro Phosphate (NP) having 22.6% P2O5 with 300 on stream days/annum. The plantcould not produce NP product at its rated capacity both in terms of designed quality as well as
quantity at the time of guarantees; Uhde was made to undertake modifications on the plant,
which they performed through addition of 2-lines of Crystallizers making total six lines.
Similarly 2 centrifuges were added to 4 existing ones and additional refrigeration capacity was
provided. However, even after the modifications desired product quality could not be achieved.
The plant consumes much higher energy level as compared with design.
In view of the fact that plant could not produce 22.6% P2O5, the specs were revised to 20%
P2O5 and 22% Nitrogen (originally 22.6% each of Nitrogen and P2O5).
5. Calcium Ammonium Nitrate (CAN) Plant
Designed capacity of this plant is 1,500 MT per day of Calcium Ammonium Nitrate having 26%
Nitrogen contents and 1-2 % Potassium Sulphate as additional nutrient to stabilize the prills &
fulfill the soil requirement. It is manufactured by mixing 75% molten Ammonium Nitrate and
25 % Calcium Carbonate in the mixing tank at 170 Celsius. Around 550 to 700 MT of
Ammonium Nitrate is produced per day directly by reacting Ammonia gas and 60% Nitric acid
in the Neutralization Reactor. 1,050 MT of Ammonium Nitrate is produced per day in the CN
Section by reacting Calcium Nitrate solution with Ammonia and Carbon dioxide gases in the CN
Reactors. 600 MT of Calcium Carbonate is also produced per day in the same CN Reactors.
Calcium Ammonium Nitrate is hygroscopic by nature and absorbs moisture from the atmosphere
therefore it can be used in the soil without sufficient water. It contains 13% Nitrate Nitrogen
which supplies nutrients immediately to the plants and rest 13% Ammonium Nitrogen gives food
slowly till ripe up of the crop.
Process of the plant is designed by Hoescht whereas detail engineering is done by UHDE
Germany. This plant is in production since 1979.
6. CO2 PlantThe CO2 Recovery Plant is designed to recover the impure, low pressure CO2 gas emitting from
the Ammonia Plant as a by-product gas and to produce purified, high pressure liquid CO2.
The capacity of this plant is 192 MT per day at a pressure of 21 bars. The temperature of the
Liquid CO2 is -20 C. The liquefaction of gases is a complicated process that uses various
compressions and expansions to achieve high pressures and very low temperature liquids.
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There are various applications of CO2 which range from the use in Beverages, Manufacturing of
Urea, Fire Extinguishers, and Dry Ice and as Food Perseveres.
7. Co-Generation
Pakarab Fertilizer Limited is a major fertilizer complex producing both Nitrogenous and
Phosphatic fertilizers. Ever since its inception, the complex is not connected to the national
electricity grid. Power and steam for the fertilizer processes as well as for common consumers
within the Pakarab Fertilizers area was supplied by the captive power plant on-site, without any
co-generation.
On 20th July, 2007 Pakarab Fertilizers Limited submitted a plan for Co-generation Power Project.
The objective of the project was:
To generate power & steam by Gas Turbines with upstream Heat Recovery Steam
Generators (HRSG) for supply to fertilizer complex using clean, renewable and sustainable
cogeneration technology.
Application of the energy efficient process of cogeneration of heat and power in natural gas
fired cogeneration plant.
To help achieving the objectives of combating climate change under UN-FCCC by reducing
significant amount of greenhouse has (Carbon dioxide) emissions.
Pakarab Fertilizers Limited hired the services of Fichtner GmbH & Co. KG; Germany as the
"Project Development Consultants" and with a total project cost of $ 35 million, the projectstarted on 1st January 2008 and was completed in one year.
The cogeneration plant has an operational life of 25 years and the new gas turbine cogeneration
plants estimated emission reduction capacity is 107,746 Tons of CO2 eq/year.
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Competitors and Industry Status
1. Engro Chemical Company Ltd.
2. Fauji Fertilizer Company Ltd.
3. Dawood Hercules
4. Fatima Fertilizer Company Ltd.
5. National Fertilizer Corporation
6. Pak American Fertilizers Limited
7. Tara Urea (Agritech Pakistan)
1. Fertilizers by Engro Chemical Pakistan
Nitrogenous Fertilizers:
Engro Urea
Phosphatic Fertilizer
Engro DAP
Engro Zorawar
Engro Phosphate
Blended Fertilizers
Engro Zarkhez
Engro NP
Micro Nutrients
Zingro
2. Fauji Fertilizer Company Ltd.
Sona Urea
Sona DAP
Sona SOP
3. Dawood Hercules Chemical Ltd.
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Bubber Sher
4. Fatima Fertilizer Company Ltd.
Nitro Phosphate Nitrogen Phosphorous Potassium
Calcium Ammonium nitrate
Urea
5. National Fertilizer Corporation
Imported UREA
6. Pak-American Fertilizer Limited
Pak American Fertilizers Limited is the largest Single Super Phosphate (SSP)
manufacturing plant in the country. Previously it was Hazara Phosphate Fertilizers (Pvt.)
Limited and was taken over by Azgard9 Group through privatization process from the Govt. of
Pakistan in 2006. The Company's vital and important strategic goal is to become a diversified
manufacturer producing both nitrogenous and phosphatic fertilizers. Since Acquisition of the
plant by Azgard 9, PAFL has managed to acquire 8 % of market share within 9 months. This
successful penetration of the market resulted in a collection of Rs. 3.0 billion as revenue.
