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FATIMA FERTILIZER COMPANY LIMITED FFCL

Internship Report Fatima Fertilizer Company Limited.

Mukhtar Gudh Sadiqabad Submitted by

Muhammad Ahsan Roll No. 40 In Partial Fulfillment of the Requirements For the Degree of

Master of Commerce

Department of Commerce The Islamia University of Bahawalpur Date of Submission: 08-Sep-2011

Internship Report


FATIMA FERTILIZER COMPANY LIMITED FFCL

The Incharge Internship Program

Internship Report


FATIMA FERTILIZER COMPANY LIMITED FFCL Department of Commerce The Islamia University of Bahawalpur Bahawalpur.

Subject: -

INTERNSHIP

REPORT

ON

FATIMA

FERTILIZER

COMPAN LIMITED. Dear Sir, It is a great honor for me to present you the internship report as required for the completion of Master of Commerce degree program.The whole staff of Fatima Fertilizer Company Limited have been very cooperative with me during my four weeks internship tenure. My whole Internship tenure is spent on the finance and audit department at plant site in Mukhtar Gudh in Sadiqabad. Due to certain constraints I have not been able to gather all the facts and figures about the

Fatima Fertilizer Company Limited due to privacy act. Yet, the report is a

comprehensive one, containing a lot of information about the Fatima Fertilizer Company Limited. The practical work during the internship period has been a reworking and enlightening experience.

Yours truly, Muhammad Ahsan Roll No. 40 M.Com (Morning) Session 2009-11

Internship Report


FATIMA FERTILIZER COMPANY LIMITED FFCL

With the name of Allah who is the most beneficial & merciful. I am very thankful to Allah for his unlimited blessings for me. Although this report base only my name but numerous people were very important to the development of this report without the support of them I could never successfully completed the internship as well as the report. I am highly thankful to Col. Sarfraz Khan the head of adman department who gave me opportunity to work in his Company, and all the Senior Personnel of Fatima Group. Especially, Mr. Amir Malik the FMA, Rana Akbar the senior audit officer, and all my audit team members. All of them gave me knowledge and helped me during

my training period. All these Persons are very cooperative and highly coordinated with each other. My special thanks to my elder brother Mr. Gulam Murtza (Land Inspector) who provided me good guidance to join the Fatima Fertilizer Company Limited that is leading Company and playing an important role in the economic developement of Pakistan . Muhammad Ahsan

Roll No.

40

M.COM(2009-11) Internship Report | Appendix 4


FATIMA FERTILIZER COMPANY LIMITED FFCL

The purpose of this internship report is to explain what I did during my internship, which is required to get degree of M.Com. I start my four weeks internship at Fatima Fertilizer Company Limited after completing 4 semester of my two year Program in Department of Commerce, The Islamia University of Bahawalpur. This report is according to the best of my perception and knowledge gained via class room lectures and practical experience. I am thankful to all of my teachers, class fellows my friends and especially my elder brother whom cheerfulness and guidance is an asset for me. I am especially thankful to my Parents, and Mr. Rao Nasir, Mr. Rana Akbar senior audit officer without their help and guidance I may not be able to complete my internship and this report.

Internship Report | Appendix 5


FATIMA FERTILIZER COMPANY LIMITED FFCL

Table Of Contents A- Prefatory Sections 1. Title page..............................................................................................................01 2. Acknowledgements..............................................................................................04 3. Preface..................................................................................................................05 4. List of contents.....................................................................................................06 B- Body of the Report 5. Introduction.....................................................................................07 a) Objective of Studying the Organization.............................................07 b) Overview of the Organization............................................................08 c) Brief History.......................................................................................09 d) Current Status.....................................................................................09 e) Nature of the Organization.................................................................10 f) Scope of business and volume...........................................................10 g) Product lines and important Brands...................................................11

6. Organization structure............................................................................17 a) Organization and hierarchical charts.................................................17 b) Primary and Secondary Activities.....................................................18 c) Main offices.......................................................................................19

7. Brief overview of the Departments..............................................20 a) Number of employees working.........................................................20 b) Details of operations.........................................................................20 c) System , SOPs, and technology employed.......................................20 Internship Report | Appendix 6


FATIMA FERTILIZER COMPANY LIMITED FFCL d) Specific learning ..............................................................................30

8. Brief overview of the manuals......................................................30 9. Report of Special assignments.....................................................30 10.Analysis.........................................................................................30 a) PEST Analysis................................................................................30 b) SWOT analysis .............................................................................36 c) Five forces model...........................................................................38 d) Financial analysis...........................................................................42

11. Conclusion..............................................................................................................47 12. Recommendations..................................................................................................48 13. Refrences................................................................................................................48

Internship Report | Appendix 7


FATIMA FERTILIZER COMPANY LIMITED FFCL

6)INTRODUCTION A)

Objectives of Studying the Organization

1.1 Subject As I have got internship in Fatima Fertilizer Company Limited. When I join the firm as internee it was the end of financial year for many companies. Just after two weeks in Company I got opportunity to work in Audit Department as an Audit Assistant. Under this chapter the detail regarding other departments and their services is also given for the reader’s knowledge. But in the rest of the report only audit and finance department Experience in Fatima Fertilizer Company Ltd will be discussed as I spend my eight weeks only in above these two departments.

Internship Report | Appendix 8


FATIMA FERTILIZER COMPANY LIMITED FFCL

1.2 Purpose The purpose of this internship report is to fulfill the requirement to in order get the degree of M.Com and to explain what I have learned during my internship tenure (Eight weeks) at Fatima Fertilizer Company.

1.3 Description of the Place of Internship Fatima Fertilizer Company is situated in Mukhtar Gudh in Sadiqabad. During my internship period, in company, I really enjoyed working with the staff. It was almost impossible to work in all the departments within that limited time. But on my request, the staff of the firm provided me the opportunity to work in the different departments for the sake of practical knowledge. Doing internship in the firm was a great experience for me. I never had been in the professional environment ever before. I learnt a lot during my internship program. Peoples were very cooperative and they guided me all through the way. I was sent to the different departments and there I learnt different things from the experience of people working over there. The departments which I selected for my Internship are finance and audit departments. As my internship is in these departments so I have explained these departments in brief as compared to the other departments of the firm.

B) Overview of an Organization 1.1

Establishment of Firm 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. From that year to up till now the firm is creating its goodwill very rapidly.

1.2

Head Office Its office is situated in Lahore E-110, Khayaban-e-Jinnah, Lahore Cantt., Pakistan.

Internship Report | Appendix 9


FATIMA FERTILIZER COMPANY LIMITED FFCL UAN: 111FATIMA (111-328-462) Fax: 042-36621389

Email: Fatima-Group.com

1.3

Plant Site Office Mukhtar Garh, Sadiqabad, Distt. Rahim Yar Khan, Pakistan. Tel: 068-5786910 Fax: 068-5786909 Email: Fatima-Group.com

C)

Brief History 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 Company is listed at all stock exchanges of Pakistan, through a successful initial public offering (IPO) in February 2010. 200 million ordinary shares were offered to the public bringing the issued Share Capital from 1,800 million to 2,000 million shares

D)

Current Status 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.Foundation stone was laid on April 26, 2006 by the then Prime Minister of Pakistan. The construction of the Complex commenced in March 2007 and is housed on 950 acres of land. The Complex, when completed, is designed to produce: Internship Report | Appendix 10


FATIMA FERTILIZER COMPANY LIMITED FFCL •

500,000 Metric Tons of Urea per Annum

420,000 Metric Tons of Calcium Ammonium Nitrate (CAN) per Annum

360,000 Metric Tons of Nitro Phosphate (NP) per Annum

420,000 Metric Tons of NPK per Annum The Complex, during its construction phase engaged over 4,000 engineers and technicians from Pakistan, China, USA, Japan and Europe. The Complex provides modern housing for its employees with all necessary facilities. This includes a school for children of employees and the local community, a medical centre and sports facilities.

E)

Nature of Organization At Fatima, we know our long-term success is linked to the success of the thousands of

farmers who grow crops. That's why we work on-the-ground with farmers and educate them the proper use of fertilizers to help improve yields. Enhance farm productivity & profitability by improving farmer's knowledge & perception on balanced fertilizer use. We have a team of highly qualified and experienced Technical Services Officers, serving the farming community throughout the country. Team is equipped with the latest scientific knowledge, updated time to time, about crop production and fertilizer management practices & balanced fertilizer use to restore soil fertility and enhance farm yields. Technical team uses state of the art methodologies and tools to educate the farming community for improving their knowledge to improve crop yields, farm income and profitability. Team has a close liaison with the Government and private research institute, seed and pesticide companies for day to day updates on new products and technologies being used in the field.

F) Scope of Business and Volume Fatima Fertilizer enters into agreement with leading German firm to develop and implement CDM (Clean Development Mechanism) Project for the Catalytic Abatement of Nitrous Oxide in the Tail Gas of its Nitric Acid Plant.Fatima Fertilizer Company Limited has entered into an agreement with N. Serve Environmental Services GmbH, a German Limited Internship Report | Appendix 11


FATIMA FERTILIZER COMPANY LIMITED FFCL Liability Company, for development and implementation of a Clean Development Mechanism (CDM) project at its Plant located in Sadiqabad under the provision of the United Nations Framework Convention on Climate Change (UNFCCC) and the Kyoto Protocol. The central feature of the Kyoto Protocol is the requirement that countries limit or reduce their greenhouse gas emissions to set levels. The CDM allows emission-reduction projects in developing countries to earn Certified Emission Reduction (CER) credits, each equivalent to one tonne of CO2. These CERs can be traded and sold, and used by industrialized countries to a meet a part of their emission reduction targets under the Kyoto Protocol.N. Serve Environmental Services GmbH specializes in developing and financing high quality greenhouse gas emission reduction projects globally and is a world-leading expert for nitric acid N2O abatement project implementation and management.

F) Product Lines Calcium Ammonium Nitrate In farming,the efficient supply nutrients to the plants, with a low level of losses, is of great importance. This applies primarily to nitrogen, which has a direct influence on crop growth and developement. Due to its special properties, the supplies of nutrients are quick and for a longe time.

Internship Report | Appendix 12


FATIMA FERTILIZER COMPANY LIMITED FFCL

Properties Products Calcium

Ammonium

Nitrate

(CAN)

26% N (Dual Nitrogen) - 13% Nitrate and 13% Ammonical Other

than

Potassium Calcium

Nitrogen,

it

supplies

additional

5

elements

required

for

plant

growth:

-

0.9%

-

10%

Internship Report | Appendix 13


FATIMA FERTILIZER COMPANY LIMITED FFCL

Nitrophos 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.

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 in nature. 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.