7. Tara Urea (Agritech Pakistan)
Tara Urea is one of the best-selling brands, owned by Agritech Pakistan (formally PAFL) and it
is expected to earn a lot of market share in future. Its high quality fertilizer gives new life to
crops. Agritech Pakistans mission is to make its "Tara brand" the 1st choice of each and every
farmer of Pakistan. This plant has a capacity to produce 1050MT of UREA per day.
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Marketing Department at PFL
&
Its Functions
Like Marketing Departments of most organizations, Marketing Department of Pakarab
Fertilizers has to study the market and the target customers and their buying behaviors from time
to time. It is also one of the duties of the marketing departments to decide and formulate best
ways and road-maps to reach the valuable customers.
Being a student of MBA (Marketing) I was appointed as an intern at Pakarab Fertilizers
Marketing Department. I completed my internship duration working at Regional office (Trust
Plant) and Plant Distribution section (PFL), I also got chance to spend a couple of days at Multan
Warehouse which is located at Bahawalpur Road, Multan.
Marketing Department of Pakarab Fertilizers is further classified into sections
Sales Department
Sales Department at Pakarab Fertilizers has been divided into 10 regions including a recently
added region Peshawar. I will explain the regions and coverage of the Marketing Department in
detail on next pages. Warehouse network of Pakarab Fertilizers is operated with the help of
private contractors as well as Pakarab has its own warehouses throughout the country.
Distribution Department
Distribution Department at Pakarab Fertilizers comprises of Plant Distribution and field
distribution, which is handled from different localities and hence Pakarab has 56 distribution
channels throughout the country.
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Business Ethics
Ethical way of doing business always brings success, repute and positive feedback to the
company in the long-run. Hence, Pakarab has rigid ethical rules to follow and they have a clearly
defined policy for doing Business in the market. They never compromise on the quality co-
ordination with the valuable customers, hence they have clearly defined the areas of concern and
preference for personal dealing, business dealings and all field personnel attached to the
organization directly or indirectly.
Policy Statement on Business Ethics
The policy of Pakarab Fertilizers Limited, as stated over the years by the Board of Directors, is
one of the strict observances of all laws applicable to its business.
Our policy does not stop here. Even when the law is permissive, PFL chooses the course of thehighest integrity. Local customs, traditions and modes differ from place to place, and this must
be recognized. But honesty is never subject to criticism in any culture. Shades of dishonesty
simply invite demoralizing and reprehensible judgments. A well-founded reputation for
scrupulous dealings is itself a priceless company asset.
An overly ambitious employee might have the mistaken idea that we do not care how results are
obtained, as long as he gets the results. He might think it best not to tell higher management all
that he is doing, not to record all transactions accurately in his books and records, and to deceive
the Companys internal and external auditors.
He would be wrong on all accounts.
We do care how we get results. We expect compliances with our standards of integrity
throughout the organization. We will not tolerate any employee who achieves results at the cost
of violation of laws or unscrupulous dealing. By the same token, we will support and we expect
you to support an employee who passes up an opportunity or advantage which can only be
secured at the sacrifice of principle.
Equally important, we expect candor from managers at all levels and compliance with
accounting rules and controls. We do not want liars for managers, whether they are lying in a
mistaken effort to protect us or make themselves look good. One of the kinds of harm which
results when a manager conceals information from higher management and the auditors is
that subordinates within his organization think that they are being given a signal that company
policies and rules, including accounting and control rules, can be ignored whenever
inconvenient. This can result in construction and demoralization of an organization. Our system
of management will not work without honest book keeping, honest budge proposals, and honest
economic evaluation of projects.
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It has been, and continued to be Pakarab Fertilizers Limited policy that all transactions
shall be accurately reflected in its books and records, and any off-the- record bank accounts are
strictly prohibited.
This policy is in accord with the previously stated policies of Pakarab Fertilizers Limited.
Business Ethic - DOs and DONTs
There will be quite a few situations in our daily work related to business ethics which may
require a company employee in the field to exercise his best judgment to act strictly in line with
the business ethics policy. Although it is difficult to enumerate each one of these situations,
some of the most common and related to our personal and business dealings/operations
are given below with required action guidelines.
1. Personal Dealings
o Giving or taking gifts should be avoided to the maximum. However, it confronted an
unavoidable gift-giving or gift taking-situation; please make sure that gifts exchanged are
of nominal value not exceeding US $15 as defined in PFLs gift policy.
o It is preferred that all such receipt of gifts be reported to the immediate supervisor
seeking his guidance on whether the gift can be retained by the employees or will need to
be surrendered to PFL audit department for future course of action.
o Entertainment should only be related to business and the cost should be small in relation
to salary of the person being retained.
o Accept in entertainment only what are you able to return.
2. Business Dealings
All employees are expected to be honest in business dealings. For example:
o Never do a job or get a job done through payoffs/bribes.
o Always do accurate reporting of all facts.
o Never let anyone else act unethically on your behalf.
o Do not provide misleading, incomplete and inaccurate information
documentation. For example:
Show all discounts on the invoice Provide correct data on customer documentation
Provide clear, accurate description of transactions on all
documents
Follow company policy and get the changing policy in written for
record.