Internship Report | Appendix 14


FATIMA FERTILIZER COMPANY LIMITED FFCL

Products Nitrophos 22%

(NP) Nitrogen

-

20%

Phosphorus

(P2O5)

Also contains 9~10% Calcium

Internship Report | Appendix 15


FATIMA FERTILIZER COMPANY LIMITED FFCL

Urea | Fertilizer 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.

Internship Report | Appendix 16


FATIMA FERTILIZER COMPANY LIMITED FFCL 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 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.

Internship Report | Appendix 17


FATIMA FERTILIZER COMPANY LIMITED FFCL

7)

Organizational Structure

A) Organization Chart Board of Directors

Audit Committee

Chief Executive Ofcer

HR and Remuneration Committee

Internship Report | Appendix 18


FATIMA FERTILIZER COMPANY LIMITED FFCL

Head

Group

of

Headof Hu-

Director Operations

man

Information

Resource

Technology

Head of Chief

Direc-

Head of

GM

Company

Procur-

Finan-

tor

Internal

Business

Secretary

ement

cial

Mark-

Audit

Develop-

Ofcer

eting

ment

B) Primary and secondary activities Fatima Fertilizer’s plants became operational under trial run in 2010. Ammonia, Urea, Nitric Acid and CAN Plants started trial production towards the end of March 2010. CAN trial production was however, successfully achieved for a short period in late 2009 with imported raw materials. Related offsite and utilities units and Product Handling and Storage sections also became operational since March/ April 2010. Extensive efforts were made to stabilize the plant operations and improve reliability and efficiency. Performance of plants continued to improve over the year. Ammonia plant produced 254,909 MT with an availability factor of 79%. Maximum operating load achieved by Ammonia plant is 88%. Urea plant produced 322,756 MT with an availability factor of 84%. CAN plant operation was stabilized gradually and the plant produced 175,619 MT during 2010 with an annual availability factor of 70%. Maximum operating load achieved by CAN plant was 84%. Nitric Acid operation has been dependent upon acid requirement by CAN plant. Total acid produced during 2010 is 131,797 MT (100% basis). The plant demonstrated stable operation at 90% load and can easily operate at design capacity, once the demand is there after NP plant comes on-stream in 2011.Ammonia plant operation at full load was not a requirement this year as NP plant is still under construction. In addition, Ammonia plant operation at design capacity Internship Report | Appendix 19


FATIMA FERTILIZER COMPANY LIMITED FFCL was hindered due to lower than expected Natural Gas pressure at Mari fields, which is being alleviated by installation of booster compressors at Mari. Further, Ammonia plant was commissioned without installation of a part of heat recovery section and some new high pressure process piping due to their late arrival at site. All such mechanical issues of Ammonia plant are being addressed in Annual Turnaround planned in March, 2011. This shall enable Ammonia plant to operate at design capacity before commissioning of NP plant. Your Company is looking at a potential market for Nitric Acid locally as well as internationally and preparations are in hand to develop facility for filling Nitric Acid in 35L Jerry Cans or 210L drums. Sales of packaged Nitric Acid have been identified to local as well as international customers. Civil works of NP plant have been significantly completed and mechanical work is also expected to be completed shortly. Plant commissioning is expected to begin in March 2011 with trial production expected to begin in April 2011.

C) Main Offices Head Office Its office is situated in Lahore E-110, Khayaban-e-Jinnah, Lahore Cantt., Pakistan. UAN: 111FATIMA (111-328-462) Fax: 042-36621389

Email: Fatima-Group.com

Plant Site Office Mukhtar Garh, Sadiqabad, Distt. Rahim Yar Khan, Pakistan. Tel: 068-5786910

Internship Report | Appendix 20


FATIMA FERTILIZER COMPANY LIMITED FFCL Fax: 068-5786909 Email: Fatima-Group.com

Registrar & Share Transfer Agent THK Associates (Pvt) Limited Ground Floor, State Life Building-3, Dr. Ziauddin Ahmed Road, Karachi - 75530. Tel: No. 92-1-111-000-322 Fax: No. 92-21-35655595

8) Brief overview of the Departments After the approvel of my internship letter when I join the finance department, first of all I met Mr. Amir Malik who is FMA in Fatima Fertilizer Company. He sent me to Mr.Rao Nasir who is inventory handling manager.Mr. Rao Nasir sent me to Mr. Akhtar Ali who is finance assistant.Such person was very cooperative. He told me th imprest system of Fatima Fertilizer Company.He learnt me to enter the transaction into oracle software.I got experience from such person for my one week. After that I came back again to finance department and a task of record keeping was assinged to me that I complete in three days.After that the senior auditor Mr.Rana Akbar called me to work in audit office as audit assistant. I accepted this offer.After two weeks I joined the audit department where I learnt much a lot. a) There are 2500 employees working in Fatima Fertilizer Company.

Internship Report | Appendix 21


FATIMA FERTILIZER COMPANY LIMITED FFCL

b) To do any work, first initiator initiates.He makes bill and sent it to planning department, planning department makes planning and after planning, planing department sent it to budget department, budget department chakes whether the department of such person has such amount to meet this bill. If approved it is sent to finance department, finance department chakes it and after chaking it is sent to audit office after the approvel of auditor, the payment is made to initiator. c) Standard Operating Procedure

Standard operating procedures are written guidelines that tell how a job or task should be performed. These guidelines are a major part of a company's quality system.

Significance Standard operating procedures are necessary for businesses to mass produce high-quality products. On-the-job injuries are minimized when procedures for completing tasks are in place.

Function The written instructions (SOP) for day-to-day tasks should be placed in a location easily accessible to employees. Guidelines and procedural information should be legibly written.

Considerations The company's standard operating procedures should provide a detailed account of the processes necessary for your company to function. These processes are generally repetitive.

Benefits When procedures are properly followed, quality products are produced in a uniform manner. Operational guidelines help companies maintain consistency. Internship Report | Appendix 22


FATIMA FERTILIZER COMPANY LIMITED FFCL

Warning Standard operating procedures that don't clearly communicate how to properly perform a task or duty are worthless. There is very little point to having written guidelines or instructions that aren't being used on a consistent basis.

Here are some Standard operating Procedures for the Company Employees

Detailed S.O.P Daily Bank Position •

Arrange cash in our bank accounts according to issued Cheques

Call to all banks on 09:30 am and confirm the available balances, after that call to all head cashiers to deposit the cash in the banks where we need it.

Coordinate with store head cashiers and reconcile the cash on daily basis.

Working on Accounts Payable Module •

Check and approve all kind of accounts payable vouchers in Oracle Financials.

Booking of monthly expenses of all locations and head office in Oracle Financials.

Open and close the accounting periods in oracle financials.

Validation of payables in Oracle Financials.

Create accounting and processing payables work to general ledger module. Internship Report | Appendix 23


FATIMA FERTILIZER COMPANY LIMITED FFCL •

Fetching of all credit and cash invoices from Navision to integration and then from integration to oracle financials.

Maintaining the supplier’s ledgers.

Working on General Ledger Module •

Check and approve all kind of journal vouchers.

Booking of expenses in Oracle Financials.

Posting of all entries to their respective heads.

Working on Accounts Receivable Module •

Booking of receivables from our all parties in Receivable module.

WORKING ON TRIAL BALANCE •

After completion of all processes from payables and general ledger module update the trial balance on monthly basis.

Export trial balance from oracle for making the monthly profit and loss account.

Summarize the trial balance data head wise for monthly and annual accounts.

WORKING ON FIXED ASSETS MODULE •

Addition and deletion of company fixed assets.

Booking of fixed assets in Oracle Financials.

WORKING IN MICROSOFT NAVISION •

Open new vendor account in Navision on request of buyers and then update in oracle.

Update the daily sales report on daily basis.

Analyze and summarize different kind of reports from Navision.

Internship Report | Appendix 24


FATIMA FERTILIZER COMPANY LIMITED FFCL CONDUCT STOCK TAKES FOR ALL LOCATIONS •

Stock takes of all locations on random basis.

On stock take night before starting post all un-posted documents in Navision.

Freeze data for the required divisions.

Update the database before punching data in laptops.

After completion of stock counting item wise scanning and punching of stock in laptops.

As the data punching completes then collect data from both laptops and compile in a master file.

Execute query after completion of all data and save in excel

Make a report with respect of divisions and difference in value.

These reports are hand over to store manager for verification of data and then update the report after all kind of verifications.

Filter the data from verified report and send to it for upload in Navision.

As the data upload then after verification of correct validation post in Navision to update the inventory.

WORKING ON SALARIES AND OVER TIME Checking and Booking •

Provide deductions from employees issued against provident fund and against salary to HR department on Monthly basis.

Checking and booking of Salaries Department wise in Oracle.

Checking and booking of Social Security Department wise in Oracle.

Checking and booking of Employee’s Old Age Benefit Department wise in Oracle.

Checking and booking of Over Time Department wise in Oracle. Internship Report | Appendix 25


FATIMA FERTILIZER COMPANY LIMITED FFCL •

Booking of recovery from employees in form of mess, phone, salary and update the ledgers by booking of entries in Oracle.

Payment of Salaries from Banks Transfer salaries to employees bank accounts through bank transfer letter printed on Company letter head which have the following detail, •

Title of Account

Bank Account Number

Payable amount

Signed by two signing authorities

Payment to SNS and Consignment Parties •

Monthly Payments of Vendors.

Monthly Payments of Consignment Vendors.

Cost of goods sold against above vendors

Rental income from above parties

Monthly Bank Reconciliations •

Monthly reconcile our bank accounts which detail is as under,

Allied Bank Sargodha

Allied Bank Bahlwal

Allied Bank Bahlwal

Allied Bank Lahore

Allied Bank Thokar

Bank Alfalah Mandi Internship Report | Appendix 26


FATIMA FERTILIZER COMPANY LIMITED FFCL •

Standard Chartered

Assist to Manager Finance •

Reporting on daily basis

Making on monthly accounts

At the time of annual audit

Detailed S.O.P Accounts Officer Sales Posting •

At early morning confirm the sales amount from store cashiers.

Match the sales amount shown in Navision with actual cash figure at all stores.

After confirmation of sales post it in Navision.

Sales Cash deposits and direct payments to vendors Reconcile the sales cash according to vendor payments and used for store. After reconciling cash on excel post all transactions to Oracle Financial All the transactions consist of following natures, •

Actual Sales amount post in oracle.

Sales cash deposit in bank post in oracle.

Credit sales transfer to alfalah bank post in oracle.

All petty expenses at store posted in oracle.

Post all payments to vendors in oracle.

Verification of Sales Cash used at stores Internship Report | Appendix 27


FATIMA FERTILIZER COMPANY LIMITED FFCL Before posting all transactions in oracle, verify the following things, •

Casting of all petty expenses.

All store expenses should be signed by store manager and store cashier.

The signed expenses should be approved by Regional retail manager.