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3. How to Evaluate a Questionable Practice
When confronted with a questionable practice, the following questions help in evaluating
it in relation to business ethics.
Do we know all the facts?
Is it lawful?
Why is it being done this way?
Why it would appear to be an outsider?
Are we trying to get an advantage not available to others? How would it look, if it
appears in a newspaper?
4. Some Areas to watch for Field Sales Personnel
Diversion of product to be properly reflected in all records. Invoice the actual customer who gets the product form the warehouse.
Sell to Company BA and farmers, meeting the specified criteria.
Clearly advice BA approved terms of sale.
Supply properly weighted (full weight) bags to BA.
In case of sales from a warehouse, ensure that invoicing is done at the time of sale and
not before or after the sale, i.e. strictly according to the Warehouse Operations manual.
Ensure that warehouse operations are in accordance with law and policy.
Give equal opportunity/preference to all customers.
Avoid committing sales when not sure of supplying the product.
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Product Quality
Pakarab Fertilizers Limited follows a Product Quality Management Program. For the pursuance
of a regular Product Quality Management Program, field officers monitor the product quality of
PFL and Competitors Urea on monthly basis in the field.
Every month one field officer form each region sends 01 sample of PFL Urea and 01 sample of
each Competitors Urea (drawn simultaneously on the same day) to laboratory incharge, Pakarab
Fertilizers Limited. Details of the sample are documented on the sample data sheet. Copies of his
data sheet are sent to the regional office (for record).
The samples received at laboratory, Pakarab Fertilizers Limited are analyzed physically
and chemically for prill size, prill strength, fines, caking, nitrogen percentage, biurate contents,
and moisture contents etc. The results are then conveyed by laboratory incharge, Pakarab
Fertilizers Limited to Marketing Manager, who tabulates them for management
information/action.
Product/Package Quality Complaint Procedure
Field staff is confronted from time to time with complaints regarding our product quality and/or
package. In the interest of striving for higher customer satisfaction, it is imperative to take
cognizance of these complaints. It may be noted that complaints are to be recorded by all
individuals who have a regular interface with the customers.
A product quality complaint (PQC) can trigger from various sources-farmer, BA, warehouse,port, plant, field, regions etc. The process to lodge a complaint is as follows:
i. PQC input Form is filled by the originator as a hard copy.
ii. The department concerned investigates the complaint and provide feedback to the RMM.
iii. The RMM then issues a letter to the originator of the complaint in light of the feedback.
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Marketing Areas
Marketing Regions and Marketing Districts
At present, the marketing area of Pakarab Fertilizers Limited comprises of ten (10)
Marketing regions, each region segmented into a number of sales districts. These are as follows:
Zones Regions Districts
South Zone Hyderabad Hyderabad
Thattha
Mirpur Khas
Digri
Tando Allah YarBadin
Sanghar
Nawab Shah
Rahim Yar Khan Rahim Yar Khan
Sadiqabad
Khanpur
Daharki
Sukkur Sukkur
Shikarpur
Noshero Feroz
Dadu
Jacobabad
Khairpur Mirs
Quetta
Larkana
Center Zone Bahawalpur Bahawalpur
Ahmed Pur East
Bahawalnagar
Haroonabad/Chishtian
Hasilpur
Lodhran
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The locations appearing in the first column are the defined Marketing Regions (MR) of PFL.
Each region is looked after by Regional Marketing Manager (RMM). The RMMs-Supervisors of
all the ten regions report to the Director Marketing in the Head Office.
Each marketing region is further divided Marketing Districts (MD). A marketing district islooked after by a DMM. The MDs have been worked out keeping in view the geography of the
area and the functional convenience in operations. One MD may cover one or more political
districts wholly or partially. These MRs and MDs are modified from time to time based on the
environment, geographical alignments and business needs.
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Business Associate (BA) / Customer
(Channel Management)
PFL has appointed a number of Business Associates (BA) throughout the country to carry out
their daily sales transaction easily and conveniently. Business Associates are the people who act
as private distributors to the company and are running their transport business in collaboration
with the organization. BAs are playing a role of middle-men between the organization and the
final customers/consumers, who book orders from the farmers and small agencies and deliver the
orders to the customers after collecting orders from the production facility/plant distribution
channel/warehouse. Final customers can also enjoy a business deal with the organization without
depending on the Business Associates, but here I will talk about the Business associates
selection and contribution to the business only.
Statement of Policy regarding Customer Relations
Pakarab Fertilizers Limited believes that customer satisfaction is of primary importance for its
success. Mindful of this responsibility, the company strives to understand customer requirements
and concerns and to merit their business by responding energetically and effectively.
Specifically, it is the companys policy to:
1. Provide high quality products that meet or exceed specifications and needs under all
reasonable circumstances.
2. Furnish services which reliably meet responsible standards of performance, efficiencyand courtesy.
3. Price the products and services competitively, explain terms of sale and send accurate
understandable bills promptly.
4. Assure that products and services are compatible with safety, health and
environmental standards of the community and beyond that continuously evaluate
safety and health aspects and give appropriate warning of know potential hazards.
5. Furnish accurate and sufficient information about its products and services so that a
customer can make an informed purchasing decisions, and scrupulously truthful in
advertising and all other communications.
6. Respond promptly and constructively to suggestions, requests for information and
complaints.
7. Recognize the importance of meeting community standards of appearance in
designing and maintaining company facilities.