Cash Reconciliations After booking of all store receipts and payments reconcile the cash in oracle financial. The closing balance of oracle financial should be equal to the amount issued to store for petty expenses and for till cash. If is there any difference the store cashier will explain the reason of tendency.

Checking of Reconciliation from Finance Manager The cash reconciliation statement should be checked and signed by finance manager.

Filling of Store Expenses and Z-Reports All the store expense vouchers should be filed with respect of there month and voucher number assigned from oracle financial. Z-Reports received from store should attach with the statement printed from Navision and then punched in the file with respect of store and month.

Systems & Procedures involved in Finance Department Accounting/Bookkeeping Accounting records will be maintained on a full accrual basis using up to date methods of electronic data processing. The following accounting records will be maintained: •

Cash – consecutive record of cash receipts and payments

General Journal Internship Report | Appendix 28


FATIMA FERTILIZER COMPANY LIMITED FFCL •

General Ledger

Subsidiary Ledgers including Receivable/Payable/Rates Assets

Other records necessary to fully document and explain the financial transaction of Company as required complying with the Companies Ordinance 1987 and GAAP.

Subsidiary ledgers shall be reconciled with the general ledger at least monthly.

There will be adequate and appropriate supervision of employees with sufficient employee backup to ensure that accounts and ledgers are adequately maintained.

The Accounts & Finance Manager to sight and review all receipt reversals, journals, credit notes, and other transactions.

Cash Received •

Cash received shall be recorded by an entry for each individual transaction.

The invoices record shall indicate the mode of payment, Cheques, cash,

Receipts shall be issued in numerical sequence.

Banking •

Cash received by an officer or employee of Company must be paid into a Company bank account.

Cash received by or on behalf of Company must be banked as soon as possible on or after the day of receipt.

Detailed records of Company’s banking activities must be kept.

Banking shall be reconciled with receipts.

In the intervening periods between banking, Cash received will be deposited in the safe.

Bank Accounts Bank accounts will be operated exclusively for the purpose of conducting Company business. Those presently approved: •

Miss.Fayza (Director)

Chief Executive Officer Internship Report | Appendix 29


FATIMA FERTILIZER COMPANY LIMITED FFCL •

Financial Manager

At least two authorized bank signatories are required to disbursements of cash from bank accounts. •

All accounts will be in the name of Company Corporation (Pvt) Limited accounts can only be opened with the approval of the Chief Executive Officer and Director

Bank reconciliation for each bank account operated by Company shall be prepared monthly.

Accounts for Payment and Disbursements All accounts for payment shall be certified by an Authorized Officer as to: •

The receipt of the goods and services being in accordance with the

Relevant Purchase order

The prices charged being fair and reasonable

The calculations and additions being correct

The allocation of the payment to the correct ledger account

Payments/disbursements is to be made by the crossed Cheques

Cheques shall be on Company stationery, pre-numbered and issued in numerical sequence

Unused Cheques shall be in the custody of the Accounts Payable Officer who shall maintain a register

Purchasing Procurement will be undertaken by Company in a way which: •

Encourages purchases being made from a registered Suppliers or from Open Markets

All the purchases must be made according to the demand

Proper documentation must be made by the purchase managers

All the purchase Orders Must be signed by the departmental purchaser

All the Purchases Orders must be matched by the Good received Notes

Salaries and Wages Payroll

Internship Report | Appendix 30


FATIMA FERTILIZER COMPANY LIMITED FFCL •

Records will be maintained in respect all employees of Company showing Gross salary or wages

Tax and details of all other payments and deductions

Sick, annual, long service and other leave available and taken

Allocation of time worked on jobs

Salaries and wages will be paid on the basis of attendance recorded on an approved time sheet, except for employees on “no fixed hours” Contracts

Time sheets will be mailed by the store Manager to the H.R manager

All claims for payment of overtime must be authorized by the relevant manager before being paid.

Information Technology ERP & OCS 10g Oracle is a technology partner providing an end to end platform. Oracle Financials, Inventory and Purchasing will form the core financial management tools for the operation. Internal company communication and external communication with vendors and suppliers will be managed through Oracle Collaboration Suite 10g.

d) Durring my internship I learnt record keeping, posting general entries in oracle software,tagging, chacking different bills. 9) In my audit work I chacked different bills in which I chacked job order bill, daily wage bill, disbursement bill, receipt bill, freight bill etc.

Internship Report | Appendix 31


FATIMA FERTILIZER COMPANY LIMITED FFCL 10) After my first week of internship, the first task that is record keeping is given to me that I done this in three days.After that the second task that is tagging is given to me that I done in one week.

11) Analysis a) PEST Analysis What is Pest Analysis? PEST analysis stands for "Political, Economic, Social, and Technological analysis" and describes a framework of macro-environmental factors used in the environmental scanning component of management. These are known as PEST analysis. Here we are analyzing the pest analysis because we want to know whether these points are affecting the performance of the Fatima company.

Importance of Pest Analysis PEST influences are a helpful method of summarizing the external environment in which a business operates.

Components of Pest analysis These are four factors whose applies in PEST analysis mostly, but here all factors will be discussed with details.

Internship Report | Appendix 32


FATIMA FERTILIZER COMPANY LIMITED FFCL

1. Political factors

Are how and what degree a Government interference in his economy specifically political factors includes areas such as •

Tax Polices

Labor Law

Environmental Law

Trade Restrictions

Tariffs

Political stability

Internship Report | Appendix 33


FATIMA FERTILIZER COMPANY LIMITED FFCL Political Factors may also includes goods and services which the Government wants to provide or be provided but others there are some question in our mind during the analysis which is The political areas have a huge influence upon the regulation of businesses, and the spending power of consumers and other businesses. We must consider issues such as: •

How stable is the political environment?