8. Participate constructively in the debate of public issues affecting customers and
consumers, encourage governmental policies conductive to adequate supplies.
9. Comply rigorously with applicable laws and regulations.
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Marketing Excellence Commitment Statement
Pakarab Fertilizers Limited believes that marketing is the responsibility of all employees and is
vital for the success of the company.
As a Pakarab Marketing Personnel said, we always will:
i. Value our customers and make their satisfaction our first priority.
ii. Ensure the effectiveness of all customer interfaces.
iii. Perform as a well-motivated, superior marketing team.
iv. Encouraging and recognize innovation in marketing.
BA Selection Criteria
A BA should be;
Financially sound party. (Should be able to invest according to the business requirement)
Having good reputation in the area.
Having established contacts with the farming community.
Has experience of fertilizer and/or associated business (e.g. seed, pesticides, agricultural
implements, commission agent, ginning factory/rice mill owner).
Owns a shop/go down which can accommodate a minimum of 1000 bags of fertilizer.
Business set-up is located at a prominent site easily accessible to farmers.
Go down/shop must be accessible to 10, 20 ton trucks/30 tons trailers.
The prospective party should have potential to adequately represent PFL in the market in
terms of annual volume up liftment and should have a positive impact on sales andmarket share.
Willing to keep adequate quantity of all products.
Willing to participate in Company-sponsored activities, e.g. farmer meetings, group
discussions, demonstration plots, etc.
Should provide reliable competitive market intelligence and maintain confidentiality
when needed.
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Sales Operations
As per literature and technical definition Sales operations are a set of business activities and
processes that help a sales organization run effectively, efficiently and in support of business
strategies and objectives. Sales operations activities; help sales leaders make sound and timely
business decisions to drive short term and long term performance, help sales leaders align selling
resources with the greatest opportunities in the most cost effective ways, help ensure all sales
personnel are treated fairly and are paid accurately, help improve sales performance through
better processes, technology and methodologies, help to improve employee morale.
Pakarab has managed to set its sales operations in a very effective way. Sales operations at PFL
include components like customer order (CO) generation, Bank Guarantee (BG) approvals for
the customers who want to have a deal on credit, cross-checks of Demand Drafts (DD),
collaboration with the warehouses, co-ordination with BAs etc. I will talk about Customer Order
generation and supplies at first place in this section and later on I will also write about the order
handling, allowances and bank guarantees (BG).
Customer Order Generation and Supplies
Pakarab use three sources to supply their products:
i. Plant Distribution (Multan)
ii. Field Warehouses
iii. Port Karachi/Karachi Warehouses
The procedure for order generation and its processing through SALES SYSTEM for supply of
product from each source of supply is followed in the sequence given below:
Customer Order Generation
PFL representative identifies all the customer requirements and after mutual agreement receives
the payment in the form of demand draft, pay order and regular cheque (in case of sugar mills,
industries, registered companies and registered institutions) drawn on Multan Branch, made in
favor of Pakarab Fertilizers Limited from the BA for further processing of the order. In some
instances, however the demand draft or other payment instruments are received from the BA by
hand or through mail at the DMMs base or Regional Office or field warehouses.
The PFL representative checks the payment instruments for correctness of the amount,
wording of the companys name and make sure that the instrument is drawn on Multan.
The DMM then prepares Manual Customer Order by inserting all relevant details of
payment instrument, order and BAs preferences. This customer order has four copies as
follows:
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i. DMM/Warehouse Copy
ii. Customer Acknowledge Copy
iii. Sales Accounting Copy
iv. Regional Office Copy
DMM/Warehouse Copy is for record purpose of MM/TMM/TMM TECH/Warehouse.Customer acknowledgement copy is handed over to the BA for its own record. The other
two (sales accounting and regional offices) copies along with payment instruments are
sent to concerned Regional office/Head office.
Upon receipt of customer order Sales Assistant inserts the data on payment instrument
and other relevant details in SALES SYSTEM. Once the payment is entered the amount
will be credited into the BAs account. Sales Assistance then logs the customer order.
This entry is considered as evidence for the review of customer accounts.
Sales system retrieves customer order detail from Payment information screen and updates theBA Account balance appearing in customer order screen. Hence forth, the BAs account balance
will be updated on entry of every new payment and becomes the basis of payment for product
ordered form all supply sources, by the representative BA. Both the manual customer orders as
well as the SALES SYSTEM can accommodate multiple products provided the shipment mode
for all products in same (i.e. OC or CC).
Supplies ex-Plants and Redistribution Hubs
1. The respective distribution officer retrieves Customer Order Log Sheet in SALES
SYSTEM. This sheet is generated on daily basis. Customer order log sheet carries theupdate on all orders logged by Sales Assistance.
2. The distribution officer then gets the order detailed through Detailing Screen in product
handling system of SALES SYSTEM. On the basis of detailed order, Truckers Backlog
Report generated through PHS. This report contains the list of all orders detailed for
shipment. The distribution officer then hands over the Truckers Backlog Report to the
trucking contractor at plants and the PH&S Section and Shipment section at
Redistribution Hubs generate invoice/PSA through PHS in SALES SYSTEM against the
order for which the truck is provided and loaded for shipment. PM&S Officer and
Distribution Officer at Redistribution Hubs get the print out of the Invoice/PSA in
triplicate for:i. BAs Acknowledgement
ii. BSs own record
iii. Gate pass
3. After delivering product at the BAs outlet, the trucker takes the acknowledgement of the
BA on the acknowledgement copy of the invoice and also gets it stamped. This copy of
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invoice is the evidence of the delivery of product to the BA. This copy is later attached by
the trucking contractor to his freight bill as the supporting document.
Supplies ex-Port
The Distribution Officer, Port, retrieves Customer Order Log Sheet through the ProductHandling System in SALES SYSTEM. This sheet is generated on daily basis.
The Distribution Office then gets the order detailed through Detailing Screen in ProductHandling System of SALES SYSTEM. On the basis of detailed order, Truckers Backlog
Report is generated through PH&S. This report contains the list of all the orders detailed
for shipment. The Distribution Officer then hands over the Truckers Backlog Report to
the Tally Contractor and Trucking Contractors at Port. The trucking contractors arrange
transport for shipment of detailed customer orders. Whereas, the tally contractor monitors
truck loading operation at port according to the Truckers Backlog Report.
The tally contractor then generates invoice/PSA manually against the order for which the
truck is provided or loaded for shipment. Invoice/PSA is issued in 04 copies for:
i. BAs acknowledgement
ii. BAs own record
iii. Gate pass for Port Authorities
iv. Distribution officer Port
Sales Assistance at pant, logs the data in SALES SYSTEM form the manual copy of
invoice to generate the same through the system.
After delivering product at the BAs outlet, the trucker takes the acknowledgement of the
BA on the acknowledgement copy of the invoice and also gets it stamped. This copy ofthe invoice is the evidence of the delivery of product to the BA. This copy is later
attached by the trucking contractor to his freight bill as the supporting document.
Order Generation and Supplies ex-Warehouse
The basic operational difference between a Plant/Redistribution Hub/Port order and a warehouse
order is that the product of former is shipping through company arranged transportation; it is the
companys responsibility to ensure that the product is finally delivered at the BAs outlet. In case
of warehouse supplies, the companys responsibility ceases as soon as the truck is loaded and the
BA or his authorized representative acknowledges the product receipt on the invoice. The stepsfrom order generation till supplies ex-warehouse are as follows:
The BA or his authorized representative brings the payment instrument for the requisite
amount covering the payment for quantity to be shipped.
The warehouse assistance raises an order for the required quantity and then prepares
Manual Invoice/Sales Tax Invoice against the quantity ordered. He inserts relevant details
(truck #, quantity, pricing) on the Invoice/Sales Tax Invoice.
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The BA or his authorized representative arranges transport and brings a truck to the
warehouse.
The warehouse in-charge arranges loading of the product in the presence of the BA orhis
authorized representative.
The BA or his authorized representative then acknowledges receipt of the product on the
Invoice/Sales Tax Invoice.
The warehouse in-charge then matches the signatures of the BA and his authorized
representative/ contact man with the specimen signature card of the representative BA.
This step is followed in order to ensure that the shipment is made to the Companys
authorized BA or his authorized representative.
The BAs copy of the invoice is handed over to him. The companys responsibility now
ceases and the product is transported to the destination at the BAs own responsibility.
8. The payment instruments are recorded on the DD listing by the warehouse in-charge
and both are mailed to the regional office on daily basis. Production and shipment are recorded in daily shipment status report on daily basis.
Handling of Consignment Shipments
Scope:
The procedure is basically developed to entertain the needs of customers, who at times fall to
service the end consumers due to unavailability of the product at their outlets. It is sort of an
arrangement between the customers and company by which the Company may ship the product
as consignments on prevailing price to facilitate them to address the need of end consumers.
However, at any date given by the company, if the customer does fail to sell the product then he
has the option either to return the product to the company or get his invoiced at prevailing price.
The procedure of consignment is envisaged both warehouses and plant shipments and is
applicable to all products on need basis as and when approved by Marketing Manager.
Transaction is allowed against a bank DD.
Procedure:
Ex-warehouse Consignments
Consignment shipment is made against DDs as covered in agreement. Bank Guaranteesare however not entertained in consignment shipments.
This agreement is executed on stamp paper of Rs. 100/- or special adhesive stamps of
same amount may also be used. The cost of special adhesive stamps is born by the
company as we normally do in the Seller Buyer Agreement.
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Agreement is signed by both customer and the companys authorized representative
(DMM/Warehouse In-charge. Office assistants and RM, those who normally cab sign the
invoices) in the presence of two witnesses.
To entertain such customers, warehouse in-charges record consignments transactions at
warehouses in separate STRs and this is done shifting the stocks form regular STRs toconsignment STRs.
The record of all consignment agreements although with details of DDs is maintained at
warehouse and DDs are kept as security deposit till products get invoiced.
Acknowledge of consignment shipments from customers is taken.
All such consignment shipments are reported as sales; however, these shipments are
reported separately by warehouse to Regional office to head office for record purpose.
Bin cards are not updated against consignment shipments.
Once price is given, all consignment shipments are invoiced and bin cards are updated.
Ex-Plant/Ex-Port Consignment
Procedure at Regional Office
Consignment agreement is prepared as per procedure explained above.
Regional Office Assistance generate/makes a physical order through system or manually.
In the case of manual order sales assistance lock the manual order information in the
system.