Will government policy influence laws that regulate or tax our business?

What is the government's position on marketing ethics?

What is the government's policy on the economy?

Does the government have a view on culture and religion?

Economic changes, terrorist activity and political unrest may result in business interruption. The success will depend on the company's ability to manage continued global political and/or economic uncertainty, especially in significant geographical markets, as well as any political or economic disruption due to terrorist and other hostile activities.For escaping these bad economic conditions, Fatima Fertilizer Company has its own strong security system.Before enter into company, complusory chacking is conducted in each gate.Adman department directly handle the security matters.Instead of adman department, Health Security Environment department is also responsible for internal security matters.

2.Economic Factors Here the Fatima Company analyzes the economy of Pakistan and know how the economic factors are influence on company the factors may be include of •

Economic growth,

Interest rates,

Exchange rates

Inflation rate.

Employment level per capita.

Long-term prospects for the economy Gross Domestic Product (GDP) per capita, and so on. Internship Report | Appendix 34


FATIMA FERTILIZER COMPANY LIMITED FFCL These factors have major impacts on how businesses operate and make decisions. For example, interest rates affect a firm's cost of capital and therefore to what extent a business grows and expands. Here the Fatima Company knows that if the majority of factors are going to his favor then the company can decide to open new stores.

3.Social Factors. In the Social Factors the Fatima Company Corporation (Pvt) Ltd will analyze the social factors include the

2. Cultural aspects 3. Health Consciousness 4. Population Growth Rate 5. Age Distribution 6. Career Attitudes 7. Emphasis on Safety A trend in social factors affects the demand for a companies products and how that company operates. For example, an aging population may imply a smaller and less-willing workforce (Thus increasing the cost of stores staff). Furthermore, companies may change various management strategies to adapt to these social trends (Such as recruiting older workers) and some question arises in our mind because the culture is different from city to city these may be

The social and cultural influences on Fatima Company (Some Extent) vary from city to city. It is very important that such factors are considered. Factors include:

8. What are the dominant language, Urdu, Punjabi, saraki, sindi, and blochi? 9. Does language impact upon the diffusion of products onto markets? 10. What are attitudes to local and imported products and services? 11. How much time do consumers have for leisure? Internship Report | Appendix 35


FATIMA FERTILIZER COMPANY LIMITED FFCL 12. What are the roles of men and women within society? 13. How long are the population living? Are the older generations wealthy? 14. Does the population have a strong/weak opinion on political issues?

If these are in favor of Fatima Company Company then will be the best environment for investing in other cities for opening the new stores. The fluctuations or changes in social /cultural activities in the areas of operations may also aff ect company business.Fatima Fertilizer Company has its own school for the childern of employees. Fatima Fertilizer Company has its own transportation system for its employees.Fatima Fertilizer Company has well furnished accomodation for the resident purpose of employees in which they have each facility as compared to ffc.

TECHNOLOGICAL FACTORS The introduction of point of sale equipment, bar codes and huge storage capacity for billing and payment database has facilitated the management of large set-ups with ease. Operations can be recorded in a structured and systematic manner, providing detailed analysis of the sales and volume of transactions. Electronic transactions have increased the volume of sales in the country. Flexibility in the mode of payment and cashless transactions has helped in driving sales. Communication assists in maintaining a competitive advantage in retaining and attracting customers. The introduction of new technology may be intricate for retailers, but the convenience and cost effectiveness create the need for new advancements. Large stores need to monitor inventories and expenses of establishments. With automated machines and high-end computers making the task simpler, the focus of retailers can stay on retaining customers with new strategies. Security systems also do help for a safer shopping, for retailers as well as customers, providing immense mental relief. Such technological advancements are only now coming into Pakistan and the need for it has been acknowledged. The point of sale (POS) applications will provide for quicker consumer check-out and multiple payment options like credit cards. Solutions ranging from simple Point of Sale (POS) systems to complex retail ERPs have been implemented mainly by large, mid-sized and manufacturer-retailers in Pakistan Using ERP packages and solutions like Retail Pro, higher-end solutions like SAP.

We know that, Technology is vital for competitive advantage, and is a major driver of retail business. Consider the following points:

Internship Report | Appendix 36


FATIMA FERTILIZER COMPANY LIMITED FFCL 1.

Does technology allow for products and services to be sold more cheaply and to a better standard of quality?

2.

Do the technologies offer consumers and businesses more innovative products and services such as Internet banking, new generation mobile telephones, etc?

3.

How the technologies effect the system of Point of sale (pos)?

4.

Does technology offer to Fatima Company a new way to communicate with consumers e.g. banner, cables, and internet?

Fatima Company analyze the technological factors if they meet their requirements then the company will decide it positively.

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. Foundation stone was laid on April 26, 2006 by the then Prime Minister of Pakistan. The construction of the Complex commenced in March 2007 and is housed on 950 acres of land. The Complex, when completed, is designed to produce: •

500,000 Metric Tons of Urea per Annum

420,000 Metric Tons of Calcium Ammonium Nitrate (CAN) per Annum

360,000 Metric Tons of Nitro Phosphate (NP) per Annum

420,000 Metric Tons of NPK per Annum The Complex, during its construction phase engaged over 4,000 engineers and technicians from Pakistan, China, USA, Japan and Europe. The Complex provides modern housing for its employees with all necessary facilities. This includes a school for children of employees and the local community, a medical centre and sports facilities.