In case of system updation at RO, RMM separately distribute information on details of
DDs received against each consignment through e-mails (consignment order #, quantity
of product, amount and DD #) and region keeps the hard copy of such e-mail for record.In case of e-mail failure this information is faxed to the distribution department.
Regions are responsible to keep the record of consignment agreements along with DDs as
security deposit (in fire proof cabinet under lock and key), and log these DDs in system
once pricing is issued and match the payments against the PSAs on which consignment
orders were serviced.
It is sole responsibility of region to have matched all the PSAs served against
consignment orders.
This is done by generating the PSAs report of consignment order and recalling the
individual PSA in system to have details of shipment through query and finally matching
the payments (already entered once price is issue) by pressing the button as given on
SALES SYSTEM screen.
This ends up the operation and system will automatically pick the price in both above
referred customer order (consignment order or invoice).
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Steps at Plant and Karachi Port Distribution
Upon receiving the consignment orders (DDs details separately through e-mail/fax from
regions), Plant and Karachi Distribution enters the data in SALES SYSTEM for detailing as they
normally do in system. The rest process is followed as normal for shipment of product andgeneration of PSAs as normally done to entertain the warehouses orders.
Steps at PH&S Plant and Karachi Port Distribution
The PH&S section at plant and Karachi port distribution generate PSAs against the consignment
orders for which the truck is provided and loaded for shipment. PH&S plants and Karachi Port
Distribution gets the print out of such PSAs.
i. BAs acknowledgement
ii. BAs own record
iii. Gate pass
iv. Trucker Copy (in case of Multan only)
v. Head Office Copy (in case of Multan only)
Steps at Truckers end
After delivering product at the BAs outlet, the trucker takes the acknowledgment from the BA on
PSAs and also gets it stamped as he normally does in case of normal delivery and submit this to
Plant and Karachi Port distribution for billing purpose.
Steps at PH&S Plant and Karachi Port Distribution (once price is issued)
Both plants and Karachi PH&S generate the PSAs report of consignment orders for their record.
As soon as regions confirm the data entry on log of payments and updating the PSAs for pricing,
both Plant and Karachi PH&S once again generate the PSAs report to flag out if any PSAs
pricing is not made. This will serve as double check in system and help to reconcile the data on
shipment as well. If there seems any PSA/invoice without pricing then concerned region is
informed and invoice get updated.
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Marketing Allowance
Marketing Allowance (MA) is paid to BA/direct customer to assist them to promote the usage of
fertilizer. The amount of MA is the function of the sales volume promoted by the BA. MA
payable to BAs/direct customer is usually defined in three forms as follows:
i. Base Marketing Allowance (MA) allowed and adjusted up front in each invoice (in
abeyance)
ii. Special Marketing Allowance (SMA) allowed and adjusted up front in each advice (in
abeyance)
iii. Deferred Marketing Allowance (DMA) allowed and adjusted separately at end of a
defined period (month) on the basis of volume lifted.
Handling of Marketing Allowance
The need for marketing allowance is identified by the DMM to work out the net price based on
the assistance needed by BAs to;
Actively promote fertilizer usage by the farmers
Sell on credit to farmers to encourage greater usage Match the pricing of the
competitors.
These considerations are reviewed by the RMM who examines the situation from the regional
perspective. He then develops a proposal for consideration of the General Marketing manager.
The General Marketing Manager accords approval through a serially controlled letter of pricing.
After this approval pricing with new MA allowed then becomes applicable to all the orders
generated OR shipments made during the period in which the MA is allowed. This MA can be
allowed on orders generated or shipments made, depending on the approval accorded by the
General Marketing Manager/Marketing Manager.
Deferred Marketing Allowance
If the MA is allowed in the form of Deferred Marketing Allowance, the MarketingManager accords his formal approval through a serially controlled letter of pricing. The
Admin assistant then logs into DMA Definition module in pricing screen for SALESSYSTEM. He then defines the different volume slabs against which the various DMA
slabs are allowed per ton, as a part of pricing approved by the General Manager. DMAs
allowed from separate sources of supply are to be entered in separate pricing in SALES
SYSTEM.
On completion of this transaction in SALES SYSTEM, the system generates another
serial number known as SALES SYSTEM DMA number assigned to the pricing allowed.
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At the end of DMA period, Admin Assistance selects the names of the BAs (qualifies for
various DMA slabs against defined volumes lifted) through the system. This is done on
the basis of the DMA applicable to BA/sales point/sales district/region, defined for the
specific supply source in step 2. Completion of this transaction in SALES SYSTEM in
turn concludes the definition and claim of DMA. The last and final step is the final calculation of DMA and issuance of DMA through
system. On the completion of the DMA period, the Sales Accounting runs the DMA
Calculation process through DMA Calculation module in pricing screen of SALES
SYSTEM. The system automatically completes the DMA process by retrieving the
required data from DMA definition and selection modules and generates the DMA note
for the concerned BA.
DMA note thus generated is sent to the concerned DMM The amount against this DMA
note becomes available in BA TAR balance in SALES SYSTEM. The BA can either
request for refund of his DMA or get this amount adjusted in his next order.
All deferred MA adjustments through DMA calculation process is SALES SYSTEM
should be completed within 15 days from the date of expiry of the contracted period.
Amendments in Order
An order once it is logged in SALES SYSTEM can be amended or cancelled as per the request
of the customer subject to its status in SALES SYSTEM.
If the status is pending then it can be cancelled and money refunded. Or the balance thus
available may be used for ordering any other product.
If the status is partially shipped then the pending quantity may be cancelled.
Suspension of Order
An order once it is logged in SALES SYSTEM can be suspended up to 75% of total order
amount, upon written request of the customer subject to its status in SALES SYSTEM.
If the status is pending then it can be suspended and order for any other product can be
raised.
Original order will remain as suspended in the SALES SYSTEM for 15 days and
afterward in case of no payment it will be cancelled automatically.
In case of price change new price will be effective on original order activation. No BG
orders can be suspended.
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Product Allocation Procedure
In peak consumption seasons, scenarios could emerge at times when the availability of the
product becomes lower than demand i.e. short supply situations. In such situations all regions are
put on allocation. Orders are then generated in accordance with the following procedure:
The allocation of the regions are worked out by the respective Marketing Managers on
the basis of the feedback from the regions in light of the Market Share trend, industry
forecast and various other factors contributing towards fertilizer consumption in the
area.
The RMM divides his allocation into his marketing districts on the basis of the above
criteria.
The DMM further breaks down his allocation for his BA network, based on the same
parameters as used by HO/RO. Month allocation will be communicated in writing to BA
in the co-ordination book. Each DMM is communicated his allocation for that month.
The RMM monitors/controls the order generation of his Marketing districts to keep the
order flow of his region in line with the sales allocation worked out for each Marketing
district.
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Sales on Secured Credit
Bank Guarantee
Objective
The company has made available the use of secured credit facility within a certain
allocation/quota to BAs/buyers. This facility is extended to the BA/buyers in order to stimulate
and promote sales volume. The main instruments of this credit are the Bank Guarantee (BG) and
Letter of credit (LC).
Policy
Marketing Division authorizes the Marketing Division to manage credit within a maximum limit
during a specified time period. Marketing Division further allocates the credit limit (amountoutstanding against quantity ordered at any point in time) to the regions.
The regions ensure that the amount outstanding for quantity uplifted against BG/LC should not
exceed their allocation at any point in time.
Bank guarantees can be issued from any of the scheduled banks, which include HBL, UBL,
ABL, MCB, BOP, BAF, ACB and NBP. Additionally, BA may also issues BGs from any of
PFL relationship banks, which include ABN AMRO, ANZ Grind lays, SCB, Citibank, Faisal
Bank, and Bank of America. Letter of Credit (LC) can be advised only through UBL corporate
Branch, Multan.
The credit facility is applicable for all PFLs product viz. Urea, NP and CAN.
Essentially, this credit is extended through the bank guarantee by way of two modes:
i. Single Credit Sales for BA/buyer
ii. Multiple Credit Sales for BA
BA Bank Guarantee Procedure
The BA submits the BG, prepared by the issuing bank on a verified stamp paper
according to the text as per the PFL specified BG format. The DMM should ensure
payment of appropriate stamp duty.
The DMM makes sure that the text/wording of the Company name, BG no., name of
issuing bank, P.A number of signing officers, terms, amount, credit period, etc are not
correct.
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The DMM also checks for the credit due date of the BG which should not be less than six
working days ahead of the bank guarantee period allowed to the BA.
Additionally, the BG is signed by:
a) Two attorneys from the issuing bank, who are executing officers duly authorized by the
bank to sign on the document. The DMM should ensure that their respective powerattorney numbers are explicitly mentioned with the signatures. In case of a single attorney
branch, the document still needs to be signed by two officers of the branch.
b) Two male witnesses with a note o their respective NIC numbers (NADRA issued) and
addresses. One of the witnesses is preferred to be PFL employee.
The DMM ensures that any corrections/modifications/cancelations in the text of the bank
guarantee must be accompanied by the by the bank stamp and the initials of the bank
executing officer.
The DMM may send the BG along with a written request for verification to the
Zonal/Regional Office of the issuing bank or to the Regional Office for arranging
verification.
Upon receipt of the original BG document from the DMM, PFL regional office seeks
independent verification of the issuance of this BG document form the Zonal/regional
office of the issuing bank branch through fax or letter.
Upon receipt of authentication through verification letter from the Zonal/Regional Office
of the issuing bank. Sales Accounting, will calculate the last shipment date falling within
the BG expiry period. This will also be automatically calculated by SALES SYSTEM on
entry of the BG data in the system. In case, credit period is for 90 days then the expiry
date of the BG must be 31 days ahead of the last shipment date; In case the credit period
is for 120 days then the expiry date of the BG must be 130 days ahead of the lastshipment date, else SALES SYSTEM will not accept the data in BG detail field.
All other particulars of BG are then logged into BA BG detail screen of SALES
SYSTEM by Sales Accounting.
The DMM , while filling out the customer order form manually, ensures that the sales
quantity does not exceed the amount allowed in the BG as calculated on the basis of the
applicable price of the product, enhanced by the applicable amount on account of BG
charges.
The DMM/Warehouse In-charge makes a note of the BG no., SALES SYSTEM no., and
date of issue, amount, and issuing bank name on the customer order form. In case of plant
shipment DMM send the Customer Order to the regional office.
12. Extra care should be taken while punching the data of Customer Order and invoices
into SALES SYSTEM by Regional Assistance, so that the quantity of order, invoices and
other particulars may not get wrongly punched. Verification should be made with the
amount of product and the amount available for BG.