Competitor’s Analysis: Internship Report | Appendix 37


FATIMA FERTILIZER COMPANY LIMITED FFCL Fatima Fertilizer Company is also carrying out competitor's analysis and in order to be competitive and win the competitive value equation it is focusing on tight control of capital spending, improved inventory control, and lower product and manufacturing costs through standardized manufacturing platforms.Fatima Company has stiff competition with Angro Fertilizer Company and Fuji Fertilizer Company.

Swot Analysis What is SWOT analysis? SWOT is an acronym for Strengths, Weaknesses, Opportunities, and Threats. Occasionally, it may also be found as a ‘WOTS up’ analysis or the TOWS analysis. The technique is credited to Albert Humphrey who led a research project at Stanford University in the 1960s and 1970s using data from leading companies involved in long range planning processes. A SWOT analysis is a planning tool used to understand the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business. It involves stating the objective of the business or project and identifying the internal and external factors that are either supportive or unfavorable to achieving that objective. SWOT is often used as part of a strategic or business planning process, but can be useful in understanding an organization or situation and decision-making for all sorts of situations. The SWOT is great for developing an understanding of an organization or situation and decisionmaking for all sorts of situations in business, organizations and for individuals. Doing a SWOT can be very simple, however its strengths lie in its flexibility and experienced application.

Strengths The positive tangible and intangible attributes, which are with in an organization. They are within the organization’s control. Strengths Internship Report | Appendix 38


FATIMA FERTILIZER COMPANY LIMITED FFCL 1. Understand the needs and wants of the local consumer 2. Having personal relationship with the community, local knowledge 3. Convenient locations 4. Low cost of running day to day operation 5. Short term payable 6. Consumer acceptance 7. Loyal customer base 8. Low price perception 9. New entrant 10. Economical pricing 11. True Retail Store providing one stop shopping 12. Fun place for families and kids

Weakness Factors that are within an organization’s control that detracts from its ability to attain the desired goal. Which areas might the organization improve? 1. Low levels of quality, service and cleanliness 2. Less variety, Poor ambiance 3. Higher pricing 4. No expansion 5. No media presence 6. Couldn’t able to attract kids/ families

Opportunities The external attractive factors, that represents the reason for an organization to exist and develop. What opportunities exist in the environment, which will improve the organization? 1. Sufficient untapped market 2. Growing knowledge of consumer 3. Media consumption habits Internship Report | Appendix 39


FATIMA FERTILIZER COMPANY LIMITED FFCL 4. Expansion in new cities 5. Improve on services, quality 6. Market presence (Advertising)

Threats External factors, beyond an organization’s control, which could place the organization mission or operation at risk. The organization may benefit by having contingency plans to address them if they should occur. •

Arrival of new markets

Consumer expectation level is getting higher day by day

Growing competition

Unpredictable Govt. taxation policies

Five competitive forces model Here is a brief background on who developed it, and why it is useful. The model originated from Michael E. Porter's 1980 book "Competitive Strategy: Techniques for Analyzing Industries and Competitors." Since then, it has become a frequently used tool for analyzing a company's industry structure and its corporate strategy. In his book, Porter identified five competitive forces that shape every single industry and market. These forces help us to analyze everything from the intensity of competition to the profitability and attractiveness of an industry. Figure 1 shows the relationship between the different competitive forces.

Internship Report | Appendix 40


FATIMA FERTILIZER COMPANY LIMITED FFCL

Internship Report | Appendix 41


FATIMA FERTILIZER COMPANY LIMITED FFCL

Threat of New Entrants Its means that the new companies have not a lot of potential in the industry to enter as a new supplier of the specific product, it is not easy for new companies to enter the industry. But there are some reasons through which peoples feel hesitation and these reasons limits the threat of the new entrants are known as a Barriers to Entry .Some examples include: •

Existing loyalty of Fatima Company.

Incentives for using a particular buyer

High fixed costs

Scarcity of resources

High costs of switching companies

Government restrictions or legislation

Power of Suppliers Its means how much pressure suppliers can place on a business? If one supplier has a large enough impact to affect a company's margins and volumes, then it holds substantial power. Fatima Company is a Retail business having different departmental at different location, so the suppliers of the Fatima Company are Open Markets Supplier, There are some how have a permanent suppliers. Some time the open market supplier take a benefit from the needs of the Fatima Company, and they charge the same rate on which they are providing to others, so it creates the completions between the Fatima Company and others company. Here are a few reasons that suppliers might have power: •

There are very few suppliers of a particular product

There are no substitutes

Switching to another (competitive) product is very costly

The product is extremely important to buyers - can't do without it

Power of Buyers Its means how much pressure customers can place on a Fatima Company.? If one customer has a large enough impact to affect a company's margins and volumes, then the customer hold substantial power. The buyers of the Fatima Company are the general public of the different Internship Report | Appendix 42


FATIMA FERTILIZER COMPANY LIMITED FFCL location, as we discussed the Fatima Company have a focus to do its business mainly in the rural areas and the peoples of the rural areas are not educated. so some time it will be difficult for the Fatima Company employees to retain the peoples of the rural areas because they not listen any one , they do according to their mind, Here are a few reasons that customers might have power: o Small number of buyers o Purchases large volumes o Switching to another (competitive) product is simple o The product is not extremely important to buyers; they can do without the Product for a period of time o Customers are price sensitive

Availability of Substitutes What is the likelihood that someone will switch to a competitive product or service? If the cost of switching is low, then this poses a serious threat. Here are a few factors that can affect the threat of substitutes.

Competitive Rivalry This describes the intensity of competition between existing firms in an industry. Highly competitive industries generally earn low returns because the cost of competition is high. A highly competitive market might result from: •

Many players of about the same size; there is no dominant firm

Little differentiation between competitors products and services

A mature industry with very little growth; companies can only grow by stealing customers away from competitors.

Internship Report | Appendix 43


FATIMA FERTILIZER COMPANY LIMITED FFCL

Fatim Fertilizer Company Limited Horizontal Analysis of Financial Statements For the Last Years Dec-2009 to Dec 2010 2009

2010

Sales

0%

0%

Less: Cost of Sales

0%

0%

Gross Profit

0%

0%

Administration Expenses

100%

118.35%

Finance cost

100%

119.49%

Other Income

100%

26.54%

Loss before taxation

100%

211.30%

Assets

2009

2010

Property, plant & equipment

100%

127.89%

Capital work in progress

100%

118.35%

Deferred tax assets

0%

Long term loans and deposits

100%

200.37%

100%

198.55%

Less: Operating Expenses

Non-current Assets

Current Assets Store and apares Stock in trade Trade debt

Internship Report | Appendix 44


FATIMA FERTILIZER COMPANY LIMITED FFCL Loans, adavances, deposiits 100%

110.67%

100%

126.23%

100%

121.42%

Cash and bank

Total Assets Equity & Liabilities

Authorized capital

0.00%

0.00%

2100,000,000 ordinary shares of rs, 10

Issued, Subscribed and paid up capital Prefrences shares

100% 0.00%

111.11% 0.00%

Accumulated Loss

100%

206.53%

Total Equity

100%

136.72%

Long term finance

100%

121.40%

Employees retirement benifits

100%

135.42%

Current poration of Long term finance

100%

0.00%

Trade and other payables

100%

222.85%

Accrued finance cost

100%

115.15%

Total Equity & Liabilities

100%

121.42%

Current Liabilities

Ratios Analysis of the Financial Statements

Internship Report | Appendix 45


FATIMA FERTILIZER COMPANY LIMITED FFCL

Ratio Analysis

2009

2010

Current Assets

2,216,453

4,284,606

Current Liabilities

4,660,938

7,074,260

0.47

0.61

535,825

0

4,660,938

7,074,260

0.11

0

C.G.S

(97,121)

(163,639)

Inventory

535,825

0

-0.18

-----------

Liquidity Ratios Current ratio

Quick Ratio Current Assets-Stock

Current Liabilities

Activity Based Ratios Inventory Turnover

Total Asset Turnover Sales Total Assets

Debt Ratios Debt Ratio

Internship Report | Appendix 46


FATIMA FERTILIZER COMPANY LIMITED FFCL Total Liabilities Total Assets

4,660,938

7,074,260

57,202,532

69,457,038

8.14%

10.18%

(97,121)

(163,639)

21,000,00

21,000,00

-0.05

-0.07

(97,121)

(163,639)

57,202,532

69,457,038

-0.16%

-0.23%

Profitability Ratios Gross Profit Margin Gross Profit Net Sale

Operating Profit Margin Operating Profit Net Sale

Net Profit Margin Net Profit Net Sale

Earning per Share Net Profit No. Of Shares

Return On Assets Net Profit/Loss Total Assets

Internship Report | Appendix 47


FATIMA FERTILIZER COMPANY LIMITED FFCL Return On Equity Net Profit/Loss Total Equity

(97,121)

(163,639)

17,742,788

24,258,780

-0.54%

-0.67%

Conclusion/summary Internship was a new experience for me as it’s a first step in the practical field so I have learned a lot while working in Fatima Fertilizer Company Limited. The key areas in which I worked are Audit and Finance departments. In my first week of internship I was placed in the Finance department where I was introduced to record keeping and to enter business transactions in oracle system that was used by Fatima Fertilizer Company Limited and I was also introduced to imprest system of Fatima Fertilizer Company Limited .I was sent to audit department to audit department to audit the voudhers, bills and different documents of the whole departments of Fatima Fertilizer Company Limited.I was also given a special task that is tagging of vehicles of Fatima Fertilizer Company Limited.It was very complex task but Al-Hamdulilah I completed this task just in five days.It was great pleaure for me to achieve this hard task. My report covers the practical experience and exposure that I gained at Fatima Fertilizer Company Limited. At the end I can say that, the overall gap between university studies and practical experience is minimized after such a good experience of practical work that will always benefit to my future life.

Internship Report | Appendix 48


FATIMA FERTILIZER COMPANY LIMITED FFCL

SUGGESTIONS & RECOMMENDATIONS  More distribution channels should be opened so that the lack of fertilizer may be fulfilled  All the distribution channels should be online so that customer can get quick services.  Fatima should hire people whose education are related to marketing, commerce, IT, engineering, fields instead of hiring graduates.  The equal employment opportunity especially in case of men and women  The distributors of Fatima should have to change behavior so that to attract customers.  Fatima should enhance online payment service at extensive level.  To improve the productivity the payee of employees should be increased.  The competent persons to enhance performance and quality of work should run all segments separately.  Fatima should spend money to conduct the series of training programs to achieve the mission of Fatima Group of Industry.

Refrences and sources www.fatima-group.com

Internship Report | Appendix 49


Internship Report