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13. The customer order form is sent to the DO, who will generate the Product Shipment
Advice (PSA) and the invoice through the system on the basis customer order logged
against the particular BG is SALES SYSTEM.
14. In case the BA lifts product from a warehouse, customer order is raised at warehouse
and invoice is prepared once product is delivered to the BA.
Buyer Bank Guarantee Procedure
This type of BG is generally allowed for single sales for a credit period ranging from
210-240 days (depending upon Management approval).
The person desirous of obtaining Buyer Bank Guarantee approaches the concerned
DMM. Checking the availability of credit facility DMM allow buyer to initiate the
process preparing BG in the bank.
DMM submits following documents to RO for approval from RMM:
i. Buyer Agreement is affixed with special adhesive stamps of Rs.100/= dulysigned by buyer and two witnesses. The cost of stamps is born by the
company.
ii. Specimen Signature Card duly signed by buyer and contact men and verified
by concerned DMM.
iii. Copy of Computerized National ID Card issued by NADRA.
Upon receipt of these documents RMM approves buyer by signing the buyer agreement.
After approval from RM regional stall is advised to enter the relevant details into the
SALES SYSTEM as done in BA Appointment.
No BA certificate will be issued in this case.
The buyer submits the bank guarantee, prepared by the issuing bank on a verified stamp
paper according to the text as per the PFL-specified Buyer Bank Guarantee format.
The DMM should ensure payment of appropriate stamp duty.
Letter of Credit Procedure
1. Making Division to provide Performa invoice to the customer to establish Letter of
Credit (LC). The Performa to be issued will be signed by the Marketing Staff Officer/or any
person authorized by the Marketing Manager, evidencing the fact that following has been
approved by Marketing Division.
i. Customer
ii. Product
iii. Quantity
iv. Price
v. Credit Period
vi. Shipment Dates
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a. Performa invoice to clearly state that drafts to be required - with cost of stamp
duty on applicants account.
b. Letter of Credit to be advised through UBL Corporate Branch Abdali Road
Multan.
c. Performa invoice to bear unique number for identification purpose.2. Once LC is received by the Marketing Division it is routed to Finance Department
for approval of credit. Finance Department checks the following before authorization:
i. Authenticity of LC message (Fax/Original)
ii. LC amount to be consistent with Performa invoice
iii. LC to allow at least 30 days negotiation period
iv. LC validity to be at least up to the negotiation period
v. Within documents are also required , following standard clause to be present:
a. Commercial invoice to be presented in original
b. Bill of exchange to be drawn on Applicant/Applicant Bank Delivery
c. Credit Period as per the Performa Invoice.
3. Marketing Division provides the following documents (before shipment) to the Finance
Department:
i. Commercial invoice marked original
ii. Original Letter of Credit received from customer
4. Finance Department to submit the documents received to the Advising Bank along with
the bill of exchange as per the LC.
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Retirement of the Bank Guarantee
The procedure for collection of Bank Guarantees is as follows:
Policy
This procedure is followed for collecting payments of all Bank Guarantees issued by any
bank (Single sales as well as multiple sales).
Credit period will be calculated on first shipment against a particular BG.
The responsibility of monitoring the expiry dates and credit period is with Sales
Accounting.
If due date falls after expiry date, expiry date is constructed as the due date. Collection
of BGs through bank is monitored by Bank Manager.
Payment through Bank
Sales accounting hands over the original BG (for single sales BG and final payment against
multiple sales) and the call notice 06 days before the due date of Finance Department.
On behalf of Finance Manager Banking, acknowledges receipt of BG after ensuring that
the instrument has been received in the manner stated above.
BG shall be accompanied by a covering note addressed to contact person in the collecting
bank. This note is signed by the Banking Supervisor.
When BG is received before 12:00 p.m., Finance Department ensures that BG sent and
received by bank the same day. When BG is received after 12:00 p.m., Finance Department ensures that BG is sent and
received by the bank latest by the next working day.
Upon receipt of realized funds, Finance Department informs SA of payments and issues
cash receipt immediately.
Payment through Region
For Interim Payments: In case of payment is not received 10 days after the due date, BG
is routed through bank and procedure set out above is followed. The 10 days period is
grace period to the customer available only in the case of interim payments. For Final Payment (single sales and multiple sales BG): In case payment is not received
06 days before the due date, payment is routed through finance. The only exception is in
case there is a cushion period of at least 06 days between due date and expiry date, in
which case collection through bank will not be triggered until the due date.
As per market practice, due dates and expiry dates fall on the same day, thereby if the
customer defaults, PFL will not have any recourse on the customer. However, if customer
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desires to pay through DMM, he must pay five days in advance so PFL has adequate time
to en-cash the BG.
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Warehouses
The huge portion and percentage of total sale of the products is operated and done at field
warehouses and hence dependent on the warehousing network of Pakarab Fertilizers. Pakarab
bound all warehouses a defined policy and set of rules. Even the warehouses owned by Business
Associates are checked on regular basis and also before signing an agreement with any Business
Associate. An applicant cannot be considered valid for being a BA unless he has a warehouse
which meets the selection policy and requirements of Pakarab. In this section I will talk about the
classifications of the warehouses, how these warehouses are selected, what safety measurements
are followed at the warehouses, and few documents used in the warehouses and the sales
process.
Classifications of Warehouses:
1. Permanent W